Summary of Semi-Annual Report 2022

Stock Code: 000020、200020 Public Notice No.: 2022-32

Short Form of the Stock: SHEN HUAFA-A SHEN HUAFA-B

Shenzhen Zhongheng Huafa Co. Ltd.Summary of Semi-Annual Report 2022

I. Important Notice

The summary is abstract from full-text of semi-annual report for more details of operating results financial condition and future

development plan of the Company; investors should found in the full-text of semi-annual report that published on media appointed

by CSRC.All directors are attended the Board Meeting for report deliberation.Prompt of non-standard audit opinion

□ Applicable √ Not applicable

Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reporting

period

□ Applicable √ Not applicable

The Company has no plan of cash dividends carried out bonus issued and capitalizing of common reserves either.Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period

□ Applicable √ Not applicable

II. Basic information of the company

1. Company profile

Shen HUAFA -A

Short form of the stock Stock code 000020

Shen HUAFA- B

Stock exchange for listing Shenzhen Stock Exchange

Person/Way to contact Secretary of the Board Rep. of security affairs

Name Niu Zhuo

Office add. 618 6/F East Tower No.411 Building

Huafa (N) Road Futian District Shenzhen

Tel. 0755-86360201

E-mail huafainvestor@126.com.cn

1Summary of Semi-Annual Report 2022

2. Main financial data and index

Whether it has retroactive adjustment or re-statement on previous accounting data

□ Yes √ No

Changes in the current

reporting period compared

Current Period Same period last year

with the same period of the

previous year (+-)

Operating revenue (RMB) 354146920.81 391633808.55 -9.57%

Net profit attributable to shareholders of

8806785.106989362.4826.00%

the listed Company (RMB)

Net profit attributable to shareholders of

the listed Company after deducting 4150928.94 7034198.78 -40.99%

non-recurring gains and losses (RMB)

Net cash flow arising from operating

49720222.38-21818369.59327.88%

activities (RMB)

Basic earnings per share (RMB/Share)

0.03110.024825.40%

(note 1)

Diluted earnings per share (RMB/Share) 0.0311 0.0248 25.40%

Weighted average ROE 2.53% 2.07% 0.46%

Changes at the end of the

reporting period compared

End of current period End of last year

with the end of the previous

year (+-)

Total assets (RMB) 638152495.34 659933225.57 -3.30%

Net assets attributable to shareholder of

352257424.41343450639.312.56%

listed Company (RMB)

3. Number of shareholders and share-holding

Unit: share

Total preference shareholders with voting

Total common shareholders

24938 rights recovered at end of reporting 0

at period-end

period (if applicable)

Top ten shareholders

Information of shares

Proportion

Full name of Nature of Amount of restricted pledged tagged or frozen

of shares Amount of shares held

Shareholders shareholder shares held State of

held Amount

share

Domestic

Wuhan

non-state-o

Zhongheng 1192898942.13% 119289894 0 Frozen

wned legal 4

Group

person

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SEG (HONG Overseas

KONG) CO. legal 5.85% 16569560 0

LTD. person

GOOD HOPE

Overseas

CORNER

legal 2.50% 7072000 0

INVESTMEN

person

TS LTD.Changjiang

Securities Overseas

Brokerage legal 1.89% 5355249 0

(Hong Kong) person

Co. Ltd.Guoyuan

Securities Overseas

Brokerage legal 1.37% 3870117 0

(Hong Kong) person

Limited

Overseas

Li Zhongqiu nature 1.00% 2830000 0

person

Domestic

Jin Guoping nature 0.65% 1849300 0

person

Domestic

He Wei nature 0.64% 1818319 0

person

Domestic

Yao Ming nature 0.56% 1577300 0

person

Domestic

Li Wei nature 0.55% 1546800 0

person

Among the top ten shareholders Li Zhongqiu is the actual controller of Wuhan Zhongheng New

Explanation on associated Science & Technology Industrial Group Co. Ltd. and is a party acting in concert. The Company

relationship among the neither knew whether there exists associated relationship among the other shareholders nor they

aforesaid shareholders belong to consistent actors that are prescribed in Measures for the Administration of Disclosure

of Shareholder Equity Changes of Listed Companies.Explanation on involving

margin business (if N/A

applicable)

3Summary of Semi-Annual Report 2022

4. Changes of controlling shareholders or actual controller

Changes of controlling shareholders in reporting period

□ Applicable √ Not applicable

Changes of controlling shareholders had no change in reporting period.Changes of actual controller in reporting period

□ Applicable √ Not applicable

Changes of actual controller had no change in reporting period.

5. Total preferred stock shareholders of the Company and shares held by top ten shareholders with

preferred stock held

The Company had no shareholders with preferred stock held in the reporting.

6. Bonds in existence as of the approval date of the semi-annual report

□ Applicable √ Not applicable

III. Important events

(1) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial Group Co. Ltd

(hereinafter referred to as Wuhan Zhongheng Group) on 29 April 2009 (details were referred to in the announcement dated 30 April

2009) and pursuant to the contract since part of the assets of the Company (namely two parcel of industrial lands located at Huafa

road Gongming town Guangming new district Shenzhen (the property certificate No. were SFDZ No.7226760 and SFDZ

No.7226763 No. of parcels were A627-005 andA627-007 and the aggregate area was 48200 sq.m) were the lands listed in the first

batch of plan for 2010 Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and joint

cooperation the Company has not completed the transfer procedures in respect of the aforesaid land.The Company convoked the first extraordinary meeting of the Board in 2015 on February 16 2015 and the first extraordinary generalmeeting of the Board in 2015 on March 4 2015 which considered and approved the “Motion on promoting and implementing theurban renewal project for the renewal units of Huafa area at Gongming street Guangming new district Shenzhen” specified that the

Company and Wuhan Zhongheng Group shall obtain the corresponding compensatory consideration for removal from the

respectively owned project plots and the respectively contributed and constructed above-ground buildings before the land

development it is estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total

consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting of 2015 haveconsidered and adopted the “Proposal on the project promotion and implementation of urban renewal and the progress of relatedtransactions of ‘the updated units at Huafa Area Gong Ming Street Guangming New District Shenzhen’” the company has signedthe “Agreement on the cooperation of urban renewal project of the updated units at Huafa Area Gong Ming Street Guangming NewDistrict Shenzhen” “Contract for the cooperative venture of reconstruction project for Huafa Industrial Park Gong Ming StreetGuangming New District” on 26 August 2015 and “Agreement on housing acquisition and removal compensation and resettlement”

with Wuhan Wuhan Zhongheng Group Shenzhen Vanke Real Estate Co. Ltd. (hereinafter referred to as “Shenzhen Vanke”) and

Shenzhen Vanke Guangming Real Estate Development Co. Ltd. (hereinafter referred to as “Vanke Guangming”).

4Summary of Semi-Annual Report 2022On 12 September 2016 Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation of urban renewal projectof the updated units at Huafa Area Gong Ming Street Guangming New District Shenzhen” against the Company and Wuhan

Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) has given a ruling in August 2017. On August 29 2018 the

court accepted the compulsory execution application of Shenzhen Vanke. In October 2019 as a number of outsiders filed an

“execution objection” and applied for “no execution” to Shenzhen Intermediate People’s Court the Shenzhen Intermediate People’s

Court ruled to terminate the enforcement procedure on March 20 2020. If the “execution objection” and “no execution” proposed by

outsiders are rejected according to law Shenzhen Vanke may continue to apply to the Shenzhen Intermediate People’s Court to

resume execution.In April 2020 Zhongheng Semiconductor sued the company to Shenzhen Intermediate People’s Court and requested the company to

transfer the above mentioned two pieces of lands and compensate the economic loss of 52 million yuan the first and second trialjudgments reject the Semiconductor’s appeal; Zhongheng Semiconductor sued the Company and the invalid of “Agreement on thecooperation of urban renewal project of the updated units at Huafa Area Gong Ming Street Guangming New District Shenzhen”

signed by Wuhan Zhongheng Group Company and Vanke the second trial rejects all claims of Zhongheng Semiconductor. Progress

of the case found more in the Notices released on Juchao website dated 14 Sept. 2016 1 Nov. 2016 16 Nov. 2016 on 18 Feb. 2017

24 March 2017 25 April 2017 1 July 2017 18 August 2017 9 Feb. 2018 25 Aug. 2018 7 Sept. 2018 21 Apr. 2020 3 Jun 2021 22

Jul. 2021 and Mar. 5 2022 respectively.

(2) On 31 December 2015 the 88750047 shares held by Wuhan Zhongheng Group are pledge to China Merchants Securities Assets

Co. Ltd. with due date of 31 December 2016. On 1 Feb. 2016 Wuhan Zhongheng Group pledge the 27349953 shares held to China

Merchants Securities Assets Co. Ltd. with due date of 31 December 2016. The above-mentioned pledged shares are deferred by

Wuhan Zhongheng Group; pledge expired on 31 December 2017. The trading day for repurchase put off to the date when pledge

actually removed. Till end of this period released controlling shareholder still not removed the pledge and the Company has apply by

letter relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in notice released on

Juchao website date 2 Feb. 2018.In March 2021 Wuhan Zhongheng Group received the judgment on case of “pledged securities repurchase dispute” brought by

China Merchants Securities Assets Management Co. Ltd from High People’s Court of Guangdong Province. Wuhan Zhongheng

Group appealed to the Supreme People’s Court against the decision. Found more in notice released on Juchao Website dated March

192021.

(3) The controlling shareholder Wuhan Zhongheng Group holds 119289894 shares of the Company’ stock accounting for 42.13%

of the total share capital of the Company of which 116489894 shares were judicially frozen by Shenzhen Intermediate People's

Court (hereinafter referred to as "Shenzhen Intermediate Court") on September 27 2016 which were frozen again by the Shenzhen

Intermediate People's Court on December 14 2018 with a frozen period of 36 months; the remaining 2800000 shares were frozen

by the Shenzhen Intermediate People's Court on May 29 2019 and were frozen again by the Higher People’s Court of Guangdong

Province on July 5 2019. For details please refer to the company’s announcements published on Juchao Website dated October 27

2016 January 11 2019 May 31 2019 and August 7 2019.

(4) On September 29 2016 the company and its controlling shareholder Wuhan Zhongheng Group signed the “Agency Contract”

with V&T Law Firm. On October 8 2016 the three parties also signed the “Supplemental Agreement for Agency Contract” it was

agreed that V&T acted as an agent for the company and Wuhan Zhongheng Group to deal with the arbitration case with Shenzhen

Vanke. After losing the lawsuit due to differences in the payment of attorney fees V&T sued our company and Wuhan Zhongheng

Group to the Shenzhen Court of International Arbitration and applied to the court to seize a bank account under our company’s name

and part of our company dormitories please refer to “Other Announcements on the Progress Involving Litigation and Arbitration”

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(Announcement Numbers: 2018-43 2019-02) released on Juchao Website dated November 14 2018 and March 6 2019. In

November 2019 the Shenzhen Court of International Arbitration ruled that the company and Wuhan Zhongheng Group paid the

corresponding fees. According to the relevant agreement of the “Entrusted Agency Contract” and “Supplementary Agreement” signed

by the three parties loss of the ruling in the case shall be fully borne by Wuhan Zhongheng Group therefore it has no impact on the

profit of the Company. Found more on “Other Announcements on the Progress Involving Litigation and Arbitration” (Announcement

No.: 2019-34) released on Juchao Website dated November 25 2019.(v) Business of the Company - Styrofoam is a traditional manufacturing industry. The industry has stepping into the maturity with

severe overcapacity the oversupply leads to a low gross margin and downward trend of profitability of the Company’s products. The

“proposal to shut down the Styrofoam business from wholly-owned subsidiary” was deliberated and approved by the third interim

meeting of BOD of 2022. Closure of the plant is progressing steadily.

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