深赛格B:2015年年度报告(英文版)

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Shenzhen SEG Co., Ltd.

2015 Annual Report

March 2016

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Chapter 1 Important Notice, Contents, and Definitions

The Board of Directors, the Board of Supervisors, the directors, the supervisors, and the

senior executives guarantee that the annual report is authentic, accurate, and complete, and

that it has no false records misleading statements or major omissions and they commit to the

individual and joint legal liabilities.

Chairman of the Board of Directors Wang Li, the Chief Financial Officer Liu Zhijun and the

responsible person of the accounting institution (Accountant in charge) Ying Huadong

hereby declare that the Financial Statements enclosed in this annual report are true,

accurate and complete.

Except the diractor listed below, all the directors have attended this board meeting reviewing

the semi-annual report.

Title of director not

Name of director unattended Cause of absence Name of attorney

attended personally

Li Luoli Independent director Business trip Song Pingping

The future plans, development strategies, and forward-looking statements involved in the

annual report do not constitute any tangible commitment to investors. Investors should pay

attention to investment risks.

The profit distribution plan passed by the Board of Directors is to issue cash RMB 0.30 (tax

included) as dividends with 0 bonus shares per 10 shares (tax included) to all shareholders

with RMB 784,799,010 as the base without transferring the capital reserve to share capital.

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CONTENTS

Chapter 1 Important Notice, Contents, and Definitions ..........................................2

Chapter 2 Company Profile and Main Financial Indexes ........................................7

Chapter 3 Overview of Business ...............................................................................12

Chapter 4 Management Discussion and Analysis ...................................................14

Chapter 5 Important Matters ...................................................................................43

Chapter 6 Changes in Share Capital and Information on Shareholders .............. 74

Chapter 7 Preferred Shares.......................................................................................80

Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees 81

Chapter 9 Corporate Governance ............................................................................91

Chapter 10 Financial Report...................................................................................105

I. Company Profile ...................................................................................................134

III. Basis of preparation of the financial statements.............................................136

V. Taxes171

VII. Change in consolidation scope ........................................................................201

No changes are made to the consolidation scope in the current reporting period.201

VIII. Equity in other entities ...................................................................................201

X. Related parties and associated transactions .....................................................206

Note *1: Under the cooperation agreement signed by and between both parties, Xi'an

Hairong SEG Electronics Market Co., Ltd. pays the rental according to 70% of profits of the

electronics market. Therefore, the amount of rental in the future is uncertain. 210

Note *2: The rental of Shenzhen SEG Electronics Market Management Co., Ltd. is adjusted

according to the CPI. Therefore, the amount of rental in the future is uncertain.210

Note *3: Under the cooperation agreement signed by and between both parties, Wujiang

SEG Electronics Market Co., Ltd. pays the rental according to 70% of pretax profits of the

electronics market. Therefore, the amount of rental in the future is uncertain. 210

XII. Events after the balance sheet date................................................................. 211

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XIII. Notes to other important matters ..................................................................212

Continued: ................................................................................................................212

Chapter 11 Documents for Reference.....................................................................222

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Definitions

Definition Refers to Description

This Company, the Company Refers to Shenzhen SEG Co., Ltd.

Shenzhen SEG Group Co., Ltd. Refers to Shenzhen SEG Group Co., Ltd.

Huakong SEG Refers to Shenzhen Huakong SEG Co., Ltd.

SEG Baohua Refers to Shenzhen SEG Baohua Enterprise Development Co., Ltd.

Xi'an SEG Refers to Xi’an SEG Electronics Market Co., Ltd.

Suzhou SEG Refers to Suzhou SEG Electronics Market Co., Ltd.

Xi'an Hairong SEG Refers to Xi’an Hairong SEG Electronics Market Co., Ltd.

Nanjing SEG Refers to Shenzhen SEG Electronics Market Management Co., Ltd.

Shanghai SEG Refers to Shanghai SEG Electronics Market Co., Ltd.

Nantong SEG Refers to Nantong SEG Times Square Management Co., Ltd.

Changsha SEG Refers to Changsha SEG Development Co., Ltd.

Mellow Orange Hotel Refers to Shenzhen Mellow Orange Business Hotel Management Co., Ltd

Longgang SEG Refers to Shenzhen SEG Electronics Market Management Co., Ltd.

SEG Industry Refers to Shenzhen SEG Industrial Investment Co., Ltd.

SEG E-Commerce Refers to Shenzhen SEG E-Commerce Co., Ltd.

SEG Credit Refers to Shenzhen SEG Credit Co., Ltd.

SEG Navigations Refers to Shenzhen SEG GPS Scientific Navigations Co., Ltd.

Wujiang SEG Refers to Wujiang SEG Electronics Market Co., Ltd.

Shunde SEG Refers to Shunde SEG Electronics Market Management Co., Ltd

Wuxi SEG Refers to Wuxi SEG Electronics Market Co., Ltd

Nanning SEG Refers to Nanning SEG Digital Plaza Management Co., Ltd.

Yantai SEG Refers to Yantai SEG Times Square Development Co., Ltd.

Suzhou SEG Digital Refers to Suzhou SEG Digital Plaza Management Co., Ltd.

Zhengzhou SEG Refers to Zhengzhou SEG Digital Plaza Management Co., Ltd.

Xi'an Fengdong SEG Refers to Xi'an Fengdong New Town SEG Times Square Properties Co.,

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Definition Refers to Description

Ltd.

Nantong SEG Operation Refers to Nantong SEG Commercial Operation Management Co., Ltd.

SEG Investment Refers to Shenzhen SEG Investment Management Co., Ltd.

SEG Chuangpinhui Refers to Chuangpinhui Branch of Shenzhen SEG Co., Ltd

SEG Logistics Refers to Shenzhen SEG Logistics Co., Ltd.

An integrated information platform for market management with

SEG Universal Refers to the functions of access control management, micro-payment,

query system and information distribution.

State-owned Assets Supervision and Administration Commission

Shenzhen SASAC Refers to

of Shenzhen Municipality

CSRC Refers to China Securities Regulatory Commission

Shenzhen Securities Regulatory Bureau of China Securities

Shenzhen Securities Regulatory Bureau Refers to

Regulatory Commission

The Articles of Association Refers to The Articles of Association of Shenzhen SEG Co., Ltd.

Unless otherwise specified, the amount referred

Refers to Amount in RMB

to in the report

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Chapter 2 Company Profile and Main Financial Indexes

I. Basic Information

Stock abbreviation SHEN SEG, SHEN SEG B Stock code 000058, 200058

Changed stock abbreviation (if

None

any)

Listed on Shenzhen Stock Exchange

Company name in Chinese 深圳赛格股份有限公司

Company name in Chinese SHEN SEG

Company name in English (if

SHENZHEN SEG CO.,LTD.

any)

Company name abbreviations

None

in English (if any)

Legal representative Wang Li

Registered address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen

Post code 518028

Office address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen

Post code 518028

Website http://www.segcl.com.cn

E-mail segcl@segcl.com.cn

II. Contact Information

Secretary of the Board of Directors Securities affairs representative

Name Zheng Dan Zhang Xin

31/F, Tower A, Stars Plaza, Huaqiang Road 31/F, Tower A, Stars Plaza, Huaqiang Road

Contact address

(N), Futian District, Shenzhen (N), Futian District, Shenzhen

Phone 0755-83747939 0755-83747939

Fax 0755-83975237 0755-83975237

E-mail segcl@segcl.com.cn segcl@segcl.com.cn

III. Information Disclosure and Filing Site

Media selected by the Company for information China Securities Journal, Securities Times, Securities Daily and Hong Kong

disclosure Commercial Daily

Website selected by CSRC for publishing the annual

http://www.cninfo.com.cn (Cninfo Website)

report

The place where the annual report is prepared and Secretary's Office of Board of Directors, 31/F, Tower A, Stars Plaza,

kept Huaqiang Road (N), Futian District, Shenzhen

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IV. Changes of Registration Information

Organization code 27925377-6

Changes to business scope on July 6, 2005: Domestic commerce, goods supply and

sale (excluding commodities under special operation, control and sale), industrial

Changes of main business since the investment (licenses for specific projects shall be subject to application on a

Company's listing (if any) case-by-case basis), economic information consultancy, property lease, real estate

agency, and operation of SEG professional electronics markets (the license for the

professional market shall be further applied for).

Changes of dominant stockholders (if any) No change.

V. Other Relevant Information of the Company

The accounting firm employed by the Company:

Name of the accounting firm BDO Dahua CPA Co., Ltd. (special general partnership)

Address of the accounting firm Room 1101, 11/F, Tower 7, No. 16 Block, Xisihuan Road (M), Haidian District, Beijing

Name of the certified public

Zhang Xing and Zhang Zhaocheng

accountant

The sponsor firm employed by the Company for fulfilling the duties of continuous supervision in the report

period:

□ Applicable √ Not applicable

The financial advisor employed by the Company for fulfilling the duties of continuous supervision in the report

period:

□ Applicable √ Not applicable

VI. Main Accounting Data and Financial Indexes

Are retrospective adjustments made to previous financial statements due to accounting policy changes or

accounting errors?

□ Yes √ No

Year-on-year

2015 2014 2013

increase/decrease

Operating revenue (Yuan) 741,533,676.93 681,343,920.99 8.83% 597,358,257.82

Net profit attributable to shareholders of

74,242,090.49 48,380,294.05 53.46% 54,338,735.35

the listed company (Yuan)

Net profit attributable to shareholders of

the listed company after deduction of 84,931,560.68 45,920,252.23 84.95% 48,912,658.58

non-recurring gains and losses (Yuan)

Net cash flow arising from operating

-12,453,523.82 -427,933,620.94 -97.09% -122,530,546.70

activities (Yuan)

Basic EPS (Yuan/Share) 0.0946 0.0616 53.57% 0.0692

Diluted EPS (Yuan/Share) 0.0946 0.0616 53.57% 0.0692

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Weighted average ROE 5.19% 3.80% 1.39% 4.44%

Year-on-year

End of 2015 End of 2014 End of 2013

increase/decrease

Total assets (Yuan) 2,614,660,524.37 2,659,717,718.28 -1.69% 2,134,940,597.85

Net assets attributable to shareholders of

1,475,126,229.16 1,298,970,719.85 13.56% 1,250,224,375.08

the listed company (Yuan)

VII. Differences in Accounting Data under Chinese and Overseas Accounting Standards

1. Differences in net profits and net assets reported in the financial statements disclosed under

international accounting standards and Chinese accounting standards

□ Applicable √ Not applicable

In the report period, the company’s net profits and net assets have no differences in the financial report disclosed

based on both the international and the Chinese accounting standards.

2. Differences in net profits and net assets reported in the financial statements disclosed under overseas

accounting standards and Chinese accounting standards

□ Applicable √ Not applicable

In the report period, the company’s net profits and net assets have no differences in the financial report disclosed

based on both the international and the Chinese accounting standards.

VIII. Major Quarterly Financial Indexes

Unit: Yuan

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Operating income 191,029,218.56 183,525,917.05 194,784,480.30 277,336,268.42

Net profit attributable to shareholders of the

21,348,553.12 13,557,580.49 7,280,509.44 32,160,825.24

listed company

Net profit attributable to shareholders of the

listed company after deduction of 21,168,892.76 13,529,361.55 6,782,338.84 43,450,967.53

non-recurring gains and losses

Net cash flow from operating activities -37,829,627.54 -60,758,206.08 52,310,864.17 33,823,445.63

Are there any significant differences between the financial indexes or their totals in the preceding table and those

described in the disclosed quarterly reports or semi-annual reports?

□ Yes √ No

IX. Items and amount of non-recurring gains and losses:

√ Applicable □ Not applicable

Unit: Yuan

Amount of Amount of Amount of

Item Remarks

2015 2014 2013

Gains and losses on disposal of

-257,269.63 6,475.34 1,810,628.46 Gains on disposal of fixed assets

non-current assets (including the write-off

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount of Amount of Amount of

Item Remarks

2015 2014 2013

of assets depreciation reserves)

Won the special subsidies issued by

Futian District Bureau of Science and

Government subsidies recorded into Technology Innovation of Shenzhen,

current gains and losses (except those won the special subsidies issued by

closely related with corporate business 980,956.24 1,554,585.78 1,117,834.72 Shenzhen Economic, Trade and

and enjoyed according to national Information Technology Commission,

standards or certain quota) and won the discount loans issued by

Futian Distict Bureau of Economic

Promotion.

Fund appropriation charges for

3,414,955.63

non-financial entities recorded into 700,000.00 581,000.00

current profits and losses

Transferred-back impairment provision

469,871.93

for accounts receivable, for which 3,022,045.29

separate impairment tests are carried out

Trustee fee from entrusted operation 200,000.00 200,000.00 200,000.00

The house leased by Nanning SEG for

developing the electronics market

suffered from severe water seeping and

leakage, so the operation of the market

was severely impacted. In 2015, because

of this incident, the potential

compensation to be paid by Nanning

Electronics Market because of the

dispute of cancelling contract was

Other non-operating income and expenses -13,043,897.59

498,4496 1,212,506.81 estimated

except the above-mentioned items

Suzhou SEG could not reach a final

agreement with Suzhou Track Traffic

Group Co. on the metro project. The the

opposite part submitted a case to the

court. According to the result of the 1st

instance judgment, in 2015 the potential

compensation to be paid by Suzhou SEG

because of the dispute of cancelling

contract was estimated

Less: Amount of affected income tax -2,022,052.01 216,991.94 1,617,611.87

Amount of influence of minority

-432,034.76 282,468.32 900,326.64

shareholders’ equity (after tax)

Total -10,689,470.19 2,460,041.82 5,426,076.77 --

An explanation shall be made with regard to the Company's considerations for defining non-recurring profit and

loss according to the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their

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Securities to the Public - Non-recurring Profit and Loss and the reason of classifying the non-recurring profit

and loss listed in this announcement as recurring.

□ Applicable √ Not applicable

In the report period, it does not happen that the company defines the non-recurring profit and loss items defined

or listed by Interpretive Bulletin No. 1 on Information Disclosure by Companies Publicly Issuing Securities -

Non-recurring Gains and Losses as recurring profit and loss items.

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Chapter 3 Overview of Business

I. Main Business within Report Period

(I) Main business and operation model

Main business of the Company includes development and operation of specialized electronics market and

supporting projects, property lease service, trade and channel service, e-commerce, value-added microcredit

service, and hotel service.

Operation model: Developing the three commercial operation platform that focuses on electronics market,

commercial real estate and Chuangpinhui, expanding externally to mainstream industries relating to electronic

information industry and relevant industries, participating in the manufacturing and operation of relevant

contents instead of only serving as a single commercial platform, and creating a combined type operation mode

with multiple industries’ interaction involving maker demonstration, children experience, culture and education,

entertainment and sports, intelligent science and technology, and e-sports games.

(II) Competition situation and development trend

In recent years, the development of the Internet - particularly the rapid development of mobile Internet and

popularity of terminal services - has profoundly influenced people's thinking mode, behavioral pattern, shopping

mode and consumption customs. Meanwhile, the rapid development of e-finance, collection and application of

big data, Internet of Things, cloud computing, e-commerce oligopoly and vertical segmentation of e-commerce

market have created many new business models and changed consumption customs and impacted the traditional

business model. Now the traditional business model cannot satisfy diversified consumption demands in modern

times. The physical electronics market that adopts traditional business and service models is declining in the

technological revolution and is suffering impact to certain extent.

Toady the science and technology are developing rapidly, the physical electronics market is developing from a

single mode to a commercial combination of electronics, science and technology, culture, catering and

entertainment. An experiential, interactive and social business operation model has become a mainstream of the

electronics market.

The Company's main business is involved in perfectly competitive industries. Significant changes in the external

market environment have brought more challenges to the Company's main business. The Company is urged to

seek new strategic business and new profit growth points through intensional innovation and extensional

expansion and alliance between giants to effectively strengthen core competences and promote the sustainable

development.

(III) Industrial position

Through 27-year hardworking operation in electronics market industry, ith rich market business resources and

mature market operation and management experience, the Company has developed a professional electronics

market chain that covers the Pearl River Delta, the Yangtze River Delta, and even the entire country. SEG

Electronics Market has successfully combined IT complex self-construction, leasing and trusted management,

combined market service and value-added financial service, and combined professional market, SEG factory

store and distribution channels. SEG Electronics Market stood out as the largest specialized electronics markets

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in China and even in Asia covering electronic components, IT products, and communications products and has

great brand influence at home and abroad.

II. Significant Changes in Main Assets

1. Significant Changes in Main Assets

Main assets Description of Significant Changes

(1) On January 9, 2015, the holding enterprise Huakong SEG of the Company privately

issued 110 million shares to its controlling shareholder Shenzhen Waranty Assets

Management Co., Ltd. The Company gave up private placement, so the shareholding

proportion fell from 22.54% to 20.00%. Based on the shareholding proportion after

alteration, the Company included RMB 102,284,520.03 in equity investment.

(2) Huakong SEG increased capital investment of RMB 55,307,710.00 individually to

the subsidiary Tsinghua Holdings Huamn Settlements Environment Institute on June 4,

Equity 2015. Based on purchase cost and the equity proportion newly acquired, the difference of

net identifiable assets since the date of transaction is RMB 2,329,608.93 to decrease the

"capital reserve-stock premium". Based on the shareholding proportion, the Company

included RMB 465,946.64 to decrease in investment in Tsinghua Holdings Huamn

Settlements Environment Institute.

(3) Within the report period, Huakong SEG holding 20% shares and Shanghai SEG

holding 35% shares made profit, jointly contributing RMB 1,203,800 to the Company's

equity investment (cash dividends to Shanghai SEG deducted).

Fixed assets There is no significant change within the report period.

Within the report period, the Company configured its financial accounting software

Intangible assets

Jindie EAS and put it into use, which was included in this item.

Within the report period, LCD in the lobby of SEG Plaza was installed, which was

Construction in progress

included in this iterm.

2. Main Overseas Assets

□ Applicable √ Not applicable

III. Analysis of Core Competence

Main business of the Company includes development and operation of specialized electronics market and

supporting projects, property lease service, trade and channel service, e-commerce, value-added microcredit

service, and hotel service.

Shenzhen SEG Electronics Market operated by the Company has a leading position in the industry and is the

founder of the professional electronics market operation model in China. The Company has won various

honorary titles such as "China Five-star Electronics Market", "Most Influential Professional Market in Shenzhen

in 30 years", “2014-2015 National Integrity Model Market” (awarded by the State Administration for Industry

and Commerce) and "Top 10 Brands of Professional Markets Influencing China in Shenzhen" and so on.

At present, the Company has operated nearly 30 professional electronics markets in China in direct operation,

joint operation, and entrusted operation modes. The electronics market covers the Pearl River Delta and Yangtze

River Delta, with a radiation to the entire China. Through 27-year hardworking operation in electronics market

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

industry, the Company possesses abandont resources of commercial tenant in market and mature experience in

market operation and management, SEG Electronics Market has successfully combined IT complex

self-construction, leasing and trusted management, combined market service and value-added financial service,

and combined professional market, SEG factory store and distribution channels. SEG Electronics Market stood

out as the largest specialized electronics markets in China and even in Asia covering electronic components, IT

products, and communications products and has great brand influence at home and abroad.

Confronted with the increasingly drastic market competition and a new business model featuring the Internet, the

Company starts with "020" of the electronics market and e-commerce, and vigorously forges a compound

business model that combines physical market, e-commerce and channels by e-commerce platform construction,

retail channel development and physical shop sales. Meanwhile, the Company cooperates with famous Internet

enterprises in "Internet+" combined type business mode by using background big-data management system

based on SEG Market Management System (MIS) and SEG Universal and so on, and also based on “PC +

mobile terminal”, to forge a resource sharing platform that integrates businesses, suppliers, purchasers and

consumers, thereby realizing "online+offline" interaction and resource integration.

In the times of "Public Makership and Mass Innovation", the Company makes the most of geographical location

of Shenzhen SEG Electronics Market at Huaqiang North as well as the industrial advantages of electronics (for

example, electronic components) hubs to give full play to its rich operational experience and industry position

achieved over the past twenty-seven years. Through SEG International Maker Product Exhibit and Promotion

Center, the Company advances from product and market terminals to the resource terminals level by level, and

integrates the information from the resource terminal with the makership terminal, thereby creating new platform

value for SEG and providing omnibearing one-stop solution and supporting service to SEG Makers’ ecosphere

for project stationing, experiment and development, project incubation, project demonstration, channel

incubation, marking promotion, IPO coaching and so on. The Company will take advantage of its unique

location, market, brand, resources and channels to invent and satisfy the demands of makers, advance

capitalization and industrialization of maker products, fuel innovation energy of the physical electronics market,

continuously extend and enrich the service value chain, and thereby promote transformation and upgrading and

healthy development of the Company.

Chapter 4 Management Discussion and Analysis

I. Overview

In 2015, the world economy remains being profoundly adjusted, and China's economy witnesses the critical

phase of restructuring and transformation. Trending decline of potential growth rate together with long-term

structural and short-term periodical problems aggravates the economic downturn. On the other hand, confronted

with the economic downturn, China continues proactive fiscal policies and stable monetary policies to boost the

real economy, advances economic restructuring, emphasizes the power of consumption to promote economic

growth, and advocates the concepts of "Public Enterpreneurship and Mass Innovation" and the “Internet+" to

solve the problems of slowdown in economic growth as well as economic restructuring, transformation and

upgrading by deepening reforms and innovation.

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The Company has re-positioned its existing business according to its advantages and realities. In 2015, thanks to

joint efforts made by the Company and investors, the Company witnessed stable growth and intensified efforts in

industrial transformation and upgrading as well as operation model innovation.

During the report period, the Company achieved a total operating income of RMB 846,675,900, a 12.53%

increase over the previous year, mainly due to: (1) substantial increase in the income of the small loan business;

(2) substantial increase in the income of the microcredit; and (3) growth in the income of property rental and

hotel business.

During the report period, the Company achieved a total profit of RMB 143,068,600, a 28.01% increase over the

previous year, mainly due to: (1) increase in the income and profit of the small loan business; (2) Huakong SEG

holding 20% shares made profit within the report period, contributing RMB 1,400,000 to investment income of

the Company, while Huakong SEG suffered losses within the same period last year, which reduced the

investment income of the Company.

II. Analysis of Main Business

1. Overview

Main business of the Company includes development and operation of specialized electronics market and

supporting projects, property lease service, trade and channel service, e-commerce, value-added microcredit

service, and hotel service.

(1) Operation of the electronics market (including maker platform and “Internet+” services)

In 2015, along with the rapis development of Internet and mobile Internet and the speedy popularity of terminal

business, and the form of e-commerce oligopoly and vertical segmentation of e-commerce market, electronics

market was impacted to certain extent.

Facing the fierce market competition and impact from new-type business mode, the Company focued on

promoting the transformation and up-grading of the exiting business, actively explored new business

development mode and continuously enhanced the abilityies of operation and innovation of the electronics

market mainly run by the Company, through the methods of making the most out of users’ value, integrating

various resources and establishing multi-channel profitability pattern and so on. In addition, the Company put

forth effort to build new-type O2O operational platform in SEG electronics market through the strategic

cooperation with popular web platform such as Taobao and Tmall and etc.

The Shenzhen Municipal Government plans to develop Huaqiang North into a maker center. Capturing this

opportunity, the Company has established SEG International Maker Product Exhibition and Promotion Center

based on its advantages, creating a segmented vertical O2O channel for SEG electronics market. With intelligent

hardware and maker products as the core, the Company makes the best of its resource allocation capability, and

connects upstream and downstream channels of the electronics market, finally creating its own platform value

with SEG characteristics, which helps attract multi-tier consumers, compete against other electronics markets

with diversified products, and promote transformation and upgrading. Meanwhile, during the development of

SEG factory store, the Company digged and incubated sales channels of maker products, and promoted the

construction and optimization of SEG maker ecosphere.

In the report period, the Company achieved operating revenue of RMB 350,190,000 from the business of

electronics markets with an increase of 12% over the same period of the previous year, and a total profit of RMB

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70,060,000 with a decrease of 9% over the same period of the previous year. The decrease results from the losses

suffered by Nanning SEG.

(2) Businesses of property leasing service

In the report period, the property rental business of the headquarters and the Company's subsidiary SEG Baohua

(holding 66.58% shares) continues to increase steadily.

Despite the depressing property lease environment in Huaqiang North district and the rising vacancy rate and

rent drop of the surrounding office buildings, SEG Baohua kept the occupancy rate at 99% and above and

maintained the highest rent among the office buildings in Huaqiang North district by improving the service level

and quality of property management and taking effective business operation measures. In addition, the rent price

was kept high among surrounding buildings in Huaqiang North and even with an increase comparing with the

previous year.

In the report period, the Company's property rental service yielded a total operation income of RMB 64,940,000,

a year-on-year decrease of 2%, and a total profit of RMB 23,860,000, a year-on-year increase of 2%.

(3) Trade and channel service

In the report period, the Company's wholly-owned subsidiary SEG Industry operated its trade and channel

service in good condition, with a dramatic increase in each economic index over the same period of the previous

year. SEG Industry has formally signed a memorandum of cooperation documents with Apple and officially

obtained the authorized Apple distributor for big customers in the China Southern Region. In mid-June, SEG

Industry has achieved good results in the first App recommended council for big customers held in Shenzhen

after the cooperation. In the report period, the number of terminal retail shops increased by 3.

In the report period, the Company's trade and channel service achieved a total operating income of RMB

264,300,000, a 14% increase over the previous year, mainly due to the increase of trade purchase agency, mobile

phone distribution and communications distribution business over the previous year.

(4) Electronic commerce

In the report period, the SEG E-commerce achieved a total operating income of RMB 35,580,000, a 24%

decrease over the previous year, total revenue of 98,000 Yuan, a 93% decrease over the previous year, mainly

due to the decrease of the supply chain service in the current report period.

Till the date of disclosure of this report, the Company's board had approved the Proposal for Transferring 51% of

the SEG E-commerce Share Held by Shenzhen SEG. At present, the Company has submitted the application to

the related departments for equity transfer, and auditing and evaluation are in progress. However, as there are

outstanding debts between SEG E-commerce and the Company, equity transfer can be continued only after the

debts are settled. The Company will timely disclose the related information according to the specific progress.

(5) Microcredit

SEG Microcredit, a subsidiary controlled by the Company (holding 53.02% shares), operated in good condition

within the report period, with a dramatic increase in each economic index over the same period of the previous

year. At present, SEG Microcredit has reached strategic cooperation with major commercial tenants of SEG

Electronics Market. Based on the warehouse receipt pledge mode, SEG Microcredit provides the agent

purchasing and other supply chain finance business, therefore relieving the cash flow pressure of the commercial

tenants and achieving a win-win situation.

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In the report period, SEG Microcredit achieved a total operating income of RMB 105,140,000, a 48% increase

over the previous year, a total revenue of RMB 46,750,000, an 18% increase over the previous year, mainly due

to the increase of the loan scale and loan interests over the previous year.

(6) Hotel

The Company's hotel includes Changsha Brach of Chengguo Hotel, Xingsha Branch of Chengguo Hotel, and

Bao'an Branch of Chengguo Hotel, which offer accommodation, catering, and conference services. Xingsha

Brach of Changguo Hotel invested in the second half of 2014 operated stably in 2015, and contributed to hotel

business growth for the Company.

In the report period, the Company achieved from its hotel business a total operating income of RMB 26,520,000,

a 10% increase over the previous year, a total profit of RMB 2,090,000, an 8.29% increase over the previous year,

mainly due to the increase in the number of hotels.

2. Income and Cost

(1) Formation of operating income

Unit: Yuan

2015 2014 Year-on-year

Percentage of total Percentage of total increase/decrease

Amount Amount

operating income operating income (%)

Total operating

846,675,884.33 100% 752,414,741.06 846,675,884.33 100%

income

Classified by industry

Electronics market 415,127,517.70

operation and 49.03% 378,687,526.55 50.33% 9.62%

property leasing

Trade 264,303,143.71 31.22% 231,763,054.54 30.80% 14.04%

Hotel 26,523,482.58 3.13% 24,114,841.00 3.20% 9.99%

(3). E-commerce 35,579,532.94 4.20% 46,778,498.90 6.22% -23.94%

Finance 105,142,207.40 12.42% 71,070,820.07 9.45% 47.94%

Classified by product

Region

Shenzhen 625,255,412.68 73.85% 550,831,410.15 65.06% 13.51%

Xi’an 59,688,953.13 7.05% 54,408,611.06 6.43% 9.70%

Su Zhou 79,040,494.44 9.34% 56,137,670.38 6.63% 40.80%

Changsha 39,091,884.16 4.62% 32,771,338.47 3.87% 19.29%

Nanjing 32,421,829.58 3.83% 40,176,866.63 4.75% -19.30%

Foshan 2,474,556.31 0.29% 2,331,170.63 0.28% 6.15%

Nanning 1,623,611.29 0.19% 10,572,085.86 1.25% -84.64%

Wuxi 7,079,142.74 0.84% 5,185,587.88 0.61% 36.52%

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(2) Information on industries, products or regions accounting for over 10% of operating income or

operating profit

√ Applicable □ Not applicable

Unit: Yuan

Year-on-year Year-on-year

Year-on-year

increase/decrease increase/decrease

Operating income Operating cost Gross Profit Rate increase/decrease

of operating of gross profit

of operating cost

income rate

Classified by industry

Electronics

market operation

415,127,517.70 301,511,104.70 27.37% 9.62% 12.89% -2.10%

and property

leasing

Trade 264,303,143.71 260,773,559.46 1.34% 14.04% 13.97% 0.07%

Hotel 26,523,482.58 22,255,148.18 16.09% 9.99% 23.80% -9.36%

(3). E-commerce 35,579,532.94 24,989,821.48 29.76% -23.94% -40.79% 19.98%

Finance 105,142,207.40 8,533,082.37 91.88% 47.94% 75.38% -1.27%

Region

Shenzhen 625,255,412.68 423,538,888.25 32.26% 13.51% 10.16% 2.06%

Xi’an 59,688,953.13 43,478,512.32 27.16% 9.70% 8.00% 1.15%

Su Zhou 79,040,494.44 75,535,558.83 4.43% 40.80% 38.45% 1.61%

Changsha 39,091,884.16 27,686,044.38 29.18% 19.29% 0.10% 13.58%

Nanjing 32,421,829.58 33,873,081.64 -4.48% -19.30% -7.80% -13.04%

Shunde 2,474,556.31 2,314,003.45 6.49% 6.15% 2.08% 3.73%

Nanning 1,623,611.29 6,134,780.83 -277.85% -84.64% -36.86% -285.95%

Wuxi 7,079,142.74 5,501,846.49 22.28% 36.52% 4.14% 24.16%

If the statistical caliber of main business data is adjusted in the report period, the Company shall use the main

business data of the previous year collected at the end of the report period after adjustment of statistical caliber.

□ Applicable √ Not applicable

(3) Is the Company's material sales revenue more than its service revenue?

□ Yes √ No

(4) Performance of executed major sales contracts as of this report period

□ Applicable √ Not applicable

(5) Formation of operating cost

Industry classification

Unit: Yuan

Industry Item 2015 2014 Year-on-year

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

classification Percentage of Percentage of increase/decrease

Amount Amount

operating cost operating cost (%)

Electronics

market operation Lease and

99,519,264.28 33.01% 92,118,558.40 34.49% 8.03%

and property property costs

leasing

Electronics

Total

market operation

remuneration for 73,123,516.29 24.25% 71,127,699.88 26.63% 2.81%

and property

employees

leasing

Electronics

market operation Depreciation and

29,266,499.62 9.71% 30,331,273.28 11.36% -3.51%

and property amortization

leasing

Electronics

Market and

market operation

property service 75,217,006.81 24.95% 73,064,579.48 27.36% 2.95%

and property

costs

leasing

Electronics

market operation Retail goods sales

24,384,817.70 8.09% 440,050.85 0.16% 5441.36%

and property cost

leasing

Electronics

market operation

Total 301,511,104.70 100.00% 267,082,161.89 100.00% 12.89%

and property

leasing

Unit: Yuan

2015 2014 Year-on-year

Product category Item Percentage of Percentage of increase/decrease

Amount Amount (%)

operating cost operating cost

Trade Goods sales cost 260,773,559.46 100.00% 228,817,359.36 100.00% 13.97%

2015 2014 Year-on-year

Industry

Item Percentage of Percentage of increase/decrease

classification Amount Amount

operating cost operating cost (%)

Finance Lease cost 664,432.82 7.79% 620,955.52 12.76% 7.00%

Financial service

Finance 7,868,649.55 92.21% 4,244,413.96 87.24% 85.39%

cost

2015 2014 Year-on-year

Industry

Item Percentage of Percentage of increase/decrease

classification Amount Amount

operating cost operating cost (%)

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2015 2014 Year-on-year

Industry

Item Percentage of Percentage of increase/decrease

classification Amount Amount

operating cost operating cost (%)

Total

E-commerce remuneration for 1,248,958.81 5.00% 1,721,073.48 4.08% -27.43%

employees

E-commerce Sales cost 16,457,203.37 65.86% 25,449,032.36 60.30% -35.33%

Promotion

E-commerce 2,562,768.35 10.26% 3,375,883.77 8.00% -24.09%

expenses

Customs

declaration and

E-commerce 2,058,226.13 8.24% 7,455,094.45 17.67% -72.39%

property service

expenses

E-commerce Others 2,662,664.82 10.65% 4,201,100.68 9.95% -36.62%

2015 2014 Year-on-year

Industry

Item Percentage of Percentage of increase/decrease

classification Amount Amount

operating cost operating cost (%)

Total

Hotel remuneration for 5,458,034.64 24.52% 5,190,604.03 28.87% 5.15%

employees

Depreciation and

Hotel 3,577,343.55 16.07% 3,590,428.65 19.97% -0.36%

amortization

Hotel Administrative fee 597,774.92 2.69% 596,888.64 3.32% 0.15%

Hotel Lease cost 8,199,833.24 36.84% 8,202,585.69 45.63% -0.03%

Hotel Others 4,422,161.83 19.87% 396,875.30 2.21% 1014.24%

(6) Is the consolidation scope changed in the report period?

□ Yes √ No

(7) Information about significant changes or adjustments of business, product or service in the report

period

□ Applicable √ Not applicable

(8) Information on main customers and main suppliers

Information about the Company's major customers

Sales amount of top 5 customers (Yuan) 259,258,237.07

Percentage of the total sales amount of top 5 customers to

30.62%

the annual sales

Information about top 5 customers

No. Customer Name Sales amount (Yuan) Percentage of the annual sales amount

1 Shenzhen Runneng Digital Co., Ltd. 120,891,901.16 14.28%

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No. Customer Name Sales amount (Yuan) Percentage of the annual sales amount

2 Shenzhen Wonder Industry Co., Ltd. 59,270,803.34 7.00%

3 Shenzhen Comnet Technology Co., Ltd. 33,381,639.00 3.94%

Shenzhen Nanfang Yunhe Technology Co.,

4 32,219,754.72 3.81%

Ltd.

Beijing Botai Yongxin Scientific and

5 13,494,138.85 1.59%

Technological Development Co., Ltd.

Total -- 259,258,237.07 30.62%

Other information on main customers

□ Applicable √ Not applicable

Information about major suppliers

Total purchase amount of top 5 suppliers (Yuan) 218,317,113.43

Percentage of the total purchase amount of top 5 suppliers

35.32%

to the annual purchase

Information about top 5 suppliers

No. Name of supplier Purchase amount (Yuan) Percentage of the annual purchase

1 Shenzhen Shuojian Industry Co., Ltd 146,858,533.11 23.76%

Nanjing Yunde Investment and

2 23,119,020.12 3.74%

Development Co., Ltd.

Beijing Hengsha Science and Technology

3 19,439,652.52 3.15%

Co., Ltd.

Tonmac International Electronics (Suzhou)

4 16,024,907.88 2.59%

Co., Ltd

Xi'an Gaoke (Group) New West China

5 12,874,999.80 2.08%

Industrial Development Co., Ltd

Total -- 218,317,113.43 35.32%

Other information on main suppliers

□ Applicable √ Not applicable

3. Expense

Unit: Yuan

Year-on-year

2015 2014 increase/decrease Description of significant changes

(%)

In the report period, the newly established

sales office of Nantong SEG Times Square

Sale expenses 4,585,434.23 2,149,313.48 113.34% incurred expenses of RMB 2,420,000, while

this project was not opened in the same period

of the previous year.

Management expenses 44,222,779.09 45,406,128.22 -2.61%

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Year-on-year

2015 2014 increase/decrease Description of significant changes

(%)

(1) In the report period, financing amount was

reduced, and interest rate decreased, which

reduced the financing cost.

Financial cost 3,564,776.76 9,168,643.60 -61.12%

(2) The proportion of loan used in Nantong

SEG Times Square increased, so the amount of

capitalized interests increased accordingly.

4. Investment in research and development

√ Applicable □ Not applicable

During the report period, the company's R&D expenditure is mainly used for the construction, upgrade, and

maintenance of segbuy.com and SEG Universal. The investment will further help to improve the Company's

e-business platform to improve the viability and competitiveness of the Company.

Investment in research and development

2015 2014 Percentage of change

Number of R&D staff (Person) 0 0 0.00%

Percentage of R&D staff 0.00% 0.00% 0.00%

Amount invested in research

659,249.00 1,136,073.70 -41.97%

and development (Yuan)

Ratio of investment in research

and development to operating 0.09% 0.17% -0.08%

income

Amount of capitalized

investment in research and 0.00 0.00 0.00%

development (Yuan)

Ratio of capitalized amount to

total investment in research and 0.00% 0.00% 0.00%

development

Reason for significant change in ratio of total investment in research and development to operating income over

the previous year

□ Applicable √ Not applicable

Reason for significant change in rate of capitalization of investment in research and development and description

of its rationality

□ Applicable √ Not applicable

5. Cash Flow

Unit: Yuan

Year-on-year increase/decrease

Item 2015 2014

(%)

Subtotal of cash inflow from

2,188,033,814.36 2,439,133,722.87 -10.29%

operating activities

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Year-on-year increase/decrease

Item 2015 2014

(%)

Subtotal of cash outflow in

2,200,487,338.18 2,867,067,343.81 -23.25%

operating activities

Net cash flow from operating

-12,453,523.82 -427,933,620.94

activities

Subtotal of cash inflow from

2,264,549,143.15 3,997,632,856.03 -43.35%

investing activities

Subtotal of cash outflow in

2,172,173,875.73 3,914,849,729.51 -44.51%

investing activities

Net cash flow from investing

92,375,267.42 82,783,126.52 11.59%

activities

Subtotal of cash inflow from

442,000,000.00 678,352,371.12 -34.84%

financing activities

Subtotal of cash outflow in

628,455,033.90 286,738,699.97 119.17%

financing activities

Net cash flow arising from

-186,455,033.90 391,613,671.15 -147.61%

financing activities

Net increase in cash and cash

-106,533,251.60 46,463,186.89 -329.29%

equivalents

Description of main factors of significant year-on-year change

√ Applicable □ Not applicable

1. The reason for a 10.29% year-on-year decrease in the sub-total of operating cash inflow in the report period is

that the subsidiary SEG E-commerce witnessed a decline in supplier chain business within the report period and

that cash inflow decreased accordingly.

2. The reasons for a 23.25% year-on-year decrease in the sub-total of operating cash outflow in the report period:

① The subsidiary SEG E-commerce witnessed a decline in supplier chain business within the report period and

the cash paid decreased.

② During the report period, the cash outflow of Nantong SEG estate subsidiary decreased over the same period

of the previous year.

3. During the report period, the net amount of cash flow incurred in operation increased over the same period of

the previous year. The reason is that the cash outflow in operation decreased for the above-mentioned reasons

and that the amount of such decrease exceeds that in cash inflow in operation during the same period.

4. The reasons for a 43.35% year-on-year decrease in the sub-total of investment cash inflow in the report period

is that the amount of bank investment decreased.

5. The reasons for a 44.51% year-on-year decrease in the sub-total of investment cash outflow in the report

period is that the amount of bank investment decreased and that the received investment fund decreased

accordingly.

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6. Net cash flow arising from investing activities has a year-on-year increase during the report period because the

bank financial investment recovered is higher than the external investment size and the income received from

bank financial investment increased.

7. The reasons for a 34.84% year-on-year decrease in the sub-total of financing cash inflow in the report period

are that the amount of acquired bank loans and financing bonds decreased.

8. The reasons for a 119.17% year-on-year increase in the sub-total of financing cash outflow in the report period

is that the total amount of acquired bank loans and financing bonds increased.

9. The reasons for a 147.61% year-on-year decrease in the net amount of financing cash flow in the report period

are that the scale of financing declined.

10. Increase or decrease in increased cash or cash equivalent in the report period is co-caused by the reasons

described in Items 3, 6, and 9.

Reasons for the big difference between the net cash flow arising from operating activities and the annual net

profit in the report period

√ Applicable □ Not applicable

The reason for the big difference between the cash flow arising from operating activities and the annual net profit

in the report period is that cash outflow of the subsidiary the Nantong SEG estate formed inventory, which did

not increase net profits within the report period.

III. Analysis of Non-major Business

√ Applicable □ Not applicable

Unit: Yuan

Percentage of

Amount Reason Sustainable or not

total profit

Financial income and income from

Investment income 17,647,493.77 12.33% Partially sustainable

investment in joint ventures

Impairment provision for loans and

Asset impairment 5,095,364.09 3.56% advances issued by subsidiary SEG Partially sustainable

CREDIT

Non-operating Government subsidies and liquidated

2,367,546.40 1.65% Partially sustainable

income damages

During the report period, Suzhou SEG paid

Non-operating

14,687,757.38 10.27% lawsuit compensation and such payment Unsustainable

expenses

was estimated.

IV. Assets and Liabilities

1. Significant Changes in Asset Formation

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Unit: Yuan

End of 2015 End of 2014

Increase/decre Description of

Percentage of Percentage of

Amount Amount ase significant changes

total assets total assets

Monetary funds 276,863,429.10 10.59% 383,056,680.70 14.40% -3.81%

Accounts

98,212,422.87 3.76% 185,866,040.16 6.99% -3.23%

receivable

Inventory 450,809,934.72 17.24% 278,281,586.72 10.46% 6.78%

Investment

443,851,726.40 16.98% 462,562,882.78 17.39% -0.41%

properties

Long-term equity

185,122,573.88 7.08% 82,100,197.01 3.09% 3.99%

investment

Fixed assets 37,524,425.25 1.44% 41,408,298.43 1.56% -0.12%

Construction in

140,810.00 0.01% 0.00% 0.01%

progress

Short-term

367,759,630.48 14.07% 189,246,687.38 7.12% 6.95%

borrowing

2. Assets and liabilities measured based on fair value

□ Applicable √ Not applicable

V. Investment

1. General

√ Applicable □ Not applicable

Investment over the same period of the

Investment in the report period (Yuan) Increase/decrease (%)

previous year (Yuan)

171,899,357.22 218,410,000.00 -21.22%

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2. Significant equity investment within report period

√ Applicable □ Not applicable

Unit: Yuan

Investment

Progress as

Shareholdi profits and

Investment Investment Source of Investment of the date Projected Lawsuite Disclosure Disclosure

Investee name Main business ng Partner Product Type losses of the

mode amount capital horizon of Balance income invololved date (if any) Index (if any)

percentage current

Sheet

period

Investment

management,

investment real

industry,

investment

CNINFhttp://w

consultation,

ww.cninfo.com.

financial

Announcement cn

consultation,

of Shenzhen Announcement

industrial Investment

SEG Newly- Self-owned Not December about

investment 10,000,000.00 100.00% None funds None 0.00 0.00 No

Investment established capital applicable 30, 2015 Establishment of

funds management

Management Shenzhen SEG

management,

Co., Ltd. Investment

makership

Management

investment

Co. Ltd.

funds

management,

equity

investment

management

Total -- -- 10,000,000.00 -- -- -- -- -- -- 0.00 0.00 -- -- --

3. Significant non-equity investment in progress within report period

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√ Applicable □ Not applicable

Unit: Yuan

Reasons for

Accumulated failure to

Amount of Accumulated

Industries amount achieve the

Fixed assets investment Source of Projected income as of Disclosure Disclosure

Project name Investment mode involved in invested as of Progress plan schedule

investment? during this capital income the end of this date (if any) Index (if any)

investment the end of this objective and

report period report period

report period expected

income

Self-owned

Nantong SEG Not

Self-constructed? No Real estate 171,899,357.22 448,858,750.91 capital and 0.00 -6,188,279.12

Times Square applicable

bank loans

Total -- -- -- 171,899,357.22 448,858,750.91 -- -- 0.00 -6,188,279.12 -- -- --

4. Financial assets investment

(1) Security investment

√ Applicable □ Not applicable

Unit: Yuan

Gains and

losses from Accumulative Amount of Amount of

Short form Accounting Gains and

Stock Initial Opening book fair value change of fair purchase in sales in the Closing book Source of

Stock type of the measurement losses in the Accounting item

code investment cost value changes in value counted the current current value capital

security mode report period

the current into equity period period

period

Domestic and

Youhao Measurement Available-for-sale Self-owned

overseas 600778 90,405.00 554,642.62 0.00 189,937.79 0.00 0.00 744,580.41

Group of fair value financial assets capital

shares

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Gains and

losses from Accumulative Amount of Amount of

Short form Accounting Gains and

Stock Initial Opening book fair value change of fair purchase in sales in the Closing book Source of

Stock type of the measurement losses in the Accounting item

code investment cost value changes in value counted the current current value capital

security mode report period

the current into equity period period

period

Domestic and Measurement

Huakong Self-owned

overseas 000068 279,307,046.38 of cost 78,523,408.83 0.00 101,818,573.39 0.00 0.00 1,401,178.85 181,743,161.07 Other assets

SEG capital

shares method

Domestic and Measurement

SEG Available-for-sale Self-owned

overseas 832770 8,275,321.43 of cost 13,515,392.83 0.00 0.00 0.00 750,000.00 13,515,392.83

Navigations financial assets capital

shares method

Other securities invested at the end of

-- 0.00 -- --

period

Total 287,672,772.81 -- 92,593,444.28 0.00 102,008,511.18 0.00 0.00 2,151,178.85 196,003,134.31 -- --

(2) Investment of derived products

□ Applicable √ Not applicable

No investment in derivatives is involved within the report period.

5. Use of the collected capital

□ Applicable √ Not applicable

In the report period, there was no usage of raised capital.

VI. Sales of Major Assets and Equity

1. Sales of Major Assets

□ Applicable √ Not applicable

No major asset sales are involved in the report period.

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2. Sales of Major Equity

□ Applicable √ Not applicable

VII. Analysis of Controlling and Holding Companies

√ Applicable □ Not applicable

Information on main subsidiaries and holding companies with more than 10% influences on the Company's net profits

Unit: Yuan

Company Registered

Company name Main business Total assets Net Assets Operating income Operating Profit Net profit

Type Capital

Operation and management of

Wujiang SEG Subsidiary 3,000,000.00 21,284,118.57 4,507,264.36 14,557,817.51 1,557,532.38 1,294,311.28

professional electronics market

Operation and management of

Wuxi SEG Subsidiary 3,000,000.00 12,180,152.44 3,945,310.68 7,079,142.74 1,561,015.08 1,254,297.87

professional electronics market

Development and operation of

Nantong SEG Subsidiary 30,000,000.00 496,111,485.13 23,811,720.88 -3,611,015.41 -3,578,015.98

real estate

Operation and management of

Nanning SEG Subsidiary 8,000,000.00 1,759,691.34 -881,062.28 1,623,611.29 -4,740,544.72 -8,667,217.21

professional electronics market

SEG E-Commerce Subsidiary E-commerce 48,000,000.00 235,625,802.19 7,960,975.57 35,579,532.94 -674,410.27 97,877.53

SEG Credit Subsidiary Micro-credit 150,000,000.00 519,089,420.44 190,007,937.67 77,554,704.11 46,750,090.02 35,003,585.70

Property operation and

SEG Baohua Subsidiary 30,808,800.00 149,837,326.21 104,178,215.48 83,242,678.25 34,832,330.47 26,178,616.48

management and hotel business

Channel retail terminal of

SEG Industry Subsidiary electronic products and property 25,500,000.00 98,207,733.58 38,661,918.21 274,095,883.71 7,807,596.25 6,913,740.17

operation and management

Operation and management of

Xi'an SEG Subsidiary 3,000,000.00 46,795,150.81 16,930,015.72 39,424,062.40 12,218,974.34 10,424,310.91

professional electronics market

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Company Registered

Company name Main business Total assets Net Assets Operating income Operating Profit Net profit

Type Capital

Operation and management of

Longgang SEG Subsidiary 3,000,000.00 27,721,592.72 7,598,986.93 10,553,765.58 2,623,440.68 1,984,703.82

professional electronics market

Operation and management of

Suzhou SEG Subsidiary 3,000,000.00 40,688,470.26 7,440,740.54 44,300,279.01 6,519,137.79 2,769,888.05

professional electronics market

Operation and management of

Changsha SEG Subsidiary 35,000,000.00 83,638,292.12 63,757,520.59 23,221,623.20 7,377,443.16 5,350,203.30

professional electronics market

Operation and management of

Xi'an Hairong SEG Subsidiary 3,000,000.00 27,235,772.09 5,223,325.28 20,264,890.73 2,389,659.27 2,152,901.11

professional electronics market

Operation and management of

Nanjing SEG Subsidiary 20,000,000.00 28,986,700.38 8,989,546.45 32,421,829.58 -3,011,470.00 -2,869,425.38

professional electronics market

Operation and management of

Suzhou SEG Digital Subsidiary 8,000,000.00 21,998,127.23 -2,543,191.96 34,740,215.43 -4,003,025.37 -3,996,481.53

professional electronics market

Operation and management of

Shunde SEG Subsidiary 6,000,000.00 4,996,901.03 3,159,222.55 2,474,556.31 12,150.64 43,916.14

professional electronics market

Nantong SEG

Commercial Subsidiary Property Operation 5,000,000.00 796,227.61 -472.97 -406.13 -406.13

Operation

Manufacturing and operation of

Shareholding

Huakong SEG color picture tube (CPT), CPT 1,006,671,464.00 757,877,879.31 662,394,969.60 170,618,870.76 -599,926.54 8,133,783.50

company

materials, and glass apparatus

Shareholding Operation and management of

Shanghai SEG 5,000,000.00 21,112,291.39 10,364,443.80 8,283,156.47 933,616.52 864,641.80

company professional electronics market

SEG GPS products

Shareholding

SEG Navigations manufacturing and operation 60,000,000.00 372,367,978.78 203,933,390.54 232,971,791.13 -6,211,307.94 5,828,366.52

company

network service

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Information on controlling and holding companies

1. In the report period, the operating income of Nanjing SEG decreased by 19.30% over the previous year mainly

because some customers withdrew and resulted in more empty stalls, the Phase IV market ended at the end of

October 2014 and resulted in zero income in 2015. As a result, operating income significantly decreased and

Nanjing SEG suffered losses in the report period.

2. In the report period, the house leased by Nanning SEG for developing the electronics market suffered from

severe water seeping and leakage, which seriously affected operation of the market and resulted in a decrease of

84.64% in operating income in the report period. Nanning SEG has filed a lawsuit against the property lesser.

The original decoration expenses of previous years can no longer be amortized according to the benef years, so

they one-off transferred into non-business expenditures as losses, making Nanning SEG suffered great losses in

the current period.

3. In the report period, Suzhou SEG Digital witnessed a dramatic increase in operating income mainly because

the operation of the company increased operating income since this company started its formal operation in

September 2014..

4. In the report period, total profits of Xi’an Hairong SEG increased by 41.47% over the previous year mainly

because of many factors, such as the market gradually matured, rents for some stalls were raised, and income

from investment in financing products also increased, making Xi’an Hairong SEG witnessed a dramatic rise in

total profits comparing to that of previous year..

5. In the report period, Wuxi SEG witnessed an increase of 36.52% in its operating income over the previous

year as well as a turnaround of total profits. Wuxi SEG opened at the end of March 2014. Rental income of the

previous year was accumulated for only three quarters, while the rental income in 2015 was accumulated for four

quarters. Therefore, the operating income increased over the previous year. The increase in operating income and

financial product investment income greatly raised the total profit over the previous year.

6. In the report period, Changsha SEG witnessed a year-on-year increase of 38.66% in the total profit mainly

because the company operated stably and fiscal expenses decreased year-on-year. The fiscal expenses decreased

mainly because Changsha SEG paid back its parent company the decoration loans together with principal and it

paid no interest in the report period.

7. In the report period, SEG E-commerce witnessed a 24% decrease in operating income and a 93% decrease in

the total profit over the previous year mainly because of reduction of supplier chain business in the report period.

Till the date of disclosure of this report, the Company's board had approved the Proposal for Transferring 51%

of the SEG E-commerce Share Held by Shenzhen SEG. At present, the Company has submitted the application to

the related departments for equity transfer, and auditing and evaluation are in progress. However, because there

was outstanding debt existing between SEG E-commerce and the Company, the relevant work can be carries out

only after the outstanding debt has been settled. The Company will timely perform the duty for information

disclosure according to the actual progress of this issue.

8. In the report period, SEG Industry witnessed a 24% decrease in operating income and a93% decrease in the

total profit over the previous year mainly because of reduction of supplier chain business in the report period.

Till the date of disclosure of this report, the Company's board had approved the Proposal for Transferring 51% of

the SEG E-commerce Share Held by Shenzhen SEG. At present, the Company has submitted the application to

the related departments for equity transfer, and auditing and evaluation are in progress.

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

In the report period, SEG Industry witnessed a 128.31% increase year-on-year in the total profit mainly because

the income from investment in SEG CREDIT increased.

Information on the acquisition and disposal of subsidiaries in the report period

√ Applicable □ Not applicable

Mode of acquisition and disposal of

Company name Impact on the overall production and performance

subsidiaries in the report period

Shenzhen SEG Investment

Investment, newly-established Net profits of the current period are not affected.

Management Co., Ltd.

VIII. Information on Structural Entity Controlled by the Company

□ Applicable √ Not applicable

IX. Outlook of future development of the Company

(I)Future development planning of the Company

1. With the development of electronic information industry in China, the electronics market industry maintains a

rapid growth in recent years and market functions are expanded. According to statistics of Wind, by the end of

2014, China has 154 electronics markets with the scale of 100 million Yuan in total and the total turnover

amounted to 97.205 billion Yuan.

The booming e-commerce in the context of mobile Internet has a considerable impact on the electronics markets.

The trade share of the physical electronics market is squeezed, causing considerable pressure on market

operation. The electronics market industry hits its bottleneck currently and presses for transformation and

upgrading.

2016 will be a critical year for transformation and upgrading of the Company. Though electronics markets of the

Company have maintained a rapid growth in recent years, to deal with the impact of e-commerce, the Company

shall transform and upgrade the traditional electronics markets by further expanding the industry chains and

enriching the industry products and service. This is specifically embodied in "three transformations": firstly,

transformation from a single electronic trading platform and commercial real estate platform to an integrated

industry platform for comprehensive makers’ echology, culture and education, intelligent science and technology,

sports and entertainment, virtual experence, Internet games and financial services, etc. and from the operation of

single business platform to the manufacturing and operation of relevant content; secondly, the Company’s rapid

transformation of enterprises engaged in electronics markets from a single tenancy role to platform operator and

service provider engaged in integration of on-line and off-line resources; thirdly, based on the business resource

platform of electronics markets and commercial real estate business, the Company shall support innovative

business development, strive to build an international maker platform with SEG characteristics, develop a

whole-industry chain layout, and expand innovative fields such as electronic information products and intelligent

electronic applications, and financial service in the supply chain.

2. The annual project investment plan in 2016 focuses on the transformation and upgrading of the Company

which is expected to be RMB 326,700,000 in total.

Unit: RMB ten thousand Yuan

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No. Project name 2016 Plan Remarks

1 New investment project 18,570 For new investment in the innovative development

business

2 Nantong SEG Times Square 14,100 The key tasks of Nantong SEG Times Square

project in 2016 are the completion of construction

and delivery with safety and high quality and

completion of the construction of Nantong

Animation Industry Base project and the

preliminary tender-invitation for the opening of the

animation industrial park and business. The new

investment in 2016 is expected to be RMB

141,000,000.

Total 32,670

(II) Completion Result of Main financial budget and investment plan of 2015:

1. The Company released Announcement of Resolution of 6th meeting of the 6th Session of the Board of

Directors on March 28, 2015, wherein main financial budget targets of 2015 was disclosed. The completion

result is shown in the table below:

Unit: RMB ten thousand Yuan

Increase or decrease

Budget target

Item Actual amount of 2015 ratio based on the

of 2015

target

I. Total assets 261,466 274,522 -4.76%

II. Total liabilities 93,432 118,084 -20.88%

III. Owners' equity 168,034 156,438 7.41%

Including: Owners' equity attributable to the parent company 147,513 135,228 9.08%

IV. Asset-liability ratio (%) 35.73% 43.01% -16.92%

V. Management expenses 4,422 5,176 -14.56%

The annual investment plan for 2015 focuses on the Company's main business, including the investments on the

continued construction and land reserves of the entity electronic stores and Nantong SEG Times Square project,

with a total expected investment of RMB 594,010,000. The completion result is shown in the table below:

Unit: RMB ten thousand Yuan

2015 Investment

No. Project name Investment planned in Details of completion

completed 2015

Due to changes in the environment of

electronics market industry, the risks of

Construction of new electronics

1 2,000 market operation increase and the Company

markets

slows down the construction of new

electronics markets. In the reporting period,

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2015 Investment

No. Project name Investment planned in Details of completion

completed 2015

the Company has no investment in the

construction of new electronics markets.

In the reporting period, this investment

2 Commercial property reserve project 30,000 budget is not used because there is no proper

land.

In consideration of the domestic real estate

market trend, in order to reduce capital costs,

Nantong SEG Electronics Market the Company postponed the opening time of

3 17,190 27,401

and auxiliary project. the project. In the reporting period, the

investment progress is slowed down and the

expected investment amount is not reached.

Total 59,401

(III) Review and summary of progress of the disclosed operation plan in the reporting period

In 2015, according to the Company's "transformation, innovation, and development" guideline for management,

the Company actively develops new business while maintaining the steady development of the existing business.

Driven by the capital and resources, the Company creates a multi-channel profit model and mainly implements

the following work in the report period:

1. Reform of organizational structure and innovation of business mode

In oreder to adtapt to the change of external business environment and customers’ demand, the Company spped

up the steps of business transformation and innovation. For this purpose, the Company has adjusted the original

organizational structure in the first half of 2015. The new organizational structure is featured by flexible

organizational structure and matrix management, a combination of the "fixation and flexibility", which helps the

company respond quickly to changes in demands of market, technology and users and improve the efficiency of

operational decision-making.

At the same time, the Company has introduced the business project system and encourages the integration of

tradition and modernism and the integration of online and offline. By utilizing resources in the global platform,

the Company actively cultivates the makership culture to stimulate the creativity of employees, promotes the

optimized distribution of all kinds of elements and,resources.

2. Development of new markets and exploration of new business modes in the electronics market

(1) In the current environment, the Company uses the asset-light model to explore new markets. In the reporting

period, the Company has completed the signing of the Tangshan SEG and Nanchang SEG entrust management

projects.

(2) Electronics markets all over the country have been promoting the business transformation and upgrading,

improving the market core competitiveness, searching for rich promotion channel, increasing investment,

enhancing service innovation, optimizing and strengthening internal management, improving the quality and

benefits of management.

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(3) While the original business mode and the market competitiveness are maintained, electronics markets all over

the country actively carry out business innovation and explore new profit model. For example, "Community

Store" project in Xi'an SEG, "Dream House" project in Suzhou SEG Digital, and "S-mart Lifestyle House"

project in Suzhou SEG, and “SEG Internet Cafe” in headquarters and so on.

3. Orderly advance of the commercial real estate project

The Nantong SEG Times Square project has obtained the sales licenses of three tower buildings (mainly SOHO

and LOFT office areas) and commercial podium buildings respectively in March 2015 and July 2015. The

permitted total construction area for pre-sale is 99,133.63 m2.

To improve the attractiveness and competitiveness of the entire project, the Company is building the first

animation industry maker base in China, together with Nantong municipal government, Gangzha district

government, Kungfu Animation Company, venture capital institutions, and universities and colleges. On June 18,

2015, Nantong SEG Times Square is formally awarded "Nantong Animation Industry Base". As of the date of

disclosure of this report, over 10 animation enterprises have entered into settlement agreements with the

Company.

Within this report period, the decoration of commercial podium buildings has been completed. In the reporting

period, the Company has been digging into the advantages and selling points of the project, enhanced the

promotion, expanded the market, optimized the business planning and orientation, and achieved differentiated

investment. Currently, anchor stores have entered and started decoration.

Nantong SEG Times Square will be built into a commercial complex with SEG characteristics integrating

children’s animation, cultural education and Internat games as a whole.

4. Research and promotion of new projects

(1) To promote the transformation and upgrading of the Company's main industry and extension to the upstream

of the industry chain, the Company has established a strategic cooperation partnership with Dongguan EONTEC

company (hereinafter referred to as EONTEC), making use of own advantages in technology research and

resources. The cooperation intends to promote the development and application in the consumer electronics and

related fields of new materials such as liquid metal. Both parties signed the Strategic Cooperation Framework

Agreement of EONTEC and Shenzhen SEG on May 27, 2015. However, in view of the restriction of either party,

no specific agreement on this cooperation project has been reached so far.

(2) The Company set up “SEG Chuangpinhui” and built SEG International Maker Product Exhibition and

Promotion Center to build the maker industry ecosystem with SEG characteristics.

In the national strategy context of “Public Enterpreneurship and Mass Innovation”, the Company built SEG

International Maker Product Exhibition and Promotion Center based on mature brand and platform resources.

With its advantages in region, brand, supporting facilities and operation, the Company expands business by

means of maker product exhibition, O2O channel creation and resource integration, which creates a new

development space and area for its upgrading and transformation and sustainable development in the future.

In August 2015, the Company set up SEG Chuangpinhui Branch through investment. As one of the major

projects of CHFT, SEG Chuangpinhui successfully started business in November 2015.

SEG Chuangpinhui principally provides services to the global makers’ space and makers, mainly divided into

four functional areas. i.e. product display and transaction area, route-show and distribution area, in-site service

and communication and leisure area, and focusing on makers’ innovative products in intellectural hardware area,

including various categories such as unmanned plane, robot, 3D printer, VR experience, intellectural wearing,

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

innovative digital products, solution demonstration, open source software and so on, exert itself to becoming the

wind vane of global intellectual hardware science and technology, and building the dreaming palace of globle

makers and the paradice of innovators and the everlasting global innovative product exhibition.

SEG Chuangpinhui takes makers’ innovative products as its core and the operational mode of being makers’

innovative product presentation center, building internationalized promotion and transaction center, achieving

O2O interactive experience and promoting nation-wide chains as its development direction. SEG Chuangpinhui

combines innovation with display and display, provides makers with comprehensive services including product

release, display, route-show, promotion, transaction, mass-funding, financing and makers’ communication and

training and so on, helps the industrialized development of makers’ products, as well as pushes the deep

integration of industry chain and innovation chain at the same time so as to decrease the cost of “Public

Enterpreneurship and Mass Innovation”.

Within a short period of several months, SEG Chuangpinhui has already attracted a number of international and

domestic famous brands and makers’ innovative products to station here gathered over 300 kinds of brand

products, held more than 20 meetings for route-show, academic exchange and product release, entertained above

40 times of the visits from leaders at various levels, industries and enterprises, and achieved extentive influence

and sound social demonstration effects. So, its brand effect is becoming increasingly obvious day by day.

(3) The Company invested and established Shenzhen SEG Investment Management Co., Ltd.

In the reporting period, in order to build the complete maker industry ecosystem, based on its geographic

advantages in electronics markets and Huaqiang North area and years of industry experience and integration

capacity in the electronic Information Industry, relying on the resource advantage of maker service platform such

as SEG International Maker Product Exhibition and Promotion Center, the Company invested and established a

wholly-owned subsidiary Shenzhen SEG Investment Management Co., Ltd. for fund management business such

as project investment, industry investment and VC.

(4) Innovative research on Internet finance

In the reporting period, SEG Credit ran well on the whole. While actively expanding business, SEG Credit

carried out in-depth exploration and research on the new-type service mode of finance of purchase chain and

Internet finance platform and so on, and has primarily intered into supply chain financial business.

5. Major asset restructuring

The Company launched a major asset restructuring program in November 2015 and its stock (SHEN SEG, SHEN

SEG B, stock code: 000058, 200058) have been suspended since the opening of morning session on November 4,

2015. During suspension, the Company and relevant parties have been promoting major asset restructuring and

regularly disclose the progress announcement according to relevant provisions. As of the date of disclosure of the

report, the Company has disclosed the major asset restructuring plan. See Shenzhen SEG Co., Ltd. Plan on

Assets Purchase and Collection of Supporting Funds based on Issue of Shares and Cash Payment & Associated

Transaction (Revision) for details. Its stocks have been suspended since the opening of morning session on

February 25, 2016. After resumption, the Company and relevant parties will continue to promote this major asset

restructuring, prepare the restructuring report and perform relevant approval procedures.

According to the major asset restructuring plan, the Company plans to purchase 100% of equity of SEG

Chuangyehui, 55% of equity of SEG Kang Le, 100% of equity of SEG Property, and 79.02% of equity of SEG

Real Estate based on issue of shares and cash payment and issued private placement to no more than 10 specific

investors.

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After this major asset restructuring, based on integration of the existing resource platform, the Company will

promote interactive development in combination of the commercial real estate and comprehensively improve the

property value. The Company will build an O2O platform via e-commerce and a diversified SEG industry

ecosystem. As a result, a new SEG with clear strategic orientation and leading position in the field will be

formed.

After restructuring, the Company plans to expand multiple businesses in cultural education,, intelligence, science

and technology, sports and entertainment, Internet games and financial service. At the same time, based on its

operation advantages in electronics market and commercial real estate business and advantages in Huaqiang

North industrial clusters, the Company gives full play to the resource allocation function. The Company has built

SEG Maker Center, SEG International Maker Product Exhibition and Promotion Center, SEG Maker Apartment

and maker funds to dig into maker business ecosystem, facilitate maker groups with fundamental hardware

technology, R & D and production supports and fund investment. Besides, the Company connects upstream and

downstream manufacturers, promotes the capitalization and industrialization of innovations, boosts the rapid

market application of technologies and products, stimulates innovation vitality of the market in order to build a

new maker business ecosystem featured by an integration of "experimental development + incubation

+marketing + supporting services" and promote the business development of the Company. In addition, based on

vitalization of the existing electronics market, the Company has integrated the service advantages of electronics

markets and customer resources to expand businesses in e-financial services, Internet e-commerce, financial

services in the supply chain, intelligent hardware, virtual interactive experience and other industries, and

optimize and integrate the business chain system. Based on the consumption experience, the Company makes

use of online and offline channels and resources to carry out industry upgrading.

(IV) Main problems of business development

1. The booming e-commerce in the context of mobile Internet has a considerable impact on the electronics

markets. The trade share of the physical electronics market is squeezed, causing considerable pressure on market

operation. The electronics market industry hits its bottleneck currently and presses for transformation and

upgrading.

2. The limited financing channels and deficient capital sources restricted the business development of SEG

Credit. Meanwhile, due to impact of economic downward pressure and slow growth of all industries, the petty

loan business is confronted with risks in sluggish growth to some extent and falling yields.

3. Due to a sharp increase in supply of domestic commercial real estate, some commercial real estate projects

have problems such as poor operating, harsh homogeneous competition and rising regional bubble risks. In 2016,

the inventory pressure of Nantong macro real estate market remains apparent, particularly office products, and

the supply and demand ratio is still inclined toward the buyer's market. In light of the macro environment of the

said commercial real estate at present and in the future, Nantong project has certain risks in investment sales and

post-operation.

4. Lack of various professional talents will be highlighted in the transformation and upgrading of the Company.

(V) Focus of 2016

1. To accelerate the transformation and upgrading of strategic business; to build the maker service platform,

financial service platform and e-market operation platform by integrating all physical or intangible resources and

resources from other channels; and to promote the transformation of SEG electronics markets from the

traditional rent-based profit model to the multi-channel platform profit model, at the same time, to expand the

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strategic cooperation with the leading enterprises in relevant industries and to actively pursue the strategic

partner with strong complementarity which not only complies with the Company’s strategic development,

direction but also exert respective advantages, so to constantly strengthen self core competence and profitability.

2. To complete the examination and approval procedures and implementation of new projects.

3. To further develop "SEG Chuangpinhui" based on the operation strategy of "SEG maker ecosystem", to

enhance strategic cooperation with famous enterprises or maker platforms, to focus on creation of the influence

of SEG maker platform, to find a suitable platform business model, to expand the popularity of the platform, and

to improve resource integration capacity of the platform.

4. Speed up the work of attracting investment and sales of Nantong SEG Times Square project.

5. In the social context that "Internet plus" and inclusive finance system have been major policies of the central

government, SEG Credit should take advantage of such opportunities to carry out transformation and upgrading.

For example, SEG Credit should focus on Internet-based business and the mobile end, try to use big data risk

control technology, exploit specific markets , bring in innovative talents, and ultimately improve efficiency and

reduce costs.

6. Actively promote the major asset restructuring. (Refer to Chapter 4 “Management Discussion and Analysis”,

Clause 9 “Outlook of future development of the Comapny”, Subclause III, Item 5.)

7. Accelerate the development of qualified personnel: To deepen reform and innovation in human resources

management, talent cultivation and reservation and especially talent motivation.

(VI) Risk warning

The future development planning and investment plan mentioned above do not reflect the profit estimation of 2016 by the Company.

The results depend on multiple factors such as changes in market condition, efforts of the operation team, and approval of relevant

authority departments and great uncertainties exist. Investors shall pay special attention to it.

X. Statement of receipt of surveys, communication and visits

1. Registration form for investigations, communication and Interviews in the report period

√ Applicable □ Not applicable

Time Means Type Basic information on investigation

Asked about the results of 29.51% equity listed for transfer,

Waranty Assets Management Co., Ltd. answered that no

January 09, 2015 Phone call Individual related information about the SEG Group equity transfer was

received. For details, please focus on the real-time

notifications on the Shenzhen Stock Exchange website.

Asked whether the Company has an owned enterprise reform

January 12, 2015 Phone call Individual program. The Company answered that no formal notice from

the parent unit has been received yet.

Asked about the results of 29.51% equity listed for transfer.

The company answered that no related information about the

January 14, 2015 Phone call Individual SEG Group equity transfer was received. For details, please

focus on the real-time notifications on the Shenzhen Stock

Exchange website.

January 15, 2015 Phone call Individual Inquired why the share is not dramatically appreciated. The

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Time Means Type Basic information on investigation

Company provided the basic information and regularly

disclosed reports of the Company.

Inquired when Nantong SEG Times Square can obtain the

pre-sale permit. The Company answered that currently the

January 22, 2015 Phone call Individual

Company was promoting the related matters and will disclose

the related information if the pre-sale permit was received.

Inquired when Nantong SEG Times Square can obtain the

pre-sale permit. The Company answered that currently the

January 26, 2015 Phone call Individual

Company was promoting the related matters and will disclose

the related information if the pre-sale permit was received.

Asked why the Huakong SEG Co., Ltd was suspended. The

January 29, 2015 Phone call Individual Company suggested the investor to consult the information

from Deputy General Manager office.

Asked why the Huakong SEG Co., Ltd was suspended. The

January 30, 2015 Phone call Individual Company suggested the investor to consult the information

from Deputy General Manager office.

Inquired the number of shareholders till January 31. The

Company answered that releasing the register of shareholders

February 1, 2015 Phone call Individual

of B shares requires T+3 working days and therefore the

corresponding information cannot be provided.

Inquired the number of shareholders till January 31. The

February 4, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired the specific operating conditions in Q1. The

February 5, 2015 Phone call Individual Company suggested the investor to focus on the 2015 Q1

Report to be disclosed soon.

Inquired when Nantong SEG Times Square can obtain the

pre-sale permit. The Company answered that currently the

February 10, 2015 Phone call Individual

Company was promoting the related matters and will disclose

the related information if the pre-sale permit was received.

Inquired when Nantong SEG Times Square can obtain the

pre-sale permit. The Company answered that currently the

February 13, 2015 Phone call Individual

Company was promoting the related matters and will disclose

the related information if the pre-sale permit was received.

Inquired the time for disclosing the annual report. The

March 9, 2015 Phone call Individual Company answered that the annual report was to be disclosed

on March 28, 2015.

Inquired the number of shareholders till February 28. The

March 10, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired the specific operating conditions in Q1. The

March 13, 2015 Phone call Individual Company suggested the investor to focus on the 2015 Q1

Report to be disclosed soon.

March 17, 2015 Phone call Individual Inquired the number of shareholders till March 15. The

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Time Means Type Basic information on investigation

Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired the specific operating conditions in Q1. The

March 24, 2015 Phone call Individual Company suggested the investor to focus on the 2015 Q1

Report to be disclosed soon.

Inquired that whether the revenues of Nantong SEG Time

Square will be disclosed in the semi-annual report. The

May 7, 2015 Phone call Individual

Company suggested the investor to focus on the 2015

Semi-annual Report to be disclosed soon.

Inquired the number of shareholders till May 15. The

May 20, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired the sales situations of Nantong SEG Time Square.

May 25, 2015 Phone call Individual The Company suggested the investor to focus on the 2015

Semi-annual Report to be disclosed soon.

Inquired that whether the revenues of Nantong SEG Time

Square will be disclosed in the semi-annual report. The

May 28, 2015 Phone call Individual

Company suggested the investor to focus on the 2015

Semi-annual Report to be disclosed soon.

Inquired the specific implementation plans after the Company

signed the strategic cooperation agreement with EONTEC.

May 29, 2015 Phone call Individual

The Company suggested the investor to focus on the related

public notice disclosed according to the progress.

Inquired the specific implementation plans after the Company

signed the strategic cooperation agreement with EONTEC.

June 1, 2015 Phone call Individual

The Company suggested the investor to focus on the related

public notice disclosed according to the progress.

Inquired the information about SEG Baohua, SEG GPS,

June 2, 2015 Phone call Institution Huakong SEG, and Nantong SEG. The Company provided the

written reply according to the disclosed public notice.

Inquired the specific implementation plans after the Company

signed the strategic cooperation agreement with EONTEC.

June 3, 2015 Phone call Individual

The Company suggested the investor to focus on the related

public notice disclosed according to the progress.

Inquired whether the Company will disclose important public

June 23, 2015 Phone call Individual notice. The Company replied no information that needs to be

disclosed is undisclosed.

Inquired the specific operating conditions in Q2. The

June 25, 2015 Phone call Individual Company suggested the investor to focus on the 2015

Semi-annual Report to be disclosed soon.

Inquired whether the Company will disclose important public

June 30, 2015 Phone call Individual notice. The Company replied no information that needs to be

disclosed is undisclosed.

July 2, 2015 Phone call Individual (20) Inquired about operation of the Company and whether

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Time Means Type Basic information on investigation

continuous drop of the stock price was caused by

abnormalities. The Company returned to normal without any

information that should have been disclosed.

Inquired whether continuous drop of the stock price was

caused by abnormalities and whether the Company took

July 6, 2015 Phone call Individual (20)

protective measures, and urged the Company to suspend its

shares.

July 7, 2015 Phone call Individual (24) Urged the Company to suspend its shares.

July 8, 2015 Phone call Individual (27) Urged the Company to suspend its shares.

July 10, 2015 Phone call Individual (8) Inquired when the Company would resume trading of shares.

Inquired about transfer of SEG E-commerce equity. The

July 22, 2015 Phone call Individual (5)

company replied based on the notice contents.

Inquired about purchase of shares by directors, supervisors

July 25, 2015 Phone call Individual and senior executives. The Company advised them to refer to

the disclosed announcement,

Inquired the number of shareholders till July 31. The

August 3, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired about progress of transfer of SEG E-commerce

August 10, 2015 Phone call Individual equity. The Company indicated that it would timely fulfill the

obligations disclosed according to the progress of transfer.

Inquired about purchase of shares by directors, supervisors

August 18, 2015 Phone call Individual and senior executives. The Company advised them to refer to

the disclosed announcement,

Inquired about purchase of shares by directors, supervisors

August 25, 2015 Phone call Individual and senior executives. The Company advised them to refer to

the disclosed announcement,

Inquired the number of shareholders till August 31. The

September 2, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired the specific operating conditions in Q3. The

September 15, 2015 Phone call Individual Company suggested the investor to focus on the 2015 Q3

Report to be disclosed soon.

Inquired the number of shareholders till September 30. The

October 9, 2015 Phone call Individual Company provided the information released by the Securities

Depository and Clearing Corporation.

Inquired about financial data in Q3. The Company suggested

October 22, 2015 Phone call Individual the investor to focus on the 2015 Q3 Report to be disclosed

soon.

Inquired why the Company suspended trading of shares. The

November 4, 2015 Phone call Individual (7)

Company replied according to the announcement thereof.

Inquired why the Company suspended trading of shares. The

November 5, 2015 Phone call Individual (3)

Company replied according to the announcement thereof.

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Time Means Type Basic information on investigation

November 9, 2015 Phone call Individual

November 20, 2015 Phone call Individual

December 2, 2015 Phone call Individual

December 3, 2015 Phone call Individual

December 7, 2015 Phone call Individual (2) Inquired about the progress of major asset restructuring. The

December 8, 2015 Phone call Individual Company replied according to the disclosed progress.

December 9, 2015 Phone call Individual

December 15, 2015 Phone call Individual (3)

December 16, 2015 Phone call Individual (4)

December 21, 2015 Phone call Individual

December 30, 2015 Phone call Individual

Frequency of reception 164

Number of institutions received 1

Number of individuals received 163

Number of other objects received 0

Is there any important information

No

disclosed?

42

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Chapter 5 Important Matters

I. Plan of ordinary share profit distribution and transferring the capital reserve to shares

Information on the establishment, implementation or adjustment of the ordinary share profit distribution policy,

especially the cash dividend policy:

√ Applicable □ Not applicable

(I) Information on the establishment, implementation or adjustment of the profit distribution policy:

1. In the report period, the Company developed a profit distribution proposal and the proposal for transfer of

capital reserve into share capital of 2014 complied with related regulations in the Articles of Association and the

Plan of Shareholder Return in the Future Three Years (2012-2014), and the deliberation procedure accorded with

related regulations without damaging the interests of the Company and shareholders. The independent director

expressed independent opinion.

2. In the report period, to perfect the dividend mechanism and supervision mechanism, further improve the

transparency of the profit distribution policy, and effectively protect the legitimate rights and interests of all

shareholders, the Company prepared the Plan of Shareholder Return in the Future Three Years (2015-2017). The

plan was passed at the first interim meeting of shareholders in 2015.

Special explanation of cash dividend policy

Does it comply with the Article of Association of the Company

Yes

or the resolutions of the meeting of shareholders?

Are the dividend standard and ratio explicit and clear? Yes

Are the decision-making procedure and mechanism perfect? Yes

Do independent directors fulfill their obligations and play their

Yes

role?

Is there any channel for medium and small shareholders to fully

express themselves? Are their legitimate rights and interests fully Yes

protected?

Are the conditions and procedure for adjustment or change of

Yes

cash dividend policy compliant and transparent?

Information on ordinary share profit distribution (proposal) and the plan of transfer of capital reserve into share

capital (proposal) in the recent three years (including the report period)

Pursuant to Accounting Standard for Business Enterprise 2014, the investment in subsidiaries by the Company

was calculated based on the basis of cost method, the profit of parent company remained bigger differences with

consolidated profit. According to relevant provisions of the Company Law and the Articles of Association, profits

shall be distributed by the parent company and the Company’s distribution of profits for 2010 shall be subject to

distributable profit of the parent company. In accordance with relevant provisions of the Company Law, the

profit distribution was implemented with the parent company as the main body. Therefore, the profit distribution

of the Company in 2013, 2014, and 2015 was implemented depending on the distributable profit of the parent

company.

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

1. Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2015: The

auditing by Beijing Shu Lun Pan Certified Public Accountants Co., Ltd found that the net profit attributable to

the listed company realized by the parent company in 2015 amounted to RMB 92,305,001.57; the profit

distributable to shareholders this time, which was calculated by adding the undistributed profit at the beginning

of the previous year, RMB -22,209,989.62 to the former, was RMB 70,095,011.95. According to the Plan of

Shareholder Return in the Future Three Years (2015-2017), the Company's profit distribution plan in 2015 is:

withdraw 10% of distributable profits RMB 7,009,501.20 as legal surplus capital reserve, and distribute cash

RMB 0.30 per ten shares (tax included) to all shareholders based on the share capital 784,799,010 shares as of

December 31, 2015. The amount of profits distributed totals RMB 23,543,970.30. Cash dividends account for

100%. The Company decided not to transfer capital reserve into share capital.

2. Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2014: The

auditing by Beijing Shu Lun Pan Certified Public Accountants Co., Ltd found that the net profit attributable to

the listed company realized by the parent company in 2014 amounted to RMB 32,887,973.01; the profit

distributable to shareholders this time, which was calculated by adding the undistributed profit at the beginning

of the previous year, RMB -55,097,962.63 to the former, was RMB -22,209,989.62. No profit distribution would

be made for the current year. The Company decided not to transfer capital reserve into share capital.

3. Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2013: The

auditing by Beijing Shu Lun Pan Certified Public Accountants Co., Ltd found that the net profit attributable to

the listed company realized by the parent company in 2013 amounted to RMB 51,015,079.16; the profit

distributable to shareholders this time, which was calculated by adding the undistributed profit at the beginning

of the previous year, RMB -106,113,041.79 to the former, was RMB -55,097,962.63. No profit distribution

would be made for the current year. The Company decided not to transfer capital reserve into share capital.

Table of distribution of ordinary share cash dividends by the Company in the recent three years (including the

report period)

Unit: Yuan

Net profit

Ratio of net profit

attributable to

attributable to

ordinary

ordinary Amount of cash Percentage of cash

Year for bonus Amount of cash shareholders of

shareholders of dividends otherwise dividends otherwise

distribution bonus (incl. tax) listed company in

listed company in distributed distributed

consolidated

consolidated

statement of bonus

statement (%)

year

2015 23,543,970.30 74,242,090.49 31.71% 0.00 0.00%

2014 0.00 48,380,294.05 0.00% 0.00 0.00%

2013 0.00 54,338,735.35 0.00% 0.00 0.00%

The net profit of the Company was positive and the profit of the parent company to be distributed to ordinary

shareholders was also positive, but the proposal for distribution of cash dividends was not put forward.

□ Applicable √ Not applicable

44

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

II. Plan of profit distribution and transferring the capital reserve to shares in the report

period

√ Applicable □ Not applicable

Bonus shares per 10 shares (share) 0

Interest per 10 shares (Yuan) (tax included ) 0.3

Base of share capital in the distribution proposal

784,799,010

(share)

Total of cash dividends (Yuan) (tax included) 23,543,970.30

Distributable profits (Yuan) 63,085,510.75

Ratio of cash dividends to total of distributed

100.00%

profits

Information on distribution of cash dividends

Others

Details of profit distribution proposal or proposal for transfer of capital reserve into share capital

According to the audit report issued by Dahua Certified Public Accountants Co., Ltd., the parent company realized net profit

attributable to listed companies amounting to of RMB 92,305,001.57 attributable to listed companies, plus the undistributed profit

at year-beginning amounting to RMB -22,209,989.62, the profit available for distribution amount to RMB 70,095,011.95.

According to the Plan of Shareholder Return in the Future Three Years (2015-2017) for Shenzhen SEG Co., Ltd., the Company's

profit distribution plan in 2015 is: withdraw 10% of distributable profits RMB 7,009,501.20 as legal surplus capital reserve, and

distribute cash RMB 0.30 per ten shares (tax included) to all shareholders based on the share capital 784,799,010 shares as of

December 31, 2015. The amount of profits distributed totals RMB 23,543,970.30. Cash dividends account for 100%. The Company

decided not to transfer capital reserve into share capital.

III. Fulfillment of Commitments

1. Commitments fulfilled within the report period or yet to be fulfilled as of the end of the report period

by the Company, shareholders, actual controllers, purchaser, directors, supervisors, senior executives or

other associates

√ Applicable □ Not applicable

Commitment Commitment

Commitments Promisor Content Fulfillment

date term

Commitment for share Not

reform applicable

Commitments in the

Acquisition Report Not

and the Report of applicable

Changes on Equity

Commitments made at

the time of Not

restructuring of major applicable

assets

Commitment made at Shenzhen According to the Article Five of the Equity July 1, 1996 Long-term In progress

45

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Commitment Commitment

Commitments Promisor Content Fulfillment

date term

the time of initial SEG Transfer Agreement signed by the Company

public offerings or Group with SEG Group when the Company was

refinancing Co., Ltd. listed, SEG Group agreed that the Company

and its subsidiaries and associated

companies to use the eight trademarks

registered by SEG Group at the National

Trademark Bureau; SEG Group agreed that

the Company used the aforesaid trademarks

or similar signs as the Company’s logo and

used the trademarks and signs during its

operation; the Company needn’t pay any fee

to SEG Group for using the aforesaid

trademarks or signs.

Shenzhen Securities Regulatory Bureau

pointed out that “There is an issue of

horizontal competition in the business of

electronics markets between the Company

and SEG Group” during the spot inspection

in 2007; the Company received the Letter of

Commitment in writing from SEG Group

Shenzhen

on September14, 2007, which said that

SEG September 14,

“SEG Group and Shenzhen SEG Co., Ltd. Long-term In progress

Group 2007

have similar business in electronics markets

Co., Ltd.

in Shenzhen (Shenzhen SEG) due to

historic reasons and the objective

background of market development; Our

Group hereby promises that we will not

individually operate a market in a same city

whose business is similar with that of

Shenzhen SEG.

From February

The 6th interim meeting of the 5th Board of

1, 2011 to

Directors held on January 26, 2011

January 31,

reviewed and approved the Proposal of

2015, totally

Solving the Horizontal Competition

five years, and

between the Company and Its Controlling

the entrustment

Shareholder. After friendly consultation,

Shenzhen contract was

SEG Group agreed to entrust the Company

SEG January 26, expired within

to operate and manage with full authority In progress

Group 2011 this report

SEG Communications Market under direct

Co., Ltd. period. As of the

management of SEG Group. Therefore, the

end of the report

two parties have signed the entrustment

period, the

operation and management contract, and

above-mentione

SEG Group will pay the Company RMB

d contract has

200,000 Yuan as entrust management

been renewed.

expenses.

The contract

46

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Commitment Commitment

Commitments Promisor Content Fulfillment

date term

term lasts from

February 1,

2015 to January

31, 2016.

Commitment of equity Not

incentives applicable

With confidence in the prospect of China's

economy and the development of the

Company, and with the objective to

Shenzhen co-maintain the stable market and promote

SEG a sustainable, stable and health development

July 9, 2015 Twelve months In progress

Group of the Company, the controlling shareholder

Co., Ltd. of the Company Shenzhen SEG Group Co.,

Ltd. makes a commitment not to unload the

shares of the Company within the coming

twelve months following July 9.

With confidence in the prospect of the

Other commitments

Company and rational judgment of the

made to the medium

share price, and with the objective to

and small

co-maintain the stable market, promote a

shareholders of the

sustainable, stable and health development

Company

of the Company and protect the interests of

Directors,

medium and small shareholders, directors,

Supervisor

supervisors, and senior executives commit

s, and July 9, 2015 Six months In progress

themselves to purchase from the secondary

Senior

market or increase share holdings with their

Executives

own funds within six months following July

14 when the trading of shares is resumed,

not to unload shares, not to engage in

insider trading, not to trade shares or engage

in short-swing trading in the sensitive

period.

Whether commitments

Yes

were fulfilled on time

Reason for not

fulfilling the

commitments and N/A

future plan (if

applicable)

2. The attainment of forecasts for the assets or projects of the Company which were profitable and the

description of the reasons with this report period remaining in the forecasting period

□ Applicable √ Not applicable

47

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

IV. Non-operating Capital Occupation on the Listed Company by the Controlling

Shareholders and Related Parties

□ Applicable √ Not applicable

No non-operating capital occupation on the listed company by the controlling shareholders and related parties is

involved in the report period.

V. Explanations of the Board of Directors, the Board of Supervisors and Independent

Directors (if any) to the “Non-standard Audit Report” made by the accounting firm in the

report period

□ Applicable √ Not applicable

VI. Information on changes in accounting policies, accounting estimates and accounting

methods compared with the financial reports of 2014

□ Applicable √ Not applicable

There is no change in the Company's accounting policies, accounting estimates and accounting methods in the

report period.

VII. Information on retroactive restatements in corrections of major accounting errors in the

report period

□ Applicable √ Not applicable

There is no retrospective restatement due to corrections on significant accounting errors in the report period.

VIII. Information on changes in the scope of consolidation compared with the financial

report of 2012

□ Applicable √ Not applicable

There are no changes in the scope of consolidation in the report period.

IX. Engagement and dismissal of the accounting firm

Engaged accounting firm

Name of accounting firm engaged from China BDO Dahua CPA Co., Ltd. (special general partnership)

Remuneration for the accounting firm engaged from

45

China (RMB ten thousand Yuan)

Consecutive years of service offered by accounting

13

firm engaged from China

Name of certified public accounts from the

Zhang Xing and Zhang Zhaocheng

accounting firm engaged from China

Name of accounting firm engaged from outside of

N/A

China (if any)

Consecutive years of service offered by overseas

N/A

accounting firm (if any)

48

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Name of certified public accounts from the overseas

N/A

accounting firm (if any)

Whether to engage another accounting firm in current period

□ Yes √ No

Engagement of internal control audit accounting firm, financial adviser or sponsor

□ Applicable √ Not applicable

X. Information on Listing Suspension or Abortion after Disclosure of Annual Report

□ Applicable √ Not applicable

XI. Bankruptcy and Reorganization

□ Applicable √ Not applicable

No bankruptcy and reorganization matter is involved in the report period.

XII. Major lawsuits and arbitrations

√ Applicable □ Not applicable

Amount

Whether

(RMB: Judgment

Basic Information About Lawsuits Estimated Judgment Disclosure

ten Progress Result and Disclosure Index

and Arbitrations Liabilities Execution Date

thousand Impact

Occurred

Yuan)

(I) In March 2013, Nanning SEG

rented from Nanning Haiqi Real

Estate Development Co., Ltd.

(hereinafrer referred to as "Haiqi")

the 1st and 2nd floors aboveground

of Nanning Zhidi Plaza at No. 158,

East Renmin Road, Xingning

District, Nanning to develop an The trial

electronics market. The lease term started on

agreed lasts from March 18, 2013 September

to March 17, 2025. With respect to 28, 2015.

455.81 Yes N/A N/A

the severe water seepage and The

leakage in the rented houses, judgment

Nanning SEG had communicated is yet to

with Haiqi for multiple times but be made.

failed to solve the problem. Thus,

Nanning SEG appealed to the

People's Court of Xingning

District, Nanning. Meanwhile,

Haiqi appealed to the same court

against Nanning SEG for its failure

to pay rent and default incurred.

49

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount

Whether

(RMB: Judgment

Basic Information About Lawsuits Estimated Judgment Disclosure

ten Progress Result and Disclosure Index

and Arbitrations Liabilities Execution Date

thousand Impact

Occurred

Yuan)

The court will rationally judge the

case.

(II) On February 4, 2013, Suzhou

SEG signed the Contract of

Renting Underground Space of

Suzhou Metro Line 1 at South

Guangji Road with Suzhou Rail

Transit (hereinafter referred to as

SRT), agreeing that Suzhou SEG

The trial

should rented the underground

ended on

space of Suzhou Metro Line 1 at

February Cninfo Website:

South Guangji Road for 96

7, 2016. http://www.cninfo.com.cn

months. After execution of the August

326.42 Yes The N/A N/A Semi-Annual Report

Contract, as market changes made 29, 2015

second 2015 of Shenzhen SEG

it difficult to operate the project,

judgment Co., Ltd.

both parties repeatedly negotiated

is yet to

about changes of conditions for

be made.

cooperation but failed to agree

upon new conditions, and the

project was under liquidation.

On January 26, 2015, SRT

appealed to the court, requesting

the court to order Suzhou SEG to

assume corresponding penalties.

(III) On June 29, 2011, SEG The case

Industry signed the Lease was

Agreement with Shenzhen Saibo registered

Maite Digital Science and with the

Technology Co., Ltd. (hereinafter People's

referred to as Saibo Maite), Court of

agreeing that SEG Industry should Futian

Cninfo Website:

lease its stores covering 240 square District,

SEG industry http://www.cninfo.com.cn

meters totally at Contemporary Shenzhen In August

0 No won the Semi-Annual Report

Window to Saibo Maite. The on April progress 29, 2015

lawsuit. 2015 of Shenzhen SEG

validity period lasts from July 1, 15, 2015.

Co., Ltd.

2011 to June 30, 2019. Later on, The court

due to construction of the subway ordered

at North Huaqiang Road, Shenzhen on August

as well as Saibo Maite encountered 12, 2015

operation problems, both parties that SEG

signed the Supplementary industry

Agreement on February 20, 2014, win the

50

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount

Whether

(RMB: Judgment

Basic Information About Lawsuits Estimated Judgment Disclosure

ten Progress Result and Disclosure Index

and Arbitrations Liabilities Execution Date

thousand Impact

Occurred

Yuan)

agreeing upon new terms of rent lawsuit.

and liquidated damages. In August

2014, SEG Industry received the

Notice of Contract Termination and

Store Takeover from Saibo Maite.

SEG Industry communicated with

Saibo Maite about liquidated

damages under the lease contract

for multiple times but failed. To

effectively protect its interests,

SEG Industry decided to engage a

lawyer to file a risk agency lawsuit.

SEG Industry engaged Guangdong

Ruiting Law Firm.

(IV) Eight intellectual property Two cases

rights cases: In these cases, have been

individual stores in the electronics Six cases closed, one

market operated by the Company have not case has been

Cninfo Website:

may sell products that infringe been judged, and

http://www.cninfo.com.cn

others' intellectual property rights, closed, one case has In August

345.41 No Semi-Annual Report

and the obligees file a lawsuit and two been progress 29, 2015

2015 of Shenzhen SEG

against them and consider the cases have withdrawn.

Co., Ltd.

Company as a co-defendant. As a been The Company

market manager, the Company is closed. is not liable

not the actual seller of the products for

that are suspected to be infringing. compensation.

XIII. Punishment and Rectification Issues

□ Applicable √ Not applicable

No punishment and rectification is involved in the report period.

XIV. Integrity of the Company and its Controlling Shareholders and Actual Controllers

□ Applicable √ Not applicable

XV. Implementation of Equity Incentive Plan, Employee Shareholding Plan or Other

Employee Incentives

□ Applicable √ Not applicable

No stock incentive plan and implementation is involved in the report period.

51

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

XVI. Major Relevant Transactions

1. Transactions Concerning Routine Operation

√ Applicable □ Not applicable

Approved

Transaction Amount Whether

Pricing transaction Available

Amount Proportion Exceeding Transaction

Related Party Associated Transaction Associated Principles of Transaction amount similar Disclosure Disclosure

(RMB ten Occupied in the the Clearing

Transaction Relationship Type Transactions Associated price (RMB ten market Date Index

thousand Transactions of Approved Form

Transactions thousand price

Yuan) the Same Kind Quota

Yuan)

Shenzhen Warehouse with an 65.77 According 60-125

Controlling Property Determined

SEG Group area of 809.26m2 on (Yuan/m2. 63.87 0.10% 100 No to the (Yuan/m2.

shareholder lease by the market

Co., Ltd. 8F of SEG Plaza month) agreement month)

The controlling

shareholder entrusted

Shenzhen its investment in According

Controlling Entrusted Determined RMB

SEG Group SEG 20 0.03% 20 No to the --

shareholder operation by the market 200,000

Co., Ltd. communications agreement

market to the

Company. March 28, (Cninfo

2015 Website)

The 15th floor of

67.77 According 60-125

Shenzhen Controlling Property SEG Plaza, with an Determined

(Yuan/m2. 46.56 0.07% Yes to the (Yuan/m2.

SEG Group shareholder lease area of 687.01 square by the market

month) agreement month)

meters

Shenzhen

SEG Real 76.58 According 60-100

Subsidiary of Property 12F (West), Block 4, Determined

Estate (Yuan/m2. 27.87 0.04% No to the (Yuan/m2.

shareholders lease SEG Science Park by the market

Investment month) agreement month)

Co., Ltd.

Total -- -- 158.3 -- 120 -- -- -- -- --

52

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

2. Relevant Transactions Due to Asset or Equity Sales and Acquisition

□ Applicable √ Not applicable

No relevant transaction due to asset or equity sales and acquisition is involved in the report period.

3. Relevant Transactions Due to Joint External Investment

□ Applicable √ Not applicable

No relevant transaction due to joint external investment is involved in the report period.

4. Creditor's Rights and Liabilities of Related Parties

√ Applicable □ Not applicable

Whether there are non-operating associated creditors rights and liabilities?

□ Yes √ No

No non-operating creditor's rights and liabilities of related parties are involved in the report period.

5. Other Important Transactions

□ Applicable √ Not applicable

In the report period, the Company has no other major related transactions.

XVII. Important contracts and implementation

1. Trusteeship, Contracting, and Leasing Issues

(1) Trusteeship Issues

√ Applicable □ Not applicable

Explanations to trusteeship

The controlling shareholder Shenzhen SEG Group Co., Ltd. entrust the Company to manage SEG

telecommunication market. The Company administrates the income RMB 200,000 according to the trusteeship

agreement in the report period.

Projects which bring the losses and gains that take up 10% of the profit amount of the Company.

□ Applicable √ Not applicable

In the report period, the Company has no entrusted projects which bring the losses and gains that take up 10% of

the profit amount of the Company in the report period.

(2) Contracting Issues

□ Applicable √ Not applicable

No contracting issue is involved within the report period.

(3) Leasing Issues

√ Applicable □ Not applicable

Information about lease

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Refer to the preceding section Transactions Concerning Routine Operation.

Projects which bring the losses and gains that take up 10% of the profit amount of the Company in the report

period.

□ Applicable √ Not applicable

In the report period, the Company has no lease projects which bring the losses and gains that take up 10% of the

profit amount of the Company in the report period.

2. Major guarantees

□ Applicable √ Not applicable

No guarantee issue is involved within the report period.

3. Information on cash asset management entrusted to others

(1) Entrusted financing

√ Applicable □ Not applicable

Unit: RMB ten thousand Yuan

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Industrial and

SZWL1560 August 24, Novembe

Commercial No 1,000 Float income 1,000 12.23 12.23 12.23

(93 days) 2015 r 25, 2015

Bank of China

Industrial and

SZWL1560 September December

Commercial No 700 Float income 700 8.75 8.75 8.75

(93 days) 17, 2015 19, 2015

Bank of China

Industrial and

SZWL1560 December March 30,

Commercial No 2,000 Float income 24.46 0

(93 days) 28, 2015 2016

Bank of China

AMZYJZT- July 4, January 9,

Bank of China No 600 Float income 600 15.53 15.53 15.53

A14208 2014 2015

Instructions

for October April 13,

Bank of China No 400 Float income 400 10 10 10.00

AMZYPW 16, 2014 2015

HQ14509

AMZYZH1 January 12, July 9,

Bank of China No 600 Float income 600 15.36 15.36 15.36

5009 2015 2015

AMZYJZT- April 14, August

Bank of China No 400 Float income 400 6.97 6.97 6.97

A15231 2015 18, 2015

Shanghai

No 230113733 400 April 29, October Float income 400 10.85 10.85 10.85

Pudong

54

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Development 8 2015 24, 2015

Bank

AMZYPW June 8, Septembe

Bank of China No 80 Float income 80 1.02 1.02 1.02

HQ15336 2015 r 10, 2015

AMZYPW June 4, Septembe

Bank of China No 320 Float income 320 3.91 3.91 3.91

HQ15334 2015 r 7, 2015

AMZYPW July 16, October

Bank of China No 400 Float income 400 4.68 4.68 4.68

HQ15443 2015 19, 2015

Product

code -

230113733

Shanghai

8; product

Pudong August 20, Novembe

No name - 400 Float income 400 4.78 4.78 4.78

Development 2015 r 18, 2015

Liduoduo

Bank

Wealth Bus

Progress

No. 3

Product

code -

230113733

Shanghai

8; product

Pudong September December

No name - 400 Float income 400 4.74 4.74 4.74

Development 12, 2015 14, 2015

Liduoduo

Bank

Wealth Bus

Progress

No. 3

AMZYPW October January

Bank of China No 400 Float income 4.19 0

HQ15711 22, 2015 21, 2016

Product

code -

230113733

Shanghai

8; product

Pudong October January

No name - 400 Float income 4.54 0

Development 28, 2015 25, 2016

Liduoduo

Bank

Wealth Bus

Progress

No. 3

Shanghai Product

November May 19,

Pudong No code - 400 Float income 8.68 0

21, 2015 2016

Development 230113733

55

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Bank 8; product

name -

Liduoduo

Wealth Bus

Progress

No. 4

Product

Shanghai code -

Pudong 230113733 December January

No 400 Float income 1.46 0

Development 5; product 16, 2015 15, 2016

Bank name -

Yuetianli

Industrial and

ZQL180ZQ June 24, December

Commercial No 77.9 Float income 46.77 1.31 1.31 1.3115

X 2014 31, 2016

Bank of China

Industrial and

October January

Commercial No SZWL1560 72 Float income 0 0.89 0

15, 2015 16, 2016

Bank of China

CNYAQKF August 19, Septembe

Bank of China No 100 Float income 100 0.36 0.36 0.36

TP0 2015 r 29, 2015

China

Gu Zhi January 9, April 23,

Merchants No 150 Float income 150 1.89 1.89 1.89

Ying 52271 2015 2015

Bank

China

Gu Zhi February 6, March 19,

Merchants No 50 Float income 50 0.22 0.22 0.22

Ying 52287 2015 2015

Bank

China

Gu Zhi March 13, May 20,

Merchants No 100 Float income 100 0.75 0.75 0.75

Ying 52298 2015 2015

Bank

China

Gu Zhi March 19, June 18,

Merchants No 50 Float income 50 0.56 0.56 0.56

Ying 52299 2015 2015

Bank

Bank of

April 10, October

Communicatio No YTCF-RZL 150 Float income 150 3.59 3.59 3.59

2015 12, 2015

ns

Bank of

April 27, October

Communicatio No YTCF-RZL 100 Float income 100 2.39 2.39 2.39

2015 26, 2015

ns

56

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Bank of

May 4, August 3,

Communicatio No YTCF-RZL 150 Float income 150 1.87 1.87 1.87

2015 2015

ns

Bank of

May 29, Septembe

Communicatio No YTCF-RZL 100 Float income 100 1.13 1.13 1.13

2015 r 3, 2015

ns

Bank of

June 15, Septembe

Communicatio No YTCF-RZL 150 Float income 150 1.46 1.46 1.46

2015 r 14, 2015

ns

Bank of

August 24, Septembe

Communicatio No YTCF-RZL 150 Float income 150 0.49 0.49 0.49

2015 r 29, 2015

ns

Bank of

September October

Communicatio No YTCF-RZL 100 Float income 100 0.34 0.34 0.34

14, 2015 15, 2015

ns

Bank of

September October

Communicatio No YTCF-RZL 150 Float income 150 0.42 0.42 0.42

21, 2015 22, 2015

ns

January 5, January

Bank of China No GSRJYL01 600 Float income 600 0.88 0.88 0.88

2015 28, 2015

March 18, March 26,

Bank of China No GSRJYL01 300 Float income 300 0.18 0.18 0.18

2015 2015

March 24, April 23,

Bank of China No GSRJYL01 600 Float income 600 0.5 0.5 0.50

2015 2015

April 22, May 26,

Bank of China No GSRJYL01 1,400 Float income 1,400 2.27 2.27 2.27

2015 2015

May 29, June 26,

Bank of China No GSRJYL01 800 Float income 800 0.87 0.87 0.87

2015 2015

June 24, July 7,

Bank of China No GSRJYL01 700 Float income 700 0.61 0.61 0.61

2015 2015

July 21, August

Bank of China No GSRJYL01 400 Float income 400 0.44 0.44 0.44

2015 11, 2015

August 25, October

Bank of China No GSRJYL01 900 Float income 900 1.83 1.83 1.83

2015 13, 2015

September October

Bank of China No GSRJYL01 300 Float income 300 0.53 0.53 0.53

29, 2015 22, 2015

Bank of China No GSRJYL01 500 October December Float income 500 1.04 1.04 1.04

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

29, 2015 8, 2015

December December

Bank of China No GSRJYL01 900 Float income 400 0

14, 2015 31, 2016

AMZYPW April 7, October

Bank of China No 500 Float income 500 12.98 12.98 12.98

HQ-15190 2015 8, 2015

AMZYPW April 16, July 16,

Bank of China No 300 Float income 300 3.7 3.7 3.7

HQ-15213 2015 2015

AMZYJZT- April 27, June 1,

Bank of China No 300 Float income 300 1.38 1.38 1.38

B15116 2015 2015

China

April 30, May 13,

Minsheng No 20150430 650 Float income 650 1.22 1.22 1.22

2015 2015

Banking

China

April 30, May 28,

Minsheng No 20150430 50 Float income 50 0.19 0.19 0.19

2015 2015

Banking

AMZYJZT- May 5, June 9,

Bank of China No 300 Float income 300 1.36 1.36 1.36

A15267 2015 2015

China

May 14, May 27,

Minsheng No 20150430 900 Float income 900 1.69 1.69 1.69

2015 2015

Banking

China

May 28, June 10,

Minsheng No 20150430 900 Float income 900 1.64 1.64 1.64

2015 2015

Banking

China

June 11, June 25,

Minsheng No 20150430 900 Float income 900 1.57 1.57 1.57

2015 2015

Banking

China

June 26, July 9,

Minsheng No 20150430 900 Float income 900 1.62 1.62 1.62

2015 2015

Banking

July 1, July 15,

Bank of China No GSRJYL01 600 Float income 600 0.64 0.64 0.64

2015 2015

China

July 10, July 23,

Minsheng No 20150430 900 Float income 900 1.59 1.59 1.59

2015 2015

Banking

AMZYJZT- July 10, October

Bank of China No 420 Float income 420 5.08 5.08 5.08

A15440 2015 13, 2015

Bank of China No AMZYPW 80 July 13, October Float income 80 1.01 1.01 1.01

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

HQ-15190 2015 15, 2015

AMZYPW July 20, October

Bank of China No 220 Float income 220 2.47 2.47 2.47

HQ-15447 2015 22, 2015

AMZYZH1 July 20, October

Bank of China No 80 Float income 80 0.98 0.98 0.98

5263 2015 19, 2015

China

July 24, August 6,

Minsheng No 20150430 900 Float income 900 1.52 1.52 1.52

2015 2015

Banking

China

August 7, August

Minsheng No 20150430 900 Float income 900 1.5 1.5 1.5

2015 20, 2015

Banking

China

August 21, Septembe

Minsheng No 20150430 900 Float income 900 1.76 1.76 1.76

2015 r 3, 2015

Banking

China

September Septembe

Minsheng No 20150430 900 Float income 900 1.11 1.11 1.11

4, 2015 r 17, 2015

Banking

September Septembe

Bank of China No GSRJYL01 500 Float income 500 0.19 0.19 0.19

25, 2015 r 29, 2015

AMZYJZT- October December

Bank of China No 1,000 Float income 1,000 5.57 5.57 5.57

A15647 16, 2015 4, 2015

December December

Bank of China No GSRJYL01 1,400 Float income 1,400 0.7 0.7 0.7

4, 2015 11, 2015

Bank of

May 26, January

Communicatio No RZLS 600 Float income 600 13.68 13.68 13.68

2014 12, 2015

ns

CITIC-CP

China Citic cash December December

No 3,000 Float income 3,000 11 11 11.00

Bank managemen 22, 2014 31, 2016

t No.3

Shanghai

Liduoduo

Pudong December January

No 230113733 6,400 Float income 6,400 29.46 29.46 29.46

Development 23, 2014 22, 2015

5

Bank

AMZYPW December February

Bank of China No 500 Float income 500 2.84 2.84 2.84

HQ14687 30, 2014 5, 2015

Shanghai Liduoduo

No 3,000 December January Float income 3,000 3.74 3.74 3.74

Pudong 230114703

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Development 1 30, 2014 12, 2015

Bank

Shanghai

Liduoduo

Pudong December January

No 230113733 5,800 Float income 5,800 26.7 26.7 26.70

Development 30, 2014 29, 2015

5

Bank

CITIC-CP

China Citic short-term January 14, April 20,

No 20,000 Float income 20,000 315.62 315.62 315.62

Bank financing 2015 2015

A14

Shanghai

Liduoduo

Pudong January 16, February

No 230113733 6,000 Float income 6,000 27.62 27.62 27.62

Development 2015 15, 2015

5

Bank

Shanghai

Liduoduo

Pudong January 28, February

No 230113733 6,460 Float income 6,460 29.73 29.73 29.73

Development 2015 27, 2015

5

Bank

Shanghai

Liduoduo

Pudong February March 12,

No 230113733 300 Float income 300 1.38 1.38 1.38

Development 10, 2015 2015

5

Bank

Shanghai

Liduoduo

Pudong February March 17,

No 230113733 920 Float income 920 4.23 4.23 4.23

Development 15, 2015 2015

5

Bank

Shanghai

Liduoduo

Pudong February March 18,

No 230113733 1,000 Float income 1,000 4.6 4.6 4.60

Development 16, 2015 2015

5

Bank

AMZYPW February March 23,

Bank of China No 1,900 Float income 1,900 9.02 9.02 9.02

HQ15085 16, 2015 2015

Shanghai

Liduoduo

Pudong February March 19,

No 230113733 6,030 Float income 6,030 27.75 27.75 27.75

Development 17, 2015 2015

5

Bank

Shanghai Liduoduo

March 3, April 2,

Pudong No 230113733 3,890 Float income 3,890 17.9 17.9 17.90

2015 2015

Development 5

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Bank

Shanghai

Liduoduo

Pudong March 17, April 16,

No 230113733 560 Float income 560 2.58 2.58 2.58

Development 2015 2015

5

Bank

AMZYJZT- March 24, April 28,

Bank of China No 2,000 Float income 2,000 9.49 9.49 9.49

LPA15175 2015 2015

March 27, April 27,

Industrial Bank No 37514031 2,800 Float income 2,800 13.32 13.32 13.32

2015 2015

CITIC-CP

China Citic cash April 1, May 12,

No 2,900 Float income 2,900 17.88 17.88 17.88

Bank managemen 2015 2015

t No.3

CITIC-CP

China Citic cash April 27, May 12,

No 20,300 Float income 20,300 45.78 45.78 45.78

Bank managemen 2015 2015

t No.3

CITIC-CP

China Citic cash June 4, August

No 6,000 Float income 2,000 6.16 6.16 6.16

Bank managemen 2015 13, 2015

t No.3

The

June 10, July 6,

Agricultural No HLF155634 5,000 Float income 5,000 13.01 13.01 13.01

2015 2015

Bank of China

Shanghai

Liduoduo

Pudong July 29, August

No 230113733 2,800 Float income 2,800 12.89 12.89 12.89

Development 2015 31, 2015

5

Bank

Shanghai

Liduoduo

Pudong August 11, Septembe

No 230113733 12,400 Float income 12,400 51.98 51.98 51.98

Development 2015 r 10, 2015

5

Bank

Shanghai

Liduoduo

Pudong August 27, Septembe

No 230113733 2,500 Float income 2,500 10.96 10.96 10.96

Development 2015 r 28, 2015

5

Bank

Shanghai

Liduoduo September October

Pudong No 2,800 Float income 2,800 13.81 13.81 13.81

230113733 2, 2015 8, 2015

Development

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Bank 5

Shanghai

Liduoduo

Pudong September October

No 230113733 1,000 Float income 1,000 3.99 3.99 3.99

Development 10, 2015 12, 2015

5

Bank

Shanghai

Liduoduo

Pudong September October

No 230113733 10,800 Float income 10,800 43.05 43.05 43.05

Development 16, 2015 16, 2015

5

Bank

Shanghai

Liduoduo

Pudong September October

No 230113733 2,000 Float income 2,000 7.97 7.97 7.97

Development 23, 2015 23, 2015

5

Bank

Shanghai

Liduoduo

Pudong September October

No 230113733 1,200 Float income 1,200 4.78 4.78 4.78

Development 30, 2015 30, 2015

5

Bank

Shanghai

Liduoduo

Pudong October Novembe

No 230113733 2,800 Float income 2,800 11.16 11.16 11.16

Development 13, 2015 r 12, 2015

5

Bank

Shanghai

Liduoduo

Pudong October Novembe

No 230113733 12,000 Float income 12,000 47.84 47.84 47.84

Development 20, 2015 r 19, 2015

5

Bank

Shanghai

Liduoduo

Pudong November December

No 230113733 10,000 Float income 10,000 38.14 38.14 38.14

Development 26, 2015 28, 2015

5

Bank

The

AXLD 20 December December

Agricultural No 3,000 Float income 0

days 2, 2015 31, 2016

Bank of China

AMZYJZT- November February

Bank of China No 500 Float income 500 6.31 6.31 6.31

A14388 11, 2014 17, 2015

China

FFZCGLB August 25, February

Minsheng No 300 Float income 300 7.83 7.83 7.83

NZL144 2014 26, 2015

Banking

Bank of China No AMZYJZT- 300 December March 24, Float income 300 3.81 3.81 3.81

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

A14468 23, 2014 2015

AMZYJZT- March 9, April 13,

Bank of China No 250 Float income 250 1.19 1.19 1.19

B15061 2015 2015

AMZYJZT- January 9, May 5,

Bank of China No 400 Float income 400 6.61 6.61 6.61

A15003 2015 2015

AMZYJZT- May 8, June 12,

Bank of China No 300 Float income 300 1.35 1.35 1.35

A15272 2015 2015

AMZYJZT- February July 3,

Bank of China No 500 Float income 500 9.78 9.78 9.78

A15079 13, 2015 2015

AMZYJZT- February July 3,

Bank of China No 100 Float income 100 1.96 1.96 1.96

A15079 13, 2015 2015

AMZYJZT- March 3, July 7,

Bank of China No 300 Float income 300 5.33 5.33 5.33

A15104 2015 2015

AMZYJZT- March 27, August 4,

Bank of China No 200 Float income 200 3.74 3.74 3.74

A15193 2015 2015

AMZYJZT- April 14, August

Bank of China No 250 Float income 250 4.36 4.36 4.36

A15231 2015 18, 2015

AMZYJZT- June 16, Septembe

Bank of China No 350 Float income 350 4.24 4.24 4.24

A15380 2015 r 18, 2015

AMZYJZT- July 10, Septembe

Bank of China No 650 Float income 650 5.1 5.1 5.1

A15438 2015 r 11, 2015

AMZYPW August 20, February

Bank of China No 800 Float income 17.15 0

HQ-15558 2015 18, 2016

AMZYJZT- September March 4,

Bank of China No 700 Float income 13.37 0

A15603 22, 2015 2016

AMZYJZT- November January

Bank of China No 500 Float income 3.25 0

A15761 27, 2015 26, 2016

AGT10000 December February

Ping An Bank No 3,300 Float income 3,300 2.7 2.7 2.7

2 31, 2014 10, 2015

AGT10000 January 5, February

Ping An Bank No 2,400 Float income 2,400 1.97 1.97 1.97

2 2015 10, 2015

AGT10000 January 26, February

Ping An Bank No 700 Float income 700 0.58 0.58 0.58

2 2015 10, 2015

AGT10000 March 12, March 16,

Ping An Bank No 3,000 Float income 3,000 0.95 0.95 0.95

2 2015 2015

Ping An Bank No AGT10000 200 March 13, March 16, Float income 200 0.06 0.06 0.06

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

2 2015 2015

AGT10000 March 20, March 31,

Ping An Bank No 3,000 Float income 3,000 2.4 2.4 2.4

2 2015 2015

e+

China enterprise

April 1, April 9,

Merchants No regular 543 Float income 543 0.64 0.64 0.64

2015 2015

Bank financing

project

e+

China enterprise

April 1, April 9,

Merchants No regular 793 Float income 793 0.93 0.93 0.93

2015 2015

Bank financing

project

e+

China enterprise

April 2, April 14,

Merchants No regular 364 Float income 364 0.64 0.64 0.64

2015 2015

Bank financing

project

AGT10000 April 2, May 6,

Ping An Bank No 400 Float income 400 0.72 0.72 0.72

2 2015 2015

AGT10000 April 10, May 06,

Ping An Bank No 1,300 Float income 1,300 2.23 2.23 2.23

2 2015 2015

AGT10000 April 16, May 6,

Ping An Bank No 260 Float income 260 0.57 0.57 0.57

2 2015 2015

AGT10000 May 8, May 13,

Ping An Bank No 1,400 Float income 1,400 0.52 0.52 0.52

2 2015 2015

AGT10000 September Novembe

Ping An Bank No 1,500 Float income 1,500 4.86 4.86 4.86

2 8, 2015 r 10, 2015

AGT10000 September Novembe

Ping An Bank No 500 Float income 500 1.62 1.62 1.62

2 23, 2015 r 20, 2015

AGT10000 December December

Ping An Bank No 1,200 Float income 700 0

2 12, 2015 31, 2016

AGT10000 December December

Ping An Bank No 2,100 Float income 0

2 29, 2015 31, 2016

AGT10000 December December

Ping An Bank No 1,000 Float income 0

2 31, 2015 31, 2016

China

No 52218 500 October January Float income 500 6.07 6.07 6.07

Merchants

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Bank 16, 2014 19, 2015

Industrial and

December February

Commercial No 14H044A 650 Float income 650 2.12 2.12 2.12

31, 2014 3, 2015

Bank of China

Industrial and

February 7, April 10,

Commercial No WL63BBX 1,000 Float income 1,000 6.39 6.39 6.39

2015 2015

Bank of China

Industrial and

February March 24,

Commercial No WL35BBX 430 Float income 430 1.48 1.48 1.48

17, 2015 2015

Bank of China

Industrial and

March 28, May 01,

Commercial No 15JH013A 430 Float income 430 1.8 1.8 1.80

2015 2015

Bank of China

Industrial and

April 14, June 15,

Commercial No 63BBX 650 Float income 650 4.15 4.15 4.15

2015 2015

Bank of China

The 995101010

April 17, May 26,

Agricultural No 010200 50 Float income 50 0.13 0.13 0.13

2015 2015

Bank of China phase 3

The 995101010

April 17, May 30,

Agricultural No 010200 300 Float income 300 0.85 0.85 0.85

2015 2015

Bank of China phase 3

Industrial and

May 05, July 07,

Commercial No 63BBX 430 Float income 430 2.89 2.89 2.89

2015 2015

Bank of China

The 995101010

June 01, June 15,

Agricultural No 010200 250 Float income 250 0.23 0.23 0.23

2015 2015

Bank of China phase 3

Industrial and

June 19, August

Commercial No 63BBX 650 Float income 650 3.93 3.93 3.93

2015 21, 2015

Bank of China

Industrial and

July 09, Septembe

Commercial No 63BBX 430 Float income 430 2.6 2.6 2.60

2015 r 10, 2015

Bank of China

Industrial and

July 31, October

Commercial No 63BBX 200 Float income 200 1.27 1.27 1.27

2015 02, 2015

Bank of China

The No BLF90 700 August 27, Novembe Float income 700 6.47 6.47 6.47

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Agricultural 2015 r 27, 2015

Bank of China

Industrial and

September Novembe

Commercial No 63BBX 430 Float income 430 2.6 2.6 2.60

15, 2015 r 17, 2015

Bank of China

Industrial and

October January

Commercial No 63BBX 200 Float income 0

30, 2015 01, 2016

Bank of China

Industrial and

November January

Commercial No 63BBX 200 Float income 0

24, 2015 26, 2016

Bank of China

Industrial and

November January

Commercial No 63BBX 230 Float income 0

26, 2015 28, 2016

Bank of China

The

November February

Agricultural No BLF90 550 Float income 0

27, 2015 25, 2016

Bank of China

The 995101010

November December

Agricultural No 010200 150 Float income 150 0.56 0.56 0.56

27, 2015 17, 2015

Bank of China phase 3

Industrial and

January 22, April 24,

Commercial No 1001RSYH 30 Float income 30 0.25 0.25 0.249534

2015 2015

Bank of China

Industrial and

January 22, April 24,

Commercial No 1001RSYH 30 Float income 30 0.25 0.25 0.249534

2015 2015

Bank of China

Industrial and

January 22, May 26,

Commercial No 1001RSYH 30 Float income 30 0.34 0.34 0.339041

2015 2015

Bank of China

Industrial and

January 22, May 26,

Commercial No 1001RSYH 30 Float income 30 0.34 0.34 0.339041

2015 2015

Bank of China

Industrial and

January 22, May 26,

Commercial No 1001RSYH 30 Float income 30 0.34 0.34 0.339041

2015 2015

Bank of China

Industrial and

January 22, Novembe

Commercial No 1001RSYH 30 Float income 30 0.78 0.78 0.778438

2015 r 05, 2015

Bank of China

66

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

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Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

Industrial and

January 22, December

Commercial No 1001RSYH 30 Float income 30 0.92 0.92 0.924904

2015 28, 2015

Bank of China

Industrial and

May 08, December

Commercial No 1001RSYH 30 Float income 30 0.64 0.64 0.637397

2015 28, 2015

Bank of China

Industrial and

May 08, December

Commercial No 1001RSYH 30 Float income 30 0.64 0.64 0.637397

2015 28, 2015

Bank of China

Industrial and

May 08, December

Commercial No 1001RSYH 30 Float income 30 0.64 0.64 0.637397

2015 28, 2015

Bank of China

Industrial and

May 8, December

Commercial No 1001RSYH 30 Float income 30 0.64 0.64 0.637397

2015 28, 2015

Bank of China

China

February March 19,

Construction No ZHQYBB 250 Float income 250 1.01 1.01 1.008219

15, 2015 2015

Bank

China

March 23, April 29,

Construction No ZHQYBB 200 Float income 200 0.89 0.89 0.892055

2015 2015

Bank

China

June 12, August

Construction No ZHQYTF 100 Float income 100 0.7 0.7 0.702740

2015 12, 2015

Bank

Industrial and

August 14, December

Commercial No 1001RSYH 30 Float income 30 0.36 0.36 0.360740

2015 28, 2015

Bank of China

Industrial and

August 14, December

Commercial No 1001RSYH 30 Float income 30 0.36 0.36 0.360740

2015 28, 2015

Bank of China

Industrial and

August 14, December

Commercial No 1001RSYH 30 Float income 30 0.36 0.36 0.360740

2015 28, 2015

Bank of China

March 20, March 16,

Bank of China No AMZYPW 1,500 Float income 1,500 83.08 83.08 83.08

2014 2015

July 01, June 29,

Bank of China No AMZYPW 1,100 Float income 1,100 57.43 57.43 57.43

2014 2015

Bank of China No AMZYZH1 1,000 July 14, July 13, Float income 1,000 52.85 52.85 52.85

67

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Actual

Principal Actual

loss and

Amount amount return of

Connected Remuneration Projecte gain

Name of Product of returned gains and

Transaction Start Date End Date confirmation d amount

trustee Type entrusted in the losses in

or Not method income in the

financing report the report

report

period period

period

4156-G 2014 2015

(364 days)

AMZYZH3

September Septembe

Bank of China No 5714206 2,000 Float income 2,000 107.59 107.59 107.59

29, 2014 r 21, 2015

(357 days)

Industrial and

December February

Commercial No WL60ZL 500 Float income 500 3.68 3.68 3.68

15, 2014 12, 2015

Bank of China

AMZYJZT January 05, January

Bank of China No 1,300 Float income 0 0 0 0

(364 days) 2015 04, 2016

February May 08,

Bank of China No AMZYJZT 1,000 Float income 1,000 12.88 12.88 12.88

03, 2015 2015

AMZYJZT March 19, March 17,

Bank of China No 1,500 Float income 0 0 0 0

(364 days) 2015 2016

CITIC-CP

China Citic cash July 17, December

No 1,000 Float income 0 0 0 0

Bank managemen 2015 31, 2016

t No.3

AMZYJF15 July 31, July 22,

Bank of China No 1,000 Float income 0 0 0 0

047HQ 2015 2016

Citic

Leying

China Citic July 31, August 3,

No series RMB 1,000 Float income 1,000 0.3 0.3 0.30

Bank 2015 2015

financing

product

CITIC-CP

China Citic cash August 04, December

No 1,000 Float income 0 0 0 0

Bank managemen 2015 31, 2016

t No.3

September Septembe

Bank of China No AMZYPW 2,100 Float income 0 0 0 0

24, 2015 r 27, 2016

Li Cai

Industrial and

Gong Ying November February

Commercial No 100 Float income 0 0 0 0

Suixin 26, 2015 26, 2016

Bank of China

Tianli

231,386.7 1,510.0

Total 257,369.9 -- -- -- 1,588.08 --

7 9

(2) Entrusted loaning

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□ Applicable √ Not applicable

No entrusted loaning is involved within the report period.

4. Other Important Contracts

√ Applicable □ Not applicable

Transaction

Price

Connected

Pricing (Unit: Associated

Lender Borrower Transaction Execution by the End of the Report Period

Principle RMB then Relationship

or Not

thousand

Yuan)

On October 14, 2013, the 3rd special meeting of the 6th

Board of Directors discussed and approved the Proposal

about Offering Shenzhen SEG E-Commerce Co., Ltd. with

Financial Assistance. The company offers the 51% share

controlled SEG E-commerce with the financial assistance

of 60,000,000 Yuan for one year (from September 15, 2013

to September 14, 2014) and pays based on the

requirements of the e-commerce business. SEG

E-Commerce pays expenses for using the funds to the

Company based on its actual loan amount and period. The

Shenzhen

Shenzhen expenses for using the funds is charged with the

SEG Fair Not

SEG Co., 6,000 No benchmarking interest rate of the one-year bank loan in the

E-Commerce value applicable

Ltd. same period and should be paid on due date.

Co., Ltd.

On December 5, 2014, the 5th special meeting of the 6th

Board of Directors discussed and approved the Proposal

about Offering Shenzhen SEG E-Commerce Co., Ltd. with

Financial Assistance. This load is the renewal load with

the term being one year. SEG E-commerce pays expenses

for using the funds to the shareholders based on its actual

load amount and period. The fund appropriation charge

rate is 6.5%. As of the end of the report period, SEG

E-commerce has not yet paid back the above-mentioned

expenses.

The 15th special meeting of the 6th Board of Directors

held on July 29, 2014 reviewed and approved the Proposal

Shenzhen on the Current Fund Loan of RMB 10,000,000 by

Shenzhen SEG Interest Shenzhen SEG Industry Investment Co., Ltd from Shenzhen

Not

SEG Co., Industrial not 4,200 No SEG Co., Ltd. The Company provides RMB 10,000,000 as

applicable

Ltd. Investment accrued cash flow for the wholly-owned subsidiary SEG Industry.

Co., Ltd. Till now, the Company has loaned a total of RMB

42,000,000 for SEG Industry. No interest is accrued for the

above funds.

Suzhou SEG The 23rd special meeting of the 6th Board of Directors

Shenzhen

Digital Plaza Fair Not held on May 27, 2015 reviewed and approved the Proposal

SEG Co., 1,000 No

Management price applicable on the Financial Aid of RMB 10,000,000 for Suzhou SEG

Ltd.

Co., Ltd. Digital Square Management Co., Ltd. The Company

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Transaction

Price

Connected

Pricing (Unit: Associated

Lender Borrower Transaction Execution by the End of the Report Period

Principle RMB then Relationship

or Not

thousand

Yuan)

provides RMB 10,000,000 for the wholly-owned

subsidiary Suzhou SEG Digital for helping the business

development of Suzhou SEG Digital. No interest is

accrued for the above funds. The loan term is one year

(from June 8, 2015 to June 7, 2016). As of the end of the

report period, the above-mentioned contract is being

performed.

XVIII. Notes on Other Important Matters

√ Applicable □ Not applicable

Inquiry Index for the Websites Disclosing the

Overview of Important Events Disclosure Date

Temporary Reports

The Announcement for Nantong SEG Times

Square Obtained the Pre-sale Permit was

1. Nantong SEG Times Square obtained the pre-sale permit. Mar 20, 2015

disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

2. Matters about Waranty Assets Management Co., Ltd. The Announcement for Equity Transfer of

transferring the 21% equity of the controlling shareholder of Mar 10, 2015 Shenzhen SEG Group Co., Ltd was disclosed on

the Company Shenzhen SEG Group Co., Ltd. the Cninfo Website (http://www.cninfo.com.cn/).

The Public Notice on Resolutions of the 21st

3. Providing a Loan of RMB 300 Million for the Company's

Meeting of the Sixth Board of Directors of

Wholly-Owned Subsidiary Nantong SEG Times Square Co., Feb 13, 2015

Shenzhen SEG Co., Ltd was disclosed on the

Ltd. to Construct the Nantong SEG Times Square Project

Cninfo Website (http://www.cninfo.com.cn/).

The Announcement for Registered Capital

4. The controlled subsidiary Shenzhen SEG E-Commerce Change of Shenzhen SEG E-Commerce Co., Ltd

Feb 13, 2015

Co., Ltd changing its registered capital was disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

The Announcement for Joint Stock Company

5. The joint stock company Shenzhen SEG GPS Technology Shenzhen SEG GPS Technology Co., Ltd. Was

Co., Ltd. was accepted for the listing in China's SME share April 18, 2015 Accepted for the Listing in China's SME Share

transfer system Transfer System was disclosed on the Cninfo

Website (http://www.cninfo.com.cn/).

The Announcement for Strategic Cooperation

6. Strategic cooperation framework agreement signed with framework Agreement Signed with Dongguan

May 29, 2015

Dongguan EONTEC EONTEC was disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

7. The joint stock company Shenzhen SEG GPS Technology The Announcement for Joint Stock Company

July 8, 2015

Co., Ltd. was accepted for the listing in China's SME share Shenzhen SEG GPS Technology Co., Ltd. Was

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Inquiry Index for the Websites Disclosing the

Overview of Important Events Disclosure Date

Temporary Reports

transfer system Approved for the Listing in China's SME Share

Transfer System was disclosed on the Cninfo

Website.

The Announcement for Joint Stock Company

Shenzhen SEG GPS Technology Co., Ltd. Was

July 21, 2015

Listed in China's SME Share Transfer System

was disclosed on the Cninfo Website.

8. Temporary share suspension

As the Company's shareholder *ST Huakong SEG's

non-public share issue significantly influenced the financial

The Announcement of Share Suspension for

standing of the Company, to prevent fluctuation of the share

July 8, 2015 Important Matters was disclosed on the Cninfo

price and protect the interests of investors, the Company

Website.

decided to temporarily suspend trading of shares (SHEN

SEG 000058 and SHEN SEG B 200058) from July 8, 2015

according to rules of Shenzhen Stock Exchange.

9. Resumption share trading

During share suspension, the Company consulted the

accountants of its annual examination institution Dahua

Certified Public Accountants Co., Ltd. as well as the

authorities, and finally confirmed the influences of the

above-mentioned matter on the Company's financial The Announcement of Share Resumption for

standing. Its share price was higher than the issuance July 14, 2015 Important Matters was disclosed on the Cninfo

premium of the book value. The long-term equity Website (http://www.cninfo.com.cn/)

investment and capital reserve should be adjusted. The

influences were represented in the 2015 semi-annual report.

The Company's shares (Shen SEG, Shen SEG B, stock code:

000058,200058) have been resumed since the opening of

morning session on July 14, 2015.

The Announcement of Supervisors to Purchase

July 09, 2015 Company Shares was disclosed on the Cninfo

Website (http://www.cninfo.com.cn/).

The Announcement of Controlling Shareholders'

Commitment to Not Unload Shares, Directors,

Supervisors and Senior Executives' Commitment

July 11, 2015 to Purchase Shares of the Company, and

10. Controlling shareholders' commitment to not unload Initiative for Employees to Purchase Shares of

shares and Directors, Supervisors and Senior Executives' the Company was disclosed on the Cninfo

commitment to purchase shares of the Company Website (http://www.cninfo.com.cn/).

The Announcement of Shares, Directors,

Supervisors And Senior Executives'' Commitment

July 17, 2015 to Increase Holding of the Company Shares was

disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

July 25, 2015 The Announcement for Strategic Cooperation

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Inquiry Index for the Websites Disclosing the

Overview of Important Events Disclosure Date

Temporary Reports

Framework Agreement Signed with Dongguan

EONTEC was disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

The Announcement for Strategic Cooperation

Framework Agreement Signed with Dongguan

September 10, 2015

EONTEC was disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

11. Transfer of 51% shares of Shenzhen SEG E-Commerce

Co., Ltd. held by the Company

As of the end of the report period, the above-mentioned The Announcement for Transferring 51% shares

matter has not been finished. As there are outstanding debts of Shenzhen SEG E-Commerce Co., Ltd. Held by

July 22, 2015

between SEG E-commerce and the Company, equity the Company was disclosed on the Cninfo

transfer can be continued only after the debts are settled. Website (http://www.cninfo.com.cn/).

The Company will timely disclose the related information

according to the specific progress.

The Announcement for Establishing the SEG

International Maker Product Exhibition and

August 10, 2015

Promotion Center was disclosed on the Cninfo

12. Establishment of the SEG International Maker Product Website (http://www.cninfo.com.cn/).

Exhibition and Promotion Center The Announcement for Chuangpinhui Branch of

SEG's Acquisition of Business License was

August 19, 2015

disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

13. Major assets restructuring

Due to major assets restructuring, the Company's shares

(Shen SEG, Shen SEG B, stock code: 000058,200058) have

been suspended since the opening of morning session on

November 4, 2015. During suspension, The Announcement about Share Suspension for

the Company and relevant parties have been promoting November 4, 2015 Important Matters was disclosed on the Cninfo

major asset restructuring and regularly disclose the progress Website (http://www.cninfo.com.cn/).

announcement according to relevant provisions. As of the

date of disclosure of the report, the Company has disclosed

the major asset restructuring plan. Its shares will be resumed

at the opening of morning session on February 25, 2016.

The Announcement about Establishment of

14. Investment in Shenzhen SEG Investment Management Shenzhen SEG Investment Management Co. Ltd.

December 30, 2015

Co., Ltd. was disclosed on the Cninfo Website

(http://www.cninfo.com.cn/).

XIX. Important Matters of Subsidiaries

□ Applicable √ Not applicable

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XX. Social Accountability

□ Applicable √ Not applicable

XXI. Company Bonds

Is there any bond publicly issued, listed on stock exchange, and unmatured as of the annual report disclosure

date or matured but not fully cahsed?

No

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Chapter 6 Changes in Share Capital and Information on

Shareholders

I. Information on Changes in Share Capital

1. Changes of shares

Unit: Share

Before the change Increase/decrease by (+) After the change

New Capitalization

Bonus

Quantity Percentage share of public Others Subtotal Quantity Percentage

share

offering reserve

I. Restricted shares 26,689 0.00% 0 0 0 45,000 45,000 71,689 0.01%

1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%

(2) State-owned legal

0 0.00% 0 0 0 0 0 0 0.00%

person’s shares

3. Other domestic shares 26,689 0.00% 0 0 0 45,000 45,000 71,689 0.00%

Including: Shares held by

0 0.00% 0 0 0 0 0 0 0.00%

overseas legal persons

Shares held by

26,689 0.00% 0 0 0 45,000 45,000 71,689 0.00%

domestic natural persons

4. Shares held by foreign

0 0.00% 0 0 0 0 0 0 0.00%

units

Including: Shares held by

0 0.00% 0 0 0 0 0 0 0.00%

overseas legal persons

Shares held by

0 0.00% 0 0 0 0 0 0 0.00%

foreign natural persons

II. Unrestricted shares 784,772,321 100.00% 0 0 0 -45,000 -45,000 784,727,321 99.99%

1. RMB ordinary shares 538,311,003 68.59% 0 0 0 -45,000 -45,000 538,266,003 68.59%

2. Domestically listed

246,461,318 31.40% 0 0 0 0 0 246,461,318 31.40%

foreign shares

3. Overseas listed foreign

0 0.00% 0 0 0 0 0 0 0.00%

shares

4. Others 0 0.00% 0 0 0 0 0 0 0.00%

III. Total shares 784,799,010 100.00% 0 0 0 0 0 784,799,010 100.00%

Reasons for change

□ Applicable √ Not applicable

Approval of changes in share capital

□ Applicable √ Not applicable

Share transfer

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□ Applicable √ Not applicable

Impact of changes in share capital on such financial indicators as basic EPS, diluted EPS, and net asset per share

attributable to common shareholders of the Company in the last year and previous report period

□ Applicable √ Not applicable

Other contents as deemed necessary by the Company or required by the securities regulatory authority to be

disclosed

□ Applicable √ Not applicable

2. Information on changes in restricted shares

√ Applicable □ Not applicable

Unit: Share

Restricted shares Restricted shares Restricted shares Date for

Name of Restricted shares Reason for

at period released in the increased in the releasing

shareholder at period end restricted trade

beginning current period current period restricted trade

Senior

Xu Ning 0 0 15,000 15,000 executive-targeted 3

share

Senior

Liu Zhijun 0 0 7,500 7,500 executive-targeted 3

share

Senior

Zheng Dan 26,689 0 5,250 31,939 executive-targeted 3

share

Senior

Zhu Longqing 0 0 9,000 9,000 executive-targeted 3

share

Senior

Ying Huadong 0 0 7,500 7,500 executive-targeted 3

share

Senior

Tian Jiliang 0 0 750 750 executive-targeted 3

share

Total 26,689 0 45,000 71,689 -- --

II. Issuance and listing of shares

1. Securities Issue (preferential shares excluded) in the report period

□ Applicable √ Not applicable

2. Explanations to changes of the sum of shares and the shareholder structure as well as the changes of the

asset and debt structure of the company.

□ Applicable √ Not applicable

3. Information of existing staff shares

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□ Applicable √ Not applicable

III. Information on Shareholders and Actual Controllers

1. Information on the number of shareholders and their shareholding status

Unit: Share

Total number

of preferred

shareholders

Total number of restored with

Total number of

Total number of ordinary the voting

preferred

ordinary shareholders at the rights at the

shareholders

shareholders at the 82,269 end of the month 87,327 0 end of the 0

restored with the

end of the report immediately before month

voting rights (if

period the disclosure of the immediately

any) (see note 8)

annual report before the

disclosure of

the annual

report (if any)

Information on the shareholders holding more than 5% shares or top 10 shareholders

Share Quantity Information on pledged or

Shares held

increase/ of Quantity of frozen shares

Nature of Shareholding by the end

Name of shareholder decrease in restricted unrestricted

shareholder percentage of report

the report shares shares held Share status Quantity

period

period held

Shenzhen SEG Group State-owned

30.24% 237,359,666 Unchanged 0 237,359,666

Co., Ltd. legal person

Domestic

Liu Guocheng 0.85% 6,691,302 1,195,707 0 6,691,302

natural person

Domestic

Liu Guohong 0.43% 3,354,558 +899,617 0 3,354,558

natural person

Domestic

Zeng Ying 0.42% 3,300,000 -4,740,826 0 3,300,000

natural person

Overseas

Gong Qianhua 0.37% 2,940,000 -2,371,520 0 2,940,000

natural person

China Securities Domestic

Finance Corporation non-state-owned 0.29% 2,271,900 +2,271,900 0 2,271,900

Limited legal person

Overseas legal

NORGES BANK 0.24% 1,890,226 Unchanged 0 1,890,226

person

ARROWSTREET

MULTI STRATEGY

Overseas legal

UMBRELLA 0.23% 1,811,274 +1,811,274 0 1,811,274

person

PLC-ARROWSTREET

EMERGING

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MARKET FUND III

GUOTAI JUNAN

SECURITIES Overseas legal +118,172

0.23% 1,780,969 0 1,780,969

(HONGKONG) person shares

LIMITED

Domestic

Zheng Anzheng 0.22% 1,750,000 +1,750,000 0 1,750,000

natural person

Strategic investors or general legal

entities who became one of the top ten

N/A

shareholders by participating in rights

issue (If any)

Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders, nor

Explanations on the association it is a concerted action unit as described by the Management Methods for Disclosure of

relationship or concerted action among Information on Changes of Shareholding Status of Shareholders of Listed Companies It is

the above-mentioned shareholders unknown whether other shareholders have an associated relationship or are concerted

action units or not.

Unrestricted Tradable Shares Held by Top Ten Shareholders

Type of share

Name of shareholder Unrestricted shares held at the period end Type of

Quantity

share

RMB

Shenzhen SEG Group Co., Ltd. 237,359,666 ordinary 237,359,666

shares

Domestically

Liu Guocheng 6,691,302 listed foreign 6,691,302

shares

Domestically

Liu Guohong 3,354,558 listed foreign 3,354,558

shares

Domestically

Zeng Ying 3,300,000 listed foreign 3,300,000

shares

Domestically

Gong Qianhua 2,940,000 listed foreign 2,940,000

shares

RMB

China Securities Finance Corporation

2,271,900 ordinary 2,271,900

Limited

shares

Domestically

NORGES BANK 1,890,226 listed foreign 1,890,226

shares

ARROWSTREET MULTI STRATEGY Domestically

UMBRELLA PLC-ARROWSTREET 1,811,274 listed foreign 1,811,274

EMERGING MARKET FUND III shares

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Domestically

GUOTAI JUNAN SECURITIES

1,780,969 listed foreign 1,780,969

(HONGKONG) LIMITED

shares

RMB

Zheng Anzheng 1,750,000 ordinary 1,750,000

shares

Explanations on the association

Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders, nor

relationship or concerted action among

it is a concerted action unit as described by the Management Methods for Disclosure of

the top ten shareholders of unrestricted

Information on Changes of Shareholding Status of Shareholders of Listed Companies It is

shares, and between the top ten

unknown whether other shareholders have an associated relationship or are concerted

shareholders of unrestricted shares and

action units or not.

the top ten shareholders

Information of top ten ordinary Among the above-mentioned top 10 shareholders, Zheng Anzheng holds 0 shares of the

shareholders participating in financing Company by the ordinary account and 1,750,000 shares by the credit account of the

business (if any) (see note 4) financing bill investor, totaling 1,750,000 shares of the Company.

Whether the top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted

shares conducted agreed repurchase transactions in the report period?

□ Yes √ No

The top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares did

not conduct agreed repurchase transactions in the report period.

2. Information about controlling shareholders of the Company

Nature of controlling shareholder: local state-owned control

Type of controlling shareholder: legal person

Name of controlling Legal representative/ Organization

Date of incorporation Main business

shareholder Company manager code

Business scope: Production and research of

electronic products, household appliances,

toys, electronic and telecom equipments,

instruments and meters, motor equipments,

computers and accessories, OA equipments

and articles and electronic chemical

projects (the license of the production site

should be specially applied for);

acceptance of various electronic system

Shenzhen SEG Group

Sun Shengdian August 23, 1984 19218093-0 projects; operation of specialized

Co., Ltd.

electronic and communications markets;

talent training; real estate development (it

is made on the land plots for which the

land use right has been legally obtained);

real estate agency; shipping agency;

logistics & warehousing; high-rise

sightseeing at SEG Plaza and supporting

catering, shopping and exhibition services;

technical development and maintenance of

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Name of controlling Legal representative/ Organization

Date of incorporation Main business

shareholder Company manager code

network and information projects; import

and export. Import and export business

Equity of other overseas listed companies in which the controlling shareholders have a controlling share and hold shares

Proportion of

Abbreviations of held stock and Number of shares held

No. Company name shareholding

securities code (Unit: Share)

(%)

Shenzhen SEG Group

1 Huakong SEG 000068 68,392,697 6.79

Co., Ltd.

SEG (HONGKONG)

2 Shen Huafa B200020 16,569,560 5.85

Company Limited

GOOD HOPE CORNER

3 Shen Huafa 200020 13,900,000 4.91

INVESTMENTS LTD

SEG (HONGKONG)

4 NewOcean Energy 0342 100,000 0.01

Company Limited

Changes of the controlling shareholders in the report period

□ Applicable √ Not applicable

In the report period, the controlling shareholders of the Company are not changed.

3. Actual controller of the Company

Nature of actual controller: local state-owned assets management institution

Type of actual controller: legal person

Legal

Date of

Name of actual controller representative/Co Organization code Main business

incorporation

mpany manager

Shenzhen State-owned Assets

Supervision and Administration Gao Zimin Not applicable Not applicable

Commission

Changes of the actual controllers in the report period

□ Applicable √ Not applicable

In the report period, the actual controllers of the Company are not changed.

Block diagram of the property rights and controlling relationship between the Company and its actual controller

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The actual controllers control the Company by trust or other asset management methods.

□ Applicable √ Not applicable

4. Other legal-person shareholders who hold more than 10% shares

□ Applicable √ Not applicable

5. Limited unloading of shares by controlling shareholder, actual controller, restructured entity and other

commitment makers

□ Applicable √ Not applicable

Chapter 7 Preferred Shares

□ Applicable √ Not applicable

No preferred share is involved in the report period.

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Chapter 8 Information on Directors, Supervisors, Senior Executives

and Employees

I. Changes in Shares Held by Directors, Supervisors and Senior Executives

Increase Decrease

of of

Shares Shares

Beginning Ending Shares Shares Increase

Held at Held at

Employment date of date of Held in Held in or

Name Title Gender Age Period Period

Status office office the the decrease

Beginning End

term term Report Report (Share)

(Share) (Share)

Period Period

(Share) (Share)

June 17, June 16,

Wang Li Chairman Incumbent Male 54 0 0 0 0 0

2013 2016

Zhang June 17, June 16,

Director Incumbent Male 53 0 0 0 0 0

Guangliu 2013 2016

June 17, June 16,

Ye Jun Director Incumbent Male 54 0 0 0 0 0

2013 2016

Liu Director/ General June 17, June 16,

Incumbent Male 47 0 10,000 0 0 10,000

Zhijun Manager 2013 2016

Director/Vice

General

Zheng June 17, June 16,

Manager/Secretary Incumbent Female 50 35,586 7,000 0 0 42,586

Dan 2013 2016

of the Board of

Directors

Zhu Director/Vice June 17, June 16,

Incumbent Male 54 0 12,000 0 0 12,000

Longqing General Manager 2013 2016

Song Independent June 17, June 16,

Incumbent Female 48 0 0 0 0 0

Pingping Director 2013 2016

Independent June 17, June 16,

Li Luoli Incumbent Male 68 0 0 0 0 0

Director 2013 2016

Zhou Independent June 17, June 16,

Incumbent Male 46 0 0 0 0 0

Hanjun Director 2013 2016

August June 16,

Xu Ning Supervisor Incumbent Male 51 0 20,000 0 0 20,000

27, 2014 2016

Tang June 17, June 16,

Supervisor Incumbent Male 55 0 0 0 0 0

Chongyin 2013 2016

Peng June 17, June 16,

Supervisor Incumbent Male 42 0 0 0 0 0

Aiyun 2013 2016

Tian June 17, June 16,

Supervisor Incumbent Male 49 0 1,000 0 0 1,000

Jiliang 2013 2016

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Increase Decrease

of of

Shares Shares

Beginning Ending Shares Shares Increase

Held at Held at

Employment date of date of Held in Held in or

Name Title Gender Age Period Period

Status office office the the decrease

Beginning End

term term Report Report (Share)

(Share) (Share)

Period Period

(Share) (Share)

Ying June 17, June 16,

Supervisor Incumbent Male 46 0 10,000 0 0 10,000

Huadong 2013 2016

Bo Vice General July 24, June 16,

Incumbent Male 58 0 0 0 0 0

Hongxi Manager 2013 2016

Total -- -- -- -- -- -- 35,586 60,000 0 0 95,586

II. Changes of Directors, Supervisors, and Senior Executives

No changes of directors, supervisors, and senior executives are involved in the report period. For details:

III. Information on Position

Professional background, work experience and main responsibility of incumbent directors, supervisors, and

senior executives

(I) Members of the Board of Directors

1. Wang Li, male, born in 1961, is a Master. He now serves as the Chairman of the Company, Vice Secretary and

General Manager of SEG Group, Chairman of SEG CREDIT, and Director of Shenzhen Saiyi Fawei Electronics

Co., Ltd. He used to serve as the Vice General Manager and standing Vice General Manager (in charge of

business) of SEG Group, President of Shenzhen SEG Hi-tech Industrial Co., Ltd., and Chairman of SEG

Property.

2. Zhang Guangliu, male and born in 1962, is a Master He now serves as the Director of the Company, Vice

General Manager of SEG Group, Chairman of SEG Kang Le, and Chairman of the Board of Supervisors of

Shenzhen Shenai Semi-conductive Co., Ltd. He used to serve as the Chairman of the Board of Supervisors of

Huakong SEG, and Chairman of SEG (HONGKONG) Company Limited

3. Liu Zhijun, male and born in 1968, is a Master of Engineering. He now serves as the Secretary of Party

Committee, Director and General Manager of the Company. Concurrently, he serves as the Chairman of Nantong

SEG, the Chairman of Longgang SEG, the Chairman of Xi'an SEG, the Chairman of Xi'an Hairong SEG, the

Chairman and General Manager of SEC Investment, Director of SEG E-commerce, director of SEG Credit, and

supervisor of Kashgar Shenzhen City Co., Ltd. He used to serve as the Vice Secretary of Party Committee of the

Company, the Chairman of SEG E-commerce, the Chairman of Shanghai SEG, the Manager of the Business

Department of SEG Group, and the Deputy General Manager of SEG Baohua.

4. Zheng Dan, female and born in 1965, a Senior Economist and a Master of Science. She now serves as the Vice

Secretary of Party Committee of the Company, the Secretary of the Discipline Inspection Commission, the

Director, Vice General Manager and Secretary of the Board of Directors; she is also a Standing Committee

Member of the Second Committee of Directors and Secretaries of China Association for Public Companies, the

Chairman of Suzhou SEG, the Chairman of Wujiang SEG, the Chairman of SEG Baohua, the Chairman of

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Suzhou SEG Digital, the Functional Chairman of Suzhou SEG, the Director of SEG Credit, the Director of

Nantong SEG, the Director of Nantong SEG Commercial Operation Management Co., Ltd., the Director of SEG

Investment, the Chairman of the Board of Supervisors of Changsha SEG, the Chairman of the Board of

Supervisors of SEG e-Commerce, and the Chairman of the Board of Supervisors of Huakong SEG. She used to

serve as the Director of SEG e-Commerce, the Director of Huakong SEG, the Chairman of the Board of

Supervisors of SEG Baohua, the Chairman of the Board of Supervisors of SEG Logistics, and the Chairman of

the Board of Supervisors of SEG GPS.

5. Zhu Longqing, male and born in 1961 is a MBA. He now serves as Director and Vice General Manager of the

Company and concurrently as President of SEG Storage and Transportation and Changsha SEG, Director of SEG

Baohua, Supervisor of Shanghai SEG, Director and General Manager of SEG E-commerce. Concurrently, he

serves as the Chairman of SEG Industry, the Chairman of Changsha SEG, the Chairman of Nanjing SEG, the

Chairman of Wuxi SEG, the Chairman of Shanghai SEG, the Director of Nantong SEG, the Director of SEG

e-commerce, the Director of Nantong SEG Commercial Operation Management Co., Ltd., the Director of SEG

GPS, and the Chairman of the Board of Supervisors of SEG Baohua. He used to serve as the Chairman of SEG

Logistics and the Chairman of the Board of Supervisors of SEG Logistics, the Director of SEG Baohua, the

Director and General Manager of SEG Industry.

6. Ye Jun, male and born in 1960, is a Bachelor and a Senior Accountant. He now serves as the Director of the

Company, the Director and President of SEC Credit. He used to serve as the Chief Financial Officer of SEG

Group, the Chairman of Shenzhen SEG Real Estate Investment Co., Ltd., the Director of Shenzhen SEG Square

Investment & Development Co., Ltd., the Director of Huakong SEG, the Director of Shenzhen Shenai

Semi-conductive Co., Ltd., and the Director of Shijiazhuang SEG Square Investment Co., Ltd.

7. Zhou Hanjun, male and born in 1969, is a CPA and a CTA. He now serves as an Independent Director of the

Company, partner of Shenzhen Asia-Pacific (Group) Certified Public Accountants Co., Ltd., and Independent

Director of Shenzhen Yushun Electronics Co., Ltd.

8. Li Luoli, male and born in 1947, is a Master of Economics. He now serves as a Professor and a PhD Tutor of

Nankai University. He now serves as the Vice President of China Development Institute (Shenzhen, China), Vice

Chairman of China Society of Economic Reform, and President of Shenzhen Mahong Economics Research and

Development Foundation. He used to serve as the Vice Director of Nankai Institute of Economics, the Vice

Director of Price Research Institute of the National Price Bureau, the Vice Director of the General Office of the

People's Government of Shenzhen City, the Director of Shenzhen Information Center, the Vice Secretary General

and Director of Recipient Office of the Municipal Commission of Shenzhen City, the Vice President and

Secretary General of China Development Institute, and Director of China Opening Journal.

9. Song Pingping, female and born in 1967, is a Master of Law. She now serves as a partner of Shenzhen

Dongfang Fuhai Investment Management Co., Ltd., the Secretary General of the Risk Control Commission of

Shenzhen Yuanzhi Fuhai Investment Management Co., Ltd., the Arbitrator of Huanan International Economy

and Trade Arbitration Commission, and the Independent Director of Shenzhen Yantianang Co., Ltd. She was a

partner of Beijing Jinshe Law Firm.

(II) Members of the Board of Supervisors

1. Xu Ning, male, born in 1965, is a Bachelor. He now serves as the Chairman of the Board of Supervisors of the

Company, Vice Secretary of the Party Committee, and the Secretary of the Discipline Inspection Commission,

and Chairman of SEG Group Labor Union. She served as the President of SEG Talent Training Center, and

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Complaint Processing Specialist at Division Level for Shenzhen State-owned Assets Supervisory and

Administrative Bureau.

2. Tang Chongyin, male and born in 1960, is a Doctor. He now serves as the Supervisor of the Company, the

Director of Shenzhen Shenai Semi-conductive Co., Ltd., the Director of Tianjin SEG Haijing Co., Ltd., the

Director of Shenzhen SEG Yuren Technology Co., Ltd., and the Chairman of the Board of Supervisors of SEC

Credit. He was the Director of SEC e-commerce, and the Vice Chairman of Shenzhen Zhongheng Huafa Co.,

Ltd.

3. Peng Aiyun, male, born in 1973, is a Bachelor. He now serves as the Director of the Company, the Vice

Director of Business Development Division of SEG Group, and concurrently serves as the Director of Shenzhen

SEG Real Estate Investment Co., Ltd., the Chairman of Shenzhen SEG Huaqiang North Makership Co., Ltd. and

the Supervisor of Shijiazhuang SEG Square Investment Co., Ltd. He was the Vice Manager of the Electronics

Market and Property Management Department of SEG Group.

4. Tian Jiliang, male and born in 1966, is a Bachelor. He now serves as Supervisor (Worker Supervisor),

Operation Director, and Director of the Strategic Department of the Company; concurrently, he serves as the

Director of SEG Baohua, the Chairman of the Board of Supervisors of Xi'an SEG, the Chairman of the Board of

Director of Longgang SEG, the Supervisor of Xi'an Hairong SEG, and the Supervisor of SEG Investment. He

served as the Director of the Department of Human Resources of the Company, the Director of Suzhou SEG, and

the Supervisor of Wuxi SEG.

5. Ying Huadong, male and born in 1969, is a Bachelor and a Senior Accountant. He now serves as Supervisor

(Worker Supervisor) of the Company and Manager of the Finance and Assets Management Department.

Concurrently, he serves as Director of Changsha SEG, Supervisor of Nanjing SEG, Supervisor of Nantong SEG,

and Supervisor of Nantong SEG Commercial Operation Management Co., Ltd. He was the Chief Financial

Officer of the Company, and the Supervisor of Changsha SEG.

(III) Senior executives

1. Liu Zhijun is General Manager and relevant information may be referred to in the above introduction on

Directors.

2. Zheng Dan is Vice General Manager and relevant information may be referred to in the above introduction to

directors.

3. Zhong Longqing is Vice General Manager and relevant information may be referred to in the above

introduction to directors.

4. Bo hongxi, male and born in 1958, is a Bachelor and a Senior Accountant. He now serves as the Vice General

Manager of the Company, the Director and General Manager of SEG Baohua, and concurrently as the Chairman

of Supervisor of Nantong SEG Commercial Operation Management Co., Ltd.

Information about directors, supervisors and senior executives serving in shareholders’ units

√ Applicable □ Not applicable

Receiving

Position in shareholders’ Beginning date of Ending date of remuneration from

Name Name of shareholders’ units

units office term office term shareholders’ units

or not

Vice Secretary of the

Wang Li SEG Group January 04, 2011 Up to now Yes

Party Committee and

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Receiving

Position in shareholders’ Beginning date of Ending date of remuneration from

Name Name of shareholders’ units

units office term office term shareholders’ units

or not

General Manager

Zhang

SEG Group Vice General Manager March 10, 2003 Up to now Yes

Guangliu

Liu Zhijun SEG Group -- -- -- No

Zheng Dan SEG Group -- -- -- No

Zhu Longqing SEG Group -- -- -- No

Ye Jun SEG Group -- -- -- No

Vice Secretary of Party

Committee, Secretary of

Xu Ning SEG Group Discipline Committee, -- Up to now Yes

and Chairman of the

Labor Union

Manager of the Asset

Tang Chongyin SEG Group April 17, 2003 Up to now Yes

Department

Vice Director of

Peng Aiyun SEG Group Business Development August 29, 2011 Up to now Yes

Division

Tian Jiliang SEG Group -- -- No

Ying Huadong SEG Group -- -- -- No

Bo Hongxi SEG Group -- -- -- No

Information about directors, supervisors and senior executives serving in other units

√ Applicable □ Not applicable

Receiving

Position in Beginning date of Ending date of remuneration

Name Name of other units

other units office term office term from other units

or not

SEG Credit Chairman November 01, 2011 Up to now No

Wang Li Shenzhen Saiyi Fawei Electronics Co.,

Director September 01, 2003 Up to now No

Ltd.

SEG Kang Le Enterprise Development

Chairman August 1, 2011 Up to now No

Co., Ltd.

Zhang Guangliu Chairman of

Shenzhen Shenai Semi-conductive

Supervisory July 1, 2010 Up to now No

Co., Ltd.

Board

Nantong SEG Chairman January 1, 2013 Up to now No

Liu Zhijun Longgang SEG Chairman June 1, 2010 Up to now No

Xi'an SEG Chairman May 1, 2013 Up to now No

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Receiving

Position in Beginning date of Ending date of remuneration

Name Name of other units

other units office term office term from other units

or not

Xi'an Hairong SEG Chairman May 1, 2013 Up to now No

Chairman

SEG Investment and General November 1, 2015 Up to now No

Manager

SEG E-Commerce Director January 1, 2014 Up to now No

SEG Credit Director September 1, 2011 Up to now No

Kashgar Shenzhen City Co., Ltd. Supervisor October 1, 2012 Up to now No

Second Committee of Directors and Standing

Secretaries of China Association for committee November 1, 2015 Up to now No

Public Companies member

Suzhou SEG Chairman September 1, 2011 Up to now No

Wujiang SEG Chairman June 1, 2012 Up to now No

SEG Baohua Chairman April 1, 2013 Up to now No

Suzhou SEG Digital Chairman August 1, 2014 Up to now No

Suzhou SEG Chairman January 1, 2016 Up to now No

SEG Credit Director September 1, 2011 Up to now No

Nantong SEG Director January 1, 2013 Up to now No

Zheng Dan

Nantong SEG Operation Director May 1, 2014 Up to now No

SEG Investment Director November 1, 2015 Up to now No

Chairman of

Changsha SEG Supervisory March 1, 2009 Up to now No

Board

Chairman of

SEG E-Commerce Supervisory May 1, 2013 Up to now No

Board

Chairman of

Huakong SEG Supervisory March 1, 2014 Up to now No

Board

SEG Industry Chairman May 01, 2013 Up to now No

Changsha SEG Chairman June 01, 2010 Up to now No

Nanjing SEG Chairman April 01, 2011 Up to now No

Wuxi SEG Chairman Aug 1, 2012 Up to now No

Zhu Longqing

Shanghai SEG Chairman June 01, 2014 Up to now No

Nantong SEG Director January 01, 2013 Up to now No

SEG E-Commerce Director January 01, 2011 Up to now No

Nantong SEG Operation Director May 01, 2014 Up to now No

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Receiving

Position in Beginning date of Ending date of remuneration

Name Name of other units

other units office term office term from other units

or not

SEG Navigations Director February 01, 2012 Up to now No

Chairman of

SEG Baohua Supervisory April 01, 2013 Up to now No

Board

SEG Credit Director June 01, 2013 Up to now No

Ye Jun

SEG Credit President June 01, 2013 Up to now No

Shenzhen SEG Hi-tech Industrial Co.,

Director July 01, 2006 Up to now No

Ltd.

Shenzhen Shenai Semi-conductive

Director December 01, 2010 Up to now No

Co., Ltd.

Tianjin SEG Haijing Co., Ltd. Director December 01, 2006 Up to now No

Shenzhen Daming Electronics Co.,

Tang Chongyin Chairman July 01, 2006 Up to now No

Ltd.

Chairman of

SEG Credit Supervisory May 01, 2014 Up to now No

Board

Shenzhen SEG Yuren Technology Co.,

Director May 01, 2015 Up to now No

Ltd.

Shenzhen SEG Huaqiang North

Director May 01, 2015 Up to now No

Makership Co., Ltd.

Shenzhen SEG Real Estate Investment

Peng Aiyun Director May 01, 2013 Up to now No

Co., Ltd.

Shijiazhuang SEG Square Investment

Supervisor August 01, 2011 Up to now No

Co., Ltd.

SEG Baohua Director March 01, 2009 Up to now No

Chairman of

Xi'an SEG Supervisory November 01, 2008 Up to now No

Board

Tian Jiliang Chairman of

Longgang SEG Supervisory May 01, 2011 Up to now No

Board

Xi'an Hairong SEG Supervisor July 01, 2011 Up to now No

SEG Investment Supervisor November 01, 2015 Up to now No

Changsha SEG Director June 01, 2010 Up to now No

Nanjing SEG Supervisor April 01, 2011 Up to now No

Ying Huadong

Nantong SEG Supervisor January 01, 2013 Up to now No

Nantong SEG Operation Supervisor May 01, 2014 Up to now No

Bo Hongxi SEG Baohua General March 01, 2005 Up to now Yes

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Receiving

Position in Beginning date of Ending date of remuneration

Name Name of other units

other units office term office term from other units

or not

Manager

SEG Baohua Director March 01, 1999 Up to now Yes

Nantong SEG Operation Chairman May 01, 2014 Up to now No

Information on punishment of incumbent and resigned directors, supervisors and senior executives in the report

period by the securities regulatory authority in the recent three years

□ Applicable √ Not applicable

IV. Information about Remuneration of Directors, Supervisors and Senior Executives

Decision-making procedure and establishment criteria for the remuneration to the directors, supervisors and

senior executives, and actual payment

The Company implements the position wage system. The annual remuneration of Senior Executives comprises

three parts, namely, the wage (the position wage and allowance), year-end bonus, and legal welfare. The wage is

decided and monthly paid by the Board of Directors in accordance with the functions of a position and the

position wage system of the Company; the year-end bonus is decided based on the completing of annual

operation targets and work tasks laid out in the General Meeting of Shareholders, and is implemented after being

approved by the Board of Directors.

According to The Articles of Association, the remuneration of directors and supervisors is determined by the

General Meeting of Shareholders, but, at present, the Company has not implemented the remuneration system

for non-independent directors and supervisors except for independent directors. The directors and supervisors of

the Company only receive the wages corresponding to their administrative positions. Eight directors (including

independent directors) and supervisors of the Company received a total amount of remuneration of RMB

3,670,600 (pre-tax) in the report period. The Company shall issue RMB 100,000 (pre-tax) per year as the

subsidies for independent directors according to the resolution passed at the seventeenth General Meeting of

Shareholders (2011) on April 20, 2012. The travel and accommodation expenses of Independent Directors due to

attendance of the meetings of the Board and the General Meeting of Shareholders as well as the expenses

incurred by Independent Directors due to exercising of their powers according to the Articles of Association are

reimbursed by the Company according to the actual expenses.

Remuneration for directors, supervisors and senior executives in the report period

Unit: RMB ten thousand Yuan

Total pre-tax

Remuneration

Employment remuneration

Name Title Gender Age acquired from

Status from the

associates

Company

Wang Li Chairman Male 54 Incumbent -- Yes

Zhang Guangliu Director Male 53 Incumbent -- Yes

Director/ General

Liu Zhijun Male 47 Incumbent 83.81 No

Manager

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Total pre-tax

Remuneration

Employment remuneration

Name Title Gender Age acquired from

Status from the

associates

Company

Director/Vice

General

Zheng Dan Manager/Secretar Female 50 Incumbent 70.65 No

y of the Board of

Directors

Director, Vice

Zhu Longqing Male 54 Incumbent 70.65 No

General Manager

Ye Jun Director Male 55 Incumbent -- Yes

Independent

Zhou Hanjun Male 46 Incumbent 10 No

Director

Independent

Li Luoli Male 68 Incumbent 10 No

Director

Independent

Song Pingping Female 48 Incumbent 10 No

Director

Chairman of

Xu Ning Supervisory Male 50 Incumbent -- Yes

Board

Tang Chongyin Supervisor Male 55 Incumbent -- Yes

Peng Aiyun Supervisor Male 42 Incumbent -- Yes

Tian Jiliang Supervisor Male 49 Incumbent 58.17 No

Ying Huadong Supervisor Male 46 Incumbent 53.78 No

Vice General

Bo Hongxi Male 57 Incumbent -- No

Manager

Total -- -- -- -- 367.06 --

Information on equity incentives bestowed to directors, supervisors and senior executives during the report

period

□ Applicable √ Not applicable

V. Information on Employees of the Company

1. Number, profession composition and education background of on-the-job employees

Number of on-the-job employees in the parent company 161

Number of on-the-job employees in the major subsidiaries 721

Total number of on-the-job employees 882

Total number of paid employees in the current period 882

Number of retired workers to whom the Company pays pension

0

benefits assumed by parent company and major subsidiaries

Profession composition

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Profession composition Number of employees

Production staff 140

Sales staff 100

Technical staff 140

Financial staff 80

Administrative staff 422

Total 882

Education background

Education background Number of employees

Master 33

Bachelor 269

Junior college graduate 259

Technical secondary school (Polytechnic school) graduate 64

Senior high school and below 257

Total 882

2. Remuneration policy

Priority to effectiveness: Remuneration structure and level are related to operation performance. Rationally set

up salary differences based on value of position as well as individual performance and competence, and incline

to core positions to reflect effective incentives of remuneration.

Performance and capability orientation: Correlate remuneration adjustment and payment to organization

performance, employee performance and employee capability to reflect value of organization of individuals.

Salary varying with position: The remuneration system supports employee career development; remuneration is

strictly matched to position.

Dynamic adjustment: Based on development strategy and operation strategy as well as industrial development,

when business model and organization structure are significantly changed, organization functions and positions

change, and remuneration structure, payment and adjustment process must be dynamically adjusted for business

development.

3. Training plan

Based on strategies, culture, operation performance and human orientation, the Company cultivates its core

competence through normalized, systematic and professional total management.

Within the report peruiod, the Company cultivated and trained the targeted talents needed in transformation and

upgrading of the Company’s industry through series of activities like “elite training camp”.

4. Labor outsourcing

□ Applicable √ Not applicable

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Chapter 9 Corporate Governance

I. Basic information on corporate governance

(I) Within the report period, the Company strictly abides by the Company Law, the Security Law, Administrative

Regulations on Listed Companies, and the Regulations on Stock Listing of Shenzhen Securities Exchange, and

relevant laws and regulations of China Securities Regulatory Commission, continuously improves the structure

for company legal person management, establishes and improves internal control system, makes further efforts

on Company management, so that the Company may further standardize its operation, increase information

disclosure, and actively engage in the management of investor relationships. As of the end of the report period,

the Company generally meets the specifications set forth in the regulation documents on listed companies as

published by China Securities Regulatory Commission. The followings are particulars on the Company's

management:

1. Information on the Company and controlling shareholders

Controlling shareholders of the Company, exercising shareholder's rights through the General Meeting of

Shareholders, imposes rules on shareholder's behaviors in strict compliance with Administrative Regulations on

Listed Companies, the Regulations on Stock Listing of Shenzhen Securities Exchange, and the Articles of

Association of the Company. Controlling shareholders are not found to have directly intervened the Company's

business and decision-making by acting without consulting with the General Meeting of Shareholders and the

Board of Directors. The Company is capable of independent business operation, and is independent from the

controlling shareholder in respect of its business, asset, personnel, organization and finance. The Board of

Directors, the Board of Supervisors, and the internal organizations can work independently.

2. Shareholders and the General Meeting of Shareholders

The Company convened and held the General Meeting of Shareholders in strict compliance with the Guidance of

the Articles of Association and the Rules of Procedure of the Board of Directors. No proposal to hold the interim

meeting of shareholders was put forward by shareholders representing more than 10% of the Company's voting

shares within the report period, nor is there a meeting of shareholders held at the proposal of the Board of

Supervisors. In the report period, the Company complied with the Company Law and the Articles of Association

by making decisions subject to the deliberation at the general meeting of shareholders without overriding the

general meeting of shareholders or implementation before deliberation.

3. Directors and the Board of Directors

The Company elected its directors in strict compliance with the Articles of Association. The Board of Directors

comprised of 9 directors, including 3 independent directors. The number and composition of personnel in the

Board of Directors was in compliance with laws and regulations. The Board of Directors had three special

committees under its management. The Board of Directors conscientiously fulfilled its obligations in strict

compliance with the Articles of Association, Regulations on Work of Independent Directors, and the Rules of

Procedure of the Board of Directors. All directors of the Company attended the meeting of directors and general

meeting of shareholders, and actively took part in relevant trainings, and studies relevant laws and regulations.

Independent directors protected the overall interests of the Company by performing their obligations in an

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independent manner, and by paying special attention to the lawful interests of medium and small shareholders.

Also, independent directors expressed their independent opinions on matters of importance and significance.

4. Supervisors and the Board of Supervisors

The Company elected supervisors in strict compliance with the Company Law and the Articles of Association.

The number and composition of the Board of Supervisors complied with laws and regulations. The Company

formulated Rules of Procedure of the Board of Supervisors; the eligibility and election of supervisors complied

with regulations. All supervisors of the Company attended the meeting of supervisors, and reviewed the regular

reports prepared by the Board of Directors and gave written opinions by attending the general meeting of

shareholders as non-voting members, attending the meeting of the Board of Directors and holding the meeting of

the Board of Supervisors. The supervisors were effective at supervising matters of importance, associated

transactions and finance status of the Company, and at overseeing the legality and regulation compliance of the

Company's directors and senior executives in performing their duties.

5. Information disclosure and transparency

The Company designates the works on information disclosure, shareholder visitation and consultation reception

to the Secretary's Office of Board of Directors of the Company in strict compliance with the Management

Methods for Disclosure of Information and the System on Investor Relationship Management. The Company

appoints China Securities Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily, and the

Cninfo Website as the newspapers and website on which the Company discloses its information. Within the

report period, the Company published 76 public announcements in total, disclosing information on the

Company's business activities and major issues in a truthful, accurate, complete and timely manner. The

Company imposed strict, sufficient and effective internal control on information disclosure without violating

regulations of relevant supervisory organs. In the future, the Company will further strengthen communication

and information exchange with the supervisory organs by pro-actively reporting Company issues and by having

a better understanding of disclosure requirements.

(II) Non-compliance within the report period

1. The controlling shareholders exert the “Property Right Representatives Report System” for managing the

Company. The Company's controlling shareholder SEG Group is a state-controlled corporation in Shenzhen and

Shenzhen State-owned Assets Supervision and Administration Bureau is the controlling shareholder of SEG

Group. It must implement the Property Right Representatives Report System for state-owned assets management

according to the management methods of Shenzhen for state-owned assets.

2. In the respect of personnel rating, our controlling shareholder SEG Group evaluates the annual operation

performance of the general manager based on the accomplishment of indexes of its annual operation plan and

other indexes.

3. The company reports the non-public information to the major shareholders and the actual controllers.

The company reports the non-public information to the major shareholders and the actual controls based on the

property right representative reporting system and requirements of the national statistical departments. In

accordance with the requirements of state-owned assets supervision department, the Company has been

submitting monthly flash reports to the majority shareholder and the actual controller and reporting important

issues to the majority shareholder and the actual controller before they are disclosed. The Company submitted

the Undisclosed Information Provided by Listed Companies for the Majority Shareholder or Actual Controller

and Letter of Commitment to Shenzhen Securities Regulatory Bureau on October 18, 2007. SEG Group offered

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the Letter of Commitment on Strengthening Management of Undisclosed Information to Shenzhen Securities

Regulatory Bureau. Meanwhile, the Company has established and implemented the Non-public Information

Insider Reporting System and the Confidentiality System of Shenzhen SEG Co., Ltd for Insiders of Non-public

Information and has monthly reported to Shenzhen Securities Regulatory Bureau about its reports of

unpublicized information. Senior executives and all employees at the headquarters signed a Confidentiality

Agreement with the Company on July 15, 2009. The Confidentiality Agreement clearly stipulates that all

employees are obligated to hold confidential the business secrets and undisclosed information of the Company.

The unpublicized information the Company offered to the Company’s majority shareholder and actual controller

in the report period is as follows:

Relationship

Organization

between the Time or Procedure

to which Type of

No. organization Procedure of report period Basis for report of

information information

and the of report approval

is reported

Company

The invested corporation of

the Company and the The document Notice

financial staff at the about Formulation of the

The flash

Headquarters prepare the Monthly Flash Report of

report of main

report and consolidate the Enterprises Supervised Approved

Controlling financial

SEG statements, which are by Stated-owned Assets by the

1 shareholder indicators of Monthly

Group reviewed by the leadership Supervision and Board of

(30.24%) the Company

of the Financial Administration Directors

registered in

Department and reported Commission of the State

Shenzhen

through the State-owned Council (SASAC

Asset Management [2003]23)

Information System.

The invested corporation of The document Notice

the Company and the about Formulation of the

financial staff at the Monthly Flash Report of

Summary sheet

Headquarters prepare the Enterprises Supervised Approved

Controlling of

SEG Group sheet and consolidate the by Stated-owned Assets by the

2 shareholder implementation Monthly

Group statements, which are Supervision and Board of

(30.24%) of monthly

reported through the Administration Directors

expense budget

State-owned Asset Commission of the State

Management Information Council (SASAC

System. [2003]23)

The invested corporation of The document Notice

the Company and the about Formulation of the

financial staff at the Monthly Flash Report of

Headquarters prepare the Enterprises Supervised Approved

Controlling Summary sheet

SEG Group sheet and consolidate the by Stated-owned Assets by the

3 shareholder of monthly Monthly

Group statements, which are Supervision and Board of

(30.24%) cash flow

reported through the Administration Directors

State-owned Asset Commission of the State

Management Information Council (SASAC

System. [2003]23)

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Relationship

Organization

between the Time or Procedure

to which Type of

No. organization Procedure of report period Basis for report of

information information

and the of report approval

is reported

Company

The document Notice

about Formulation of the

The financial personnel at Monthly Flash Report of

Summary sheet

the Headquarters prepare Enterprises Supervised Approved

Controlling of deposits,

SEG Group the sheet that is reported by Stated-owned Assets by the

4 shareholder financing, and Quarterly

Group through the State-owned Supervision and Board of

(30.24%) loans of the

Asset Management Administration Directors

Headquarters

Information System. Commission of the State

Council (SASAC

[2003]23)

The invested corporation of The document Notice

Summary sheet the Company and the about Formulation of the

of quarterly financial staff at the Monthly Flash Report of

non-operating Headquarters prepare the Enterprises Supervised Approved

Controlling

SEG Group gains and sheet and consolidate the by Stated-owned Assets by the

5 shareholder Quarterly

Group losses of the statements, which are Supervision and Board of

(30.24%)

Company reported through the Administration Directors

registered in State-owned Asset Commission of the State

Shenzhen Management Information Council (SASAC

System. [2003]23)

It has been reported since

June 2009. The document Notice

Summary sheet The invested corporation of about Formulation of the

of quarterly the Company and the Monthly Flash Report of

information on financial staff at the Enterprises Supervised Approved

Controlling

SEG Group investment Headquarters prepare the by Stated-owned Assets by the

6 shareholder Quarterly

Group properties of sheet and consolidate the Supervision and Board of

(30.24%)

the Company statements, which are Administration Directors

registered in reported through the Commission of the State

Shenzhen State-owned Asset Council (SASAC

Management Information [2003]23)

System.

Monthly

They should be reported

consolidated

every month after being

statements The Notice of Shenzhen

printed, signed and sealed

(including the SEG Co., Ltd on Approved

Controlling and reported every quarter

SEG Group Balance Sheet, Submitting of Monthly by the

7 shareholder through the State-owned Monthly

Group the Profit Statements issued by Board of

(30.24%) Asset Management

Statement, the Shenzhen SEG Group Directors

Information System. They

Cash Flow Co., Ltd.

have been reported on line

Statement, the

from July 2008.

Notes to

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Relationship

Organization

between the Time or Procedure

to which Type of

No. organization Procedure of report period Basis for report of

information information

and the of report approval

is reported

Company

Preparation of

the Statements

and the

Financial

Statements)

Controlling It was provided by

SEG Group

shareholder Article Three of the

Group

(30.24%) Statistics Law of the

People’s Republic of

China that state organs,

social organizations,

corporations, public

institutions and privately

or individually owned

businesses, on which

Statistical statistical survey is

survey on the implemented, must

statements or comply with the

monthly and Statistics Law and the Approved

Monthly

annual reports regulations of the state by the

8 Sealed by the Company and

Shenzhen of the and provide statistical Board of

Government production annually

Statistics of data faithfully but not Directors

branch electronics make a false report,

Bureau

information conceal data, refuse to

industry report, delay the report,

or fabricate or falsify

data. Self-governing

mass organizations at the

grass roots level and

citizens have the

obligation to provide

truthfully the

information required by

the statistical survey of

the state.

The document Notice

about Formulation of the

Monthly Flash Report of Approved

Controlling Summary sheet

SEG Group Enterprises Supervised by the

9 shareholder of quarterly Sealed by the Company Quarterly

Group by Stated-owned Assets Board of

(30.24%) financial assets

Supervision and Directors

Administration

Commission of the State

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Relationship

Organization

between the Time or Procedure

to which Type of

No. organization Procedure of report period Basis for report of

information information

and the of report approval

is reported

Company

Council (SASAC

[2003]23)

The hard copy of the

The requirements from The Board

Register of top official website of

2015 Shenzhen of

Shenzhen Actual 100 A and B Shenzhen Branch of China

10 Quarterly state-owned enterprise Directors

SASAC controller shareholders in Securities Depository and

capital operation agrees to

2015 Clearing Corporation

conference report.

Limited

Whether the Company generally meets the specifications set forth in the regulation documents on listed

companies as published by China Securities Regulatory Commission

□ Yes √ No

Whether the Company generally meets the specifications set forth in the regulation documents on listed

companies as published by China Securities Regulatory Commission

II. Description about the Company's independence from controlling shareholders in terms of

business, personnel, asset, organization and finance

(I) In the aspect of business, Shenzhen Securities Regulatory Bureau pointed out that there was horizontal

competition between the Company and SEG Group in regard to the electronics market business. The Company

received a written commitment letter from SEG Group on September 14, 2007, saying "We have similar business

to Shenzhen SEG Co., Ltd. (hereinafter referred to as Shenzhen SEG) in regard to the electronics market of

Shenzhen because of historical reasons with an objective market development background. We hereby promise

that we will not individually operate a market in a same city whose business is similar with that of Shenzhen

SEG. The aforesaid matter was disclosed on Securities Times, China Securities Journal and Hong Kong Wen Wei

Po and the Cninfo Website on September 18, 2007. In order to solve the issue of horizontal competition between

the Company and its controlling shareholder, SEG Group, due to historical reasons, the 6th temporary meeting of

the 5th Board of Directors held on January 26, 2011 reviewed and approved the Proposal of Solving the

Horizontal Competition between the Company and Its Controlling Shareholder. After friendly consultation, SEG

Group agreed to entrust the Company to operate and manage with full authority SEG Communications Market

under direct management of SEG Group. Therefore, the two parties have signed the entrustment operation and

management contract:

(1) SEG Group has the ownership and the income right of SEG Communication Market and assumes all

creditor’s rights and liabilities occurring during the operation of SEG Communications Market. (2) The

management representative from the Company shall operate and management SEG Communications Market

during the period of entrustment operation and management, who has a sufficient authority in operation and

management of SEG Communications Market. (3) In accordance with the provisions of the Company on

entrustment management of the electronics market and with full consideration to the maturity of the entrusted

market and whether the market is located in a primary business area, the Company shall collect from SEG Group

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the management fee and profit fee as follows based on the market sound value: the total income of SEG

Communications Market in 2010, RMB 20,000,000 Yuan, shall be regarded as the base number; the Company

shall collect a management fee of RMB 200,000 Yuan should the total income of the market in the current year is

equal to or less than RMB 20,000,000 Yuan; the Company shall take 20% from the part beyond the base number

apart from the management fee that is RMB 200,000 Yuan should the total income in the current year exceed

RMB 20,000,000 Yuan. The detailed information about the above-mentioned matter may be referred to in the

Public Notice on Shenzhen SEG Co., Ltd on the Related Transaction for the Purpose of Solving the Issue of

Horizontal Competition between the Company and the Controlling Shareholder that was disclosed on the China

Securities Journal, the Securities Times, the Hong Kong Commercial Daily and the Cninfo Website on January

28, 2011. Till the date of disclosure of this report, the Company had received the timely payment of the

management fee of 2011-2015, RMB 200,000 Yuan, from SEG Group. Therefore, there is no longer the issue of

horizontal competition between the Company and SEG Group.

(II) In respect of personnel, the Company’s Senior Executives including General Manager, Vice General

Manager and Secretary of the Board of Directors take full-time posts; they receive wages from the Company and

do not take concurrent posts in the Company’s first majority shareholder enterprise; the Company has a complete

management system for labor, human resources and wages, which can keep the independence of the personnel.

(III) In respect of assets, at the beginning of the Company’s establishment, the equity of the eight enterprises

separated from SEG Group to the Company was already audited and evaluated by domestic and overseas

accounting firms, which was acknowledged by the state-owned assets management departments of the state and

Shenzhen Municipality. The controlling shareholder of the eight enterprises was changed from SEG Group to the

Company, which was registered at the Industrial and Commercial Administration. The Company independently

makes registration, establishes accounts, and implements accounting and management so as to maintain the

completeness and independence of the assets. According to the Article Five of the Equity Transfer Agreement

signed by the Company with SEG Group when the Company was listed, SEG Group agreed that the Company

and its subsidiaries and associated companies to use the eight trademarks registered by SEG Group at the

National Trademark Bureau; SEG Group agreed that the Company used the aforesaid trademarks or similar signs

as the Company’s logo and used the trademarks and signs during its operation; the Company needn’t pay any fee

to SEG Group for using the aforesaid trademarks or signs.

(IV) In respect of organization, the Company has set up organizations and arranged corresponding personnel

fully in accordance with its own demand of operation and management; its production and administrative

departments are totally independent from the majority shareholder.

(V) In respect of finance, as a legal entity that implements independent operation and accounting and assumes

sole responsibility for its profits and losses, the Company has set up an independent financial and auditing

department, an independent accounting system and an financial management system, has its independent bank

account, pays taxes independently according to law, and keeps absolute independence in its financial work.

III. Horizontal Competition

□ Applicable √ Not applicable

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IV. Annual meeting of shareholders and interim meeting of shareholders held in the report

period

1. Annual general meeting of shareholders in the report period

Percentage of

Meeting No. Meeting Type Investor Date Disclosure Date Disclosure Index

Participation

Cninfo Website:

http://www.cninfo.com.cn

The 20th General Annual general

Announcement about

Meeting of meeting of 0.07% April 17, 2015 April 18, 2015

Resolutions of the 20th Meeting

Shareholders (2014) shareholders

of Shareholders (2014) of

Shenzhen SEG Co., Ltd.

Cninfo Website:

http://www.cninfo.com.cn

First Interim

Interim general Announcement about

Meeting of December 31,

meeting of 0.08% January 04, 2016 Resolutions of the First Interim

Shareholders in 2015

shareholders General Meeting of

2015

Shareholders (2015) of Shenzhen

SEG Co., Ltd.

2. Preferred shareholders restored with the voting rights proposed to hold interim general meeting of

shareholders

□ Applicable √ Not applicable

V. Performance of independent directors in the report period

1. Attendance of independent directors in meetings of the Board of Directors and the general meeting of

shareholders

Attendance of independent directors in meetings of the Board of Directors of the Company

Failure to attend

Number of Times of

Attendances Times of the meeting in

Name of independent meetings to be entrusted

through entrusted Times of absence person in two

director attended in the personal

communication presence consecutive

report period presence

times

Zhou Hanjun 12 3 9 0 0 No

Li Luoli 12 2 9 1 0 No

Song Pingping 12 2 9 1 0 No

Times for independent directors to

attend the general meeting of 2

shareholders

2. Objections raised by independent directors against relevant matters of the Company

Whether independent directors raised objections against relevant matters of the Company

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□ Yes √ No

The independent directors did not raise any objection against relevant matters of the Company in the report

period.

3. Other descriptions about the performance of independent directors

Whether the independent directors accepted proposals of the Company

√ Yes □ No

In the report period, three independent directors of the Company fully exercised power and functions specified

by national regulations and the Articles of Association, gave play to professional skills, fulfilled their obligations

with caution, rationalized decision making and procedures, and protected the overall interests of the Company,

particularly legitimate rights and interests of the medium and small shareholders.

(I) Attended the meeting of the Board of Directors on time, and actively fulfilled obligations of independent

directors. Independent directors deeply understood and investigated resolutions deliberated on by the Board of

Directors, actively participated in discussions, and gave rational suggestions. Besides, they always paid attention

to important matters of the Company, independently fulfilled obligations without being affected by controlling

shareholders, actual controllers or units or individuals having interest in the Company and its controlling

shareholders or actual controllers, objectively and cautiously deliberated on self-evaluation reports on associated

transactions, foreign guarantee and internal control, expressed independent opinions and fulfilled the obligation

of supervision.

(II) Actively cooperated with the professional committees of the Board of Directors. Independent directors were

members of Development Strategy Committee, Audit Committee and Wage and Assessment Committee of the

Board of Directors. In compliance with the working rules of the professional committees, they actively

participated in daily work of the committees, gave professional opinions and suggestions on the Company

development planning and short-term financing bonds issuance, and supported scientific and cautious decision

making of the Board of Directors.

(III) Paid attention to internal control of the Company. Independent directors communicated repeatedly with the

management and relevant departments over construction and evaluation of the internal control system, and gave

suggestions based on their professional experience. In this way, they played the role of supervisors, supervised

and urged the Company to continuously perfect corporate management structure, perfect the internal control

system, continuously and deeply carry out corporate management activities and improve normalized operation.

(IV) Deeply understood the Company. In 2015, independent directors took advantage of the Company meetings

and specially took time to conduct field investigation of the Company and its investors to deeply understand the

Company's daily operation and project construction. Meanwhile, independent directors kept in close touch with

other directors, senior executives and personnel by means of phone and e-mails, always paid attention to

influences of changes of external environment and market on the Company, and timely understood the progress

of important matters of the Company. In addition, independent directors always paid attention to information

disclosure, supervised and check such disclosure, and ensure fair and timely disclosure of the Company

information so that public shareholders could be timely updated about the development of the Company.

(V) Proposals raised by independent directors in regard to normalized development and the adoption of

proposals

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Adoption

Proposal raised by Proposal content Form

status

Zhou Hanjun, Song Pingping and Li Advice to the Company on paying more attention to "Chuangke"

Oral Adopted

Luoli and other emerging industries

Zhou Hanjun, Song Pingping and Li

Advice on Company business transformation and upgrading Oral Adopted

Luoli

Zhou Hanjun, Song Pingping and Li

Relevant advice on Company major assets restructuring Oral Adopted

Luoli

Song Pingping and Zhou Hanjun Advice on asset operation model adopted by the Company Oral Adopted

Advice on rolling business plan of the Company for the next 3

Zhou Hanjun and Li Luoli Oral Adopted

years (from 2016 to 2018)

Advice on adjustment to Company organization structure and the

Li Luoli and Song Pingping Oral Adopted

implementation of project system

VI. Performance of duties by special committees of the Board of Directors

Within the report period, the Audit Committee, Wage and Assessment Committee, and Development Strategy

Committee under the Board of Supervisors conscientiously performed their duties in compliance with the Code

of Corporate Governance for Listed Companies, the Articles of Association, the Rules of Procedure of the Board

of Directors, and functions, powers and obligations conferred by implementation rules of the special committees.

(I) Performance of duties by the Audit Committee of the Board of Directors

In accordance with the requirements of the Working Rules of the Audit Committee of Shenzhen SEG Co., Ltd and

the Working Procedures of the Audit Committee of Shenzhen SEG Co., Ltd for the Annual Report, the Audit

Committee, in the report period, performed its duty in a serious way, implemented supervision and inspection on

the establishment and improvement of the internal control system of the Company and a comprehensive

inspection on the annual financial auditing.

1. The review opinion of the Audit Committee on the 2015 Financial Statements of the Company

In the report period, the Audit Committee reviewed the annual financial statements and issued opinions for twice

in accordance with relevant provisions of CSRC.

(1) Before the entrance of the certified public accountant for annual auditing, the Audit Committee reviewed the

financial statements to be audited and issued the first opinion in writing. The Audit Committee believed that the

Company formulated reasonable accounting policies and appropriate accounting estimates in accordance with

relevant requirements of the accounting standard and based on the actual conditions of the Company; the

financial statements prepared by the Company truthfully reflected the financial status of the Company as of

December, 2015 and the operating results and cash flow of the Company in 2015. The Committee approved the

use of these financial statements as the basis for implementation of the audit work for 2015.

(2) After the completing of the first draft by the CPA, the Audit Committee read the draft in time and

communicated with the CPA. There was no dispute on the important issues mentioned by the 2015 Financial

Statements between the Committee and the CPA. The financial statements comply with the provisions of the

Accounting Standard for Business Enterprises and relevant laws and regulations. The Audit Committee approved

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the use of these financial statements as the basis for the preparation of the 2015 Annual Report and Report

Summary.

2. Supervision on and impelling over the audit work of the accounting firm

After consultation with Dahua Certified Public Accountants Co., Ltd., the auditing institution of 2015, the

arrangement for the 2015 auditing was decided by the Company in December 2015, which was reported to the

Audit Committee in time. After communication with the auditing institution, the Audit Committee believed that

the Company had made preparations in advance based on the actual situation and its time arrangement for the

annual auditing was appropriate. The Audit Committee approved the annual audit plan formulated by the

auditing institution. After the entrance of the auditing institution, the Audit Committee communicated with the

main responsible person of the project, the CPA whose signature was provided and relevant personnel, got

known about the progress of the audit and the issues concerned about by the CPA, and reported the progress and

the issues to relevant department of the Company in time.

3. The work summary of the Audit Committee for the 2015 auditing conducted by Dahua Certified Public

Accountants Co., Ltd.

In order to conduct timely and accurate audit on the financial status and business results of 2015 of the Company,

Dahua Certified Public Accountants Co., Ltd. carried out preliminary investigation and pre-auditing in December

12, and completed the audit work in March 2015.

The audit committee exchanged ideas with the CPAs on December 23, 2015, and continued the communication

during audit. Also, the audit committee reviewed the draft of the annual audit report issued by the CPAs. The

Audit Committee believed that the CPA could perform his duty in strict accordance with auditing laws,

regulations and principles, focused on the Company's operating environment, understood the establishment,

improvement and implementation of the internal control system of the Company, had a strong awareness of risks,

and could finish the audit work in time in accordance with the arranged audit schedule. The CPA was capable of

being independent and discreet, well finished the auditing on the Financial Statements and internal control of the

Company for the Year 2015, and issued an objective and fair audit report.

4. The Audit Committee implemented supervision and inspection on the establishment and improvement of the

internal control system and the defect rectification status, and listened to the report about the establishment of the

internal control standardization system.

5. Two meetings were held in the report period by the Audit Committee of the Board of Directors and the details

were as follows:

(1) The audit committee of the Company held the first meeting of 2015 on March 9, 2015 by means of

telecommunication, reviewed and approved the Opinion of the Audit Committee on the 2014 Financial

Statements, Audit Report of 2014 from Dahua Certified Public Accountants Co., Ltd., Proposal on Auditor

Engagement for the 2015 Annual Report and Payment of Audit Fee, and Proposal on Engagement of Internal

Control Auditor for the 2015 Semi-Annual Report and Payment of Internal Control Audit Fee.

(2) The audit committee of the Company held the second meeting of 2015 on December 23, 2015 by means of

telecommunication. The meeting reviewed and approved the Audit Work Plan and Communication Report of the

Audit Committee of 2015 of Shenzhen SEG Co., Ltd.

(II) Performance of duties by the Wage and Assessment Committee of the Board of Directors

The opinion of the Wage and Assessment Committee on the disclosed remuneration of the Directors, Supervisors

and Senior Executives of the Company: Director of the Board and General Manager Liu Zhijun, Director, Vice

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General Manager and Secretary of the Board Zheng Dan, Director and Vice General Manager Zhu Longqing,

Supervisor Tian Jiliang and Supervisor Ying Huadong only received the wages corresponding to their respective

administrative posts; Independent Directors Zhou Hanjun, Li Luoli and Song Pingping received allowances for

independent directors; other directors and supervisors did not receive wages from the Company. The Company

had not implemented the non-independent director and supervisor remuneration system yet.

Two meetings were held in the report period by the Wage and Assessment Committee of the Board of Directors

and the details were as follows:

1. The Wage and Assessment Committee of the Company held the first meeting of 2015 on March 10, 2015 by

means of telecommunication. The meeting reviewed and approved the Proposal of Shenzhen SEG Co., Ltd. on

the Adjustment of WagesCorporate Organizational Structure.

2. The Wage and Assessment Committee of the Company held the second meeting of 2015 on April 17, 2015 in

the Company conference room. The meeting reviewed and approved the Proposal of Shenzhen SEG Co., Ltd. on

the Adjustment of Wages.

(V) Performance of duties by the Development Strategy Committee of the Board of Directors

Two meetings were held in the report period by the Development Strategy Committee of the Board of Directors

and the details were as follows:

1. The Development Strategy Committee of the Company held the first meeting of 2015 on December 23, 2015

by means of telecommunication. The meeting reviewed and approved the Rolling Business Plan from 2016 to

2018 of Shenzhen SEG Co., Ltd.

2. The Development Strategy Committee of the Company held the second meeting of 2015 on December 31,

2015 by means of telecommunication. The meeting reviewed and approved the Work Summary of 2015 and the

Work Plan for 2016 of Shenzhen SEG Co., Ltd.

VII. Performance of the Board of Supervisors

Whether the Board of Supervisors found any risk in the Company during supervision in the report period

□ Yes √ No

The Board of Supervisors raised no objections against the supervised matters in the report period.

VIII. Assessment and incentive system for senior executives

Principles on performance management of senior executives of the Company

(I) Target management principle: the target management over senior executives is carried out in light of

enterprise annual target and enterprise management requirements.

(II) Categorized assessment principle: categorized assessment is carried out in accordance with the industry

engaged in by the enterprise and the industrial characteristics.

(III) The principle of coupling incentives with restrictions: senior executives were rewarded or punished in

accordance with the completion of annual targets, and the assessment system is carried out where incentives are

coupled with restrictions.

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IX. Internal control

1. Information about the major defects discovered in the report period in the internal control

self-assessment report

□ Yes √ No

2. Internal Control Self-assessment Report

Disclosure date of the internal control

March 30, 2016

self-assessment report

Disclosure index of the internal control Cninfo Website: http://www.cninfo.com.cnAnnouncement about Internal Control

self-assessment report Self-assessment Report (2014) of Shenzhen SEG Co., Ltd.

Defect Identification Standard

Category Financial Statements Non-financial statements

Major defects: extremely negative

impact due to the lack of scientific

decision-making procedures, the

intended result being in contrary to the

result achieved, or extremely low

Major defect: malpractice by directors,

decision-making efficiency, rendering the

supervisors and senior executives; correction

Company impossible to grasp market

to major errors in published financial report;

opportunities; major miscalculation due

current financial report included major

to the Company's decision-making

faults, and internal control failed to detect

procedures; the Company is given

such faults in the process; the internal

warnings from the securities agency or

control and supervision by the Audit

the securities exchange; serious loss of

Committee and Internal Audit Division on

medium and high level management and

the internal control of the financial report is

senior technical staff; frequent negative

invalid.

news on media, with widespread

Important defects: failure in selecting and

negative influence and long-term impact;

applying accounting policies according to

Identification standards lack of systematic control over major

publicly recognized accounting standards;

business or failure of the system; failure

failure in establishing anti-malpractice

in correcting major or significant internal

procedures and control measures; failure in

control defects of the Company.

establishing corresponding control

Important defects: serious negative

mechanism or implementing corresponding

impact due to a lack of scientific

compensatory control on non-conventional

decision-making procedure, the result

or special transaction accounting treatments;

achieved is far from the intended target,

one or more defects in the process of

or the decision-making efficiently is very

controlling closing financial report, and

low, with frequent cases where market

failure in ensuring the truthfulness and

opportunities are lost; general

accuracy of the financial statements

miscalculation in the Company's

prepared.

decision-making procedures; failure in

correcting important or general defects in

the Company's internal control; serious

loss of personnel in important positions;

regional impact of negative news on

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media; defects in institution or system

for important business.

Major defects: satisfying one or more

conditions as follows: erroneous

reporting≥10% of total profit; erroneous

reporting≥1% of total asset; erroneous

reporting≥2% of business income; erroneous

reporting≥1% of owner's equity. Major defects: absolute value of direct

Important defects: satisfying one or more property loss≥10% of total profit.

Quantification conditions as follows: 5% of total Important defects: absolute value of

profit≤erroneous reporting<10% of total direct property loss≥5% of total profit

profit; 0.5% of total assets≤erroneous but <10% of total profit.

reporting<1% of total asset; 1% of business

income≤erroneous reporting<2% of total

business income; 0.5% of owner's

equity≤erroneous reporting<1% of owner's

equity.

Number of major defects in financial report 0

Number of major defects in non-financial

0

report

Number of important defects in financial

0

report

Number of important defects in financial

6

report

X. Internal Control Audit Report

√ Applicable □ Not applicable

Opinion paragraph in the internal control audit report

Da Hua Certified Public Accountants thinks that the Company has maintained effective internal financial control in every major

aspect in accordance with the Basic Standard for Enterprise Internal Control and relevant rules and regulations on December 31,

2015.

Disclosure on internal audit report Disclosure

Disclosure date of the internal

March 30, 2016

control audit report

Disclosure index of the internal Cninfo Website: http://www.cninfo.com.cnAnnouncement about Internal Control Report

control audit report (2014) of Shenzhen SEG Co., Ltd.

Type of advice on disclosure on

No conservation in standard

internal audit report

Whether or not major defects exist

No

in non-financial report

Does the accounting firm provide the internal control audit report with a modified opinion?

□ Yes √ No

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Is the internal control audit report issued by the accounting firm consistent with the self-assessment report

provided by the Board of Directors?

√ Yes □ No

Chapter 10 Financial Report

I. Auditor's Report

Type of auditor’s opinion Non-standard audit opinions

Signing date of Audit Report March 28, 2016

Da Hua Certified Public Accountants (Special General

Name of audit firm

Partnership)

Auditor’s Report Document No. Da Hua Shen Zi [2016] No. 001907

Names of Certified Public Accountant Zhang Xing and Zhang Zhaocheng

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Shenzhen SEG Co., Ltd.

Audit Report and Financial Statements

From January 1, 2015 to December 31, 2015

CONTENTS Page

I. Audit Report 85-105

II. Audited Financial Statements 85-105

Consolidated Balance Sheet

Consolidated Profit Statement

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Owners' Equity

Balance Sheet of the Parent Company

Profit Statement of the Parent Company

Cash Flow Statement of the Parent Company

Statement of Changes in Owners' Equity of the Parent

Company

Notes to the Financial Statements 105-177

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I. Audit Report

D. H. S. Zi. [2016] No. 001907

Shenzhen SEG Co., Ltd.,

We have audited the attached Financial Statements of Shenzhen SEG Co., Ltd (hereinafter referred to as "SEG

Corporation"), including the Consolidated Balance Sheet and the Balance Sheet of the Parent Company as of

December 31, 2015 as well as the Consolidated Profit Statement, the Profit Statement of the Parent Company,

the Consolidated Cash Flow Statement, the Cash Flow Statement of the Parent Company, the Consolidated

Statement of Changes in Owners' Equity, the Statement of Changes in Owners' Equity of the Parent Company

and the Notes to Financial Statements for the year 2015.

1. Responsibilities of the management to financial statements

It is the responsibility of the management of SEG Corporation to prepare and fairly present financial statements,

which includes: (1) Preparing financial statements in accordance with the provisions of the Accounting Standard

for Business Enterprises and making the statements fairly reflect the financial status of the Company; (2)

Designing, implementing and maintaining necessary internal control in order to avoid major misstatements

resulting from fraud, malpractice, mistakes or errors.

2. CPA's responsibility

Our responsibility is to express opinions on these financial statements on the basis of the implementation of

auditing work. We have conducted our audit in accordance with the provisions in the Auditing Standards for

Chinese Certified Public Accountants. The Auditing Standards for Chinese Certified Public Accountants require

that we observe the professional ethics and regulations, plan and perform the audit to obtain reasonable

assurance about whether these financial statements are free of misstatements.

The audit involves the implementation of an audit procedure to obtain the auditing evidences supporting the

amounts in the financial statements and relevant disclosure. The selection of the auditing procedure depends on

the judgment of the CPA, including the estimation to the risks on material misstatements in the financial

statements resulting from malpractice or mistakes and errors. During the process of risk assessment, we took into

account the internal control related to the preparation and fair presentation of the financial statements so as to

design an appropriate auditing procedure. The audit also comprises assessing the appropriateness of the

accounting policies used and the reasonableness of the accounting estimates made by the management, as well as

evaluating the overall presentation of the financial statements.

We believe that we have obtained sufficient and appropriate auditing evidences to provide a reasonable basis for

expressing auditor's opinions.

3. Auditor's opinion

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We believe that the Financial Statements of SEG Corporation have been prepared in accordance with the

provisions of the Accounting Standard for Business Enterprises in all major aspects, which fairly reflect the

consolidated and the parent company's financial status as of December 31, 2015 as well as the consolidated and

the parent company's operating results and cash flows for the year 2015.

Da Hua Certified Public Accountants (Special General Partnership)

Certified Public Accountant: Zhang Xing

Certified Public Accountant: Zhang Chaocheng Zhang Chaocheng

March 28, 2016

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II. Financial Statements

The Unit in the notes to financial statements is RMB Yuan.

1. Consolidated Balance Sheet

Prepared by: Shenzhen SEG Co., Ltd.

December 31, 2015

Unit: Yuan

Item Closing balance Opening balance

Current assets:

Monetary funds 276,863,429.10 383,056,680.70

Deposit reservation for balance

Loans to other banks 40,000,000.00 30,000,000.00

Financial assets measured by fair value with

changes included in current profit and loss

Derivative financial assets

Notes receivable 84,618.08

Accounts receivable 98,212,422.87 185,866,040.16

Prepayment 129,044,887.26 94,633,317.07

Premiums receivable

Reinsurance accounts receivable

Reinsurance deposit receivable

Interest receivable

Dividends receivable

Other accounts receivable 27,352,784.33 95,366,156.27

Redemptory monetary capital for resale

Inventory 450,809,934.72 278,281,586.72

Held-for-sale assets

Non-current assets due within one year

Other current assets 339,430,419.74 443,543,013.49

Total current assets 1,361,713,878.02 1,510,831,412.49

Non-current assets:

Loans and prepayment issued 475,520,822.08 452,517,072.06

Available-for-sale financial assets 34,539,973.24 34,350,035.45

Held-to-maturity investment

Long-term receivables

Long-term equity investment 185,122,573.88 82,100,197.01

Investment properties 443,851,726.40 462,562,882.78

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Item Closing balance Opening balance

Fixed assets 37,524,425.25 41,408,298.43

Construction in progress 140,810.00

Engineering materials

Disposal of fixed assets

Productive biological assets

Oil & gas assets

Intangible assets 1,143,762.11 655,587.54

Development expenses

Goodwill 10,328,927.82 10,328,927.82

Long-term expenses to be amortized 49,235,999.86 49,768,678.00

Deferred income tax assets 10,433,814.57 10,539,563.16

Other non-current assets 5,103,811.14 4,655,063.54

Total non-current assets 1,252,946,646.35 1,148,886,305.79

Total assets 2,614,660,524.37 2,659,717,718.28

Current liabilities:

Short-term borrowing 367,759,630.48 189,246,687.38

Loans from central bank

Deposits from customers and interbank

Loans from other banks

Financial liabilities measured by fair value with

changes included in current profit and loss

Derivative financial liabilities

Notes payable

Accounts payable 89,908,781.98 200,129,651.92

Prepayment from customers 190,430,121.05 183,059,311.31

Financial assets sold for repurchase

Service charges and commissions payable

Payroll payable 21,849,134.16 18,858,843.33

Taxes payable 34,645,030.07 39,445,696.47

Interest payable 516,758.34 10,295,250.65

Dividends payable 2,218,224.58 1,717,882.74

Other payables 194,329,885.69 244,804,403.06

Reinsurance accounts payable

Insurance deposit

Customer brokerage deposits

Securities underwriting brokerage deposits

Held-for-sale liabilities

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Item Closing balance Opening balance

Non-current liabilities due within one year

Other current liabilities 250,000,000.00

Total current liabilities 901,657,566.35 1,137,557,726.86

Non-current liabilities:

Long-term borrowing

Bonds payable

Preferred stock

Perpetual capital securities

Long-term payables

Payroll payable

Special payables

Estimated liabilities 7,000,000.00

Deferred income 9,634,114.77 9,705,371.01

Deferred income tax liabilities 16,024,102.35 17,085,543.80

Other non-current liabilities

Total non-current liabilities 32,658,217.12 26,790,914.81

Total liabilities 934,315,783.47 1,164,348,641.67

Owners' equity:

Share capital 784,799,010.00 784,799,010.00

Other equity instruments

Preferred stock

Perpetual capital securities

Capital reserve 506,545,831.11 404,727,257.72

Less: Treasury shares

Other comprehensive income 326,662.48 231,817.05

Special reserve

Surplus reserve 109,922,336.87 102,912,835.67

General risk provision

Undistributed profits 73,532,388.70 6,299,799.41

Total owners' equity attributable to the parent company 1,475,126,229.16 1,298,970,719.85

Minority shareholders' equity 205,218,511.74 196,398,356.76

Total owners' equity 1,680,344,740.90 1,495,369,076.61

Total liabilities and owners' equity 2,614,660,524.37 2,659,717,718.28

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

2. Balance Sheet of the Parent Company

111

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Unit: Yuan

Item Closing balance Opening balance

Current assets:

Monetary funds 186,369,470.58 204,395,253.65

Financial assets measured by fair value with

changes included in current profit and loss

Derivative financial assets

Notes receivable

Accounts receivable

Prepayment 418,544.10

Interest receivable 897,225.78

Dividends receivable

Other accounts receivable 570,671,617.38 410,453,048.03

Inventory 112,715.50 786,589.00

Held-for-sale assets

Non-current assets due within one year

Other current assets 393,166,401.54 463,590,246.68

Total current assets 1,150,738,749.10 1,080,122,363.14

Non-current assets:

Available-for-sale financial assets 33,515,392.83 33,515,392.83

Held-to-maturity investment

Long-term receivables

Long-term equity investment 455,106,100.12 382,083,723.25

Investment properties 284,399,860.14 294,918,970.98

Fixed assets 19,458,584.25 19,583,422.45

Construction in progress 140,810.00

Engineering materials

Disposal of fixed assets

Productive biological assets

Oil & gas assets

Intangible assets 622,054.24 271,067.06

Development expenses

Goodwill

Long-term expenses to be amortized 7,000,181.66 4,589,158.00

Deferred income tax assets 8,242,045.89 8,354,062.87

Other non-current assets 1,313,063.54

Total non-current assets 808,485,029.13 744,628,860.98

Total assets 1,959,223,778.23 1,824,751,224.12

112

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Item Closing balance Opening balance

Current liabilities:

Short-term borrowing 315,000,000.00 100,000,000.00

Financial liabilities measured by fair value with

changes included in current profit and loss

Derivative financial liabilities

Notes payable

Accounts payable 36,075.52 1,500.00

Prepayment from customers 42,704,620.99 65,628,441.87

Payroll payable 13,652,201.42 9,907,467.00

Taxes payable 10,033,418.41 20,697,003.64

Interest payable 477,402.78 10,237,500.66

Dividends payable 119,803.29 119,803.29

Other payables 95,119,560.37 87,202,387.17

Held-for-sale liabilities

Non-current liabilities due within one year

Other current liabilities 250,000,000.00

Total current liabilities 477,143,082.78 543,794,103.63

Non-current liabilities:

Long-term borrowing

Bonds payable

Preferred stock

Perpetual capital securities

Long-term payables

Payroll payable

Special payables

Estimated liabilities 7,000,000.00

Deferred income 9,500,000.00 9,500,000.00

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 16,500,000.00 9,500,000.00

Total liabilities 493,643,082.78 553,294,103.63

Owners' equity:

Share capital 784,799,010.00 784,799,010.00

Other equity instruments

Preferred stock

Perpetual capital securities

Capital reserve 507,773,837.83 405,955,264.44

113

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Item Closing balance Opening balance

Less: Treasury shares

Other comprehensive income

Special reserve

Surplus reserve 109,922,336.87 102,912,835.67

Undistributed profits 63,085,510.75 -22,209,989.62

Total owners' equity 1,465,580,695.45 1,271,457,120.49

Total liabilities and owners' equity 1,959,223,778.23 1,824,751,224.12

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

3. Consolidated Profit Statement

Unit: Yuan

Amount incurred in the current Amount incurred in the previous

Item

period period

I. Total operating revenue 846,675,884.33 752,414,741.06

Including: Operating revenue 741,533,676.93 681,343,920.99

Interest income 101,205,806.40 61,496,910.07

Earned premiums

Service charges and commissions income 3,936,401.00 9,573,910.00

II. Total operating cost 708,934,598.86 649,917,541.74

Including: Operating cost 618,062,716.19 560,944,457.78

Interest expenses 5,599,355.64 3,344,972.23

Commissions

Surrender value

Net compensation pay-outs

Net insurance deposit accrued

Insurance dividends

Reinsurance expenses

Operating tax and surcharges 27,804,172.86 26,612,635.13

Sale expenses 4,585,434.23 2,149,313.48

Management expenses 44,222,779.09 45,406,128.22

Financial cost 3,564,776.76 9,168,643.60

Loss from asset impairment 5,095,364.09 2,291,391.30

Income from change of fair value (enter "-" for

loss)

Income from investment (enter "-" for loss) 17,647,493.77 7,204,943.01

Including: Income from investment in joint

1,703,803.48 -24,010,440.06

ventures and associated enterprises

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Amount incurred in the current Amount incurred in the previous

Item

period period

Income from exchange (enter "-" for loss)

III. Operating profit (enter "-" for loss) 155,388,779.24 109,702,142.33

Add: Non-operating revenue 2,367,546.40 3,135,256.00

Including: Gains on disposal of non-current

19,382.00 21,274.83

assets

Less: Non-operating expenses 14,687,757.38 1,075,753.92

Including: Loss from disposal of non-current

276,651.63 14,799.49

assets

IV. Total profit (enter "-" for total loss) 143,068,568.26 111,761,644.41

Less: Income tax 35,099,837.65 33,087,414.03

V. Net profit (enter "-" for net loss) 107,968,730.61 78,674,230.38

Net profit attributable to owners of the parent

74,242,090.49 48,380,294.05

company

Profit and loss of minority shareholders 33,726,640.12 30,293,936.33

VI. Net of tax of other comprehensive incomes 142,453.34 -5,916.59

Total owners' net of tax of other comprehensive

94,845.43 -3,939.27

incomes attributable to the parent company

1. Other comprehensive incomes not to be

reclassified into profit and loss

(1) Changes of net liabilities or net assets of

the re-measured defined benefit plans

(2) Shares of the investee of other

comprehensive incomes not to be reclassified into profit

and loss under the equity method

2. Other comprehensive incomes to be reclassified

94,845.43 -3,939.27

into profit and loss

(1) Shares of the investee of other

comprehensive incomes to be reclassified into profit and

loss under the equity method

(2) Profit and loss from changes of fair

94,845.43 -3,939.27

value of the available-for-sale financial assets

(3) Held-to-maturity investments

categorized as profit and loss from the available-for-sale

financial assets

(4) Effective gains or loss from cash flows

(5) Foreign currency translation differences

(6) Others

Net of tax of other comprehensive incomes

47,607.91 -1,977.32

attributable to minority shareholders

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Amount incurred in the current Amount incurred in the previous

Item

period period

VII. Total comprehensive income 108,111,183.95 78,668,313.79

Total comprehensive income attributable to

74,336,935.92 48,376,354.78

shareholders of the parent company

Total comprehensive income attributable to

33,774,248.03 30,291,959.01

minority shareholders

VIII. Earnings per share

1. Basic earnings per share 0.0946 0.0616

2. Diluted earnings per share 0.0946 0.0616

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

4. Profit Statement of the Parent Company

Unit: Yuan

Amount incurred in the current Amount incurred in the previous

Item

period period

I. Operating revenue 123,925,453.43 125,724,062.61

Less: Operating cost 76,436,384.08 76,758,875.18

Operating tax and surcharges 7,016,959.19 7,389,606.24

Sale expenses

Management expenses 22,226,491.04 22,468,321.28

Financial cost -18,483,129.66 7,413,635.27

Loss from asset impairment -448,067.93 -51,814.00

Income from change of fair value (enter "-" for

loss)

Income from investment (enter "-" for loss) 70,405,467.34 31,358,353.59

Including: Income from investment in joint

1,703,803.48 -24,010,440.06

ventures and associated enterprises

II. Operating profit (enter "-" for loss) 107,582,284.05 43,103,792.23

Add: Non-operating revenue 297,504.50 721,464.41

Including: Gains on disposal of non-current

1,975.00

assets

Less: Non-operating expenses 8,207,673.50 132,950.00

Including: Loss from disposal of non-current

1,270.00

assets

III. Total profit (enter "-" for total loss) 99,672,115.05 43,692,306.64

Less: Income tax 7,367,113.48 10,804,333.63

V. Net profit (enter "-" for net loss) 92,305,001.57 32,887,973.01

V. Net of tax of other comprehensive incomes

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Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

1. Other comprehensive incomes not to be

reclassified into profit and loss

(1) Changes of net liabilities or net assets of

the re-measured defined benefit plans

(2) Shares of the investee of other

comprehensive incomes not to be reclassified into profit

and loss under the equity method

2. Other comprehensive incomes to be reclassified

into profit and loss

(1) Shares of the investee of other

comprehensive incomes to be reclassified into profit and

loss under the equity method

(2) Profit and loss from changes of fair

value of the available-for-sale financial assets

(3) Held-to-maturity investments

categorized as profit and loss from the available-for-sale

financial assets

(4) Effective gains or loss from cash flows

(5) Foreign currency translation differences

(6) Others

VI. Total comprehensive income 92,305,001.57 32,887,973.01

VII. Earnings per share

1. Basic earnings per share

2. Diluted earnings per share

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

5. Consolidated Cash Flow Statement

Unit: Yuan

Amount incurred in the current Amount incurred in the previous

Item

period period

I. Cash flow from operating activities:

Cash received from sales of goods and rendering of

1,511,673,510.40 1,939,331,584.78

services

Net increase in deposits from customers and

interbank

Net increase in loans from central bank

Net increase in borrowing from other financial

institutions

Cash received from premiums of primary insurance

contracts

Net cash received from reinsurance business

117

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount incurred in the current Amount incurred in the previous

Item

period period

Net increase in deposits from policyholders and

investment

Net increase in financial assets measured by fair

value with changes included in current profit and loss

Cash received from interest and commissions 102,063,076.56 72,018,080.07

Net increase in loans from other banks

Net increase in redemption capital

Tax refunds 152,736,297.03 89,775,871.83

Other cash received related to operating activities 421,560,930.37 338,008,186.19

Subtotal of cash inflow from operating activities 2,188,033,814.36 2,439,133,722.87

Cash paid for goods and service 1,521,336,369.82 1,992,374,811.35

Net increase in loans to customers and prepayment 23,205,533.47 210,971,045.00

Net increase in deposits with central bank and

interbank

Cash paid for compensation pay-outs of primary

insurance contracts

Cash paid for interest, service charges, and

120,333.34 3,287,222.24

commissions

Cash paid as insurance dividends

Cash paid to and on behalf of employees 101,723,764.24 95,611,490.67

Taxes paid 127,410,425.79 141,705,938.09

Other cash paid related to operating activities 426,690,911.52 423,116,836.46

Subtotal of cash outflow in operating activities 2,200,487,338.18 2,867,067,343.81

Net cash flow from operating activities -12,453,523.82 -427,933,620.94

II. Cash flows from investing activities:

Cash received from withdrawal of investment 2,247,982,304.11 3,950,900,000.00

Cash received from investment income 16,383,656.54 37,207,556.03

Net cash received from disposal of fixed assets,

183,182.50 25,300.00

intangible assets and other long-term assets

Net cash received from disposal of subsidiaries and

other business units

Other cash received related to investing activities 9,500,000.00

Subtotal of cash inflow from investing activities 2,264,549,143.15 3,997,632,856.03

Cash paid for purchase and construction of fixed

17,573,875.73 26,270,729.51

assets, intangible assets and other long-term assets

Cash paid for investment 2,154,600,000.00 3,888,579,000.00

Net increase in mortgage loans

Net cash paid for acquisition of subsidiaries and

118

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount incurred in the current Amount incurred in the previous

Item

period period

other business units

Other cash paid related to investing activities

Subtotal of cash outflow in investing activities 2,172,173,875.73 3,914,849,729.51

Net cash flow from investing activities 92,375,267.42 82,783,126.52

III. Cash flow from financing activities:

Cash received by absorbing investment

Including: Cash received by subsidiaries from

investment of minority shareholders

Borrowings received 442,000,000.00 355,400,000.00

Cash received from bond issue 250,000,000.00

Other cash received related to financing activities 72,952,371.12

Subtotal of cash inflow from financing activities 442,000,000.00 678,352,371.12

Cash repayment 513,484,629.66 236,153,312.62

Cash paid for dividend and profit distribution or

56,139,431.32 29,547,818.85

interest payment

Including: Dividends and profit paid by

23,853,751.20 19,156,907.18

subsidiaries to minority shareholders

Other cash paid related to financing activities 58,830,972.92 21,037,568.50

Subtotal of cash outflow in financing activities 628,455,033.90 286,738,699.97

Net cash flow arising from financing activities -186,455,033.90 391,613,671.15

IV. Influence of exchange rate fluctuation on cash and

38.70 10.16

cash equivalents

V. Net increase of cash and cash equivalents -106,533,251.60 46,463,186.89

Add: Opening balance of cash and cash equivalents 382,056,680.70 335,593,493.81

VI. Closing balance of cash and cash equivalents 275,523,429.10 382,056,680.70

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

6. Cash Flow Statement of the Parent Company

Unit: Yuan

Amount incurred in the current Amount incurred in the previous

Item

period period

I. Cash flow from operating activities:

Cash received from sales of goods and rendering of

124,700,292.45 114,802,727.21

services

Tax refunds

Other cash received related to operating activities 180,735,884.82 395,074,870.68

Subtotal of cash inflow from operating activities 305,311,177.27 509,877,597.89

119

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount incurred in the current Amount incurred in the previous

Item

period period

Cash paid for goods and service 55,054,712.57 34,329,122.58

Cash paid to and on behalf of employees 37,351,053.58 37,875,519.23

Taxes paid 73,873,732.82 98,652,745.40

Other cash paid related to operating activities 262,681,816.46 515,490,539.56

Subtotal of cash outflow in operating activities 428,961,315.43 686,347,926.77

Net cash flow from operating activities -123,525,138.16 -176,470,328.88

II. Cash flows from investing activities:

Cash received from withdrawal of investment 2,065,693,441.09 3,581,000,000.00

Cash received from investment income 70,106,085.85 60,463,740.83

Net cash received from disposal of fixed assets,

5,420.00

intangible assets and other long-term assets

Net cash received from disposal of subsidiaries and

other business units

Other cash received related to investing activities 9,500,000.00

Subtotal of cash inflow from investing activities 2,135,799,526.94 3,650,969,160.83

Cash paid for purchase and construction of fixed

2,002,530.00 3,672,148.03

assets, intangible assets and other long-term assets

Cash paid for investment 1,965,600,000.00 3,782,000,000.00

Net cash paid for acquisition of subsidiaries and

other business units

Other cash paid related to investing activities

Subtotal of cash outflow in investing activities 1,967,602,530.00 3,785,672,148.03

Net cash flow from investing activities 168,196,996.94 -134,702,987.20

III. Cash flow from financing activities:

Cash received by absorbing investment

Borrowings received 315,000,000.00 180,000,000.00

Cash received from bond issue 250,000,000.00

Other cash received related to financing activities 302,371.12

Subtotal of cash inflow from financing activities 315,000,000.00 430,302,371.12

Cash repayments of amounts borrowed 350,000,000.00 80,000,000.00

27,697,680.55 7,132,693.34

Other cash paid related to financing activities 742,500.00

Subtotal of cash outflow in financing activities 377,697,680.55 87,875,193.34

Net cash flow arising from financing activities -62,697,680.55 342,427,177.78

IV. Influence of exchange rate fluctuation on cash and

38.70 13.31

cash equivalents

V. Net increase of cash and cash equivalents -18,150,783.07 31,253,875.01

120

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount incurred in the current Amount incurred in the previous

Item

period period

Add: Opening balance of cash and cash equivalents 204,395,253.65 173,141,378.64

VI. Closing balance of cash and cash equivalents 186,244,470.58 204,395,253.65

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the

accounting institution: Ying Huadong

121

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

7. Consolidated Statement of Changes in Owners' Equity

Amount incurred in the current period

Unit: Yuan

Current period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Perpetual Special Undistributed shareholders'

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity

reserve profits equity

capital Others

Shares shares income provision

securities

I. Closing balance of the

784,799,010.00 404,727,257.72 231,817.05 102,912,835.67 6,299,799.41 196,398,356.76 1,495,369,076.61

previous year

Plus: Change of

accounting policies

Correction to

errors of the previous

period

Merger of the

enterprises under the

control of a same entity

Others

II. Opening balance of the

784,799,010.00 404,727,257.72 231,817.05 102,912,835.67 6,299,799.41 196,398,356.76 1,495,369,076.61

current year

III. Increase and decrease

of the current year (enter 101,818,573.39 94,845.43 7,009,501.20 67,232,589.29 8,820,154.98 184,975,664.29

"-" for decrease)

1. Total comprehensive

94,845.43 74,242,090.49 33,774,248.03 108,111,183.95

income

122

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Current period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Perpetual Special Undistributed shareholders'

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity

reserve profits equity

capital Others

Shares shares income provision

securities

2. Capital invested or

101,818,573.39 101,818,573.39

decreased by owners

(1) Ordinary shares

invested by the

shareholders

(2) Capitals invested by

other equity instrument

holders

(3) Amount of

share-based payment

included in owners' equity

(4) Others 101,818,573.39 101,818,573.39

3. Profit distribution 7,009,501.20 -7,009,501.20 -24,954,093.05 -24,954,093.05

(1) Accrual of surplus

reserve

(2) Accrual of general

-24,954,093.05 -24,954,093.05

risk provision

(3) Amount distributed to

owners (or shareholders)

(4) Others

4. Internal carrying

123

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Current period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Perpetual Special Undistributed shareholders'

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity

reserve profits equity

capital Others

Shares shares income provision

securities

forward of owners' equity

(1) Capital reserve

transferred to increase

capital (or share capital)

(2) Surplus reserve

transferred to increase

capital (or share capital)

(3) Surplus reserve

compensating losses

(4) Others

5. Special reserve

(1) Accrual of the current

year

(2) Amount utilized in

the current period

6. Others

IV. Closing balance of the

784,799,010.00 506,545,831.11 326,662.48 109,922,336.87 73,532,388.70 205,218,511.74 1,680,344,740.90

current period

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong

124

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount of the previous period

Unit: Yuan

Previous period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Special Undistributed shareholders'

Perpetual equity

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk

reserve profits equity

capital Others

Shares shares income provision

securities

I. Closing balance of the

784,799,010.00 404,357,267.73 235,756.32 102,912,835.67 -42,080,494.64 185,584,512.58 1,435,808,887.66

previous year

Plus: Change of

accounting policies

Correction to

errors of the previous

period

Merger of

enterprises under common

control

Others

II. Opening balance of the

784,799,010.00 404,357,267.73 235,756.32 102,912,835.67 -42,080,494.64 185,584,512.58 1,435,808,887.66

current year

III. Increase and decrease

of the current year (enter 369,989.99 -3,939.27 48,380,294.05 10,813,844.18 59,560,188.95

"-" for decrease)

1. Total comprehensive

-3,939.27 48,380,294.05 30,291,959.01 78,668,313.79

income

125

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Previous period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Special Undistributed shareholders'

Perpetual equity

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk

reserve profits equity

capital Others

Shares shares income provision

securities

2. Capital invested or

67,618.87 79,378.67 146,997.54

decreased by owners

(1) Ordinary shares

invested by the

shareholders

(2) Capitals invested by

other equity instrument

holders

(3) Amount of

share-based payment

included in owners' equity

(4) Others 67,618.87 79,378.67 146,997.54

3. Profit distribution -19,557,493.50 -19,557,493.50

(1) Accrual of surplus

reserve

(2) Accrual of general risk

-19,557,493.50 -19,557,493.50

provision

(3) Amount distributed to

owners (or shareholders)

(4) Others

126

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Previous period

Owners' equity attributable to the parent company

Other equity instruments Minority

Item Less: Other General Total owners'

Special Undistributed shareholders'

Perpetual equity

Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk

reserve profits equity

capital Others

Shares shares income provision

securities

4. Internal carrying

forward of owners' equity

(1) Capital reserve

transferred to increase

capital (or share capital)

(2) Surplus reserve

transferred to increase

capital (or share capital)

(3) Surplus reserve

compensating losses

(4) Others

5. Special reserve

(1) Accrual of the current

year

(2) Amount utilized in the

current period

6. Others 302,371.12 302,371.12

IV. Closing balance of the

784,799,010.00 404,727,257.72 231,817.05 102,912,835.67 6,299,799.41 196,398,356.76 1,495,369,076.61

current period

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong

8. Statement on Changes of Owners' Equity of the Parent Company

127

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Amount incurred in the current period

Unit: Yuan

Amount incurred in the current period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

I. Closing balance of the

784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49

previous year

Plus: Change of

accounting policies

Correction to

errors of the previous period

Others

II. Opening balance of the

784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49

current year

III. Increase and decrease of

the current year (enter "-" 101,818,573.39 7,009,501.20 85,295,500.37 194,123,574.96

for decrease)

1. Total comprehensive

92,305,001.57 92,305,001.57

income

2. Capital invested or

101,818,573.39 101,818,573.39

decreased by owners

(1) Ordinary shares invested

by the shareholders

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Amount incurred in the current period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

(2) Capitals invested by

other equity instrument

holders

(3) Amount of share-based

payment included in owners'

equity

(4) Others 101,818,573.39 101,818,573.39

3. Profit distribution 7,009,501.20 -7,009,501.20

(1) Accrual of surplus

7,009,501.20 -7,009,501.20

reserve

(2) Amount distributed to

owners (or shareholders)

(3) Others

4. Internal carrying forward

of owners' equity

(1) Capital reserve

transferred to increase

capital (or share capital)

(2) Surplus reserve

transferred to increase

capital (or share capital)

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Amount incurred in the current period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

(3) Surplus reserve

compensating losses

(4) Others

5. Special reserve

(1) Accrual of the current

year

(2) Amount utilized in the

current period

6. Others

IV. Closing balance of the

784,799,010.00 507,773,837.83 109,922,336.87 63,085,510.75 1,465,580,695.45

current period

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong

Amount of previous period

Unit: Yuan

Previous period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

I. Closing balance of the

784,799,010.00 405,652,893.32 102,912,835.67 -55,097,962.63 1,238,266,776.36

previous year

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Previous period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

Plus: Change of

accounting policies

Correction to

errors of the previous period

Others

II. Beginning balance of the

784,799,010.00 405,652,893.32 102,912,835.67 -55,097,962.63 1,238,266,776.36

current year

III. Increase and decrease of

the current year (enter "-" 302,371.12 32,887,973.01 33,190,344.13

for decrease)

1. Total comprehensive

32,887,973.01 32,887,973.01

income

2. Capital invested or

decreased by owners

(1) Ordinary shares

invested by the shareholders

(2) Capitals invested by

other equity instrument

holders

(3) Amount of share-based

payment included in owners'

equity

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Previous period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

(4) Others

3. Profit distribution

(1) Accrual of surplus

reserve

(2) Amount distributed to

owners (or shareholders)

(3) Others

4. Internal carrying forward

of owners' equity

(1) Capital reserve

transferred to increase

capital (or share capital)

(2) Surplus reserve

transferred to increase

capital (or share capital)

(3) Surplus reserve

compensating losses

(4) Others

5. Special reserve

(1) Accrual of the current

year

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Previous period

Other equity instruments

Other

Item Perpetual Less: Treasury Undistributed Total owners'

Share capital Preferred Capital reserve comprehensive Special reserve Surplus reserve

capital Others shares profits equity

Shares income

securities

(2) Amount utilized in the

current period

6. Others 302,371.12 302,371.12

IV. Closing balance of the

784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49

current period

Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong

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Shenzhen SEG Co., Ltd.

Notes to the Financial Statements 2015

I. Company Profile

(I) Registered Place, Organizational Form and Headquarters Address

Shenzhen SEG Co., Ltd. (hereinafter referred to as "the Company" or “this Company”) was incorporated on July

16, 1996 through public offering with Shenzhen SEG Group Co., Ltd. as the sole initiator upon the approval of

relevant departments of Shenzhen and the state in accordance with the Company Law of the People's Republic of

China. The Enterprise Corporation Business License S. S. Zi. No. N16886 (Registration No. 440301103573251)

was issued on July 16, 1996. And upon the approval of the securities administration departments of Shenzhen

and the state, the Company's B shares and A shares were listed and traded on Shenzhen Stock Exchange

respectively in July and December, 1996.

On June 7, 2006, the Company passed a resolution at the general meeting of shareholders concerning the equity

division reform. According to the transfer plan of capital reserve into common shares, the Company distributed

4.6445 shares to tradable A share shareholders for each 10 shares, which totaled 40,233,322 transferred shares.

As a result, its non-tradable A shares were qualified for listing and circulating. Among the converted and

increased capital share obtained by the tradable A-share shareholders, 6,997,054 shares were received due to the

company's share capital expansion and the rest of 33,236,268 shares were the consideration paid to the tradable

A-share shareholders by non-tradable A-share holders under fixed arrangements.

As of December 31, 2015, the total capital share of the Company amounts to 784,799,010 shares, including

26,689 restricted shares and 784,772,321 unrestricted shares. The registered capital is 784,799,010 Yuan. The

registered address is 31F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen. The final

controlling party of the enterprise is Shenzhen State-owned Assets Supervision and Administration Commission.

District, Shenzhen. The parent company is Shenzhen SEG Group Co., Ltd., and its final controlling party is

Shenzhen State-owned Assets Supervision and Administration Commission.

(II) Business Scope

General items: Domestic commerce, goods supply and sales (excluding commodities under special operation,

control and sales), business development (specific projects shall be further declared), economic information

consulting. property lease, real estate agency, and operation of SEG special electronics markets (the license for

the special market shall be further applied for).

(III) Business Property and Business Operations

The Company engages in business service industry, involving products and service mainly in operation and

management of special electronics markets, lease business and other tertiary industries.

(IV) Approval for Disclosure of the Financial Statements

The Financial Statements are approved for disclosure by all directors of the Company on March 28, 2016.

II. Scope of Consolidated Financial Statements

20 entities are included in the current consolidated financial statements, namely:

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Type of Proportion of Proportion of voting

Company name Level

subsidiary shareholding (%) right(%)

Shenzhen SEG Baohua Enterprise Development Holding

I 66.58 66.58

Co., Ltd. subsidiary

Holding

Shenzhen Mellow Orange Business Hotel

grandson II 66.58 66.58

Management Co., Ltd

company

Wholly-owned

Shenzhen SEG Industrial Investment Co., Ltd. I 100.00 100.00

subsidiary

Holding

Changsha SEG Development Co., Ltd. I 46.00 51.00

subsidiary

Shenzhen SEG Electronics Market Management Share-controlled

I 70.00 70.00

Co., Ltd. subsidiary

Holding

Suzhou SEG Electronics Market Co., Ltd. I 45.00 45.00

subsidiary

Holding

Xi'an SEG Electronics Market Co., Ltd. I 65.00 65.00

subsidiary

Holding

Shenzhen SEG Credit Co., Ltd. I 53.02 53.02

subsidiary

Holding

Shenzhen SEG E-Commerce Co., Ltd. I 51.00 51.00

subsidiary

Shenzhen SEG Electronics Market Management Wholly-owned

I 100.00 100.00

Co., Ltd. subsidiary

Holding

Xi'an Hairong SEG Electronics Market Co., Ltd. I 51.00 51.00

subsidiary

Holding

Wujiang SEG Electronics Market Co., Ltd. I 51.00 51.00

subsidiary

Holding

Wuxi SEG Electronics Market Co., Ltd I 51.00 51.00

subsidiary

Shunde SEG Electronics Market Management Co., Wholly-owned

I 100.00 100.00

Ltd. subsidiary

Nanning SEG Electronics Market Management Co., Wholly-owned

I 100.00 100.00

Ltd. subsidiary

Wholly-owned

Nantong SEG Times Square Development Co., Ltd. I 100.00 100.00

subsidiary

Holding

Yantai SEG Times Square Development Co., Ltd. I 90.00 90.00

subsidiary

Nantong SEG Commercial Operation Management Wholly-owned

I 100.00 100.00

Co., Ltd. subsidiary

Wholly-owned

Suzhou SEG Digital Plaza Management Co., Ltd. I 100.00 100.00

subsidiary

Xi'an Fengdong New Town SEG Times Square Wholly-owned

I 100.00 100.00

Properties Co., Ltd. subsidiary

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For the cause of difference between the proportion of shareholding and the proportion of voting rights and the

basis for control of the invested entity even with half of voting rights or less, see "Attachment 8: Equities in

other entities – (1) Equities in subsidiaries".

Entities included in the consolidated financial statements of current period remain the same as that of previous

period.

III. Basis of preparation of the financial statements

(I) Basis of preparation of the financial statements

The Company has conducted confirmation and measurement based on the transactions and events that have been

actually incurred and in accordance with the Accounting Standards for Business Enterprises (ASBE) and specific

standards, the application guide of ASBE, the interpretation of ASBE and other relevant regulations (hereinafter

collectively referred to as "the ASBE"). According to Listed Company Information Disclosure Preparation Rules

No. 15 - General Regulations on Financial Report (amended in 2014) released by CSRC, the Company prepared

the financial statements.

(II) Sustainable Operation ability

There is no concern on sustainable operation ability of the Company within 12 months since the end of the

current reporting period.

IV. Main accounting policies and accounting estimates

(I) Statement on compliance with ASBE

The financial statements prepared by the Company comply with the requirements of the Accounting Standard for

Business Enterprises and truthfully and completely reflect relevant information on the financial position,

operating results, and cash flows of the Company.

(II) Accounting period

A fiscal year lasts from January 1st to December 31st of the Gregorian Calendar.

(III) Recording currency

Renminbi is the recording currency of the financial statements of the Company.

(IV) Accounting method for the business merger under or not under common control

1. If the terms and conditions or economic influences of deals involved in business merger by steps are

consistent with the following case(s), several deals will be treated as a package deal for accounting treatment.

(1) Those deals are made at the same time or in consideration of mutual influences;

(2) A complete business result can be achieved only with the deals as integrity;

(3) The occurrence of one deal depends on the occurrence of at least one deal.

(4) A single deal is uneconomical but the integration with other deals is economical.

2. Business merger under common control

Assets and liabilities acquired by the Company in the merger are calculated based on the book value of the

merged party's assets and liabilities (including goodwill resulting from the acquisition of the merged party) in the

consolidated financial statements of the ultimate controlling party on the date of merger. The capital stock

premium of capital reserve is adjusted based on the difference between the book value of net assets acquired in

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the merger and that of the consideration of the merger (or the total book value of issued shares). The retained

earnings are adjusted if the capital stock premium is not sufficient for writing off.

If contingent consideration exists and the estimated liabilities and assets have to be recognized, the capital

reserve (capital surplus or capital stock premium) is adjusted based on the difference between the estimated

liabilities and assets and the subsequent contingent consideration. The retained earnings are adjusted if the

capital reserve is not sufficient for writing off.

For business merger through several deals, deals in a package will be treated as one deal with control right

acquired for accounting treatment; for deals not in a package, the capital reserve is adjusted based on the

difference between the initial cost of long-term equity investment and the sum of book value of long-term equity

investment before merger and book value of consideration payment for new shares. The retained earnings are

adjusted if the capital reserve is not sufficient for writing off. For equity investment held before merger, other

comprehensive income recognized by the equity method, financial instruments or calculation standards will not

be subject to accounting treatment, and until the disposal of such investment such accounting treatment is carried

out on the same basis as the direct disposal of related assets and liabilities by the invested party; other changes in

owners' equity excluding net profit and loss, other comprehensive income and profit distribution in the net assets

of the invested party recognized by the equity accounting method will not be subject to accounting treatment and

is transferred to current profit and loss after the disposal of such investment.

3. Business merger not under common control

The assets paid and the liabilities incurred or undertaken by the Company as the consideration on the date of

merger are calculated based on fair value. The difference between fair value and book value will be included in

current profit and loss.

If the merger cost is higher than the fair value of the net identifiable assets of the acquired party acquired by

merger, the difference is recognized as goodwill. If the merger cost is lower than the fair value of the net

identifiable assets of the acquired party acquired by merger, the difference is included in current profit and loss.

For business merger through several deals, deals in a package will be treated as one deal with control right

acquired for accounting treatment; for deals not in a package, the sum of book value of long-term equity

investment before merger and new investment cost is treated as the initial cost of long-term equity investment on

the date of merger. For equity investment held before merger, other comprehensive income recognized with the

equity accounting method, accounting treatment of such investment is carried out on the same basis as the direct

disposal of related assets and liabilities by the invested party. If the equity investment held before merger is

subject to recognition by financial instruments and accounting by measure standards, the sum of book value of

long-term equity investment on the date of merger and new investment cost is treated as the initial cost of

long-term equity investment on the date of merger. The difference between the fair value and book value of the

equity previously held and accumulative changes in fair value originally included in other comprehensive

income are transferred to the investment income of the period of the date of merger.

4. Expenses incurred due to merger

The auditing, legal, appraisal and consulting, and other relevant direct fees incurred for business merger are

included in current profit and loss at occurrence. The transaction expenses of equity securities issued for business

merger which are directly attributable to equity transaction are deducted from the equity.

(V) Preparation method of the consolidated financial statements

1. Consolidation scope

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The scope of the consolidated financial statements of the Company is determined based on share-holding status,

and all subsidiaries are included in the scope.

2. Consolidation procedure

The Company prepares the consolidated financial statements based on the financial statements of its own and its

subsidiaries and other related materials. In the preparation of consolidated financial statements, the whole group

is deemed as an accounting entity. According to the recognition, calculation and presentation requirements of

related accounting standards and consistent accounting policies, the overall financial condition, operation results

and cash flow are reflected.

The accounting policies and accounting period adopted by all subsidiaries included in the consolidation scope

are consistent with those of the Company. Otherwise, the Company shall make necessary adjustments according

to its own accounting policies and accounting period when preparing the consolidated financial statements.

During the consolidation, the influences of internal transactions between the Company and its subsidiaries and

among the subsidiaries on the consolidated balance sheet statement, the consolidated profit statement, the

consolidated cash flow statement and the consolidated statement of changes of owner's equity will be

counteracted. If judgment on the same transaction differs from the group perspective and with the Company or a

subsidiary as the accounting entity, the transaction shall be adjusted from the group perspective.

The owner's equity of subsidiaries, current net profit and loss and minority shares in current comprehensive

income are separately listed in the owner's equity of the consolidated balance sheet statement, net profit and total

comprehensive income of the consolidated profit statement respectively. If the current losses undertaken by

minority shareholders of a subsidiary exceed the owners' equity shared by minority shareholders of a subsidiary,

the balance will be used to offset the minority shareholders' equity.

For a subsidiary acquired by merger of enterprises under common control, its financial statements are adjusted

based on the book value of its assets and liabilities (including goodwill resulting from acquisition of this

subsidiary) in the financial statements of the ultimate controlling party.

For a subsidiary acquired by merger of enterprises not under common control, its financial statements are

adjusted based on the fair value of net identifiable assets on the date of acquisition.

(1) Expansion of subsidiaries or business

In the current reporting period, in case of expansion of subsidiaries or business due to merger of enterprises

under common control, the opening amount of the consolidated balance sheet is adjusted. The income, expenses

and profits of such subsidiaries and business from the beginning of merger to the end of the current reporting

period are included in the consolidated profit statement. The cash flow of such subsidiaries from the beginning

of merger to the end of the current reporting period is included in the consolidated cash flow statement and

relevant items of comparative statements are also adjusted. The reporting entity after merger is deemed to exist

since the ultimate controlling party starts control.

If the Company exerts control on an invested party under common control due to additional investment, it is

deemed that all parties involved in merger make adjustments in the present condition since the ultimate

controlling party starts control. For the equity investment held before acquisition of control right of the acquiree,

relevant income and loss, other comprehensive income and other changes in net asset are recognized from the

later one between the date of acquisition of the original equity and the date of the acquirer and the acquiree under

common control to the date of merger, which are used to offset the opening retained earnings or current profit

and loss respectively.

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In the current reporting period, in case of expansion of subsidiaries or business due to merger of enterprises not

under common control, the opening amount of the consolidated balance sheet is not adjusted. The income,

expenses and profits of such subsidiaries and business from the date of acquisition to the end of the current

reporting period are included in the consolidated profit statement. The cash flow of such subsidiaries from the

date of acquisition to the end of the current reporting period is included in the consolidated cash flow statement

If the Company exerts control on an invested party not under common control due to additional investment, the

equity of the acquiree held before the date of acquisition shall be remeasured based on its fair value on the date

of acquisition, and the difference between the fair value and book value of the equity shall be included in current

investment income. If the equity of the acquiree held before the date of acquisition is involved in other

comprehensive income and other changes in owner's equity except net profit and loss, other comprehensive

income and profit distribution with the equity method, the relevant other comprehensive income and other

changes in owner's equity are included in current investment income, excluding other comprehensive income

due to re-measurement of changes in net liabilities and net assets in defined benefit plans.

(2) Disposal of subsidiaries or business

1) General disposal method

If the Company disposes of a subsidiary in the current reporting period, the income, expenses and profits of the

subsidiary from the beginning period to the disposal date are included in the consolidated profit statement and

the cash flow of the subsidiary in the same period is included in the consolidated cash flow statement.

If the Company loses control of its subsidiary due to disposal of part of equity investment or other reasons, the

remaining equity shall be remeasured at fair value on the day when the Company losses control of the subsidiary.

The difference between the sum of consideration acquired due to equity disposal & fair value of the remaining

equity and the sum of net assets to be enjoyed based on the original shareholding proportion since the date of

acquisition or merger & goodwill is included in the investment income in the period of loss of control. Other

comprehensive income and other changes in owner's equity except net profit and loss, other comprehensive

income and profit distribution relevant to the equity investment in any previous subsidiary are transferred to

current investment income at the time of loss of control, excluding other comprehensive income due to

re-measurement of changes in net liabilities and net assets in defined benefit plans.

2) Disposal of subsidiaries by steps

If the Company disposes of equity investment in a subsidiary in several deals by steps until its loss of control and

the terms and conditions or economic influences of deals are consistent with the following case(s), several deals

will be treated as a package deal for accounting treatment.

A. Those deals are made at the same time or in consideration of mutual influences;

B. A complete business result can be achieved only with the deals as integrity;

C. The occurrence of one deal depends on the occurrence of at least one deal.

D. A single deal is uneconomical but the integration with other deals is economical.

If deals incurred for disposal of equity investment in a subsidiary until the loss of control belong to a package

deal, the Company treats all deals as one for accounting treatment. However, the difference between the

consideration acquired from every disposal and the net asset to be enjoyed such subsidiary based on such equity

investment before loss of control is recognized as other comprehensive income of the consolidated financial

statements and transferred to the current profit and loss at the time of loss of control.

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For deals not in a package, before loss of control, the accounting treatment is based on policies about disposal of

part of equity investment in a subsidiary in case of no loss of control while at the time of loss of control, the

accounting treatment is based on general methods for disposing of such subsidiary.

(3) Acquisition of minority shares of subsidiary

Based on the difference between long-term equity investment acquired due to acquisition of minority shares and

net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital stock premium

of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the capital stock

premium is not sufficient for writing off.

(4) Disposal of part of equity investment in a subsidiary in case of no loss of control

The difference between the consideration acquired due to disposal of party of long-term equity investment in a

subsidiary and net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital

stock premium of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the

capital stock premium is not sufficient for writing off.

(VI) Classification of joint venture arrangement and accounting treatment method of joint operation

1. Classification of joint venture arrangement

Based on the structure and legal form of joint venture arrangement, terms agreed in joint venture arrangement

and other facts and condition, the Company classifies joint venture arrangement into joint operation and joint

venture.

Joint venture arrangement agreed not by individual entities is defined as joint operation. Joint venture

arrangement agreed by individual entities is generally defined as joint venture. If any joint venture arrangement

satisfies any of the following conditions and conforms to relevant laws and regulations with conclusive evidence,

such joint venture arrangement is defined as joint operation:

(1) The legal form of joint venture arrangement shows that joint ventures share rights and obligations for assets

and liabilities in such arrangement.

(2) It is agreed in the terms of joint venture arrangement that joint ventures share rights and obligations for assets

and liabilities in such arrangement.

(3) Other facts and condition show that joint ventures share rights and obligations for assets and liabilities in

such arrangement. For example, the joint ventures enjoy nearly all output relevant to such arrangement and

settlement of liabilities in such arrangement constantly depends on the support of joint ventures.

2. Accounting treatment method of joint operation

The Company recognizes the following items in interest shares during joint operation, and carries out accounting

treatment in accordance with Accounting Standards for Business Enterprises:

(I) Recognizing the assets held separately and assets shared based on shares;

(2) Recognizing the liabilities undertaken separately and liabilities shared based on shares;

(3) Recognizing the income from sales of the share in joint operation output;

(4) Recognizing the income from sales of joint operation output based on shares;

(5) Recognizing the expenses individually incurred and expenses incurred by joint operation based on shares.

If the Company invests or sells assets (excluding assets that constitute business) to the joint operation, before

such assets are sold by the joint operation to the third party, only the part of profit and loss attributed to other

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parties in the joint operation incurred by such transaction is recognized. If any impairment losses occur to the

assets invested or sold in accordance with Accounting Standards for Business Enterprises No. 8 - Asset

Impairment, the Company recognizes the losses in full.

If the Company purchases assets from the joint operation, before such assets are sold to the third party, only the

part of profit and loss attributed to other parties in the joint operation incurred by such transaction is recognized.

If any impairment losses occur to the assets purchased in accordance with Accounting Standards for Business

Enterprises No. 8 - Asset Impairment, the Company recognizes the losses based on shares.

The Company enjoys no common control of the joint operation. If the Company enjoys assets in the joint

operation and undertakes liabilities in the joint operation, the Company shall still carry out accounting treatment

based on the foregoing principles. Otherwise, the Company shall carry out accounting treatment in accordance

with Accounting Standards for Business Enterprises.

(VII) Standards for determination of cash and cash equivalents

In the preparation of the cash flow statement, the cash on hand and the bank deposits available for payment at

any time of the Company are recognized as cash. The investments that meet four conditions at the same time, i.e.

short term (due within 3 months since the date of purchase), strong liquidity, easiness in being converted into

known cash, fairly small risk of value fluctuation are recognized as cash equivalents.

(VIII) Foreign currency business and translation of foreign currency financial statements

1. Foreign currency business

In the initial recognition, a foreign currency business transaction is converted to RMB for bookkeeping based on

the spot exchange rate at the date of transaction.

At the balance sheet date, monetary items in foreign currency are converted based on the spot exchange rate at

the balance sheet date. The exchange difference thus incurred is included in current profit and loss while the

exchange difference incurred by special foreign currency borrowings for acquisition and construction of assets

eligible for capitalization is treated with the principle of capitalization of borrowing costs. Non-monetary items

in foreign currency measured by the historical cost method are converted based on the spot exchange rate at the

date of transaction, and the amount in the recording currency is not changed.

Non-monetary items in foreign currency measured by fair value are converted based on the spot exchange rate at

the date of recognition of the fair value while the translation difference thus incurred is included in current profit

and loss as profit and loss from changes in fair value. For non-monetary items in available-for-sale foreign

currency, the translation difference is included in other comprehensive income.

2. Translation of foreign currency financial statements

In the balance sheet statement, assets and liabilities are converted based on the spot exchange rate at the date of

balance sheet statement, and items other than "undistributed profits" in the owner's equity are converted based on

the spot exchange rate. The income and expense in the profit statement are converted based on the spot exchange

rate at the date of transaction. The translation difference of foreign currency financial statements with the

foregoing method is included in other comprehensive income.

At the disposal of overseas business, the translation difference of foreign currency financial statements that is

listed in other comprehensive income of the balance sheet statement and relevant to such overseas business is

transferred from other comprehensive income to current profit and loss in the period of disposal. The equity

proportion in overseas business is reduced due to disposal of part of equity investment or other reasons but the

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control right on the overseas business remains, the translation difference of foreign currency financial statements

relevant to such overseas business is not transferred to current profit and loss. At the disposal of part of equity

investment in overseas business in the form of associate or joint venture, the translation difference of foreign

currency financial statements relevant to such overseas business is transferred to current profit and loss in the

period of disposal based on the proportion of disposal.

(IX) Financial instruments

Financial instruments include financial assets, financial liabilities and equity instruments.

1. Classification of financial instruments

According to the contract terms and economic nature of financial instruments rather than in the legal form only,

in combination of the purposes of acquisition and holding of financial assets and undertaking of financial debts,

the management classifies financial assets and liabilities as follows: financial assets (or liabilities) measured by

fair value with changes included in current profit and loss, held-to-maturity investment, accounts receivable,

available-for-sale financial assets, and other financial liabilities.

2. Confirmation basis for and measurement method of financial instruments

(1) Financial assets (liabilities) measured by fair value with changes included in current profit and loss

Financial assets or liabilities measured by fair value with changes included in current profit and loss include

transactional financial assets or liabilities and financial assets or liabilities to be measured by fair value with

changes included in current profit and loss through direct designation.

Transactional financial assets or liabilities refer to financial assets or liabilities that satisfy any of the following

conditions:

1) Such financial assets or liabilities are acquired for the purpose of sales, repurchase or redemption in a short

term;

2) Such financial assets or liabilities are part of identifiable financial instruments portfolio available for central

management, and objective evidence shows that the Company has recently managed the portfolio for short-term

gains;

3) Such financial assets or liabilities belong to derivative financial instruments, excluding the designated

derivative instruments which are effective hedging instruments, derivative instruments for financial guarantee

contracts, and derivative instruments that are connected with equity instrument investments for which there is no

quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by

delivering the said equity instruments.

Financial assets or liabilities can be measured by fair value with changes included in current profit and loss

through designation only when one of the following conditions is met.

1) Through such designation, inconsistency in recognition or measurement of profit and loss resulting from

different measurement basis of financial assets or liabilities can be eliminated or obviously reduced;

2) It has been set forth in formal written documents about risk management or investment strategy that such

financial asset portfolio, financial liability portfolio, or the portfolio of such financial assets or liabilities shall be

managed, evaluated and reported to key management based on fair value;

3) A mixed instrument with one and several embedded derivative instrument (s), unless the embedded derivative

instruments cause no major changes to the cash flow of such mixed instrument or shall not be separated from the

derivative instrument (s) obviously;

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4) A mixed instrument with embedded derivative instrument (s) that needs to be separated but cannot be

separately measured at the time of acquisition or the subsequent balance sheet date.

The Company treats the fair value of financial assets or liabilities measured by fair value with changes included

in current profit and loss at the time of acquisition as the initial recognized amount, and includes relevant

transaction expenses in current profit and loss. The interests and cash dividends acquired during the period of

holding are recognized as investment income. At the time of disposal, the difference between the fair value and

the initial amount entered in the account is recognized as investment income and the profit and loss from

changes in fair value are adjusted at the same time.

(2) Accounts receivable

For credit receivable due to the commodities sold or labor services provided by the Company and credit of other

enterprises held by the Company other than the credit of debt tools with quotes in an active market, including

accounts receivable and other receivables, the amount receivable in contracts or agreements from the purchaser

is treated as the initial recognition amount. For those of a financing nature, the current value is treated as the

initial recognition amount.

At the time of collection or disposal, the difference between the amount acquired and the book value of such

accounts receivable are included in current profit and loss.

(3) Held-to-maturity investment

Held-to-maturity investment refers to non-derivative financial assets with fixed maturity date and fixed or

definite recovery amount which the Company may hold to maturity with clear intention and ability.

For held-to-maturity investment, the Company treats the sum of fair value at the time of acquisition (deducting

bond interests matured but not collected) and relevant transaction expenses as the initial recognition amount.

During the period of share-holding, the interest income is calculated and confirmed in accordance with the

amortized and the actual interest rate, which is included in the investment income. The actual interest rate is

determined at the time of acquisition and remains unchanged within the anticipated existence period or a shorter

period applicable. At the time of disposal, the difference between the price of acquisition and the book value of

such investment is included in investment income.

If the amount of held-to-maturity investment disposed of or reclassified into other financial assets is larger than

the total amount of held-to-maturity investment before sales or reclassification, the remaining held-to-maturity

investment shall be immediately reclassified into available-for-sale financial assets after disposal or

reclassification. The difference between book value and fair value of such investment is included in other

comprehensive income at the date of reclassification, and transferred to current profit and loss in case of

impairment of such available-for-sale financial assets or termination of recognition. However, the following

cases are exceptional:

1) The date of sales or reclassification is close to the due date or redemption date of such investment (e.g. within

3 months before the due date), and changes in the market interest rate have no significant influence on the fair

value of such investment.

2) The enterprise has recovered almost all initial principal with the payment method agreed in the contract.

3) The sales or reclassification arise from independent events beyond the control that are not expected to recur

and is difficult to predict reasonably.

(4) Available-for-sale financial assets

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Available-for-sale financial assets refer to non-derivative available-for-sale financial assets through designation

at initial recognition and financial assets other than other financial asset categories.

For available-for-sale financial assets, the Company treats the sum of fair value at the time of acquisition

(deducting bond interests matured but not collected) and relevant transaction expenses as the initial recognition

amount. The interests or cash dividends obtained during the time of holding are recognized as investment income.

Profit or loss from change in the fair value of available-for-sale financial assets, excluding impairment loss and

exchange difference of monetary financial assets in foreign currency, are directly included in other

comprehensive income. At the time of disposal, the difference between the price of acquisition and the book

value of such financial assets is included in investment profit and loss. At the same time, the amount of assets

disposed originally included in the accumulative amount of changes in the fair value of other comprehensive

income is transferred to investment profit and loss.

Equity instruments with no quotes in the active market and with fair value not reliably measured and derivative

instruments that are connected with the said equity instruments and settled by delivery of the said equity

instruments are measured by cost.

(5) Other financial liabilities

The sum of the fair value of such assets and relevant transaction expenses is taken as the initial recognition

amount. The amortized cost is adopted in the subsequent measurement.

3. Recognition basis and measurement method of financial assets transfer

In case of financial assets transfer of the Company, if almost all risks and returns in the ownership rights of

financial assets are transferred to the assignee, the recognition of such financial assets is terminated, and if

almost all risks and returns in the ownership rights of such financial assets are retained, the recognition of such

financial assets is not terminated.

In the judgment whether a financial asset transfer meets the foregoing conditions for termination of its

recognition, the principle of more focus on substance than form is adopted. The Company divides financial

assets transfer into the complete and the partial transfer. Where the complete transfer of financial assets meets the

conditions for termination of recognition, the difference between the following two amounts is included in

current profit and loss.

(1) Book value of the transferred financial assets;

(2) The sum of consideration acquired due to transfer and the accumulative amount of changes in fair value

originally included in owners' equity (involving the case where the transferred financial assets are the

available-for-sale financial assets).

If the partial transfer of financial assets meet conditions for termination of recognition, the part with its

recognition terminated and that with its recognition not terminated, among the book value of all the transferred

financial assets, are apportioned separately based on their relevant fair value while the difference between the

following two amounts is included in current profit and loss.

(1) Book value of the part with its recognition terminated;

(2) The sum of consideration of the part with its recognition terminated and the amount of the part with its

recognition terminated originally included in the accumulative amount of changes in the fair value of owners'

equity (involving the case where the transferred financial assets are the available-for-sale financial assets).

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In case that financial assets transfer does not meet the conditions for termination of recognition, the recognition

of such financial assets is continued. The consideration acquired is recognized as a financial liability.

4. Conditions for termination of recognition of financial liabilities

If current obligations for a financial liability are discharged wholly or partially, the recognition of the financial

liability is terminated wholly or partially. If the Company signs an agreement with the creditor to substitute an

existing financial liability with a new financial liability and the contract terms about the new liability and the

existing liability are inconsistent, the recognition of the existing financial liability is terminated and the new

financial liability is recognized at the same time.

If material alterations have been made to contract terms of the existing financial liability wholly or partially, the

recognition of the existing liability is wholly or partially terminated and, in the meantime, the liability after

alterations is recognized as a new financial liability.

If the confirmation of all or a part of a financial liability is terminated, the difference between the book value of

the liability with its confirmation terminated and the consideration (including non-cash assets transferred or the

new liability assumed) is included in current profit and loss.

If the Company repurchases part of a financial liability, the total book value of such liability is allocated on the

date of purchase based on the relative fair value of the part with its recognition continued and that with its

recognition terminated. The difference between the book value allocated to the part with its recognition

terminated and the consideration (including non-cash assets or the new liability) is included in current profit and

loss.

5. Methods for the determination of the fair value of financial assets and liabilities

For financial assets and liabilities that exist in an active market, the Company determines their fair value based

on the quotation in the active market. For financial assets initially acquired or derivative financial assets or

liabilities undertaken, the Company determines their fair value based on the market price. For financial assets

and liabilities that do not exist in an active market, their fair value are determined with appraisal techniques. In

appraisal, the Company adopts applicable appraisal techniques in the current case with sufficient data and other

information support, chooses the input values that are consistent with features of assets or liabilities taken into

consideration by market participants in relevant transactions, and makes priority use of relevant observable input

values. In case that relevant observable input values cannot be obtained or it is unpractical to obtain them,

unobservable input values will be used.

6. Accrual of impairment provision for financial assets (excluding accounts receivable)

The Company shall verify the book value of financial assets measured by fair value with changes included in

current profit and loss at the balance sheet date. If any objective evidence shows impairment of such financial

assets, an impairment provision shall be made.

Objective evidence for impairment of such financial assets includes but is not limited to:

(1) A serious financial difficulty occurs to the issuer or debtor;

(2) The debtor breaches any contract terms, for example, fails to pay or delays the payment of interests or the

principal;

(3) The creditor makes any concession to the debtor which is in financial difficulties due to economic or legal

factors;

(4) The debtor will probably become bankrupt or carry out other financial reorganizations;

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(5) The financial asset can no longer continue to be traded in the active market due to serious financial

difficulties of the issuer;

(6) It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial

assets has decreased or not. But after an overall appraisal according to the public data available, it is found that

the predicted future cash flow of the said combination of financial assets has indeed decreased since it was

initially recognized and such decrease can be measured, for example, the ability of the debtor of the said

combination of financial assets worsens gradually, the unemployment rate of the country or region where the

debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the

industrial sector concerned is in slump;

(7) Any seriously disadvantageous change has occurred to technical, market, economic or legal environment

wherein the issuer operates its business, which makes the investor of an equity instrument unable to withdraw its

investment cost;

(8) Where the fair value of the equity instrument investment drops significantly or not temporarily.

Specific impairment methods of financial assets are as follows:

(1) Impairment provision for available-for-sale financial assets

The Company shall appraise the impairment loss of each financial asset with the specific identification method at

the balance sheet date. Where the fair value of the equity instrument investment drops significantly or not

temporarily, it is an objective evidence for impairment of available-for-sale equity instruments. In terms of the

specific quantitative criterion, if the fair value of such equity instrument investment is lower than over 50%

(including 50%) of its cost or is lower than its cost for over 12 months (including 2 months) consecutively, it

indicates that such asset is impaired.

When an available-for-sale financial asset is impaired, even if the recognition of the financial asset has not been

terminated, the accumulative losses arising from decrease in the fair value of the owner's equity which was

directly included in other comprehensive income shall be transferred out and included in current profit and loss.

The accumulative losses that are transferred out shall be the balance between the initial costs of the financial

asset available for sale and the principals as taken back, the current fair value and the impairment-related losses

as was included in current profit and loss.

As for the available-for-sale debt instruments whose impairment losses have been recognized, if, within the

accounting period thereafter, the fair value has risen and such instruments are objectively related to the

subsequent events that occur after the original impairment losses were recognized, the originally recognized

impairment losses shall be reversed and included in current profit and loss. The impairment loss of

available-for-sale equity instruments shall be reversed when the value of such equity instruments rebound.

However, for equity instruments investment with no quotes in the active market and with fair value not reliably

measured and derivative instruments that are connected with the said equity instruments and settled by delivery

of the said equity instruments, the impairment loss shall not be reversed.

(2) Impairment provision for held-to-maturity investments

If any objective evidence shows impairment of held-to-maturity investments, the impairment loss shall be

calculated based on the difference between the book value of those investments and the current value of the

expected future cash flow. If any evidence indicates that the investment value has recovered after provision, the

originally recognized impairment loss can be reversed and included in current profit and loss. However, the

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reversed book value shall not exceed the amortized cost of such financial assets at the date of reversal in case

that the impairment provision has not been made.

7. Counteraction of financial assets and liabilities

Financial assets and liabilities are separately listed in the balance sheet statement and not counteracted. However,

if the following conditions are satisfied at the same time, the balance after counteraction may be listed in the

balance sheet statement.

(1) The Company has the legal right to counteract the recognized amount which is currently enforceable.

(2) The Company plans to settle in net amount or realize such financial assets and liquidate such financial

liabilities at the same time.

(X) Accounts receivable

1. Accounts receivable with significant single amount and single provision for bad debts

Recognition criteria for accounts receivable with significant single amount and single provision for bad debts:

Top 5 accounts receivable

Recognition criteria for accounts receivable with significant single amount: impairment tests are carried out

separately, and the difference between the expected future cash flow and its book value is accrued for bad debt

provision and included in current profit and loss. Accounts receivable with no impairment by test shall be

included in the bad debt provision for a certain combination.

2. Accounts receivable with bad debt provision accrued based on credit risk feature combinations

(1) Determination basis for credit risk feature combinations

Accounts receivable with no significant single amount and accounts receivable with significant single amount

and no impairment by test are classified into several combinations according to credit risk feature. Based on the

actual loss rate of the accounts receivable combinations with similar credit risk feature in the previous year, the

bad debt provision accrual shall be determined according to the present condition.

Determination basis for combination:

Name of combination Method of accrual Determination basis for combination

The Company makes the best appraisal of the provision proportion of

Combination of aging accounts receivable based on the previous experience and classifies

Aging analysis method

analysis method the credit risk feature combinations by reference to aging of accounts

receivable

Based on the property of accounts receivable, the bad debt provision

Combination of

No bad debt provision accrual is not accrued, including rental deposit, deposit, account with related

specific object

parties, etc.

(2) Accrual method based on credit risk feature combinations:

Bad debt provision accrued with the aging analysis method

Provision proportion of accounts Provision proportion of other accounts

Aging

receivable (%) receivable (%)

Within 1 year (including 1 year)

1-2 years 5.00 5.00

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Provision proportion of accounts Provision proportion of other accounts

Aging

receivable (%) receivable (%)

2-3 years 10.00 10.00

Over 3 years 20.00 20.00

Accounts receivable with no significant single amount but with single provision for bad debts

Reason for single provision for bad debts: Any objective evidence indicates that the Company is unable to

recover the accounts receivable according to the original terms.

Accrual method for bad debt provision: The difference between the expected future cash flow and its book value

is accrued for bad debt provision.

(XI) Inventory

1. Classification of inventory

Inventory refers to finished products or commodities held for sale by the Company in daily activities, products in

process, and materials consumed in the production or labor service process. It mainly includes raw materials,

circulating materials, commissioned processing materials, products in process, semi-finished goods, finished

products (stock goods), delivered goods, development costs, developed products, etc.

Development costs refer to properties not completed for sale purposes. Lands to be developed refer to the land

which is purchased and planned for developed products after its completion. Developed products refer to

properties which has been completed and is to be sold. In the overall development of a project, lands to be

developed are transferred to development costs. In the development by phases, the land developed in phases is

transferred to development costs while the land not developed remains in the land to be developed.

2. Pricing method of inventory

Initial measurement will be carried out at the time of acquisition of the inventory based on its costs, including

procurement cost, processing cost and other costs. The pricing of the inventory is based on the weighted-average

method at the time of delivery.

3. Determination basis for net realizable value of inventory and accrual method for inventory depreciation

provision

After a complete check on the inventory at the end of the period, the inventory depreciation provision is accrued

or adjusted based on the lower one between the inventory cost and the net realizable value. The net realizable

value of commodity inventory directly for sale including finished products, stock goods and materials for sale is

determined by the estimated selling price of such inventory minus estimated selling expenses and relevant taxes

during production and operation. The net realizable value of material inventory to be processed is determined by

the estimated selling price of the finished product minus estimated cost to be incurred until completion,

estimated selling expenses and relevant taxes during production and operation. The net realizable value of

inventory held for fulfilling sales contract or labor service contract is calculated based on the contract price. If

quantity of inventories held is more than the ordered quantity in the sales contract, the net realizable value of the

inventory for the excess part is calculated based on general selling price.

At the end of the period, the inventory depreciation provision is accrued based on separate items. However, for

inventories in large quantity at low unit price, the depreciation provision is accrued based on types of inventories.

For inventories that are related to product series produced and sold in the same area for same or similar final use

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or purpose and difficult to be measured separately from other items, inventory depreciation provision is

consolidated for accrual.

Where factors that caused decrease in value of inventory disappear, the amount written down shall be recovered

and written back from the accrued inventory depreciation provision. The amount written back shall be included

in current profit and loss.

4. Inventory system

The perpetual inventory system is adopted.

5. Amortization method of low-value consumables and packages

(1) For low-value consumables, one-off amortization method is adopted.

(2) For packages, one-off amortization method is adopted.

6. Accounting method of land for development

The expenses incurred by pure land development project shall constitute the land development cost alone.

For projects with overall development of property, the expenses with definite payers are generally amortized to

the commodity house cost based on the actual area.

7. Accounting method of public facility expenses

For public facilities not available for paid transfer, the expenses shall be included in the commodity house cost

based on the benefit ratio;

For public facilities available for paid transfer, all supporting facilities are treated as the accounting object and

the costs incurred are collected.

8. Accounting method of maintenance fund

According to relevant provisions at the location of the developed project, the maintenance cost is collected from

the house purchaser or included in the development cost when the relevant developed product is sold (or

pre-sold), and turned in to maintenance cost management department.

9. Accounting method of quality deposit

The quality deposit is retained from the project fund of the construction party according to the construction

contract. Maintenance expenses incurred during the warranty period of the developed product are used to offset

the quality deposit. When the agreed warranty period expires, the remaining quality deposit is returned to the

construction party.

(XII) Loans and prepayment issued

1. Loan

Loan refers to the money in RMB lent to medium and small enterprise corporations, individual businessmen and

individuals according to the market interest rate, the principal of which issued will be taken as the amount for

initial recognition. The earnings of interest recognized during the holding of the loan shall be calculated

according to actual interest rate, which will be determined when the loan is issued, and will remain unchanged

during the holding of the loan or shorter period.

2. Reserve for loss of loan

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In the end of every quarter, the Company will divide every unit loan into such five categories as normal, focused,

secondary, suspicious and lost according to the quality of the credit assets and incorporate into daily credit

management to carry out classified supervision.

The Company shall reasonably estimate possible loss that might arise from the loan to accrue reserve for loss of

loan in time, which shall include general reserve and special reserve. General reserve is accrued according to

certain percentage of the total balance of loan, used for compensating the reserve of potential loss not recognized.

Special reserve is the provision accrued for compensating special loss according to the level of the loss of every

loan after classifying the risks of the loan in light with the Guiding Principles o Classification of Risks of Loan.

The scope of provision of reserve for loss of loan comprises the assets to bear risks and losses, in details,

including all kinds of small loans (including loan by mortgage, pledge, guarantee and credit, etc.) and bill

discount, etc.

The Company shall withdraw general serve every quarter. The year-end balance of general reserve shall not be

lower than 1% of the balance of the loan in the end of the year.

The Company shall withdraw special reserve per quarter according to the following percentages:

(1) Normal loan: the percentage of provision is 1%;

(2) Focused loan: the percentage of provision is 2%;

(3) Secondary loan: the percentage of provision is 25%;

(4) Suspicious loan: the percentage of provision is 50%;

(5) Lost loan: the percentage of provision is 100%.

(XIII) Held-for-sale assets

1. Standards to recognize as held-for-sale

The Company will recognize the components of the enterprise (or non-circulating assets) satisfying the

following conditions at the same time as the held-for-sale part:

(1) Such components can be sold immediately under current situations according to the conventional terms for

selling such components;

(2) The enterprise has made resolution on how to dispose such components. If approval shall be obtained from

shareholders according to the stipulations, approval has been obtained from the General Meeting of Shareholders

or relevant power authority;

(3) The enterprise has signed irrevocable transfer agreement with the transferee;

(4) This transfer will be completed within one year.

2. Accounting method for dividing to held-for-sale

The Company will adjust the estimated net residual value of the fixed asset held-for-sale to make its estimated

residual value reflect the amount of its fair value minus the disposition cost, but shall not exceed the original

book value of such fixed asset in compliance with the held-for-sale conditions. The balance between the original

book value and the estimated net residual value (the former higher than the latter) shall be incorporated into

current profits and losses as assets impairment loss. No depreciation or amortization will be accrued for

held-for-sale fixed asset, but will measurement will be carried out according to the lower between the book value

and the net amount of fair value minus the disposition cost.

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Other non-circulating assets including equity investment and intangible assets in compliance with the

held-for-sale conditions shall be treated according to the aforesaid principles, but will not include deferred

income tax assets, financial assets normalized by

the contractual rights arising from Enterprise Accounting Rules No. 22-Reconigition and Measurement of

Financial Instruments, investment real estate and biological assets measured by fair value and contractual rights

arising from insurance contract.

(XIV) Long-term equity investment

1. Determination of investment cost

(1) Long-term equity investment formed by consolidation of enterprises. For specific accounting policies, please

refer to Notes IV/iv Accounting Treatment Methods of Consolidation of Enterprises under Same Control and Not

under Same Control.

(2) Long-term equity investment obtained by other methods

Concerning the long-term equity investment obtained by paying cash, the purchasing price actually paid will be

taken as initial investment cost, which includes costs, taxes and other necessary expenditures directly related

with the acquisition of long-term equity investment.

Concerning the long-term equity investment obtained by issuing equity securities, the fair value of the equity

securities issued shall be taken as the initial investment cost. Transaction cost arising from issuance or acquiring

own equity tools, if can be directly attributed to equity transaction, can be deducted from equity.

Under the preconditions that the non-monetary assets exchange possesses commercial nature and the fair value

of assets exchanged in or out can be reliably measured, the initial investment cost of long-term equity investment

exchanged in by non-monetary assets shall be determined based on the fair value of assets exchanged out, unless

there is solid evidence proving that the fair value of the assets exchanged in is more reliable. For the exchange of

non-monetary assets not satisfying aforesaid preconditions, the book value of the assets exchanged out and

relevant taxes payable shall be recognized as the initial investment cost of long-term equity investment

exchanged in.

The initial investment cost of the long-term equity investment obtained by restructure of debts shall be

determined based on fair value.

2. Subsequent measurement and recognition of profits and losses

(1) Cost method

The Company can adopt cost method to account the long-term equity investment controlled by the invested unit,

and priced according to the investment cost, add or recover the investment and adjust the cost of long-term

equity investment.

Except the cash dividends or profits included in the price or the consideration actually paid when acquiring the

investment but not issued, the Company shall recognize the cash dividends or profits announced to distribute by

the invested unit as the current investment earnings.

(2) Equity method

The Company adopts equity method to account the long-term equity investment to the affiliated business and

jointly operated enterprise. For equity investment of the jointly operated enterprise indirectly held by similar

subject including venture investment organization, joint fund, trust company or unit-linked insurance fund, fair

value shall be adopted for measurement and the changes will be incorporated into profits and losses.

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For the balance between the initial investment cost of long-term equity investment higher than the identifiable

net assets fair value of the invested unit at the time of investment, initial investment cost of long-term equity

investment shall not be adjusted. The balance between the initial investment cost lower than the fair value shares

of identifiable net assets of the invested unit at the time of investment shall be incorporated into current profits

and losses.

After the Company acquires long-term equity investment, according to the net profits and losses realized by the

invested unit to be enjoyed or shared and other comprehensive earnings, investment earnings and other

comprehensive earnings shall be recognized respectively, meanwhile book value of long-term equity investment

shall be adjusted. Moreover, according to the profits or cash dividends announced by the invested unit to be

distributed, the part to be received will be calculated and book value of long-term equity investment shall be

reduced accordingly. Concerning other changes in owner's equity of the invested unit apart from net profits and

losses, other comprehensive earnings and profits distribution, book value of long-term equity investment shall be

adjusted and incorporated into owner's rights and interests.

When recognizing the shares of net profits and losses of the invested unit to be received, based on the fair value

of each identifiable asset of the invested unit at the time of acquiring the investment, recognition shall be made

after adjusting the net profits of the invested unit. Profits and losses from internal transactions not realized

between the Company and the joint ventures and jointly operated enterprises shall be amortized according to the

part attributable to the Company that is calculated based on the percentage receivable, and on such basis

investment profits and losses are recognized.

When the Company recognizing the losses of the invested unit to be shouldered, it shall be handled according to

the following sequence: firstly, to write down the book value of the long-term equity investment; secondly, if the

book value of long-term equity investment is not sufficient to write down, investment loss shall be recognized

continuously based on the book value of long-term equity that has materially formed net investment to the

invested unit, and write down the book value of long-term receivable items. At last, after aforesaid disposal,

according to investment contract or agreement, if it is stipulated that the enterprise shall undertake extra

obligations, estimated liabilities shall be recognized according to the estimated obligations for undertaking,

incorporated into current investment loss.

If profits are realized by the invested unit in subsequent period, after the Company deducts the shares to be

shouldered for the losses not recognized, the treatment shall be made according to reverse sequence as above

mentioned. After writing down the book balance of estimated liabilities, recovering the long-term equity that

actually forms net investment to the invested unit as well as the book value of long-term equity investment,

investment earnings shall be recovered in recognition.

3. Conversion of accounting method for long-term equity investment

(1) Measurement of fair value changed to accounting by equity method

Concerning the equity investment on which accounting treatment is carried out held by the Company previously

that has no control, joint control or significant influences on the invested unit according to the recognition as

financial instruments and measurement rules, after increasing investment, if the Company is able to impose

significant influences on the invested unit or performs joint control by not control, the total of the fair value of

the equity investment held according to Enterprise Accounting Rules No. 22-Reconigition and Measurement of

Financial Instruments plus the newly increased investment cost shall be recognized as the initial investment cost

accounted by equity method.

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If the originally held equity investment is classified as available-for-sale financial asset, the balance between its

fair value and book as well as the total fair value changes that were incorporate dint other comprehensive

earnings shall be transferred to the current profits and losses accounted by equity method.

The book value of the long-term equity investment accounted by the balance between the initial investment cost

accounted by equity method and the fair value of identifiable net assets of the invested unit on the date of

increased investment determined by the new shareholding percentages after the increase of investment, and shall

be incorporated into current non-operating revenue.

(2) Fair value measurement or equity method accounting changed to accounting by cost method

Concerning the equity investment held by the Company in the invested unit that the Company does not control,

jointly control or generates significant influences accounted according to recognition of financial instruments

and measurement rules, or due to the increase of investment in long-term equity investment held in any joint

venture or jointly operated enterprise, the Company is able to perform control on the invested unit not under the

same control, when individual financial statement is prepared, the total of the book value of the equity

investment held previously and the newly increased investment cost will be recognized as initial investment cost

accounted by cost method.

Concerning other comprehensive earnings recognized by adopting equity method on equity investment held

before the date of acquisition, when such investment is disposed, accounting treatment shall be carried out

according to the same basis as directly treatment of relevant assets or liabilities by the invested unit.

If the equity investment held before the date of acquisition encounters accounting treatment in accordance with

relevant stipulations set out in Enterprise Accounting Rules No. 22 - Reconigition and Measurement of Financial

Instruments, total changes of fair value that was incorporated into other comprehensive earnings previously shall

be transferred into current profits and losses when cost method is used for accounting.

(3) Accounting by equity method changed to measurement by fair value

If the Company loses it joint control or significant influence on the invested unit due to such reason as disposing

part of the equity investment, the remaining equity shall be accounted according to Enterprise Accounting Rules

No. 22 - Reconigition and Measurement of Financial Instruments. The balance between the fair value and the

book value on the date of losing joint control or significant influence shall be incorporated into current profits

and losses.

Other comprehensive earnings recognized because of the adaptation of equipment method for the accounting of

the original equity investment shall receive accounting treatment of the same basis as the invested unit directly

treating relevant assets or liabilities when the use of equity method for accounting is terminated.

(4) Cost method changed to equity method

If the Company has lost the control over the invested unit due to such reasons as treating part of equity

investment, when preparing individual financial statement, if the remaining equity after treatment can perform

joint control or impose significant influences on the invested unit, equity method shall be used for the accounting,

and adjustment shall be implemented as if the remaining equity has been accounted by using equity method since

the acquisition.

(5) Cost method changed to measurement by fair value

If the Company has lost the control over the invested unit due to such reasons as treating part of equity

investment, when preparing individual financial statement, if the remaining equity after treatment cannot

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perform joint control or impose significant influences on the invested unit, accounting treatment shall be

changed to according to relevant stipulations set out in Enterprise Accounting Rules No. 22 - Reconigition and

Measurement of Financial Instruments. The balance between the fair value and the book value on the date of

losing control shall be incorporated into current profits and losses.

4. Treatment on long-term equity investment

When treating long-term equity investment, the balance between its book value and the actually acquired price

shall be incorporated into current profits and losses. Concerning long-term equity investment accounted by

equity method, when treating such investment, the same basis used by the invested unit in directly treatment

relevant assets or liabilities shall be adopted to carry out accounting treatment on the part that was incorporated

into other comprehensive earnings according to relevant percentages.

When treating the equity investment to subsidiaries, if terms, conditions and economic influences of the

transactions comply with one or several situations below, several transactions shall be taken as package deal to

carry out accounting treatment:

(1) These transactions are concluded at the same time or after mutual influences are considered.

(2) The entirety of these transactions can reach a complete business result.

(3) Occurrence of one transaction depends on at least one other transaction.

(4) On transaction, separately seen, is not economic, but when being considered with other transactions, is

economic.

If control over the previous subsidiary is lost due to treating part of equity investment or other reasons, it is not

considered as package deal. Individual financial statement and consolidated financial statement shall be

distinguished to carry out relevant accounting treatment.

(1) In individual financial statement, the balance between the book value and the actual acquisition price of the

equity to be treated shall be incorporated into current profits and losses. If the remaining equity after treatment

can implement joint control or impose significant influence on the invested unit, equity method shall be changed

for accounting, and adjustment shall be made on the remaining equity as if it was accounted by equity method at

the time of acquisition. If the remaining equity after treatment cannot implement joint control or impose

significant influence on the invested unit, accounting treatment shall be carried out according to relevant

stipulations set out in Enterprise Accounting Rules No. 22 - Reconigition and Measurement of Financial

Instruments. The balance between the fair value and the book value on the date of losing control shall be

incorporated into current profits and losses.

(2) In consolidated financial statement, for all the transactions before the loss of the control on the subsidy,

capital surplus (share capital premium) shall be adjusted based on the balance between the disposition price and

the net assets shares enjoyable in the subsidiary that is calculated continuously since the date of purchase or

consolidation. If the capital surplus is not sufficient to write down, retained earnings shall be adjusted. When the

control over the subsidy is lost, the remaining equity shall be measured again according to the fair value on the

date of losing the control. The balance obtained by total of consideration acquired by disposing equity and the

fair value of remaining equity minus the net assets calculated continuously since the date of purchase of the

subsidiary enjoyable as calculated according to the original shareholding percentage shall be incorporated into

the investment earnings of the term in which the control is lost, meanwhile goodwill shall be written down.

Other comprehensive earnings related with the equity investment of the previous subsidiary shall be transferred

to be current investment earnings when the control is lost.

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If the transactions from dealing with the equity investment to subsidiary until the loss of control belong to

package deal, all transactions shall be taken as one transaction of disposing equity investment to the subsidiary

and losing control for accounting treatment. Relevant accounting treatment shall be carried out in individual

financial statement and consolidated financial statement:

(1) In individual financial statement, before the loss of control, the balance between the price of every disposal

and the book value of long-term equity investment corresponding to the equity disposed shall be recognized as

other comprehensive earnings, and will be transferred to losses and profits of the term in which the control is lost

when the control is lost.

(2) In consolidated financial statements, the balance between the price of every disposal before the loss of

control and the net assets shares held in the subsidiary corresponding to the disposal of investment shall be

recognized as other comprehensive earnings, and will be transferred to losses and profits of the term in which the

control is lost when the control is lost.

4. Standards to judge control joint and significant influences

If the Company controls some arrangement with other participants collectively according to relevant stipulations,

and the decision on activity that generates significant influence on the return of such arrangement only exists

upon consensus of all participants that share the control right, it will be regarded as the Company controls such

arrangement jointly with other participants, and the arrangement belongs to jointly operated arrangement.

If jointly operated arrangement is achieved by single entity, according to relevant stipulations, if it is judged that

the Company has right on the net assets of such single entity, the single entity shall be taken as joint venture, and

equity method will be adopted for settlement. If according to relevant stipulations, it is judged that the Company

has no right on the net assets of such single entity, such single entity shall be taken as jointly operating. The

Company shall recognize the items that are related with the shares of the jointly operated interests, and carry out

accounting treatment according to the stipulations set out in relevant enterprise accounting standards.

Significant influence refers that the investor has the power to participate in the decision-making of financial and

operation policies of the invested unit, but cannot control or jointly control with other parties the formulation of

these policies. The Company will judge the possession of significant influence on the invested unit through one

or several situations below and comprehensively consideration of all facts and situations. (1) Has designated

deputy in the Board of Directors or similar power authority in the invested unit; (2) Participates in the

formulation of financial and operation policies of the invested unit; (3) Has important transactions with the

invested unit; (4) Has dispatched management personnel to the invested unit; (5) Provides key technical files to

the invested unit.

(XV) Investment real estate

Investment real estate refers to the real estate held for earning rent or capital value adding or both, including the

using right of the land leased, the land using right held for transfer after appreciation and the leased buildings.

Cost of investment real estate of the Company shall be taken as entry value. Cost of purchased investment real

estate includes purchasing price, relevant taxes and other expenses that can be directly attributable to such asset.

Cost of the investment real estate built will be composed by all necessary expenses to build such asset and those

arising before the asset reaches the estimated usable status.

The Company carries out follow-up measurement on investment real estate by adopting cost mode, and accrues

depreciation or amortization on buildings and land using right according to estimated service life and net residual

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value rate. Estimated service life, net residual value rate and yearly depreciation (amortization) rate are shown

below:

Yearly depreciation (amortization)

Type Estimated service life (year) Estimated net residual value rate

rate

Buildings 20-40 5% 4.75%-2.38%

If the purpose of investment real estate is for own use, since the date of change, the Company converts such

investment real estate to fixed asset or intangible asset. If the purpose of the real estate is changed to earning rent

or capital value adding, since the date of change, the Company shall convert fixed asset or intangible asset to

investment real estate. When conversion occurs, the book value before the conversion will be taken as the entry

value after conversion.

When investment real estate is disposed or permanently exits from use, and is estimated that no economic

interest will be gained from its disposal, the recognition on such investment real estate shall be terminated. The

income of disposal of real estate, including selling, transferring, discarding or destroying the investment real

estate minus its book value and relevant taxes shall be incorporated into current profits and losses.

(XVI) Fixed asset

1. Conditions to recognize fixed assets

Fixed assets refer to intangible assets that are held for producing commodities, providing labors, renting or

operation management with the service life over one fiscal year. Fixed asset will be recognized when satisfying

the following conditions at the same time:

(1) Economic interest related with such fixed assets might probably flow into the enterprise.

(2) Cost of such fixed asset can be reliably measured.

2. Initial measurement of fixed assets

Initial measurement on the fixed assets of the Company will be carried out according to the cost, in which cost of

fixed assets purchased include purchasing price and import tariff, etc. as well as other expenses arising in order

to make the fixed assets reach estimated usable status that can be directly attributable to such assets. Cost of

fixed asset built by the Company will be composed of necessary expenses to make the asset reach usable status.

Value of fixed asset invested by the investor stipulated in the investment contract or agreement shall be taken as

entry value, but if the price set out in the contract or agreement is not fair, it shall be accounted according to its

fair value. If the price of fixed asset purchased exceeds normal credit conditions and is paid in extension, in fact

possessing financing nature, the cost of fixed asset shall be determined based on the current value of purchasing

price. The balance between the actually paid price and the current value of purchasing price, except to be

capitalized, shall be incorporated into current profits and losses in the credit period.

3. Follow-up measurement and disposal of fixed assets

(1) Depreciation of fixed assets

Depreciation of fixed asset shall be accrued during the estimated service life according to the entry value minus

the estimated net residual value. For fixed asset that impairment reserve has been provided, depreciation shall be

determined according to the book value after the deduction of impairment reserve in the coming period as well

as the years to be used.

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According to nature and situation of use of fixed asset, the Company will determine the service life and

estimated net residual value of the fixed asset. At the end of the year, the Company will recheck the service life,

the estimated net residual value and the depreciation method of the fixed. If there is difference from the

previously estimated amount, relevant adjustment shall be carried out.

Estimated service life, net residual value rate and yearly depreciation rate of different type of fixed assets are

shown below:

Yearly depreciation

Type Depreciation method Depreciation life (year) Residual value rate (%)

rate (%)

Buildings and Straight-line depreciation

20-40 5 4.75-2.38

constructions method

Machines and Straight-line depreciation

5-10 5 19.00-9.50

equipment method

Electronic Straight-line depreciation

5-10 5 19.00-9.50

equipment method

Transportation Straight-line depreciation

5-10 5 19.00-9.50

equipment method

Straight-line depreciation

Other equipment 5-10 5 19.00-9.50

method

(2) Subsequent expenditures of fixed assets

Subsequent expenditures related with fixed asset, if complies with the recognition conditions for fixed asset,

shall be incorporated into the cost of fixed asset; if does not comply with the recognition conditions for fixed

asset, shall be incorporated into current profits and losses at the time of occurrence.

(3) Disposal of fixed asset

When a fixed asset cannot generate economic profits by disposal or by use as estimated, such fixed asset shall be

terminated in recognition. The amount received by disposal of fixed asset, such as selling, transferring,

discarding or destroying, minus its book value and relevant taxes shall be incorporated into current profits and

losses.

4. Recognition basis, pricing and depreciation method of fixed assets leased by financing

When fixed asset leased by the Company complies one or several standards set below, it shall be recognized as

fixed asset leased in by financing:

(1) When the leasing period is expired, the ownership of the leased asset will be transferred to the Company.

(2) The Company has the option to purchase the leased asset. It is estimated that the purchasing price concluded

will be far lower than the fair value of the leased asset at the time of exercising the option, therefore, it can be

reasonably decided from the starting date of the lease that the Company will excise such option.

(3) Even if the ownership of asset will not be transferred, the leasing period accounts for most of the service life

of the leased asset.

(4) The current value of the minimum leasing payment from the starting date of the lease is almost equal to the

fair value of the leased asset when the lease starts.

(5) The nature of the leased asset is special. If no big renovation is made, it can only be used by the Company.

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The lower between the fair value of the leased asset starting from the leasing date and the current value of the

minimum leasing payment will be taken as the entry value of the fixed asset leased in by financing. The

minimum leasing payment shall be taken as the entry value of long-term payable, and its balance shall be taken

as the unrecognized financing cost. Initially direct expenses arising from the leasing negotiation and the signing

of leasing contract attributable to leased items, including commission charge, lawyer fee, traveling cost and

stamp tax shall be incorporated into the value of the leased asset. The leasing expenses not recognized will be

amortized by using actual interest rate method during the period of leasing in installments.

The Company adopts depreciation policy consistent with the self-owned fixed assets to accrue depreciation of

fixed assets leased in by financing. If it can be reasonably determined that the ownership of the leased asset can

be acquired when the leasing period is expired, depreciation shall be accrued during the service life of the leased

asset. If it cannot be reasonably determined that the ownership of the leased asset can be acquired when the

leasing period is expired, depreciation shall be accrued in the shorter period between the leasing period and the

service life of the leased asset.

(XVII) Construction in progress

1. Type of construction in progress

Construction in progress built by the Company shall be priced according to the actual cost, which will be

composed of the necessary costs to build the asset and make it reach the estimated usable status, including

material cost for the project, labor cost, relevant taxes paid, borrowing cost to be capitalized and indirect cost to

be amortized. The construction in progress of the Company shall be settled according to the category of project.

2. Standard and time for construction in progress to be carried over to fixed asset

All costs of construction in progress arising to make such asset reach estimated usable status shall be taken as the

entry value of the fixed asset. If the construction in progress built has reached the estimated usable status, but no

completion settlement is done, from the date of reaching the usable status, according to engineering budget,

construction cost or actual cost of the project, the construction in progress will be carried over to fixed asset

according to the estimated value, and depreciation of fixed asset shall be accrued according to the Company's

depreciation policy on fixed assets. After the completion settlement is done, the estimated value shall be adjusted

according to the actual cost, but the depreciation accrued will not be adjusted.

(XVIII) Borrowing costs

1. Recognition principles of capitalization of borrowing costs

Borrowing costs incurred by the Company, if can be directly attributable to the purchase, construction or

production of asset in compliance with the capitalization conditions, will be capitalized upon satisfying the

conditions of capitalization, and incorporated into costs of relevant assets. Other borrowing costs will be

recognized as costs according to the accrual at the time of occurrence, and incorporated into current profits and

losses.

Assets in compliance with the capitalization conditions refer to fixed assets, investment real estate and inventory

that can reach estimated usable or sellable status after quite long time of purchasing, construction or production

activities.

Borrowing costs will be capitalized when satisfying the following conditions at the same time:

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(1) Assets costs have occurred, which include the expenses arising from paying cash, transferring non-cash assets

or bearing liabilities with interest in order to purchase, build or produce assets in compliance with the

capitalization conditions.

(2) Borrowing costs have occurred.

(3) Necessary activities including purchasing, building or production to make the asset reach estimated usable or

sellable status have been started.

2. Period of capitalization of borrowing costs

The capitalization period refers to the period from when the borrowing costs are capitalized to the stop of the

capitalization. The suspended period of capitalization of borrowing costs are not included.

When the assets purchased, built or produced in compliance with the capitalization conditions reach estimated

usable or sellable status, the capitalization of borrowing costs shall be stopped.

When part of the items in the assets purchased, built or produced in compliance with the capitalization are

completed respectively and can be used separately, the capitalization of borrowing costs of such part of assets

shall be stopped.

If the assets purchased, built or produced are completed in different parts, but can only be used or sold after the

entire completion, the capitalization of borrowing costs shall be stopped when such assets are entirely completed.

3. Period of suspension of capitalization

If asset in compliance with capitalization conditions encounters abnormal suspension, and the suspension

exceeds 3 months continuously during the process of purchase, construction or production, the capitalization of

borrowing costs shall be suspended. If such suspension is necessary procedure to make the asset in compliance

with capitalization conditions purchased, built or produced to reach usable or sellable status, capitalization of

borrowing costs shall be continued. The borrowing costs arising during the suspension shall be recognized as

current profits and losses until the activities of purchasing, building or production of asset are restarted,

capitalization of borrowing costs shall be continued.

4. Calculation method for amount of capitalization of borrowing costs

Interest of special loan (minus the income of interest obtained by unused loan deposited in the bank or the

investment earnings obtained by temporary investment) and its auxiliary costs shall be capitalized before the

asset in compliance with the capitalization conditions purchased, built or produced reaches usable or sellable

status.

Interest amount of general loan to be capitalized shall be calculated and determined by the weighted average of

the accumulated asset expenditures exceeding special loan multiplying the capitalization rate of general loan

occupied. Capitalization rate will be calculated and determined according to the weighted average interest rate of

general loan.

If the loan has discount or premium, amount of discount or premium to be amortized in every accounting period

shall be determined according to actual interest rate method, and amount of interest of every period shall be

adjusted.

(XIX) Intangible assets and development expenses

An intangible asset refers to an identifiable non-monetary asset without physical substance which is possessed or

controlled by the Company, including purchased software and land use rights.

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1. Initial measurement of intangible assets

The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes and other

expenses incurred due to putting such assets to the anticipated use that can be directly attributed to such assets.

Where the price money of the purchased intangible assets is paid on a deferred basis within a term exceeding

regular credit conditions and actually of a financing nature, the cost of the intangible assets is determined on the

basis of the current value of the price money in purchase.

The entry value in the account of the fixed assets obtained from debtors for the repayment of liabilities in debt

restructuring is determined on the basis of the fair value of the fixed assets. The difference between the book

value of debt restructuring and the fair value of the fixed assets used for the repayment of liabilities is included

in current profit and loss.

Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the

assets received and given out in the exchange can be measured reliably, the initial investment cost of the

long-term equity investment received in non-monetary assets exchange is determined on the basis of the fair

value of the assets given out, unless there are definite evidences that the fair value of the received assets is more

reliable. For the non-monetary assets exchange that do not meet the above premises, the book value of the

received assets and relevant taxes payable is taken as the cost of the long-term equity investment.

The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the

control of a same entity is determined according to the book value of the merged party. The recorded value in the

account of the intangible assets obtained by the merger of the enterprises under the control of different entities is

determined according to the fair value.

The cost of the intangible assets formed through internal R&D activities includes: the cost of materials and labor

consumed in the development of such intangible assets, registration fee, the amortization of other patent rights

and franchises used in the development process and the interests expenses that meet the conditions of

capitalization, and other direct expenses incurred due to putting such intangible assets into the anticipated use.

2. Subsequent measurement of intangible assets

When the Company acquires intangible assets, the Company analyzes and determines the service life and

classifies intangible assets into intangible assets with limited service life and intangible assets with uncertain

service life.

(1) Intangible assets with limited service life

The intangible assets with limited service life are amortized based on straight-line method in the period when the

assets bring economic benefits to the enterprise. The estimated service life and basis of intangible assets with

limited service life are as follows:

Item Estimated service life Basis

Outsourced software 5 Benefit period

Land use right 50 Benefit period

At the end of each year, the service life and amortization method of intangible assets with limited service life are

rechecked and an adjustment is made if the service life differs from the original estimated service life.

At the end of the current period, the service life and amortization method of the intangible assets are the same as

the last year.

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3. Classification standards for research and development phases of R&D projects inside the Company

Research phase: a phase in which creative and planned investigation and research activities are carried out for

the purpose of obtaining and understanding new scientific or technological knowledge.

Development phase: a phase in which research results or other knowledge, before being produced or used for

commercial purposes, are applied in a certain plan or design for the purpose of producing materials, equipment

and products that are new or feature substantial improvement.

The expenses for inside R&D projects in the research phase are included in current profit and loss when the

expenses occur.

4. Standards for meeting the conditions of capitalization by research phase

The expenditure in the development phase of the research and development project can be recognized as

intangible assets only when all the following conditions are met:

(1) The completion of such intangible assets makes it usable or its sale technically feasible.

(2) There is an intention to complete such intangible assets and use or sell it.

(3) The way that the intangible assets generate economic interests can prove that the product using such

intangible assets or the intangible assets itself have market. If the intangible assets are to be used internally, its

usefulness is proved.

(4) The Company has sufficient technical and financial resources and other resources to support the completion

of the development of such intangible assets and the capacities to use or sell such intangible assets.

(5) The expenditure attributed to the development stage of such intangible assets can be reliably measured.

The expenditure in the development phase not meeting the preceding conditions is included in the current profits

and losses when it is incurred. The development expenditure that is included in profits and losses in the previous

year will not be identified as assets again in later years. The capitalized expenditure in the development phase is

listed as development expenditure in the balance sheet and is converted into intangible assets from the date when

it meets the expected purpose.

(XX) Long-term impairment of assets

The Company determines whether any sign of possible impairment exists for long-term assets on the balance

sheet date. If the sign of impairment exists for long-term assets, the recoverable amount of each asset is

estimated. If the recoverable amount of each assets cannot be estimated, the recoverable amount of the asset

group where the asset belong is determined based on the asset group.

The recoverable amount may be determined according to the higher one of the net value of the fair value of the

assets minus the disposal expenses and the current value of the anticipated future cash flow of the assets.

If the measurement result of recoverable amount indicates that the recoverable amount of a long-term asset is

lower than its book value, the book value of the long-term asset is written down to the recoverable amount. The

write-down amount is identified as asset impairment loss and is included in the current profits and losses and

provision for asset impairment provision is made. Once the impairment loss of assets is recognized, the loss will

not be reversed in later accounting periods.

At the same time, the corresponding assets impairment provision is accrued. After the recognition of assets

impairment loss, corresponding adjustments are made in the future periods on the depreciation or amortized

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expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated expected

salvage value deducted) can be amortized systematically within the remaining service life.

The goodwill and intangible assets with uncertain service life, which are formed due to enterprise merger, are

tested every year on whether the sign of impairment exists.

During impairment test of goodwill, the book value of goodwill can be amortized to the asset group or

combination of asset groups that is expected to acquire synergistic benefit from business combination. When

impairment test is performed for relevant asset groups or asset group combinations that include goodwill, for

example, if the sign of impairment exists for asset groups or asset group combinations relevant to goodwill, the

impairment test is first performed for the asset groups or asset group combinations that do not include goodwill

and the recoverable amount is calculated and is compared with the relevant book value to recognize the

corresponding impairment loss. Then the impairment test is first performed for the asset groups or asset group

combinations that include goodwill and the book value (including the book value of amortized goodwill) of the

relevant asset groups or asset group combinations is compared with the recoverable amount. If the recoverable

amount of relevant asset groups or asset group combinations is lower than the book value, the impairment loss of

goodwill is recognized.

(XXI) Long-term expenses to be amortized

1. Method of amortization

Long-term unamortized expenses refer to the expenses that have incurred at the Company but should be born in

current period and later periods, where the amortization period is above one year. Long-term unamortized

expenses shall be amortized based on direct method in the period of benefit.

(XXII) Payroll

Payroll refers to various remunerations and compensations provided by the Company for obtaining services

provided by employees or for terminating the employment relationship. Payroll includes short-term remuneration,

welfare after leave, dismissal welfare and other long-term employee's welfare.

1. Short-term payroll

Short-term remuneration refers to the payroll that needs to be paid completely within 12 months in the annual

report period when employees provide relevant services, excluding welfare after leave and dismissal welfare. In

the accounting period when employees provide services, the Company identities short-term remuneration as

liabilities and includes it in relevant asset costs and fees according to the benefit objects of services provided by

employees.

2. Post-employment welfare

The welfare after leave refers to the remuneration and welfare provided by the Company for obtaining services

provided by employees or for terminating the employment relationship after employees have retired, excluding

short-term remuneration and dismissal welfare. The welfare plan after dismissal is classified into the defined

contribution plan and the defined benefit plan.

The welfare defined contribution plan aims to join the social basic endowment insurance and unemployment

insurance organized and implemented by labor and social security agencies in various regions. In addition to

social basic endowment insurance and unemployment insurance, employees can join the pension plan set by the

Company at their own discretion. In the accounting period when employees provide the Company with services,

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the amount that shall be paid and deposited shall be identified as liabilities according to the defined contribution

plan and is included in the current profits and losses or relevant asset costs.

After making the preceding payment according to the national standard and pension plan, the Company shall no

longer have any other payment obligation.

3. Dismissal welfare

Dismissal welfare refers to the compensation the Company gives to an employee for terminating the employment

relationship with employee before the employment contract expires or for encouraging an employee to accept

downsizing. It is a liability incurred by compensating an employee for terminating employment relationship with

the employee when the Company cannot unilaterally withdraw the contract termination plan or downsizing

suggestion, or when the Company confirms the costs related to restructuring that involves payment of dismissal

welfare, whichever is earlier. Dismissal welfare is included in the current profits and losses.

The Company provides early retirement welfare for the employees who accept early retirement. Early retirement

welfare involves salary paid to and social insurance premiums paid for the employees who are permitted by the

Company management to voluntarily leave office before state-specified retirement age. The Company pays early

retirement welfare to early retired employees from the day the arrangement takes effect to the day the employees

reach retirement age. The Company deals with early retirement welfare using the accounting method for

dismissal welfare, namely when the conditions for dismissal welfare are met, recognizing the salary and social

insurance premiums to be paid within the period from the day the employees leave office to the day the

employees reach the retirement age as liabilities and including them in the current profits and losses once.

Actuarial analysis of early retirement welfare assumes that differences caused by changes and welfare standard

adjustment are included in the current profits and losses.

4. Other long-term employees' welfare

Other long-term employees' welfare refers to all other employees' welfare except short-term remuneration,

welfare after leave and dismissal welfare.

For other long-term employees' welfare that meets conditions of the defined contribution plan, the amount that

shall be paid and deposited shall be identified as liabilities in the accounting period and is included in the current

profits and losses or relevant asset costs; except other long-term employees' welfare in the preceding

circumstance, an independent actuary sets the welfare generated by the defined benefit plan to the period in

which employees provide services by using the method of expected accumulative welfare unit and includes it in

the current profits and losses or relevant asset costs.

(XXIII) Estimated liabilities

1. Recognition standards for estimated liabilities

The obligations related to contingencies, which meet all the following conditions, are recognized by the

Company as estimated liabilities.

The obligation is a current obligation undertaken by the Company;

The fulfillment of the obligation is very likely to cause an outflow of economic interests from the Company;

The amount of the obligation can be measured reliably.

2. Measurement method of estimated liabilities

Initial measurement is carried out to estimated liabilities of the Company according to the optimum estimation

amount of the required expense when relevant obligations are fulfilled.

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When determining the optimum estimation amount, the Company considers in a comprehensive way the factors

related to contingencies like risks, uncertainties and time value of currency. Where there are great influences of

time value of currency, the optimum estimation amount is determined after discounting relevant future cash

flows.

The optimum estimation amount is determined according to different situations as follows:

Where there is a continuous range (or interval) of the required expense and different results in the range have

same possibility to occur, the optimum estimation amount is determined according to the intermediate value of

the range, i.e. the average of the maximal and the minimum amounts.

Where there is no continuous range (or interval) or there is a continuous range but different results have different

possibilities to occur, if contingencies involve individual proceedings, the optimum estimation amount is the

amount most likely to occur, and if contingencies involve several proceedings, the optimum estimation amount is

determined according to various possible results and the calculation of relevant probabilities.

If all expenses or part of them, which are used by the Company for paying off estimated liabilities, are

anticipated to be compensated by a third party and compensation amount is basically sure to be received, the

compensation amount is recognized separately as an asset, which should not exceed the book value of the

estimated liabilities.

(XXIV) Share-based payment

1. Types of share-based payment

The Company provides equity-settled and cash-settled share-based payment.

2. Recognition of the fair value of equity instruments

For equity instruments such as the granted option, which exist in the active market, the fair value is recognized

according to their prices in the active market. For those not existing in the active market, their fair value is

recognized by using the option pricing model, which should be selected in consideration of the following factors:

a. option exercise price; b. option period; c. the current price of the underlying shares; d. the predicted

fluctuation rate of the share price, e. the estimated dividend of the share; f. risk free rate in the option period; g.

payment of shares of installment options

When determining the grant-date fair value of equity instruments, the Company shall take into account the

influence of market conditions in vesting conditions and non-vesting conditions stipulated in the share-based

payment agreement. Where a share-based payment has a non-vesting condition, the Company shall recognize

receipt of the corresponding service cost if employees or other parties satisfy all the non-market conditions (for

example, service duration) in vesting conditions.

3. Basis of recognition of the best estimate of the number of vested equity instruments

On each balance sheet date in the vesting period, the Company shall make the best available estimate of the

number of equity instruments expected to vest, and shall revise that estimate if subsequent information indicates

that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the

Company shall revise the estimate to equal the number of equity instruments that ultimately vested.

4. Accounting for implementation, modification and termination of share-based payment plans

The Company shall measure the equity-settled share-based payment at the fair value of the granted employee

equity instruments. If the equity instruments granted vest immediately, the Company shall include the grant-date

fair value of equity instruments into related cost or expense, with a corresponding increase in capital reserve. If

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the equity instruments granted do not vest until the counterparty completes a specified period of service or

achieves a performance condition in the vesting period, the Company shall include the service obtained in the

current period into related cost or expense and capital reserved by reference to the grant-date fair value of equity

instruments based on the best estimate of the number of vested equity instruments on each balance sheet date

during the vesting period. The Company shall not adjust the confirmed cost or expense and total equity amount

after the vesting date.

The case-settled share-based payment shall be measured by reference to the fair value of the Company's eligible

liabilities which is calculated based on shares or other equity instruments. If the equity instruments granted vest

immediately, the Company shall include the fair value of eligible liabilities in related cost or expense on the

vesting date, with a corresponding increase in liabilities. For the cash-settled share-based payment where the

granted options are not exercised until the counterparty completes a specified period of service or achieves a

performance condition in the vesting period, the Company shall include the service obtained in the current period

into related cost or expense and liabilities by reference to the grant-date fair value of liabilities, based on the best

estimate of the number of vested equity instruments on each balance sheet date during the vesting period. The

Company shall re-measure the fair value of its liabilities on each balance sheet date and settlement date before

settlement of related liabilities, and include liability changes in current profit and loss.

5. Modifications to the terms and conditions on which equity instruments were granted

If a grant of an equity instrument is canceled during the vesting period, the Company shall account for the

cancellation as an acceleration of vesting, and shall therefore include immediately the amount that would

otherwise have been confirmed for services received over the remainder of the vesting period in the current

profit and loss, and recognize capital reserve. If employees or other parties can but fail to satisfy non-vesting

conditions in the vesting period, the Company shall account for the failure as a cancellation of the grant of the

equity instrument.

(XXV) Other financial instruments such as preferred stock and sustainable debt

Based on the rules of financial instruments, the Company classifies financial instruments or their components

into financial liabilities or equity instruments during initial recognition according to the contact terms of

financial instruments such as preferred stock and sustainable debt and economic essence they reflect rather than

legal form, in combination with definitions of financial liabilities and equity instruments.

1. When one of the following conditions is met, the issued financial instrument is classified into financial

liabilities:

(1) Contractual obligation to deliver cash or other financial assets to other parties;

(2) Contractual obligation to exchange financial assets or financial liabilities under potential adverse conditions;

(3) Non-derivative instrument contract that must or may use equity instruments of an enterprise for settlement in

the future (the enterprise delivers a variable number of equity instruments according to the contract);

(4) Derivative instrument contract that must or may use equity instruments of an enterprise for settlement in the

future (except derivative instrument contracts that use a fixed number of equity instruments to exchange a fixed

amount of cash or other financial assets).

2. When the following conditions are met at the same time, the issued financial instruments are classified into

equity instruments:

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(1) The financial instruments do not include the contractual obligation to deliver cash or other financial assets to

other parties or exchange financial assets or financial liabilities under potential adverse conditions;

(2) For the financial instruments that must or may use equity instruments of an enterprise for settlement in the

future, if the financial instruments are non-derivative instruments, the contractual obligation to deliver a variable

number of equity instruments for settlement is not included; if the financial instruments are derivative

instruments, the enterprise can only settle the financial instruments by exchanging a fixed number of equity

instruments with the fixed amount of cash or other financial assets.

3. Accounting treatment method

For financial instruments that belong to equity instruments, the interest expenditure or dividend distribution shall

be used as profits of the enterprise for distribution, the buy-back and write-off are treated as changes of equity,

and transaction expenses such as handling charge and commission shall be deducted from the equity.

For financial instruments that belong to financial liabilities, the interest expenditure or dividend distribution shall

be treated as borrowing costs in principle, the gain or loss generated due to buy-back or redemption are included

in the current profits and losses, and transaction expenses such as handling charge and commission are included

in the initial amount of measurement of the issues instruments.

(XXVI) Income

1. Standards for recognition time of sales income

The realization of the income from the sale of commodities is recognized when the Company has already

transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the

Company has not retained any further management right connected to the ownership right nor implement

effective control over the sold commodities, the amount of the revenue can be reliably measured, relevant

economic interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be

measured reliably.

The Company mainly runs the leasing business in the electronics market. It identifies received rental as rental

income in the term of lease by using the method of line and the income of other business is recognized when the

risk premium is transferred according to contract provisions.

The price of a contract or agreement is collected through deferral. In the case of actual financial nature, the

amount of income from sales commodities shall be determined according to the fair value of the price of the

contract or agreement.

2. Basis for recognition of income from transfer of asset use right

When economic interests relevant to transaction probably flow into the enterprise and the amount of income can

be reliably measured, the amount of income from transfer of asset use right is determined in the following

circumstances:

(1) The amount of interest income is determined according to the time and actual interest rate of other people

using the monetary fund of the enterprise.

(2) The amount of the income from use fee is determined in accordance with the time and method of charges as

agreed in relevant contract or agreement.

3. Recognition basis and method for income from rendering of services

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Where the results of the labor services provided on the balance sheet date can be estimated reliably, the income

from the provision of labor services is recognized with the completion percentage method. The completion

progress of a labor service transaction is determined by survey of the work completed.

When the following conditions are met at the same time, the result of rendering of services can be reliably

estimated:

(1) The amount of income can be measured reliably;

(2) Relevant economic interests are very likely to flow into the enterprise;

(3) The completion progress of transactions can be reliably determined;

(4) The costs that have been incurred or will be incurred in transactions can be reliably measured.

The total amount of the income from the provision of labor services is determined according to the price money

received or receivable of a relevant contract or agreement, unless the price money received or receivable of a

relevant contract or agreement is unfair. The labor services income of the current period is recognized on the

balance sheet date according to the resulted amount of the total amount of income from provision of labor

services times the completion percentage and deducted by the accumulative amount of the recognized income

from provision of labor services in previous accounting periods. At the same time, the labor cost of the current

period is carried forward according to the estimated total cost of the provision of labor services times the

completion percentage and deducted by the accumulative amount of the recognized labor cost in previous

accounting periods.

Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably, such

results are processed respectively according to the following conditions:

(1) Where it is estimated that the labor services cost incurred can be compensated, the income from provision of

labor services is recognized according to the amount of the labor services cost incurred and the same amount is

transferred to the labor cost.

(2) Where it is estimated that the labor services cost incurred cannot be compensated, the labor services cost

incurred is included in current profit and loss and no income is recognized.

When the contracts or agreements between the Company and other companies involve commodity sales and

labor service and these two parts can be differentiated from each other and can be separately measured,

commodity sales and labor service are handled separately. If they cannot be differentiated from each other or

they can be differentiated from each other but cannot be separately measured, both parts will be handled as

commodity sales.

4. Recognition basis and method for income from construction contracts

(1) When the results of construction contracts can be reliably estimated, relevant income from contracts and

costs of contracts are confirmed based on the method of completion percentage. The method of completion

percentage refers to the method for confirming income from contracts and costs of contracts according to the

completion progress of contracts. The completion progress of a contract is determined according to the ratio of

actual accumulative cost of the contract to estimated total costs of the contract.

If the following conditions are met at the same time, the result of a fixed construction contract can be reliably

estimated:

1) The total income from the contract can be reliably measured;

2) Economic interests relevant to the contract are very likely to flow into the enterprise;

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3) The actual costs of the contract can be clearly distinguished and reliably measured;

4) The completion progress of the contract and the costs needed for completing the contract can be reliably

determined.

If the following conditions are met at the same time, the result of a cost-plus contract can be reliably estimated:

1) Economic interests relevant to the contract are very likely to flow into the enterprise;

2) The actual costs of the contract can be clearly distinguished and reliably measured;

On the balance sheet date, the amount of total contractual income multiplied by the completion progress,

deducting the accumulated confirmed income in the previous accounting period, is recognized as the current

contractual income; the amount of estimated total contract cost multiplied by the completion progress, deducting

the accumulative confirmed cost in the previous accounting period, is recognized as the current costs of contract.

The change of contract engineering, claim and bonus is included in the total income of contract based on the

amount that may be brought and can be reliably calculated.

(2) If the result of a construction contract cannot be reliably estimated, the contract is treated as follows:

1) If the contract cost can be recovered, the income from the contract is recognized according to the actual

recovered contract cost and the contract cost is recognized as the current costs of contract.

2) If the contract cost cannot be recovered, the cost is immediately recognized as the costs of contract in the

current period when the cost is incurred and the income from the contract is not recognized.

(3) If the total cost of contract probably exceeds the total income from the contract, the expected loss is

immediately recognized as costs.

5. Transfer of the assets with repurchase conditions

If the Company signs a repurchase agreement when selling products or transferring other assets, whether the

products sold meet the conditions for income recognition is judged according to the articles of the agreement. If

the repurchase is a financing transaction, the Company does not recognize sales income when delivering

products or assets. If the repurchase price is higher than the selling price, interests are accrued for the difference

during repurchase period and included in financial expenses.

(XXVII) Government subsidies

1. Type

A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the

government, but excluding the capital invested by the government as the owner of the enterprise. Based on the

subsidy objects specified in relevant government documents, the subsidies are divided into subsidies relevant to

assets and subsidies relevant to profits.

Subsidies relevant to assets refer to government subsidies acquired by the Company for the purposes of

acquisition and construction or turned to long-term assets in other ways. Subsidies relevant to profits refer to

government subsidies other than subsidies relevant to assets.

2. Recognition of government subsidies

If any evidence indicates that the Company can meet relevant conditions for financial support policies and is

expected to obtain financial support fund at the end of the period, the government subsidy shall be recognized

based on the amount receivable. In other cases, government subsidies shall be recognized at receipt.

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Government subsidies that are monetary funds shall be measured based on the amount received or receivable.

Government subsidies that are non-monetary funds shall be measured based on fair value. Where the fair value

cannot be reliably calculated, the nominal amount (1 Yuan) is measured. Government subsidies that are

measured by nominal amount shall be directly included in current profit and loss.

3. Accounting treatment method

The government subsidies relevant to assets are recognized as deferred income and are included in non-operating

income according to the service life of the built or purchased assets;

The government subsidies related to profits, used to compensate relevant expenses or losses in later periods, are

recognized as deferred profits when they are obtained; the subsidies, used to compensate relevant expenses or

losses having occurred, are recognized as the current non-operating income when they are obtained.

If recognized government subsidies have to be returned and the balance of relevant deferred income exists, the

book balance of relevant deferred income is offset and the excess part is included in the current profit and loss;

when relevant deferred income does not exist, the government subsidies are directly included in the current profit

and loss.

(XXVIII) Deferred income tax assets and liabilities

Deferred income tax assets and liabilities are calculated and recognized according to the difference (temporary

difference) between the taxable basis of the assets and liabilities and their book value. On the balance sheet date,

deferred income tax assets and liabilities are measured based on the tax rate applicable to the period when the

assets are expected to be recovered or the liabilities are expected to be paid off.

1. Basis for recognition of deferred incomes tax assets

The Company confirms the deferred income tax assets generated due to deductible temporary difference based

on the amount of taxable income that is probably obtained to deduct deductible temporary difference and can

carry over deductible loss and tax deduction. However, the deferred income tax assets generated due to initial

recognition of assets or liabilities in a transaction with the following features at the same time: (1) the transaction

is not business merger; (2) the transaction does not affect the accounting profit, taxable income or deductible

loss.

For the deductible temporary difference relevant to investment of joint ventures, when the following conditions

are met at the same time, corresponding deferred income tax assets are confirmed; the temporary difference is

probably reversed in the foreseeable future and taxable income used to deduct the deductible temporary

difference will probably be obtained in the future.

2. Basis for recognition of deferred income tax liabilities

The temporary difference between the tax payable but unpaid in the current period and that in previous periods is

recognized by the Company as deferred income tax liabilities, excluding:

(1) Temporary difference formed due to initial confirmation of goodwill;

(2) Transaction or matter formed due to factors rather than business merger (the transaction or matter does not

affect the accounting profit or the temporary difference formed due to taxable income or deductible loss);

(3) For the taxable temporary difference relevant to investment of subsidiaries and joint ventures, the reversal

time of the temporary difference can be controlled and may not be reversed in the foreseeable future.

3. The balance between deferred income tax assets and deferred tax income liabilities is listed if the following

conditions are met at the same time.

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(1) The entity has the legal right to settle the current tax income assets against current income tax liabilities; and

(2) The deferred income tax assets and deferred tax income liabilities are relevant to income taxes levied by

common taxation authority on either the same taxable entity or different taxable entities which intend either to

settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities

simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are

expected to be settled or recovered.

(XXIX) Lease

If the lease terms essentially transfer all risks and gains related to the ownership of the leased asset to the lessee,

such lease is finance lease while other leases are operating lease.

1. Accounting treatment of operating lease

(1) The rental fee paid by the Company for rented assets is apportioned by the straight-line method in the whole

lease term including the rent-free period and included in current expenses. The initial direct expenses related to

lease transactions, paid by the Company, are included in current expenses.

In case that the lessor undertakes the lease-related expenses that shall be undertaken by the Company, the

Company shall deduct such expenses from the total rental fee and the rental fee after deduction is apportioned in

the lease term and included in current expenses.

(2) The rental fee received by the Company from leasing of assets is apportioned by the straight-line method in

the whole lease term including the rent-free period and included in the lease income. The initial direct expenses

related to lease transactions, paid by the Company, are included in current expenses. Those with significant

amounts are capitalized and included in current profit in the whole lease term on the same basis for recognition

of the lease income.

In case that the Company undertakes the lease-related expenses which shall be undertaken by the lessee, the

Company shall deduct the expenses from the total lease income and the lease expenses after deduction are

allocated in the lease term.

Accounting treatment of financing lease

(1) Assets leased under financing lease: The lower one between the fair value of rented assets and the minimum

lease payment is treated as the recording value of the rented assets, the minimum lease payment as the recording

value of long-term accounts payable, and the difference between the two as financing expenses yet to be

recognized.

The financing expenses yet to be recognized are apportioned by the Company by the actual interest rate method

in the lease term of the assets and included in accounting expenses.

(2) Assets rented under financing lease: The difference between the total residual value, without guarantee, of the

financing lease payment receivable and the current value is recognized by the Company on the lease-beginning

date as financing profits yet to be realized and as the lease income in future lease periods. The initial direct

expenses related to lease transactions are included in the initial measurement of financing lease payment

receivable and the amount of profits recognized in the lease term is reduced.

(XXX) Changes of main accounting policies and accounting estimates

1. Changes of accounting policies

No change was made to main accounting estimates in the current reporting period.

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2. Changes of accounting estimates

No change was made to main accounting estimates in the current reporting period.

V. Taxes

(I) Main tax types and tax rates imposed on the Company

Tax category Basis Tax rate (%)

Value-added tax Sales of goods 17

Business tax Revenue from rental and interest on loans 5

Urban maintenance and construction tax Paid-in turnover tax payable 7

Educational surtax Paid-in turnover tax payable 3

Local educational surtax Paid-in turnover tax payable 2

Enterprise income tax Taxable income 25, 15

Notes to income tax rate for different tax payers:

Name of tax payer Income tax rate (%)

Xi'an SEG Electronics Market Co., Ltd. 15

Xi'an Hairong SEG Electronics Market Co., Ltd. 15

(II) Tax preference policy and basis

According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2014] No. 134 issued by Shaanxi Provincial

Development and Reform Commission, Xi'an SEG Electronics Market Co., Ltd., a subsidiary of the Company, is

engaged in projects encouraged by the nation and complies with the corporate income tax preference policy for

development of the west regions. Therefore, the corporate income tax shall be paid at the rate of 15%.

According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2014] No. 060 issued by Shaanxi Provincial

Development and Reform Commission, Xi'an Hairong SEG Electronics Market Co., Ltd., a subsidiary of the

Company, is engaged in projects encouraged by the nation and complies with the corporate income tax

preference policy for development of the west regions. Therefore, the corporate income tax shall be paid at the

rate of 15%.

Excluding the foregoing two subsidiaries, the income tax rates of other subsidiaries are 25%.

VI. Notes to Main Items of the Consolidated Financial Statements

(Unless specifically noted, the following unit of the amount is RMB Yuan)

Note 1. Monetary funds

Item Closing balance Opening balance

Cash on hand 526,467.72 602,592.57

Bank deposit 274,816,839.04 381,404,611.82

Other monetary capital 1,520,122.34 1,049,476.31

Total 276,863,429.10 383,056,680.70

Details of other restricted monetary fund:

Item Closing balance Opening balance

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Item Closing balance Opening balance

Performance bond 340,000.00 -

Cash deposit for credit card repayment 1,000,000.00 1,000,000.00

Total 1,340,000.00 1,000,000.00

Note 2. Loans to other banks

Item Closing balance Opening balance

Loans to interbank 40,000,000.00 30,000,000.00

Less: impairment provision - -

Total 40,000,000.00 30,000,000.00

Note 3. Notes receivable

1. Types of notes receivable

Item Closing balance Opening balance

Bank's acceptance bill - 84,618.08

Commercial acceptance bill - -

Total - 84,618.08

2. The Company has no pledged notes receivable at the end of the period.

3. The Company has no notes receivable endorsed or discounted and not due on the balance sheet date at the end

of the period.

4. The Company has no notes that were transferred to accounts receivable due to default by the biller at the end

of the period.

Note 4. Accounts receivable

1. Accounts receivable disclosed by type

Closing balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Accounts receivable with single

significant amount and single - - - - -

bad debt provision

Accounts receivable with bad

debt provision accrued based on 98,238,596.47 89.91 26,173.60 0.03 98,212,422.87

credit risk feature combinations

Accounts receivable with no

significant single amount but

11,029,908.51 10.09 11,029,908.51 100.00 -

with single provision for bad

debts

Total 109,268,504.98 100.00 11,056,082.11 10.12 98,212,422.87

Continued:

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Opening balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Accounts receivable with single

significant amount and single - - - - -

bad debt provision

Accounts receivable with bad

debt provision accrued based on 185,866,040.16 94.08 - - 185,866,040.16

credit risk feature combinations

Accounts receivable with no

significant single amount but

11,699,138.18 5.92 11,699,138.18 100.00 -

with single provision for bad

debts

Total 197,565,178.34 100.00 11,699,138.18 5.92 185,866,040.16

Notes to types of accounts receivable:

(1) Accounts receivable with no significant single amount but with single provision for bad debts at the end of

the period

Closing balance

Name of company Accounts Bad debt Proportion of

Reason for provision

receivable provision provision (%)

Unable to be recovered for aging

Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00

of over 5 years

Shenzhen Shuangxionghui Industrial Unable to be recovered for aging

2,160,725.63 2,160,725.63 100.00

Co., Ltd of over 5 years

Shenzhen LiYuanshun Industrial Unable to be recovered for aging

1,906,865.35 1,906,865.35 100.00

Co., Ltd. of over 5 years

Zhejiang Financial Information Co., Unable to be recovered for aging

786,000.00 786,000.00 100.00

Ltd of over 5 years

Unable to be recovered for aging

Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00

of over 5 years

Unable to be recovered for long

Other companies 2,185,306.44 2,185,306.44 100.00

aging

Total 11,029,908.51 11,029,908.51 100.00 -

(2) Accounts receivable in combinations with bad debt provision accrued by the aging analysis method

Closing balance

Aging

Accounts receivable Bad debt provision Proportion of provision (%)

Less than one year 97,715,124.47 - -

1-2 years 523,472.00 26,173.60 5.00

2-3 years - - -

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Closing balance

Aging

Accounts receivable Bad debt provision Proportion of provision (%)

Over 3 years - - -

Total 98,238,596.47 26,173.60 0.03

2. Accrual, recovery and writing back of current bad debt provision

The accrual amount of current bad debt provision is RMB 26,173.60. The written-off amount of current bad debt

provision is RMB 400,000.00. The written-back amount of current bad debt provision is RMB 269,229.67.

Including: Current bad debt provision written back or recovered to accounts receivable with significant amount:

Amount of writing back or Method of writing back or

Name of company Remarks

recovery recovery

House fund for Jiangshang

400,000.00 House fund collected -

Village

Total 400,000.00 -

3. Accounts receivable with top 5 closing balance collected based on debtors

Percentage in the total

Accrued bad debt

Name of company Closing balance amount of accounts

provision

receivable

Shenzhen Wonder Industry Co., Ltd. 12,482,060.76 11.42 -

Shenzhen Qway Group Co., Ltd. 11,405,168.45 10.44 -

Shenzhen Runneng Digital Co., Ltd. 9,916,497.72 9.08 -

POCO TRADE CO.,LTD 9,460,596.43 8.66 -

BORICLE INTL 9,310,555.50 8.52

Total 52,574,878.86 48.12 -

4. There are no accounts receivable with its recognition terminated due to transfer of financial assets in the

current period.

5. There are no assets and liabilities due to transfer or increase of accounts receivable in the current period.

Note 5. Prepayment

1. Prepayment listed by aging

Closing balance Opening balance

Aging

Amount Proportion (%) Amount Proportion (%)

Less than one year 129,044,887.26 100.00 94,633,317.07 100.00

1-2 years - - - -

2-3 years - - - -

Over 3 years - - - -

Total 129,044,887.26 100.00 94,633,317.07 100.00

2. Prepayment with top 5 closing balance collected based on prepayment payers

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Percentage in the

Period-end total amount of Reason for

Name of company Prepayment date

amount accounts non-settlement

receivable (%)

Xi'an Gaoke (Group) New West China Less than one Prepaid rental for

20,000,000.00 15.50

Industrial Development Co., Ltd year 2016

Shenzhen Must Energy Technology Co., Less than one

18,688,026.22 14.48 Prepayment for goods

Ltd. year

Tonmac International Electronics (Suzhou) Less than one Prepaid rental for

17,500,000.00 13.56

Co., Ltd year 2016

Less than one

Shenzhen Must Power Co., Ltd. 13,215,125.18 10.24 Prepayment for goods

year

Less than one

Shenzhen Shuojian Industry Co., Ltd 9,936,340.86 7.70 Prepayment for goods

year

Total 79,339,492.26 61.48 - -

Note 6. Other accounts receivable

1. Other receivables disclosed by type

Closing balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Other accounts receivable with

single significant amount and 14,434,547.87 24.12 14,434,547.87 100.00 -

single bad debt provision

Other accounts receivable with bad

debt provision accrued based on 27,674,049.48 46.25 321,265.15 1.16 27,352,784.33

credit risk feature combinations

Combination 1 13,873,923.11 23.19 321,265.15 2.32 13,552,657.96

Combination 2 13,800,126.37 23.06 - - 13,800,126.37

Other accounts receivable with no

significant single amount but with 17,731,257.04 29.63 17,731,257.04 100.00 -

single provision for bad debts

Total 59,839,854.39 100.00 32,487,070.06 54.29 27,352,784.33

Continued:

Opening balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Other accounts receivable with

single significant amount and 14,434,547.87 11.31 14,434,547.87 100.00 -

single bad debt provision

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Opening balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Other accounts receivable with bad

debt provision accrued based on 95,371,972.98 74.74 5,816.71 0.01 95,366,156.27

credit risk feature combinations

Combination 1 4,516,398.14 3.54 5,816.71 0.13 4,510,581.43

Combination 2 90,855,574.84 71.20 - - 90,855,574.84

Other accounts receivable with no

significant single amount but with 17,800,002.44 13.95 17,800,002.44 100.00 -

single provision for bad debts

Total 127,606,523.29 100.00 32,240,367.02 25.27 95,366,156.27

Notes to types of other accounts receivable:

(1) Other accounts receivable with single significant amount and single bad debt provision at the end of the

period

Closing balance

Name of company Other accounts Bad debt Proportion of

Reason for provision

receivable provision provision (%)

Unable to be recovered

Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00

with aging of over 5 years

Creditor's right transferred in by Unable to be recovered

5,904,271.52 5,904,271.52 100.00

SEG Communications with aging of over 5 years

Total 14,434,547.87 14,434,547.87 100.00 -

(2) Accounts receivable in combinations with bad debt provision accrued by the aging analysis method

Closing balance

Aging

Other accounts receivable Bad debt provision Proportion of provision (%)

Less than one year 7,513,116.52 - -

1-2 years 6,323,147.84 316,157.40 5.00

2-3 years 24,240.00 2,424.00 10.00

Over 3 years 13,418.75 2,683.75 20.00

Total 13,873,923.11 321,265.15 2.32

(3) Other accounts receivable in Combination 2 are mainly deposit, security deposit, account with related parties.

2. Accrual, recovery and writing back of current bad debt provision

The amount of the current accrued bad debt provision is RMB 316,574.97 and the amount of the current

recovered or reversed bad debt provision is RMB 69,871.93. There are no other receivables written off in the

current period.

3. Classification of other receivables by nature

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Item Closing balance Opening balance

Creditor's right transfer cost 32,165,804.91 28,568,316.79

Imprest 831,185.54 1,733,960.46

Deposit and security deposit 23,342,863.94 90,906,485.24

Others 3,500,000.00 6,397,760.80

Total 59,839,854.39 127,606,523.29

4. Other accounts receivable with top 5 closing balance collected based on debtors

Percentage in the Bad debt

Nature of total amount of other provision

Name of company Closing balance Aging

receivables accounts receivable Closing

(%) balance

Debt

Yangjiang Yuntong Grease

restructuring of 8,530,276.35 Over 5 years 14.26 8,530,276.35

Co., Ltd.

SEG Orient

Nantong Construction Salary deposit for

6,200,000.00 1-2 years 10.36 -

Engineering Administration peasant workers

Debt

Creditor's right transferred in restructuring of

5,904,271.52 Over 5 years 9.87 5,904,271.52

by SEG Communications SEG

Communications

Creditor's

Shenzhen Lianjing Trade Co.,

incomings and 5,697,287.51 Over 5 years 9.52 5,697,287.51

Ltd.

outgoings

Creditor's

Shenzhen Top Industry Co.,

incomings and 3,281,387.96 Over 5 years 5.48 3,281,387.96

Ltd.

outgoings

Total 29,613,223.34 49.49 -

5. There are no items involving government subsidies in the current period.

6. There are no accounts receivable with its recognition terminated due to transfer of financial assets in the

current period.

7. There are no assets and liabilities due to transfer or increase of other accounts receivable in the current period.

Note 7. Inventory

1. Classification of inventory

Closing balance Opening balance

Item Depreciation Depreciation

Book balance Book value Book balance Book value

provision provision

Raw materials 149,186.66 - 149,186.66 80,293.26 - 80,293.26

Commodity

1,579,916.40 - 1,579,916.40 202,195.78 - 202,195.78

stock

Low-value 222,080.75 - 222,080.75 1,039,703.99 - 1,039,703.99

177

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Closing balance Opening balance

Item Depreciation Depreciation

Book balance Book value Book balance Book value

provision provision

consumables

Development

448,858,750.91 - 448,858,750.91 276,959,393.69 - 276,959,393.69

cost

Total 450,809,934.72 - 450,809,934.72 278,281,586.72 - 278,281,586.72

2. Notes to capitalization amount of borrowing costs included in closing balance of inventory

Decrease in the current Capitalization

period rate of

capitalization

Opening Increase in the

Inventory item name Closing balance amount

balance current period Decrease in

Others recognized in the

sales

current period

(%)

Nantong SEG Times

2,885,600.89 11,029,496.28 - - 13,915,097.17 5.37

Square

Total 2,885,600.89 11,029,496.28 - - 13,915,097.17 -

3. Development cost

Expected

Commencemen Expected

Project name investment Closing balance Opening balance

t time completion date

amount

Nantong SEG Times

2013.5 2015.12 600,000,000.00 448,858,750.91 276,959,393.69

Square

Total - - - 448,858,750.91 276,959,393.69

Note 8. Other current assets

Item Closing balance Opening balance

Bank financial products 259,831,270.00 322,679,000.00

Tax to be deducted and withheld 79,402,305.52 120,700,762.42

Others 196,844.22 163,251.07

Total 339,430,419.74 443,543,013.49

Note 9. Loans and prepayment issued

1. Loans and prepayment issued

Item Closing balance Opening balance

Loan principal 486,435,059.77 458,229,526.30

Advance - -

Less: Impairment provision for loans and

10,914,237.69 5,712,454.24

prepayment

Total 475,520,822.08 452,517,072.06

178

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Note 10. Available-for-sale financial assets

1. Available-for-sale financial assets

Closing balance Opening balance

Item Impairment Impairment

Book balance Book value Book balance Book value

provision provision

Available-for-sale debt

- - - - - -

instruments

Available-for-sale

- - - - - -

equity instruments

Measured by fair value 744,580.41 - 744,580.41 554,642.62 - 554,642.62

Measured by cost 33,810,392.83 15,000.00 33,795,392.83 33,810,392.83 15,000.00 33,795,392.83

Others - - - - - -

Total 34,554,973.24 15,000.00 34,539,973.24 34,365,035.45 15,000.00 34,350,035.45

2. Available-for-sale financial assets measured by fair value at the end of the period

Available-for-sale Available-for-sale debt

Classification Others Total

equity instruments instruments

Cost of equity

instruments/amortized cost of 90,405.00 - - 90,405.00

debt instruments

Accumulative changes in fair

value

654,175.41 - - 654,175.41

included in other

comprehensive income

Less: Accrued impairment

- - - -

amount

Fair value 744,580.41 - - 744,580.41

3. Measured by cost

Shareholding Book balance

Invested organization proportion Opening Increase in the Decrease in the

Closing balance

(%) balance current period current period

Kashgar Shenzhen City Co., Ltd. 3.03 20,000,000.00 - - 20,000,000.00

Shenzhen SEG GPS Scientific

12.50 13,515,392.83 - - 13,515,392.83

Navigations Co., Ltd.

Nanjing Shangsha Co., Ltd 0.68 280,000.00 - - 280,000.00

Anshan Yibai Co., Ltd - 15,000.00 - - 15,000.00

Total 33,810,392.83 - - 33,810,392.83

179

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Continued:

Impairment provision Cash dividends

Invested organization Opening Increase in the Decrease in the Closing of the current

balance current period current period balance period

Kashgar Shenzhen City Co., Ltd. - - - - -

Shenzhen SEG GPS Scientific

- - - - -

Navigations Co., Ltd.

Nanjing Shangsha Co., Ltd - - - - -

Anshan Yibai Co., Ltd 15,000.00 - - 15,000.00 -

Total 15,000.00 - - 15,000.00 -

4. Loss from impairment of available-for-sale financial assets in the current reporting period

Available-for-sale Available-for-sale

Available-for-sale financial assets Others Total

equity instruments debt instruments

Accrued impairment provision at the

15,000.00 - - 15,000.00

beginning of period

Provision of the year - - - -

Including: Transfer in Other

- - - -

comprehensive income

Decrease in the year - - - -

Including: Writing back due to

recovery of fair value at the end of the - - - -

period

Accrued impairment provision at the

15,000.00 - - 15,000.00

end of the period

Note 11. Long-term equity investment

Increase/Decrease of the year

Investment profit Adjustment of

Invested organization Opening balance Additional Negative and loss other

investment investment recognized with comprehensive

the equity method income

II. Associates - - - - -

Shanghai SEG Electronics Market

3,576,788.18 - - 302,624.63 -

Co., Ltd.

Shenzhen Huakong SEG Co., Ltd. 78,523,408.83 - - 1,401,178.85 -

Subtotal 82,100,197.01 - - 1,703,803.48 -

Total 82,100,197.01 - - 1,703,803.48 -

180

Full text of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Continued:

Increase/Decrease of the year Closing

balance of

Issued cash Accrued

Invested organization Other equity Closing balance impairme

dividends or impairment Others

changes nt

profits provision

provision

II. Associates - - - - - -

Shanghai SEG Electronics Market

- -500,000.00 - - 3,379,412.81 -

Co., Ltd.

Shenzhen Huakong SEG Co., Ltd. 101,818,573.39 - - - 181,743,161.07 -

Subtotal 101,818,573.39 -500,000.00 - - 185,122,573.88 -

Total 101,818,573.39 -500,000.00 - - 185,122,573.88 -

Note 12. Investment properties

1. Details of investment properties

Construction in

Item Houses and buildings Land use right Total

progress

I. Original book value

1. Opening balance 705,673,301.76 5,237,512.49 - 710,910,814.25

2. Increase in the current

12,608,327.29 - - 12,608,327.29

period

Outsourcing - - - -

Transfer-in of

inventory/fixed

- - - -

assets/construction in

progress

Increase due to business

- - - -

merger

Capital invested by

- - - -

shareholders

Other transfer-in 12,608,327.29 - - 12,608,327.29

3. Decrease in the current

- - - -

period

Disposal - - - -

Other transfer-out

4. Closing balance 718,281,629.05 5,237,512.49 - 723,519,141.54

II. Accumulated

depreciation

1. Opening balance 246,495,704.92 1,852,226.55 - 248,347,931.47

2. Increase in the current

31,198,883.82 120,599.85 31,319,483.67

period

181

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Construction in

Item Houses and buildings Land use right Total

progress

Provision or

18,590,556.53 120,599.85 18,711,156.38

amortization

Increase due to business

- - - -

merger

Other transfer-in 12,608,327.29 - - 12,608,327.29

3. Decrease in the current

- - - -

period

Disposal - - - -

Other transfer-out - - - -

4. Closing balance 277,694,588.74 1,972,826.40 279,667,415.14

III. Impairment provision

1. Opening balance - - - -

2. Increase in the current

- - - -

period

Accrual - - - -

Increase due to business

- - - -

merger

Other transfer-in - - - -

3. Decrease in the current

- - - -

period

Disposal - - - -

Other transfer-out - - - -

4. Closing balance - - - -

IV. Book value

1. Closing book value 440,587,040.31 3,264,686.09 - 443,851,726.40

2. Opening book value 459,177,596.84 3,385,285.94 - 462,562,882.78

2. Details of investment properties

Owner of investment property Investment property project Net value of investment property

Shenzhen SEG Co., Ltd. F2, F4 and F5 of SEG Plaza 230,986,014.27

Shenzhen SEG Co., Ltd. Some floors of Contemporary Window 51,579,212.11

Shenzhen SEG Co., Ltd. Other houses 1,834,633.76

Shenzhen SEG Baohua Enterprise

Blocks A and B of Baohua Building 33,609,325.51

Development Co., Ltd.

Shenzhen SEG Industrial Investment Co.,

Some floors of Contemporary Window 2,698,987.72

Ltd.

Changsha SEG Development Co., Ltd. Changsha SEG 123,143,553.03

Total 443,851,726.40

182

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Note 13. Original value and accumulated depreciation of fixed assets

1. Details of fixed assets

Houses and Machinery Transportatio Electronic Other

Item Total

buildings equipment n vehicles equipment equipment

I. Original book value - - - - - -

1. Opening balance 48,303,175.02 30,320,272.81 5,951,816.82 32,154,377.47 3,598,264.71 120,327,906.83

2. Increase in the

- 759,698.00 5,500.00 637,808.12 119,395.17 1,522,401.29

current period

Purchase - 759,698.00 5,500.00 637,808.12 119,395.17 1,522,401.29

Transfer-in of

construction in - - - - - -

progress

Increase due to

- - - - - -

business merger

Capital invested by

- - - - - -

shareholders

Financial leasing - - - - - -

Other transfer-in - - - - - -

3. Decrease in the

12,608,327.29 486,435.00 355,162.75 - 13,785,051.36

current period 335,126.32

Disposal or scrap - 335,126.32 486,435.00 355,162.75 - 1,176,724.07

Financial leasing - - - - - -

Other transfer-out 12,608,327.29 - - - - 12,608,327.29

4. Closing balance 35,694,847.73 30,744,844.49 5,470,881.82 32,437,022.84 3,717,659.88 108,065,256.76

II. Accumulated

- - - - - -

depreciation

1. Opening balance 26,571,597.38 28,179,465.09 3,253,103.09 18,892,024.93 2,023,417.91 78,919,608.40

2. Increase in the

825,314.98 1,589,023.04 651,896.93 1,407,337.12 500,935.22 4,974,507.29

current period

Accrual 825,314.98 1,589,023.04 651,896.93 1,407,337.12 500,935.22 4,974,507.29

Increase due to

business merger

Other transfer-in - - - - - -

3. Decrease in the

12,608,327.29 181,864.17 274,372.55 286,780.59 1,939.58 13,353,284.18

current period

Disposal or scrap - 181,864.17 274,372.55 286,780.59 1,939.58 744,956.89

Financial leasing - - - - - -

Other transfer-out 12,608,327.29 - - - - 12,608,327.29

4. Closing balance 14,788,585.07 29,586,623.96 3,630,627.47 20,012,581.46 2,522,413.55 70,540,831.51

III. Impairment - - - - - -

183

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Houses and Machinery Transportatio Electronic Other

Item Total

buildings equipment n vehicles equipment equipment

provision

1. Opening balance - - - - - -

2. Increase in the

- - - - - -

current period

Accrual - - - - - -

Increase due to

- - - - - -

business merger

Other transfer-in - - - - - -

3. Decrease in the

- - - - - -

current period

Disposal or scrap - - - - - -

Financial leasing - - - - - -

Other transfer-out - - - - - -

4. Closing balance - - - - - -

5. Book value - - - - - -

6. Closing book value 20,906,262.66 1,158,220.53 1,840,254.35 12,424,441.38 1,195,246.33 37,524,425.25

7. Opening book

21,731,577.64 2,140,807.72 2,698,713.73 13,262,352.54 1,574,846.80 41,408,298.43

value

2. There are no fixed assets that are temporarily idle at the end of the period.

3. There are no fixed assets acquired through financing lease in at the end of the period.

4. There are no fixed assets acquired through financing lease out at the end of the period.

5. Fixed assets with no property right certificate acquired at the end of the period

Reason for property right certificate not

Item Book value

acquired

Houses and buildings 1,280,170.96 Qualification procedures not complete

Total 1,280,170.96

Note 14. Construction in progress

1. Details of Construction in progress

Closing balance Opening balance

Item Impairment Impairment

Book balance Book value Book balance Book value

provision provision

LCD in the lobby

140,810.00 - 140,810.00 - - -

of SEG Plaza

Total 140,810.00 - 140,810.00 - - -

Note 15. Intangible assets

1. Intangible assets

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Item Land use right Outsourced software Total

I. Original book value

1. Opening balance 159,759.24 2,269,353.00 2,429,112.24

2. Increase in the current period - 791,500.00 791,500.00

Purchase - 791,500.00 791,500.00

Internal R&D - - -

Increase due to business merger - - -

Capital invested by shareholders - - -

Other transfer-in - - -

3. Decrease in the current period - 18,000.00 18,000.00

Disposal - - -

Other transfer-out 18,000.00 18,000.00

4. Closing balance 159,759.24 3,042,853.00 3,202,612.24

II. Accumulated amortization

1. Opening balance 54,754.79 1,718,769.91 1,773,524.70

2. Increase in the current period 2,759.76 291,565.67 294,325.43

Accrual 2,759.76 291,565.67 294,325.43

Increase due to business merger - - -

Other transfer-in - - -

3. Decrease in the current period - 9,000.00 9,000.00

Disposal - - -

Other transfer-out - 9,000.00 9,000.00

4. Closing balance 57,514.55 2,001,335.58 2,058,850.13

III. Impairment provision

1. Opening balance - - -

2. Increase in the current period - - -

Accrual - - -

Increase due to business merger - - -

Other transfer-in - - -

3. Decrease in the current period - - -

Disposal - - -

Other transfer-out - - -

4. Closing balance - - -

IV. Book value

1. Closing book value 102,244.69 1,041,517.42 1,143,762.11

2. Opening book value 105,004.45 550,583.09 655,587.54

Note 16. Goodwill

185

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1. Original book value of goodwill

Decrease in the current

Name of the invested Increase in the current period

period

organization or the item

Opening balance Increase due Closing balance

contributing to a

to business Others Disposal Others

goodwill

merger

Changsha SEG

10,328,927.82 - - - - 10,328,927.82

Development Co., Ltd.

Total 10,328,927.82 - - - - 10,328,927.82

Goodwill is measured as the difference on the acquisition date between the cost of the enterprises merger not

under common control over the acquirer's interest in the fair value of the identifiable net assets.

Calculation process of goodwill:

Item Amount

Investment cost 69,000,000.00

Book value of the net assets of the invested organization 57,508,384.14

Estimated increment of net assets 93,383,233.24

Deferred income tax liabilities incurred by the estimated increment of net assets 23,345,808.30

Fair value of the net assets of the invested organization 127,545,809.08

Shareholding proportion in the invested organization 46.00%

Difference between the investment cost and the fair value of net identifiable assets of the invested

10,328,927.82

organization to be enjoyed at the time of acquisition

The Company purchased 46% of the equity of Changsha SEG Development Co., Ltd with the price of

69,000,000 Yuan in March 2009. The net assets in book value of Changsha SEG Development Co., Ltd were

57,508,384.14 Yuan in the current month while the net assets in fair value of Changsha SEG Development Co.,

Ltd after the evaluation for the added value was carried out. Thus, a goodwill amounting to 10,328,927.82 was

formed.

The goodwill impairment testing was conducted at the end of the period and there was no sign of impairment, so

no provision was accrued for impairment.

Note 17. Long-term expenses to be amortized

Amortization

Increase in the

Item Opening balance amount of Other decrease Closing balance

current period

current period

Decoration expenses 48,923,477.62 11,403,776.91 13,117,828.08 2,984,091.34 44,225,335.11

Firefighting renovation 111,754.83 5,053,548.00 490,103.03 356,268.00 4,318,931.80

Market supporting fee of

733,445.55 - 41,712.60 - 691,732.95

Tower B

Total 49,768,678.00 16,457,324.91 13,649,643.71 3,340,359.34 49,235,999.86

Note 18. Deferred income tax assets and liabilities

1. Deferred income tax assets not offset

186

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Closing balance Opening balance

Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax

difference assets difference assets

Asset impairment provision 32,235,258.25 8,058,814.57 32,658,252.58 8,164,563.16

Unrealized profit from

- - - -

internal transaction

Deductible losses - - - -

Payroll payable - - - -

Technology development

- - - -

expense

Accrued expenses - - - -

Estimated liabilities - - - -

Government subsidies

9,500,000.00 2,375,000.00 9,500,000.00 2,375,000.00

included in deferred income

Total 41,735,258.25 10,433,814.57 42,158,252.58 10,539,563.16

2. Deferred income tax liabilities not offset

Closing balance Opening balance

Item Taxable temporary Deferred income Taxable temporary Deferred income tax

difference tax liabilities difference liabilities

Asset evaluation increment for

merger of not the same 63,442,234.08 15,860,558.49 67,877,937.66 16,969,484.39

controlling enterprise

Changes in fair value of the

available-for-sale financial 654,175.41 163,543.86 464,237.62 116,059.41

assets

Changes in fair value of

- - - -

transactional financial assets

Designated financial assets

measured by fair value with

- - - -

changes included in current

profit and loss

Changes in fair value of the

- - - -

investment property

Changes in fair value of

- - - -

productive biological assets

Total 64,096,409.49 16,024,102.35 68,342,175.28 17,085,543.80

3. Details of deductible temporary difference of deferred income tax assets unrecognized in this period

Item Closing balance Opening balance

Asset impairment provision 11,322,893.92 11,296,252.62

187

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Item Closing balance Opening balance

Estimated liabilities - -

Deductible losses 46,691,048.83 39,063,382.24

Total 58,013,942.75 50,359,634.86

The deductible temporary differences and deductible losses are not recognized because it is uncertain to make

sufficient taxable income in the future.

4. Unrecognized deductible losses of deferred income tax assets will be due in the following years

Item Closing balance Opening balance Remarks

2015 - -

2016 12,973,257.02 13,071,134.55

2017 7,431,196.64 7,431,196.64

2018 9,295,488.88 11,864,843.19

2019 6,546,777.27 6,696,207.86

2020 10,444,329.02 -

Total 46,691,048.83 39,063,382.24

Note 19. Other non-current assets

Category and contents Closing balance Opening balance

Prepayment for software - 520,000.00

Prepayment for engineering in electronics

5,103,811.14 4,135,063.54

market

Total 5,103,811.14 4,655,063.54

Note 20. Short-term borrowing

1. Classification of short-term borrowings

Item Closing balance Opening balance

Borrowing on credit 10,000,000.00 -

Pledge loans 42,759,630.48 59,246,687.38

Mortgage loans 315,000,000.00 100,000,000.00

Guaranteed loans - 30,000,000.00

Total 367,759,630.48 189,246,687.38

2. There are no overdue outstanding short-term loans in this period.

3. The collateral of the pledge loan is the export tax rebate of Shenzhen SEG E-Commerce Co., Ltd., a subsidiary

of the Company.

Note 21. Accounts payable

Item Closing balance Opening balance

Payment for goods 84,158,671.54 195,385,013.38

Others 5,750,110.44 4,744,638.54

188

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Total 89,908,781.98 200,129,651.92

Note 22. Prepayment

1. Details of prepayment

Item Closing balance Opening balance

Advance brand royalty 11,452,476.85 9,390,743.64

Advance rental payment 111,836,641.23 136,482,047.49

Advance payment for goods 53,693,141.53 27,013,851.48

Advance advertising payment 8,013,712.80 6,353,263.26

Others 5,434,148.64 3,819,405.44

Total 190,430,121.05 183,059,311.31

Note 23. Payroll payable

1. List of payroll payable

Increase in the Decrease in the

Item Opening balance Closing balance

current period current period

Short-term payroll 18,719,733.31 97,824,417.06 94,764,047.34 21,780,103.03

Welfare after leave – defined contribution

139,110.02 6,265,382.11 6,335,461.00 69,031.13

plan

Dismissal welfare - 624,255.90 624,255.90 -

Other welfare due within one year - --- --- -

Total 18,858,843.33 104,714,055.07 101,723,764.24 21,849,134.16

2. List of short-term payroll

Increase in the Decrease in the

Item Opening balance Closing balance

current period current period

Wages, bonuses, allowances and

16,654,352.38 85,937,544.18 83,324,989.40 19,266,907.16

subsidies

Employee welfare - 3,047,755.61 2,830,208.55 213,347.06

Social insurance premiums 16,498.16 2,775,135.97 2,702,481.62 89,152.51

Including: Medical insurance premiums 10,294.54 2,442,368.09 2,363,906.12 88,756.51

Supplementary medical insurance 5,639.70 6,798.22 12,041.92 396.00

Work injury insurance 265.38 144,270.60 144,535.98 -

Maternity insurance 298.54 181,699.06 181,997.60 -

Housing fund 1,159,284.62 3,776,357.26 3,575,835.42 1,265,986.46

Labor union expenditures 617,715.42 1,696,942.37 1,369,947.95 944,709.84

Accumulative compensated absences in

- - - -

short term

Short-term profit (bonus) sharing plan - - - -

Other short-term payroll 271,882.73 688,701.67 960,584.40 -

189

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Increase in the Decrease in the

Item Opening balance Closing balance

current period current period

Total 18,719,733.31 97,824,417.06 94,764,047.34 21,780,103.03

3. List of defined contribution plan

Increase in the Decrease in the

Item Opening balance Closing balance

current period current period

Pension insurance 9,288.08 4,365,731.60 4,306,976.17 68,043.51

Unemployment insurance premium 663.43 219,255.02 218,930.83 987.62

Supplementary pension payment 129,158.51 1,680,395.49 1,809,554.00 -

Total 139,110.02 6,265,382.11 6,335,461.00 69,031.13

Note 24. Taxes payable

Taxes and fees Closing balance Opening balance

Value-added tax 169,594.16 1,659,452.21

Business tax 1,424,420.92 1,028,150.77

Enterprise income tax 28,476,563.20 32,336,241.19

Individual income tax 805,153.42 1,098,931.96

Urban maintenance and construction tax 178,371.98 720,549.53

Education surtax 102,484.34 461,020.60

Housing property tax 2,939,568.67 1,721,703.23

Stamp tax and water fund 532,994.96 254,539.95

Others 15,878.42 165,107.03

Total 34,645,030.07 39,445,696.47

Note 25. Interest payable

Item Closing balance Opening balance

Interest payable of short-term financing

- 10,062,500.66

bonds

Interest payable on short-term loans 516,758.34 232,749.99

Total 516,758.34 10,295,250.65

Note 26. Dividends payable

Reason for not making

Item Closing balance Opening balance

payment for over one year

Common stock dividends 2,218,224.58 1,717,882.74 -

Total 2,218,224.58 1,717,882.74 -

Note 27. Other payables

1. Other payables listed based on nature

Nature of receivables Closing balance Opening balance

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Nature of receivables Closing balance Opening balance

Deposit and security deposit 117,687,835.08 119,826,258.74

Central air conditioner maintenance cost and special

12,975,174.61 11,754,618.52

maintenance fund

Receipts under custody 16,469,845.49 13,624,148.51

Funds from related parties 2,753,679.48 57,653,186.81

Electronics market water and electricity charges and rental

44,443,351.03 41,946,190.48

payable

Total 194,329,885.69 244,804,403.06

Note 28. Other current liabilities

Item Closing balance Opening balance

Short-term financing bonds - 250,000,000.00

Total - 250,000,000.00

1. Increase and decrease in short-term bonds payable

Bond name Book value Issuing date Bond term Issue amount Opening balance

Short-term financing

100.00 May 15, 2014 365 days 250,000,000.00 250,000,000.00

bonds

Continued:

At par Premium and

Bond name Issue in this period Provision for discount Current repayment Closing balance

interest amortization

Short-term

- 15,750,000.00 - 265,750,000.00 -

financing bonds

Total - 15,750,000.00 - 265,750,000.00 -

Note 29. Estimated liabilities

Item Closing balance Opening balance Cause

External guarantee - -

Pending litigation 7,000,000.00 - See item 2 of note 11

Product quality assurance - - -

Restructuring obligation - - -

Onerous contract to be executed - - -

Others - - -

Total 7,000,000.00 - -

Note 30. Deferred income

Opening Increase in the Decrease in the

Item Closing balance Cause

balance current period current period

Asset-related government 9,593,659.89 --- 5,549.52 9,588,110.37 -

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Opening Increase in the Decrease in the

Item Closing balance Cause

balance current period current period

subsidy

Income-related government

111,711.12 849,700.00 915,406.72 46,004.40 -

subsidy

Bonus point 9,705,371.01 849,700.00 920,956.24 9,634,114.77 -

Total 9,593,659.89 --- 5,549.52 9,588,110.37 -

1. Deferred income related to government subsidy

Amount of

Amount of Relevant to

Opening non-operating Other Closing

Liability item new subsidies assets/relevant

balance income in the changes balance

in this period to income

current period

Subsidies for online Relevant to

93,659.89 - 5,549.52 - 88,110.37

SEG projects asset

Subsidies for project Relevant to

111,711.12 849,700.00 915,406.72 - 46,004.40

funds income

Support project for

construction of Relevant to

9,500,000.00 - - - 9,500,000.00

Nantong SEG assets

Electronics Market

Total 9,705,371.01 849,700.00 920,956.24 - 9,634,114.77

Note 31. Share capital

Increase (+)/decrease (-) in the current period

Capitalizati

Item Opening balance New share Closing balance

Bonus share on of public Others Subtotal

offering

reserve

Sum of shares 784,799,010.00 - - - - - 784,799,010.00

Note 32. Capital reserve

Increase in the Decrease in the

Item Opening balance Closing balance

current period current period

Capital premium (capital share premium) 322,339,973.81 - - 322,339,973.81

Other capital reserves 82,387,283.91 102,284,520.03 465,946.64 184,205,857.30

Total 404,727,257.72 102,284,520.03 465,946.64 506,545,831.11

Notes to capital reserve:

1. The main cause for increase in capital reserve is that Shenzhen Huakong SEG Co., Ltd., an associated

company of the Company (hereinafter referred to as "Huakong SEG") issued 110,000,000.00 shares by

non-public offering to raise a total fund of RMB 529,100,000.00. After deduction of underwriting expenses of

RMB 6,976,169.80, the actual fund raised is RMB 522,123,830.20. After the foregoing transaction, the

newly-added capital of Huakong SEG is RMB 110,000,000.00. The difference between the actual fund raised

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and the newly-added capital RMB 412,123,830.20 is included in "capital reserve-stock premium". The Company

gave up private placement, so the shareholding proportion fell from 22.54% to 20.00%. Based on the

shareholding proportion after alteration, the Company included RMB 102,284,520.03 in "capital reserve-other

capital reserve".

2. Huakong SEG increased capital investment of RMB 55,307,710.00 individually to the subsidiary Tsinghua

Holdings Huamn Settlements Environment Institute on June 4, 2015. Based on purchase cost and the equity

proportion newly acquired, Huakong SEG calculated the difference of net identifiable assets since the date of

transaction and included RMB 2,329,608.93 to decrease in "capital reserve-stock premium". Based on the

shareholding proportion, the Company included RMB 465,946.64 to decrease in "capital reserve-other capital

reserve".

Note 33. Other comprehensive income

Amount incurred in the current period

Less: profit

and loss Amount Amount

Pretax

Opening transferred in Less: after tax after tax Closing

Item amount

balance from other Income attributable attributable balance

obtained in

comprehensive tax to parent to minority

this period

income in the company shareholders

current period

I. Other comprehensive

incomes not to be

reclassified into profit and

loss

(1) Changes in net liabilities

or net assets due to

- - - - - - -

re-measurement in defined

benefit plans

(2) Shares of the investee of

other comprehensive

incomes not to be - - - - - - -

reclassified into profit and

loss with the equity method

II. Other comprehensive

income to be reclassified

into profit and loss

(1) Shares of the investee of

other comprehensive

incomes to be reclassified

- - - - - - -

into profit and loss with the

equity method if the

required conditions are met

(2) Profit or loss from

changes in the fair value of 231,817.05 189,937.79 - 47,484.45 94,845.43 47,607.91 326,662.48

available-for-sale financial

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Amount incurred in the current period

Less: profit

and loss Amount Amount

Pretax

Opening transferred in Less: after tax after tax Closing

Item amount

balance from other Income attributable attributable balance

obtained in

comprehensive tax to parent to minority

this period

income in the company shareholders

current period

assets

(3) Held-to-maturity

investments reclassified

into profit or loss from the - - - - - - -

available-for-sale financial

assets

(4) Effective profit or loss

- - - - - - -

from hedging of cash flows

(5) Foreign currency

- - - - - - -

translation differences

Total other comprehensive

231817.05 189,937.79 47,484.45 94,845.43 47,607.91 326,662.48

income

Note 34. Surplus reserve

Increase in the current Decrease in the current

Item Opening balance Closing balance

period period

Statutory surplus

102,912,835.67 7,009,501.20 - 109,922,336.87

reserve

Total 102,912,835.67 7,009,501.20 - 109,922,336.87

Note 35. Undistributed profits

Item Amount Accrual/Distribution Rate

Before adjustment undistributed profits at the end of the previous

6,299,799.41 -

period

After adjustment total undistributed profits (+ for increase, - for

- -

decrease) at the beginning of period

After adjustment undistributed profit at the beginning of period 6,299,799.41 -

Add: Net profits attributable to the parent company owner in the

74,242,090.49 -

current period

Less: Accrual of statutory surplus reserve -7,009,501.20 10.00

Accrual of free surplus reserve - -

Accrual of reserve fund - -

Accrual of enterprise development fund - -

Accrual of bonus and welfare fund - -

Ordinary share dividends payable - -

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Item Amount Accrual/Distribution Rate

Ordinary share dividends converted to share capital - -

Preferred stock dividend - -

Other distributions to shareholders - -

Profits capitalized on return - -

Other profit distribution - -

Plus: Surplus reserve compensating losses - -

Changes in net liabilities or net assets due to re-measurement in

- -

defined benefit plans

Internal carrying forward of owners' equity - -

Others - -

Undistributed profits at the end of the period 73,532,388.70 -

Note 36. Operating income and operating cost

1. Operating income and operating cost

Amount incurred in the current period Amount incurred in the previous period

Item

Income Cost Income Cost

Main business 715,233,992.20 607,958,493.22 662,288,806.93 555,763,805.28

Other businesses 26,299,684.73 10,104,222.97 19,055,114.06 5,180,652.50

2. Main operating businesses (by industry)

Amount incurred in the current period Amount incurred in the previous period

Name of company

Operating income Operating cost Operating income Operating cost

(1) Industry - - - -

(2) Trade 328,466,444.85 317,862,517.36 280,659,908.96 273,086,775.55

(3) Real estate - - - -

(4) Leasing and others 386,767,547.35 290,095,975.86 381,628,897.97 282,677,029.73

Total 715,233,992.20 607,958,493.22 662,288,806.93 555,763,805.28

Note 37. Operating tax and surcharges

Item Amount incurred in the current period Amount incurred in the previous period

Business tax 24,424,798.34 23,430,459.38

Urban maintenance and construction tax 1,877,631.66 1,700,075.86

Education surtax 1,349,358.86 1,265,708.52

Others 152,384.00 216,391.37

Total 27,804,172.86 26,612,635.13

Note 38. Financial cost

Category Amount incurred in the current period Amount incurred in the previous period

Interest expenses 9,028,274.77 17,742,811.44

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Category Amount incurred in the current period Amount incurred in the previous period

Less: Interest income 5,060,702.65 6,804,715.70

Loss on exchange -1,048,526.70 -2,273,683.31

Others 645,731.34 504,231.17

Total 3,564,776.76 9,168,643.60

Note 39. Loss from asset impairment

Item Amount incurred in the current period Amount incurred in the previous period

Loss from bad debt -106,419.36 -34,020.36

Impairment losses on loans and

5,201,783.45 2,325,411.66

prepayment

Loss from inventory depreciation - -

Loss from impairment of

- -

available-for-sale financial assets

Total 5,095,364.09 2,291,391.30

Note 40. Investment income

1. Details of investment income

Amount incurred Amount incurred

Item in the current in the previous

period period

Long-term equity investment income by the equity method 1,703,803.48 -24,010,440.06

Long-term equity investment income by the cost method - -

Income from disposal of long-term equity investments - -

Income from holding financial assets measured by fair value with changes included in

- -

current profit and loss

Income from disposal of financial assets measured by fair value with changes included

- -

in current profit and loss

Income from holding of held-to-maturity investments - -

Income from disposal of held-to-maturity investments - -

Investment income during the possession of available-for-sale financial assets 755,461.47 16,991.24

Income from disposal of available-for-sale financial assets - -

Profit from re-measurement of fair value of the remaining equity after loss of control - -

Others (financial products) 15,188,228.82 31,198,391.83

Total 17,647,493.77 7204,943.01

Note 41. Non-operating income

Amount included in

Amount incurred in the Amount incurred in the

Item current non-recurring

current period previous period

profit and loss

Total gains on disposal of non-current 19,382.00 21,274.83 19,382.00

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assets

Including: Gain on disposal of fixed

19,382.00 21,274.83 19,382.00

assets

Profit from disposal of intangible assets - - -

Profit from debt restructuring - - -

Profit from transfer of non-monetary

- - -

assets

Income from donations - - -

Government subsidies 980,956.24 1,554,585.78 980,956.24

Liquidated damages 809,234.56 1,152,807.95 809,234.56

Others 557,973.60 406,587.44 557,973.60

Total 2,367,546.40 3,135,256.00 2,367,546.40

1. Government subsidies included in current profit and loss

Amount incurred in the Amount incurred in the Relevant to assets

Subsidy item

current period previous period /Relevant to income

Special funds for development of

- 491,000.00 Relevant to income

industries

Subsidies for online SEG projects 5,549.52 57,834.72 Relevant to assets

Subsidies for project funds 915,406.72 499,040.46 Relevant to income

Guiding funds for development of service

- 500,000.00 Relevant to income

industry

Others 60,000.00 6,710.60 Relevant to income

Total 980,956.24 1,554,585.78

Note 42. Non-operating expenses

Amount included in

Amount incurred in the Amount incurred in the

Item current non-recurring

current period previous period

profit and loss

Total loss from disposal of non-current

276,651.63 14,799.49 276,651.63

assets

Including: loss from disposal of fixed

276,651.63 14,799.49 276,651.63

assets

Loss from disposal of intangible assets - - -

Loss from debt restructuring - - -

Loss from transfer of non-monetary

- - -

assets

Donation expenses 3,000.00 83,000.00 3,000.00

Compensation for loss 10,511,906.63 49,382.00 10,511,906.63

Others 3,896,199.12 928,572.43 3,896,199.12

Total 14,687,757.38 1,075,753.92 14,687,757.38

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Note 43. Income tax

1. Income tax

Item Amount incurred in the current period Amount incurred in the previous period

Income tax of the current period 36,103,014.96 36,558,413.93

Deferred income tax -1,003,177.31 -3,470,999.90

Total 35,099,837.65 33,087,414.03

2. Adjustment process of accounting profit and income tax

Item Amount incurred in the current period

Total profit 143,173,946.06

Income tax calculated according to statutory or applicable tax rate 35,793,696.09

Impact of different tax rates applicable to subsidiaries -1,485,485.15

Impact of income tax before adjustment -112,586.22

Impact of non-taxable income 434,488.67

Impact of non-deductible costs, expenses and losses 761,602.54

Impact of deferred income tax assets unrecognized in the early phase of utilization on

-77,246.80

deductible losses

Impact of deferred income tax assets unrecognized in the current period on deductible

-214,631.48

temporary difference or deductible losses

Income tax 35,099,837.65

Note 44. Notes on the cash flow statement

1. Other cash received concerning operating activities

Item Amount incurred in the current period Amount incurred in the previous period

Acquisition of security deposit for land 60,000,000.00 -

Incomings and outgoings 18,596,802.04 49,899,809.43

Goods payment collected from tenants 337,685,284.36 278,226,239.78

Interest income 5,060,702.65 6,804,715.70

Non-operating income 218,141.32 3,077,421.28

Total 421,560,930.37 338,008,186.19

2. Other cash paid concerning operating activities

Item Amount incurred in the current period Amount incurred in the previous period

Payment of security deposit for land - 60,000,000.00

Incomings and outgoings 56,090,169.65 36,450,341.99

Goods payment paid for tenants 284,098,911.45 274,400,400.19

Cash expenses 46,498,830.42 21,205,139.85

Non-operating expenses 3,000.00 1,060,954.43

Total 386,690,911.52 393,116,836.46

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3. Other cash received concerning investing activities

Item Amount incurred in the current period Amount incurred in the previous period

Asset-related government subsidy - 9,500,000.00

Total - 9,500,000.00

4. Other cash received concerning financing activities

Item Amount incurred in the current period Amount incurred in the previous period

Cash received from disposal of fractional

- 302,371.12

share

Interbank financing of related parties - 72,650,000.00

Total - 72,952,371.12

5. Other cash paid related to financing activities

Item Amount incurred in the current period Amount incurred in the previous period

Interbank financing of related parties 57,650,000.00 20,000,000.00

Payment for cash deposit - -

Payment for loan interest of related

110,222.92 295,068.50

parties

Payment for issuance of short-term

1,070,750.00 742,500.00

financing bonds

Total 58,830,972.92 21,037,568.50

Note 45. Supplementary information on the cash flow statement

1. Supplementary information on the cash flow statement

Amount of the Amount of the

Item

current period previous period

1. Reconciliation of net income to cash flow from operating activities

Net profit 107,968,730.61 78,674,230.38

Plus: Asset impairment provision 5,095,364.09 2,291,391.30

Depreciation of fixed assets, oil & gas assets and consumable biological assets 18,711,156.38 24,050,023.59

Amortization of intangible assets 294,325.43 235,813.92

Amortization of long-term expenses to be apportioned 13,649,643.71 15,012,751.26

Loss on disposal of fixed assets, intangible assets, and other long-term assets (enter "-"

257,269.63 -6,475.34

for profit)

Loss on discard of fixed asset (enter "-" for profit) - -

Loss on change in fair value (enter "-" for profit) - -

Financial expenses (enter “–” for profit) 9,028,274.77 17,742,811.44

Income from investment (enter “–” for profit) -17,647,493.77 -7,204,943.01

Decrease in deferred tax assets (enter “–” for increase) 105,748.59 -2,362,074.00

Increase in deferred tax liabilities (enter “–” for decrease) -1,061,441.45 -1,108,925.90

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Amount of the Amount of the

Item

current period previous period

Inventory decrease (enter “–” for increase) -172,528,348.00 -180,280,665.22

Decrease in accounts receivable related to operating activities (enter “–” for increase) 188,086,349.80 -77,682,986.62

Increase in accounts payable related to operating activities (enter “–” for decrease) -164,413,103.61 -297,294,572.74

Others - -

Net cash flow from operating activities -12,453,523.82 -427,933,620.94

2. Major investing and financing activities that involve no cash payments and receipts - -

Conversion of debt into capital - -

Convertible bonds due within one year - -

Fixed assets acquired by financing lease -

3. Change in cash and cash equivalents: -

Closing balance of cash 275,523,429.10 382,056,680.70

Less: Opening balance of cash 382,056,680.70 335,593,493.81

Add: Closing balance of cash equivalents - -

Less: Opening balance of cash equivalents - -

Net increase in cash and cash equivalents -106,533,251.60 46,463,186.89

2. Combination of cash and cash equivalents

Item Closing balance Opening balance

1. Cash 275,523,429.10 382,056,680.70

Cash on hand 526,467.72 602,592.57

Bank deposits available for payment at any time 274,816,839.04 381,404,611.82

Other monetary capital available for payment at any time 180,122.34 49,476.31

Accounts in the central bank available for payment - -

Deposits from interbank - -

Loans from interbank - -

2. Cash equivalents - -

Including: Bond investments due within 3 months - -

3. Closing balance of cash and cash equivalents 275,523,429.10 382,056,680.70

Including: Cash and cash equivalents with the use by the parent company and

- -

subsidiaries

Note 46. Assets with restrictions on ownership or the use right

Item Balance Reason for restriction

Deposit and performance bond for credit

Monetary funds 1,340,000.00

card repayment

Investment properties 98,205,323.20 Pledge for bank loans

Fixed assets 15,903,181.38 Collaterals for bank loans

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Item Balance Reason for restriction

Total 300,482,399.26

Note 47. Foreign currency monetary items

1. Foreign currency monetary items

Closing balance of foreign Closing balance of converted

Item Discount exchange rate

currency RMB

Monetary funds - -

Including: USD 100.00 6.4936 649.36

HK$ 240.00 0.8378 201.07

Accounts receivable

Including: USD 18,028,404.32 6.4936 117,069,246.31

VII. Change in consolidation scope

No changes are made to the consolidation scope in the current reporting period.

VIII. Equity in other entities

(I) Equity in subsidiaries

1. Composition of the group

Main Share-holding

Place of Business Method of

Subsidiary name business proportion (%)

registration Nature of business acquisition

address Direct Indirect

Xi'an SEG Electronics Market Electronics market Investment and

Xi'an Xi'an 65.00 -

Co., Ltd. lease management establishment

Shenzhen SEG Electronics Electronics market Investment and

Shenzhen Shenzhen 70.00 -

Market Management Co., Ltd. lease management establishment

Suzhou SEG Electronics Market Electronics market Investment and

Su Zhou Su Zhou 45.00 -

Co., Ltd. lease management establishment

Shenzhen Mellow Orange Hotel management,

Investment and

Business Hotel Management Co., Shenzhen Shenzhen consultancy and - 66.58

establishment

Ltd property management

Petty loan business

(pooling public

deposits is prohibited) Investment and

Shenzhen SEG Credit Co., Ltd. Shenzhen Shenzhen 36.00 17.02

within the establishment

administrative region

of Shenzhen.

Shenzhen SEG E-Commerce Co., Investment and

Shenzhen Shenzhen E-commerce 51.00 -

Ltd. establishment

Market facilities

Shenzhen SEG Electronics leasing, property Investment and

Nanjing Nanjing 100.00 -

Market Management Co., Ltd. management, sales of establishment

electronic products and

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Main Share-holding

Place of Business Method of

Subsidiary name business proportion (%)

registration Nature of business acquisition

address Direct Indirect

advertisement

Property leasing, sales

Xi'an Hairong SEG Electronics Investment and

Xi'an Xi'an of electronic products 51.00 -

Market Co., Ltd. establishment

and advertisement

Wujiang SEG Electronics Market Electronics market Investment and

Wujiang Wujiang 51.00 -

Co., Ltd. lease management establishment

Wuxi SEG Electronics Market Electronics market Investment and

Wuxi Wuxi 51.00 -

Co., Ltd lease management establishment

Shunde SEG Electronics Market Electronics market Investment and

Foshan Foshan 100.00 -

Management Co., Ltd. lease management establishment

Nanning SEG Electronics Market Electronics market Investment and

Nanning Nanning 100.00 -

Management Co., Ltd. lease management establishment

Nantong SEG Times Square Investment and

Nantong Nantong real estate development 100.00 -

Development Co., Ltd. establishment

Merger of

Shenzhen SEG Baohua Enterprise Property lease and

Shenzhen Shenzhen 66.58 - enterprises under

Development Co., Ltd. management

common control

Investment in industrial Merger of

Shenzhen SEG Industrial

Shenzhen Shenzhen and commercial 100.00 - enterprises under

Investment Co., Ltd.

business common control

Merger of the

Changsha SEG Development Co., enterprises under

Changsha Changsha Property lease 46.00 -

Ltd. the control of a

same entity

Yantai SEG Times Square Investment and

Yantai Yantai real estate development 90.00 -

Development Co., Ltd. establishment

Nantong SEG Commercial Investment and

Nantong Nantong - 100.00 -

Operation Management Co., Ltd. establishment

Suzhou SEG Digital Plaza Investment and

Su Zhou Su Zhou - 100.00 -

Management Co., Ltd. establishment

Xi'an Fengdong New Town SEG Real estate Investment and

Xi'an Xi'an 100.00 -

Times Square Properties Co., Ltd. development establishment

(1) Cause for difference between the proportion of shareholding and the proportion of voting rights

For Changsha SEG Development Co., Ltd. (originally named Changcha Emerging Development Co., Ltd.), the

current capital stock structure is as follows: The company holds 46% of shares and is the largest shareholder. In

addition, according to the Memorandum of Cooperation Concerning the Stock Equity Project of Joint Investment

and Acquisition of Changsha Emerging Development Co., Ltd. signed by and between the Company and Hong

Kong Jinhong Group on October 8th, 2008, Hong Kong Jinhong Group agreed to give up the 5% of voting

power, which would be exercised by the Company, and the voting power ratio of the company is 51%. Half of

the directors, the Chairman of the Board, the General Manager, the Chief Financial Officer and the management

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team of Changsha SEG Development Co., Ltd are all dispatched by the Company, therefore, the Company has

obtained the control of Changsha SEG Development Co., Ltd.

(2) Basis for control of the invested entity even with half of voting rights or less

Half of the directors, the Chairman of the Board, the General Manager, the Chief Financial Officer and the

management team of Suzhou SEG Electronics Market Management Co., Ltd are all dispatched by the Company

that actually controls the operation of Suzhou SEG.

2. Important non-wholly-owned subsidiaries

Equity Minority

Current gains of Current dividends

proportion of shareholders'

Subsidiary name losses of minority paid to minority Remarks

minority equity at the end

shareholders shareholders

shareholders of the period

Shenzhen SEG Credit Co., Ltd. 46.98 16,444,684.56 - 89,265,729.12

Changsha SEG Development Co.,

54.00 2,889,109.78 - 34,429,061.12

Ltd.

Shenzhen SEG Baohua Enterprise

33.42 8,748,893.63 6,177,600.00 34,816,359.61

Development Co., Ltd.

Total - 28,082,687.97 6,177,600.00 158,511,149.85

3. Main financial information on important non-wholly-owned subsidiaries

Unit: Yuan

Closing balance

Subsidiary name Non-current Current Non-current

Current assets Total assets Total liabilities

assets liabilities liabilities

Shenzhen SEG

43,081,968.84 476,007,451.60 519,089,420.44 329,081,482.77 - 329,081,482.77

Credit Co., Ltd.

Changsha SEG

Development Co., 15,438,729.45 68,199,562.67 83,638,292.12 19,880,771.53 - 19,880,771.53

Ltd.

Shenzhen SEG

Baohua Enterprise

97,334,289.19 52,503,037.02 149,837,326.21 45,495,566.87 163,543.86 45,659,110.73

Development Co.,

Ltd.

Total 155,854,987.48 596,710,051.29 752,565,038.77 394,457,821.17 163,543.86 394,621,365.03

Continued:

Opening balance

Subsidiary

Non-current Non-current

name Current assets Total assets Current liabilities Total liabilities

assets liabilities

Shenzhen

SEG Credit 42,768,150.12 452,858,389.93 495,626,540.05 313,882,188.08 - 313,882,188.08

Co., Ltd.

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Changsha

SEG

4,480,359.54 139,281,931.91 143,762,291.45 17,477,036.50 16,969,484.39 34,446,520.89

Development

Co., Ltd.

Shenzhen

SEG Baohua

Enterprise 84,928,255.69 56,270,653.64 141,198,909.33 44,740,424.26 116,059.41 44,856,483.67

Development

Co., Ltd.

Total 132,176,765.35 648,410,975.48 780,587,740.83 376,099,648.84 17,085,543.80 393,185,192.64

Continued:

Amount incurred in the current Amount incurred in the previous

period period

Subsidiary name

Operating Operating

Net profit Net profit

income income

Shenzhen SEG Credit Co., Ltd. 77,554,704.11 35,003,585.70 62,998,793.90 29,712,107.16

Changsha SEG Development Co., Ltd. 23,221,623.20 5,350,203.30 21,651,924.25 480,408.75

Shenzhen SEG Baohua Enterprise Development

83,242,678.25 26,178,616.48 81,708,199.76 24,911,642.59

Co., Ltd.

Total 184,019,005.56 66,532,405.48 166,358,917.91 55,104,158.50

(II) Equity in joint venture arrangements or joint ventures

1. Important associates

Main Place of Business Shareholding proportion

Accounting

Name of joint venture or associate business registrati Nature of (%)

treatment method

address on business Direct Indirect

Manufactu

Shenzhen Huakong SEG Co., Ltd. Shenzhen Shenzhen 20.00 - Equity method

ring

Shanghai SEG Electronics Market Service

Shanghai Shanghai 35.00 - Equity method

Co., Ltd. industry

2. Main financial information on important associates

Closing balance/amount incurred in the current period

Item Shenzhen Huakong SEG Co., Shanghai SEG Electronics

Ltd. Market Co., Ltd.

Current assets 395,623,546.83 20,901,493.33

Non-current assets 362,254,332.48 210,798.06

Total assets 757,877,879.31 21,112,291.39

Current liabilities 94,113,723.78 10,747,847.59

Non-current liabilities 1,369,185.93 -

Total liabilities 95,482,909.71 10,747,847.59

204

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Closing balance/amount incurred in the current period

Item Shenzhen Huakong SEG Co., Shanghai SEG Electronics

Ltd. Market Co., Ltd.

Minority shareholders' equity 48,141,144.00 -

Shareholders' equity attributable to the parent company 614,253,825.60 10,364,443.80

Net asset shares calculated based on shareholding ratio 122,857,318.61 3,627,555.33

Adjustment items - -

Goodwill - -

-Unrealized profit from internal transaction - -

-Others 58,885,842.46 -248,142.52

Book value of equity investment in associates 185,122,573.88 3,379,412.81

Fair value of equity investment with public offer 2,551,041,568.11 -

Operating income 170,618,870.76 8,283,156.47

Net profit 7,005,520.52 864,641.80

Net profit after termination of operation - -

Other comprehensive income - -

Total comprehensive income 7,005,520.52 864,641.80

Dividends received from associates in the current period - 500,000.00

Continued:

Opening balance/amount incurred in the previous period

Item Shenzhen Huakong SEG Co., Shanghai SEG Electronics

Ltd. Market Co., Ltd.

Current assets 158,732,194.56 30,650,791.15

Non-current assets 262,002,634.60 37,816.64

Total assets 420,734,829.16 30,688,607.79

Current liabilities 303,841,418.53 20,289,991.11

Non-current liabilities 456,054.73 -

Total liabilities 304,297,473.26 20,289,991.11

Minority shareholders' equity 28,983,272.09 -

Shareholders' equity attributable to the parent company 87,454,083.81 10,293,666.63

Net asset shares calculated based on shareholding ratio 19,633,441.82 3,602,783.32

Adjustment items - -

Goodwill - -

-Unrealized profit from internal transaction - -

-Others 58,889,967.01 -25,995.14

Book value of equity investment in associates 78,523,408.83 3,576,788.18

Fair value of equity investment with public offer 1,759,755,588.42 -

Operating income 67,194,613.97 21,463,752.09

205

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Opening balance/amount incurred in the previous period

Item Shenzhen Huakong SEG Co., Shanghai SEG Electronics

Ltd. Market Co., Ltd.

Net profit -105,387,168.32 898,454.72

Net profit after termination of operation - -

Other comprehensive income - -

Total comprehensive income -105,387,168.32 898,454.72

Dividends received from associates in the current period - 5,992,172.96

IX. Fair value

(I) Financial instruments measured by fair value

The Company listed the book value of financial asset instruments measured by fair value on December 31, 2015

based on three levels of fair value. The fair value is classified into three levels according to the lowest level that

each important input value used in measurement of fair value is attributed to. Definitions of three levels:

Level 1: Unadjusted quotes of same assets or liabilities available on the date of measurement in the active

market.

Level 2: Directly or indirectly observable input values of relevant assets or liabilities other than input values at

level 1.

Input values at level 2 include: (1) quotes of similar assets or liabilities in the active market; (2) quotes of same

or similar assets or liabilities in the non-active market; (3) other observable input values other than quotes,

including observable interest rate and yield rate curves, implied volatility and credit spread in the interval of

normal quotes; (4) input values proved by the market.

Level 3: Unobservable input values of relevant assets or liabilities.

(II) Measurement of fair value at the end of the period

Persistent fair value measurement

Fair value at the end of the period

Item

Level 1 Level 2 Level 3 Total

Total available-for-sale

744,580.41 - - 744,580.41

financial assets

Bond instrument

- - - -

investment

Equity instrument

744,580.41 - - 744,580.41

investment

Other investment - - - -

X. Related parties and associated transactions

(I) Information on subsidiaries of the Company:

206

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Registered

Shareholding Voting right

Place of Capital

Name of parent company Nature of business proportion over the proportion over the

registration (RMB ten

Company (%) Company (%)

thousand Yuan)

Comprehensive

Shenzhen SEG Group Co., Ltd. Shenzhen 135,542.00 30.24 30.24

business

1. The final controlling party of the Company is Shenzhen State-owned Assets Supervision and Administration

Commission.

(II) For details of subsidiaries of the Company, see Note 8 (1) equity in subsidiaries

(III) Information on the joint ventures and associates of the Company

For details of important associates or joint ventures of the Company, see Note 8 (2) equity in joint venture

arrangement or associates.

(IV) Information on other related parties

Name of other related parties Relationship between other related parties and the Company

Shenzhen SEG Property Development Co., Ltd. Subsidiary of shareholders

Shenzhen SEG Group Service Co., Ltd Subsidiary of shareholders

Shenzhen SEG Computers Co., Ltd Subsidiary of shareholders

Shenzhen SEG Hi-tech Industrial Co., Ltd. Subsidiary of shareholders

Shenzhen SEG Real Estate Investment Co., Ltd. Subsidiary of shareholders

Shenzhen SEG Business Operation Co., Ltd. Subsidiary of the controlling shareholder

(V) Related party transaction

1. The transactions among the subsidiaries that have controlling relationship with the Company and have been

included in the consolidation scope as well as the transactions between the subsidiaries and the parent company

have been offset.

2. Information on associate entrust

(1) Information on the Company's entrusted management

Pricing basis for

Trust profit

Type of income from

recognized in the

Name of trustor Name of trustee entrusted Starting date Ending date entrusted

current reporting

assets management/con

period

tracting

SEG

Shenzhen SEG Shenzhen SEG January 1, January 31, Trusteeship

Communicat 200,000.00

Group Co., Ltd. Co., Ltd. 2015 2016 Agreement

ions Market

Total 200,000.00

3. Information on leases between the Company and related parties

(1) The Company as the leasee:

207

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Rental recognized in this Rental recognized in previous

Name of lessor Type of leased assets

period period

Shenzhen SEG Group Co., Warehouse with an area of

638,661.00 586,200.00

Ltd. 809.26m2 on 8F of SEG Plaza

Total 638,661.00 586,200.00

(2) A subsidiary of the Company as the leasee:

Rental recognized in this Rental recognized in previous

Name of lessor Type of leased assets

period period

The 15th floor of SEG Plaza,

Shenzhen SEG Business

with an area of 687.01 square 465,593.70 502,891.20

Operation Co., Ltd.

meters

12F (West), Block 4, SEG

Shenzhen SEG Real Estate

Science Park with an area of 278,684.00 -

Investment Co., Ltd.

909.79 m2

Total 744,277.70 502,891.20

4. Interbank financing of related parties

(1) Loans from other banks

Related party Loans Starting date Due date Remarks

Shenzhen SEG Hi-tech Industrial Co., Tuesday, December 30, Tuesday, January 20, Interest

17,650,000.00

Ltd. 2014 2015 calculation

according to

Wednesday, December Tuesday, January 6,

Shenzhen SEG Group Co., Ltd. 40,000,000.00 the exact

31, 2014 2015

number of days

Total 57,650,000.00

Loans from associated party

As of December 31, 2015, the interest of RMB 66,922.92 has been paid to Shenzhen SEG Hi-tech Industrial Co.,

Ltd., and the interest of RMB 43,300.00 to payable Shenzhen SEG Group Co., Ltd. has been accrued.

5. Remuneration of key managers

Amount incurred in the current period Amount incurred in the previous period

Item

(RMB ten thousand Yuan) (RMB ten thousand Yuan)

Remuneration of key managers 337.06 340.20

6. Accounts receivable from and payable to related parties

(1) Accounts receivable from related parties

Closing balance Opening balance

Project name Related party Bad debt Bad debt

Book balance Book balance

provision provision

Other accounts

receivable

Shenzhen SEG Property 10,325.00 - 12,325.00 -

208

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Closing balance Opening balance

Project name Related party Bad debt Bad debt

Book balance Book balance

provision provision

Development Co., Ltd.

Shenzhen SEG Group Co.,

227,149.60 - 214,491.60 -

Ltd.

Shenzhen SEG Property

20,100.00 - - -

Management Co., Ltd.

Shenzhen SEG Real Estate

139,342.00 - - -

Investment Co., Ltd.

(2) Accounts payable to related parties

Project name Related party Closing balance Opening balance

Dividends

payable

Shenzhen SEG Computers Co., Ltd 662,310.00 543,510.00

Other payables

Shenzhen SEG Group Co., Ltd. - 40,000,000.00

Shenzhen SEG Property Development Co.,

- -

Ltd.

Shenzhen SEG Hi-tech Industrial Co., Ltd. - 17,653,186.81

XI. Commitments and contingency

(I) Major commitments

1. Concluded lease contract being performed or to be performed and minimum rental to be paid the next year

Xi'an

Shenzhen SEG Shenzhen SEG

Hairong Wujiang SEG

Xi'an SEG Suzhou SEG Electronics Electronics

Remaining lease SEG Electronics

Electronics Electronics Market Market

term Electronics Market Co.,

Market Co., Ltd. Market Co., Ltd. Management Management

Market Ltd.

Co., Ltd. Co., Ltd.

Co., Ltd.

Within one year

(including one 13,125,000.00 16,024,907.88 5,060,198.20 - - -

year)

Above one year

but within two

13,375,000.00 16,234,383.80 5,212,004.15 - - -

years (including

two years)

Above two years

but within three

13,375,000.00 16,234,383.80 5,212,004.15 - - -

years (including

three years)

Over 3 years 35,375,000.00 140,977,294.16 9,925,451.00 - - -

209

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Total 75,250,000.00 189,470,969.64 25,409,657.50 Note *1 Note *2 Note *3

(Continued)

Nanning SEG Shunde SEG

Remaining lease Electronics Market Electronics Market Wuxi SEG Electronics Suzhou SEG Digital Plaza

term Management Co., Management Co., Market Co., Ltd Management Co., Ltd.

Ltd. Ltd.

Within one year

(including one 8,000,000.00 4,800,000.00 - 13,054,290.12

year)

Above one year but

within two years

8,000,000.00 5,040,000.00 - 13,403,893.21

(including two

years)

Above two years

but within three

8,000,000.00 5,040,000.00 - 13,403,893.21

years (including

three years)

Over 3 years 56,000,000.00 38,047,508.73 - 69,228,846.75

Total 80,000,000.00 52,927,508.73 Note *4 109,090,923.29

Note *1: Under the cooperation agreement signed by and between both parties, Xi'an Hairong SEG Electronics Market Co., Ltd.

pays the rental according to 70% of profits of the electronics market. Therefore, the amount of rental in the future is uncertain.

Note *2: The rental of Shenzhen SEG Electronics Market Management Co., Ltd. is adjusted according to the CPI. Therefore, the

amount of rental in the future is uncertain.

Note *3: Under the cooperation agreement signed by and between both parties, Wujiang SEG Electronics Market Co., Ltd. pays the

rental according to 70% of pretax profits of the electronics market. Therefore, the amount of rental in the future is uncertain.

Note *4: Wuxi SEG Electronics Market Co., Ltd. is exempted from the rental within the three years before

opening of the company and pays the rental in the fourth year according to 70% of the pre-tax profits of the

electronics market. Therefore, the amount of rental in the future is uncertain.

Except the preceding commitments, the Company has no significant commitments that shall be disclosed or have

not been disclosed by December 31, 2015.

2. Other major financial commitment

(1) Other important financial commitments

As of the end of the current reporting period, the Company mortgaged its own property for bank loans and issue

of bonds. Details of the mortgaged property and the at the end of the current reporting period are as follows:

Net value of

Owner of property Name of property property at the end Remarks

of the period

Shenzhen SEG Co., Ltd. 4F, SEG Plaza 45,952,119.59 Mortgage for bank loans

2F & 5F of SEG Operational property of 2F & 5F of SEG Plaza as

Shenzhen SEG Co., Ltd. 185,033,894.68

Plaza pledge for issue of bond

210

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Some floors of

Shenzhen SEG Co., Ltd. Contemporary 51,579,212.11 Mortgage for bank loans

Window

Shenzhen SEG Co., Ltd. 31F, Qunxing Plaza 9,645,613.75 Mortgage for bank loans

Shenzhen SEG Co., Ltd. Other properties 6,931,559.13 Mortgage for bank loans

Total 299,142,399.26

(II) Contingency on the balance sheet date

1. Contingency arising from pending litigation or arbitration and its financial impact

On July 1, 2015, Nanning Haiqi Real Estate Development Co., Ltd. filed a lawsuit against Nanning SEG Digital

Square Management Co., Ltd. (a subsidiary of the Company) to the People's Court of Xingning District, Nanning

for dispute on contract termination, and requested the Court to order that the Company (as the second defendant)

and the subsidiary pay the rental fee of RMB 4,503,669.43, the liquidated damage of RMB 24,391.97 and the

attorney fee of RMB 30,000.00 as of October 2015 As of the end of current year, the Company has recognized

the estimated liabilities of RMB 7,000,000.00 based on the amount payable. As of the report date, the case is in

trial.

Except the preceding contingency, the Company has no significant commitments that shall be disclosed but have

not been disclosed as of December 31, 2015.

XII. Events after the balance sheet date

(I) Major non-adjustment items

1. Issue of shares and bonds

The 6th Session of the Board of Directors of Shenzhen SEG Co., Ltd. passed Plan on Non-Public Offering of

Bonds at the 29th interim meeting. Shenzhen SEG Co., Ltd. released an announcement hereof on December 16,

2015 that bonds of 400-600 million Yuan would be issued. As of the financial report date, the issue of bonds is

not completed.

2. Significant acquisitions or restructuring plan

On February 3, 2016, Shenzhen SEG Co., Ltd. and Shenzhen SEG Group Co., Ltd. entered into the "Framework

Agreement on Issue of Shares and Assets Purchase in Cash". The Company plans to purchase the equity of

targeted companies held by SEG Group (including 55% of equity of SEG Kang Le, 100% of equity of SEG

Property, 100% of equity of SEG Chuangyehui, and 79.02% of equity of SEG Real Estate) by non-public

offering of shares and in cash, and issue private placement to no more than 10 specific investors to raise

supporting funds for no more than 2 billion Yuan. The supporting funds are used to pay the cash considerations

of such transaction, the subsequent investment to the construction project of Xi'an SEG Plaza, and the

subsequent investment to the construction project of Shenzhen SEG International Electronics Industry Center by

Shenzhen SEG New Urban Construction Development Co., Ltd. As of the report date, the organization plan is in

progress.

(II) Details of profit distribution

According to the resolutions of the meeting of the Board of Directors, the Company shall distribute profits to all

shareholders at 0.03 yuan per share in 2015. The foregoing plan is to be approved by the shareholder's meeting.

(III) Notes to other events after the balance sheet date:

211

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Except the events after the balance sheet date, the Company has no such events that shall be disclosed but have

not been disclosed as of the report date.

XIII. Notes to other important matters

(I) Purchase of financial products with idle funds

On the second shareholders meeting held on July 21, 2014, the Proposal on Purchase of Financial Products

Using Idle Funds of the Company was passed, which allows the company and its subsidiaries to invest and

manage wealth by using idle funds of not more than RMB 1 billion Yuan and the capital can be rolled over

within the forgoing limit. The shareholder's meeting passed a resolution that general manager of the Company

shall make decisions for specific projects and the management shall carry out such decisions. The investment

period is from the date of resolution to June 30, 2016 (subject to the time of purchasing financial products).

As of December 31, 2015, the balance of financial products purchased by the Company and its subsidiaries is as

follows:

Unit: RMB ten thousand Yuan

Wujiang SEG Shenzhen SEG Baohua Wuxi SEG Xi'an Hairong

Company Shenzhen SEG

Electronics Market Enterprise Development Electronics SEG Electronics

name Co., Ltd.

Co., Ltd. Co., Ltd. Market Co., Ltd Market Co., Ltd.

Amount 9,000.00 1,600.00 8,000.00 1,180.00 2,000.00

Continued:

Shenzhen SEG Nanning SEG

Company Shenzhen SEG Credit Co.,

E-Commerce Co., Electronics Market Total

name Ltd.

Ltd. Management Co., Ltd.

Amount 3,600.00 500.00 103.127 25,983.127

XIV. Notes to main items in the financial statements of the parent company

Note 1. Accounts receivable

1. Accounts receivable disclosed by type

Closing balance

Book balance Bad debt provision

Type

Proportion of Book value

Amount Proportion (%) Amount

provision (%)

Accounts receivable with single

significant amount and single - - - - -

bad debt provision

Accounts receivable with bad

debt provision accrued based on - - - - -

credit risk feature combinations

Accounts receivable with no

significant single amount but

8,869,182.88 100.00 8,869,182.88 100.00 -

with single provision for bad

debts

Total 8,869,182.88 100.00 8,869,182.88 100.00 -

212

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Continued:

Opening balance

Book balance Bad debt provision

Type

Proportion of Book value

Amount Proportion (%) Amount

provision (%)

Accounts receivable with single

significant amount and single 7,163,876.44 77.29 7,163,876.44 100.00

bad debt provision

Accounts receivable with bad

debt provision accrued based on - - - -

credit risk feature combinations

Accounts receivable with no

significant single amount but

2,105,306.44 22.71 2,105,306.44 100.00

with single provision for bad

debts

Total 9,269,182.88 100.00 9,269,182.88 100.00

Notes to types of accounts receivable:

2. Accrual, recovery and writing back of current bad debt provision

The amount of the current bad debt provision recovered or reversed is RMB 400,000.00.

3. No other accounts receivable are written off in the current period

4. Accounts receivable with top 5 closing balance collected based on debtors

Percentage in the total amount

Name of company Closing balance Accrued bad debt provision

of accounts receivable

Jiangsu Unicom 3,092,011.09 34.86 3,092,011.09

Shenzhen LiYuanshun

1,906,865.35 21.50 1,906,865.35

Industrial Co., Ltd.

Shanghai Tianci Industrial

899,000.00 10.14 899,000.00

Co., Ltd.

Zhejiang Financial

786,000.00 8.86 786,000.00

Information Co., Ltd

Sichuan HuiYuan Electronics

480,000.00 5.41 480,000.00

Co., Ltd.

Total 7,163,876.44 80.77 7,163,876.44

Note 2. Other accounts receivable

1. Other receivables disclosed by type

Closing balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

213

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Closing balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Other accounts receivable with

single significant amount and single 8,530,276.35 1.43 8,530,276.35 100.00 -

bad debt provision

Other accounts receivable with bad

debt provision accrued based on 570,672,790.85 95.71 1,173.47 0.00 570,671,617.38

credit risk feature combinations

Including: Combination 1 1,059,894.27 0.18 1,173.47 0.11 1,058,720.80

Combination 2 569,612,896.58 95.53 - - 569,612,896.58

Other accounts receivable with no

significant single amount but with 17,070,353.09 2.86 17,070,353.09 100.00 -

single provision for bad debts

Total 596,273,420.29 100.00 25,601,802.91 4.29 570,671,617.38

Continued:

Opening balance

Book balance Bad debt provision

Type

Proportion Proportion of Book value

Amount Amount

(%) provision (%)

Other accounts receivable with

single significant amount and single 8,530,276.35 1.96 8,530,276.35 100.00 -

bad debt provision

Other accounts receivable with bad

debt provision accrued based on 410,454,248.03 94.12 1,200.00 - 410,453,048.03

credit risk feature combinations

Including: Combination 1 1,168,219.48 0.27 1,200.00 0.10 1,167,019.48

Combination 2 409,286,028.55 93.85 - - 409,286,028.55

Other accounts receivable with no

significant single amount but with 17,118,394.49 3.92 17,118,394.49 100.00 -

single provision for bad debts

Total 436,102,918.87 100.00 25,649,870.84 5.88 410,453,048.03

Notes to types of other accounts receivable:

(1) Other accounts receivable with single significant amount and single bad debt provision

Closing balance

Name of company Other accounts Bad debt Proportion of

Reason for provision

receivable provision provision (%)

Unable to be recovered for

Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00

aging of over 5 years

214

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Closing balance

Name of company Other accounts Bad debt Proportion of

Reason for provision

receivable provision provision (%)

Total 8,530,276.35 8,530,276.35 100.00 -

(2) Other accounts receivable in Combination 1, for which bad debt provision is accrued by the aging analysis

method:

Closing balance

Aging

Other accounts receivable Bad debt provision Proportion of provision (%)

Less than one year 1,036,424.93 - -

1-2 years 23,469.34 1,173.47 5.00

Total 1,059,894.27 1,173.47 0.11

(3) Other accounts receivable in Combination 2 include deposit, security deposit, account with related parties.

2. Accrual, recovery and writing back of current bad debt provision

The amount of the current bad debt provision reversed is RMB 48,067.93.

3. No other accounts receivable are written off in the current period.

4. Classification of other receivables by nature

Item Closing balance Opening balance

Receivables of related parties 568,166,228.80 408,087,205.17

Creditor's right transfer cost 23,583,862.58 22,664,045.27

Imprest 579,868.64 790,404.70

Deposit and security deposit 1,446,667.78 1,247,233.78

Others 2,496,792.49 3,314,029.95

Total 596,273,420.29 436,102,918.87

5. Other receivables with top 5 closing balance collected based on arrears party

Bad debt

Percentage in the total

Nature of provision

Name of company Closing balance Aging amount of other

receivables Closing

accounts receivable

balance

Nantong SEG Times Square Loans and Within 3

449,256,574.33 75.34 -

Development Co., Ltd. interests years

Shenzhen SEG E-Commerce Loans and Within 2

10.08 -

Co., Ltd. interests 60,117,534.25 years

Shenzhen SEG Industrial Loans and Within 5

7.25 -

Investment Co., Ltd. interests 43,202,666.68 years

Suzhou SEG Digital Plaza Incomings and Less than

10,000,000.00 1.68 -

Management Co., Ltd. outgoings one year

Yangjiang Yuntong Grease Co., Debt Over 5

8,530,276.35 1.43 8,530,276.35

Ltd. restructuring of years

215

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Bad debt

Percentage in the total

Nature of provision

Name of company Closing balance Aging amount of other

receivables Closing

accounts receivable

balance

SEG Orient

Total 571,107,051.61 95.78 8,530,276.35

Note 3. Long-term equity investment

Closing balance Opening balance

Nature of

Bad debt Bad debt

receivables Book balance Book value Book balance Book value

provision provision

Investment in

269,983,526.24 - 269,983,526.24 299,983,526.24 - 299,983,526.24

subsidiaries

Investment in

associates and 185,122,573.88 - 185,122,573.88 82,100,197.01 - 82,100,197.01

joint ventures

Total 455,106,100.12 - 455,106,100.12 382,083,723.25 - 382,083,723.25

1. Investment in subsidiaries

Accrued

Increase impairment Closing

Initial Decrease in

Invested Opening in the Closing provision balance of

investment cost the current

organization balance current balance in the impairment

Cost period

period current provision

period

Shenzhen SEG

Baohua

Enterprise 20,512,499.04 20,512,499.04 - - 20,512,499.04 - -

Development

Co., Ltd.

Shenzhen SEG

Industrial

29,181,027.20 29,181,027.20 - - 29,181,027.20 - -

Investment Co.,

Ltd.

Changsha SEG

Development 69,000,000.00 69,000,000.00 - - 69,000,000.00 - -

Co., Ltd.

Shenzhen SEG

Electronics

Market 2,100,000.00 2,100,000.00 - - 2,100,000.00 - -

Management

Co., Ltd.

Suzhou SEG

Electronics 1,350,000.00 1,350,000.00 - - 1,350,000.00 - -

Market Co.,

216

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Accrued

Increase impairment Closing

Initial Decrease in

Invested Opening in the Closing provision balance of

investment cost the current

organization balance current balance in the impairment

Cost period

period current provision

period

Ltd.

Xi'an SEG

Electronics

1,950,000.00 1,950,000.00 - - 1,950,000.00 - -

Market Co.,

Ltd.

Shenzhen SEG

54,000,000.00 54,000,000.00 - - 54,000,000.00 - -

Credit Co., Ltd.

Shenzhen SEG

E-Commerce 15,300,000.00 15,300,000.00 - - 15,300,000.00 - -

Co., Ltd.

Shenzhen SEG

Electronics

Market 20,000,000.00 20,000,000.00 - - 20,000,000.00 - -

Management

Co., Ltd.

Xi'an Hairong

SEG

Electronics 1,530,000.00 1,530,000.00 - - 1,530,000.00 - -

Market Co.,

Ltd.

Wujiang SEG

Electronics

1,530,000.00 1,530,000.00 - - 1,530,000.00 - -

Market Co.,

Ltd.

Wuxi SEG

Electronics

1,530,000.00 1,530,000.00 - - 1,530,000.00 - -

Market Co.,

Ltd

Shunde SEG

Electronics

Market 6,000,000.00 6,000,000.00 - - 6,000,000.00 - -

Management

Co., Ltd.

Nanning SEG

Electronics

Market 8,000,000.00 8,000,000.00 - - 8,000,000.00 - -

Management

Co., Ltd.

Nantong SEG

30,000,000.00 30,000,000.00 - - 30,000,000.00 - -

Times Square

217

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Accrued

Increase impairment Closing

Initial Decrease in

Invested Opening in the Closing provision balance of

investment cost the current

organization balance current balance in the impairment

Cost period

period current provision

period

Development

Co., Ltd.

Suzhou SEG

Digital Plaza

8,000,000.00 8,000,000.00 - - 8,000,000.00 - -

Management

Co., Ltd.

Xi'an Fengdong

New Town

SEG Times

30,000,000.00 30,000,000.00 - 30,000,000.00 - - -

Square

Properties Co.,

Ltd.

Total 299,983,526.24 299,983,526.24 - 30,000,000.00 269,983,526.24 - -

2. Investment in associates and joint ventures

Increase/Decrease of the year

Investment

Adjustment of

profit and loss

Invested organization Opening balance Additional Negative other

confirmed

investment investment comprehensive

under the equity

income

method

II. Associates -

Shanghai SEG Electronics Market

3,576,788.18 - - 302,624.63 -

Co., Ltd.

Shenzhen Huakong SEG Co., Ltd. 78,523,408.83 - - 1,401,178.85 -

Subtotal 82,100,197.01 - - 1,703,803.48 -

Total 82,100,197.01 - - 1,703,803.48

Continued:

Increase/Decrease of the year Closin

g

balanc

Declared cash Accrued

e of

Invested organization Other changes in dividends or impairme Closing balance

Others impair

equity profits nt

ment

distribution provision

provis

ion

II. Associates - - - - - -

Shanghai SEG Electronics Market - 500,000.00 - - 3,379,412.81 -

218

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Increase/Decrease of the year Closin

g

balanc

Declared cash Accrued

e of

Invested organization Other changes in dividends or impairme Closing balance

Others impair

equity profits nt

ment

distribution provision

provis

ion

Co., Ltd.

Shenzhen Huakong SEG Co., Ltd. 101,818,573.39 - - - 181,743,161.07 -

Subtotal 101,818,573.39 500,000.00 - - 185,122,573.88 -

Total 101,818,573.39 500,000.00 - - 185,122,573.88 -

Note 4. Operating revenue and operating cost

1. Operating income and operating cost

Amount incurred in the current period Amount incurred in the previous period

Item

Income Cost Income Cost

Main business 123,368,604.11 76,436,384.08 125,263,172.20 76,758,875.18

Other businesses 556,849.32 - 460,890.41 -

Note 5. Investment income

Amount incurred in the Amount incurred in the

Item

current period previous period

Long-term equity investment income by the cost method 32,436,680.00 25,244,873.17

Long-term equity investment income by the equity method 1,703,803.48 -24,010,440.06

Income from disposal of long-term equity investments - -

Income from holding financial assets measured by fair value with changes

- -

included in current profit and loss

Income from disposal of financial assets measured by fair value with changes

- -

included in current profit and loss

Income from holding of held-to-maturity investments - -

Investment income during the possession of available-for-sale financial assets - -

Income from disposal of held-to-maturity investments - -

Income from disposal of available-for-sale financial assets - -

Profit from re-measurement of fair value of the remaining equity after loss of

- -

control

Others 36,264,983.86 30,123,920.48

Total 70,405,467.34 31,358,353.59

XV. Supplementary material

(I) Details of non-recurring profit and loss

219

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Item Amount Notes

profit and loss from disposal of non-current assets -257,269.63

Tax refund, reduction or exemption upon approval exceeding authorized

--

limits or without formal documents

Government subsidies included in current gains and losses (except those

closely related with corporate business and enjoyed according to national 980,956.24

standards or certain quota)

Fund appropriation charges for non-financial entities included in current

3,414,955.63

profit and loss

Gains from the margin between the investment cost of the Company for

acquisition of subsidiaries, joint ventures and joint operation enterprises and

-

the recognizable fair value of net assets of invested units at the time of

acquisition

Loss from transfer of non-monetary assets -

profit and loss from entrusting investment or managing assets -

Provision for assets impairment withheld for Force Majeure -

profit and loss from debt restructuring -

Expenditures for corporate restructuring, such as expenses for relocation of

-

employees and for integration

profit and loss from unfairly priced transactions in which the transaction

-

value exceeds the fair value

Net current profit and loss of a subsidiary due to the merger of enterprises

-

under common control from the beginning of period to the date of merger

profit and loss from contingency items irrelevant with regular operation of the

-

Company

Profit and loss from fair value changes by holding of transaction financial

assets and liabilities, except effective hedging business related to regular

operation of the Company, and investment income from disposal of -

transaction financial assets and liabilities as well as available-for-sale

financial assets

Transferred-back impairment provision for accounts receivable, for which

469,871.93

separate impairment tests are carried out

Profit and loss for external entrusted loans -

profit and loss from fair value changes of investment properties, whose

-

subsequent measurement is carried out based on the fair value mode

Influence on current profit and loss by one-off adjustment according to tax

-

and accounting laws and regulations

Trustee fee from entrusted operation 200,000.00

Other non-operating income and expenses except the above-mentioned items -13,043,897.59

Other profit and loss fitting the definition of non-recurring profit and loss -

Influenced amount of income tax -2,022,052.01

Amount of influence of minority shareholders' equity (after tax) -432,034.76

220

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Item Amount Notes

Total -10,689,470.19

(II) ROE and EPS

Weighted average Earnings per share

Profit in current reporting period

return on equity (ROE) (%) Basic EPS Diluted EPS

Net profit attributable to common shareholders

5.19 0.0946 0.0946

of the Company

Net profit attributable to common shareholders

of the Company after deduction of 5.94 0.1082 0.1082

non-recurring losses and gains

221

Full Texrt of 2015 Annual Report of Shenzhen SEG Co., Ltd.

Chapter 11 Documents for Reference

1. Financial statements with seals of legal representative, person in charge of accounting, and responsible person

of the accounting institution;

2. Original of Audit Report with the seal of the accounting firm and the signatures and seals of CPAs;

3. Originals of all documents of the Company disclosed in the newspapers designated by China Securities

Regulatory Commission in the reporting period and the original manuscripts of the relevant announcements.

Shenzhen SEG Co., Ltd.

(Offical seal)

March 28, 2016

222

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