Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Stock Code: 000020 200020 Public Notice No.: 2021-21 Short Form of the Stock: SHEN HUAFA-A SHEN HUAFA-B

Shenzhen Zhongheng Huafa Co. Ltd.The Third Quarterly Report for 2021

The Company and whole members of the BOD guarantee that the information disclosed is true

accurate and complete and there are no any fictitious records misleading statements or

important omissions.Important content reminder:

1. Board of Directors Supervisory Committee all directors supervisors and senior

executives of Shenzhen Zhongheng Huafa Co. Ltd. (hereinafter referred to as the

Company) hereby confirm that there are no any fictitious statements misleading

statements or important omissions carried in this report and shall take all

responsibilities individual and/or joint for the reality accuracy and completion of

the whole contents.

2. Principal of the Company Person in Charge of Accounting Works and Person in

Charge of Accounting Organ (Accounting Officer) hereby confirm that the Financial

Report of the Third Quarterly Report is authentic accurate and complete.

3. Whether the Third Quarterly Report has been audited or not

□Yes √No

I. Main financial data

(i) Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data or not

□Yes √No

Increase/decrease from

Increase/decrease in

year-begin to

the period compared Year-begin to

Current period period-end compared

with the same period period-end

with the same period

of the previous year

of the previous year

Operating income

211898917.915.85%603532726.4620.49%

(Yuan)

Net profit attributable

to shareholders of the 1123649.14 -33.33% 8113011.63 67.24%

listed company (Yuan)

1Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Net profit attributable

to shareholders of the

listed company after

554781.27-49.95%7332980.0672.67%

deducting

non-recurring gains

and losses (Yuan)

Net cash flow arising

from operating —— —— -24053649.58 -275.69%

activities (Yuan)

Basic earnings per

0.004-33.33%0.028868.42%

share (Yuan /Share)

Diluted earnings per

0.004-33.33%0.028868.42%

share (Yuan /Share)

Weighted average ROE 0.33% -0.19% 2.17% 0.71%

Increase/decrease at the period-end compared

End of current period End of previous year

with the end of the previous year

Total assets (Yuan) 669050137.81 627779621.06 6.57%

Net assets attributable

to shareholder of listed 344361748.92 336248737.29 2.41%

company (Yuan)

(ii) Items and amounts of non-recurring profit (gains)/losses

√ Applicable □ Not applicable

Unit: Yuan

Amount from

Amount for the

Item year-begin to Note

period

period-end

Gains/losses from the disposal of non-current asset

(including the write-off that accrued for 21059.60 21059.60

impairment of assets)

Government subsidy recorded in current

gains/losses (except those closely related to the

Company’s normal operation and those

345453.35345453.35

continuously enjoyed on a fixed or quantitative

basis with certain standards in accordance with

national policy regulations)

Gains/losses of entrusting others to invest or

88894.00238661.58

manage assets

Other non-operating income and expenses other

113460.92174857.04

than the above

Total 568867.87 780031.57 --

Other gain/loss items that qualified the definition of non-recurring profit (gains)/losses:

2Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

□ Applicable √ Not applicable

The Company does not have other gain/loss items that qualified the definition of non-recurring profit (gains)/lossesExplanation on those non-recurring gain/loss listed in the “Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss” defined as recurring gain/loss

□ Applicable √ Not applicableThe Company does not have the non-recurring gain/loss listed in the “Q&A Announcement No.1 on Information Disclosure forCompanies Offering Their Securities to the Public --- Extraordinary Profit/loss” defined as recurring gain/loss

(iii) Particulars about changes in items of main accounting data and financial index and explanations of

reasons

√ Applicable □Not applicable

Item January-September January-September Changes Reason

2021 2020 ratio

Salary for R&D from Hengfa

R&D expenses 5653280.67 4313254.44 31%

increased

Other income 345453.35 645623.00 -46% Government subsidy of Hengfa

Gains on acceptance margin

Investment income 238661.58 103172.15 131%

from Hengfa

Disposal the company’s

Asset disposal income 21059.60 -93373.67 -123%

vehicles

Government subsidy received

at the period-end was less than

Non-operating income 394744.60 681877.61 -42%

those received in the same

period last year

Non-operating expenses 219887.56 7302.38 2911% Disposal of fixed assets

Item September 30 2021 September 30 2021 Changes Reason

ratio

Decrease in the amount of

Accounts receivable financing 5774948.69 25436468.30 -77%

promissory note

Due to the impact of

international epidemic some

raw materials are in short

supply in the market inventory

Inventory 98556230.42 61964943.06 59%

of the Company are increased

in an appropriated amount

according to the operation

needs

Other current assets 741380.21 234014.36 217% VAT retention credit

The contract signed through

Long-term prepaid expenses 568577.93 135529.27 320% system and the expenses to be

amortized increased

Borrowings of Hengfa

Thhe Short-term loan 39841600.00 13660894.00 192%

increased

Account received in advance

Contract liabilities 574325.56 2575945.15 -78%

declined

Borrowings increased in the

Interest payable 124190.30 32583.49 281% period and the interest

increased

Non-current liabilities due Reclassification of long-term

12000000.00-100%

within one year loans

3Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

II. Shareholders Information

(i) Total number of common shareholders and preference shareholders with voting rights recovered and

top ten common shareholders

Unit: Share

Total preference

shareholders with voting

Total common shareholders at the

20191 rights recovered at end of 0

end of report period

reporting period (if

applicable)

Top ten shareholders

Amount of Information of shares pledged

Shareholder’s Nature of Proportion of Amount of

restricted tagged or frozen

name shareholder shares held shares held

shares held State of share Amount

Wuhan Pledged 116100000

Zhongheng

Domestic

New Science &

non-state-owne 42.13% 119289894 0

Technology

d legal person Frozen 119289894

Industrial

Group Co. Ltd

SEG (HONG Pledged 0

Overseas legal

KONG) CO. 5.85% 16569560 0

person

LTD. Frozen 0

GOOD HOPE Pledged 0

CORNER Overseas legal

2.50%70720000

INVESTMEN person Frozen 0

TS LTD.Changjiang Pledged 0

Securities

Overseas legal

Brokerage 1.89% 5355249 0

person

(Hongkong) Frozen 0

Co. Ltd.Guoyuan Pledged 0

Securities

Overseas legal

Brokerage 1.37% 3870117 0

person

(Hong Kong) Frozen 0

Limited

Overseas Pledged 0

Li Zhongqiu 1.00% 2830000 0

nature person Frozen 0

Domestic Pledged 0

Jin Guoping 0.86% 2443500 0

nature person Frozen 0

Domestic Pledged 0

Huang Xuelin 0.66% 1880503 0

nature person Frozen 0

China Pledged 0

Merchants

State-owned

Securities 0.60% 1708873 0

legal person

Hong Kong Frozen 0

Co. Ltd.Domestic Pledged 0

Li Wei non-state-owne 0.57% 1610000 0

d legal person Frozen 0

Top ten shareholders with unrestricted shares held

Type of shares

Shareholder’s name Amount of unrestricted shares held

Type Amount

4Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Wuhan Zhongheng New Science

RMB common

& Technology Industrial Group 119289894 119289894

share

Co. Ltd

Domestically

SEG (HONG KONG) CO. LTD. 16569560 listed foreign 16569560

shares

Domestically

GOOD HOPE CORNER

7072000 listed foreign 7072000

INVESTMENTS LTD.shares

Domestically

Changjiang Securities Brokerage

5355249 listed foreign 5355249

(Hongkong) Co. Ltd.shares

Domestically

Guoyuan Securities Brokerage

3870117 listed foreign 3870117

(Hong Kong) Limited

shares

Domestically

Li Zhongqiu 2830000 listed foreign 2830000

shares

RMB common

Jin Guoping 2443500 2443500

share

RMB common

Huang Xuelin 1880503 1880503

share

Domestically

China Merchants Securities Hong

1708873 listed foreign 1708873

Kong Co. Ltd.shares

Domestically

Li Wei 1610000 listed foreign 1610000

shares

Explanation on associated Among the top ten shareholders Li Zhongqiu is the actual controller of Wuhan Zhongheng

New Science & Technology Industrial Group Co. Ltd. and is a party acting in concert. The

relationship among the aforesaid Company neither knew whether there exists associated relationship among the other

shareholders shareholders nor they belong to consistent actors that are prescribed in Measures for the

Administration of Disclosure of Shareholder Equity Changes of Listed Companies.Among the top ten shareholders Jin Guoping holds 73200 shares through ordinary

Explanation on top 10

accounts 2370300 shares through credit securities accounts totaling 2443500 shares;

shareholders involving margin

Huang Xuelin holds 629902 shares through ordinary accounts and 1250601 shares

business (if applicable)

through credit securities accounts totaling 1880503 shares.(ii) Total shareholders with preferred stock held and shares held by top ten shareholders with preferred

stock held

□ Applicable √ Not applicable

III. Other significant events

√ Applicable □ Not applicable

(i) 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

5Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

cooperation the Company has not completed the transfer procedures in respect of the aforesaid land.The Company convoked the first extraordinary meeting of the Board in 2015 on February 16 2015 and the first

extraordinary general meeting of the Board in 2015 on March 4 2015 which considered and approved the“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area atGongming 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 have considered and adopted the “Proposal on the project promotion and implementation of urban renewaland the progress of related transactions of ‘the updated units at Huafa Area Gong Ming Street Guangming NewDistrict Shenzhen’” the company has signed the “Agreement on the cooperation of urban renewal project of theupdated units at Huafa Area Gong Ming Street Guangming New District Shenzhen” “Contract for thecooperative venture of reconstruction project for Huafa Industrial Park Gong Ming Street Guangming NewDistrict” on 26 August 2015 and “Agreement on housing acquisition and removal compensation andresettlement” 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”).On 12 September 2016 Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation ofurban renewal project of the updated units at Huafa Area Gong Ming Street Guangming New District Shenzhen”

against the Company and Wuhan Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) 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 “noexecution” 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 company received the first trial verdict in the case in May

2021. and the company appealed to the supreme people’s court against the judgment which has not yet entered

into force. 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 and 22 Jul. 2021 respectively.

(ii) 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

6Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

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 dated 2 Feb. 2018.(iii) 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.

(iv) Wuhan Zhongheng Group received the first-instance judgment of Guangdong Higher People’s Court to the

“pledged securities repurchase dispute” case sued by China Merchants Securities Asset Management Co. Ltd. in

March 2021. Wuhan Zhongheng Group refused to accept the judgment and has appealed to the Supreme People's

Court the judgment of first instance has not yet taken effect. For details please refer to the company

announcement issued by the company on Juchao Website dated March 19 2021.(v) On September 29 2016 the company and its controlling shareholder Wuhan Zhongheng Group signed the

“Agency Contract” with V&T Law Firm. On October 8 2016 the three parties also signed the “SupplementalAgreement for Agency Contract” it was agreed that V&T acted as an agent for the company and 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’sname and part of our company dormitories please refer to “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement Numbers: 2018-43 2019-02) released on Juchao Website dated

November 14 2018 and March 6 2019. The Shenzhen Court of International Arbitration ruled that the company

and Wuhan Zhongheng Group paid the corresponding fees. The loss of the arbitrament in this case was borne byWuhan Zhongheng Group in whole and found more on “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement No.: 2019-34) released on Juchao Website dated November 25 2019.IV. Quarterly financial statements

(i) Financial statement

1. Consolidate balance sheet

Prepared by Shenzhen Zhongheng Huafa Co. Ltd.September 30 2021

Unit: Yuan

Item September 30 2021 December 31 2020

Current assets:

7Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Monetary fund 42948262.54 60968053.58

Settlement provisions

Capital lent

Trading financial assets

Derivative financial assets

Note receivable 43892072.62 20240464.79

Account receivable 144703950.74 128063911.79

Receivable financing 5774948.69 10057385.11

Accounts paid in advance 19408972.82 39643255.11

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Other account receivable 29057128.91 4466949.96

Including: Interest receivable

Dividend receivable

Buying back the sale of financial

assets

Inventories 98556230.42 70166013.49

Contractual assets

Assets held for sale

Non-current asset due within one

year

Other current assets 741380.21 4255643.19

Total current assets 385082946.95 337861677.02

Non-current assets:

Loans and payments on behalf

Debt investment

Other debt investment

Long-term account receivable

Long-term equity investment

Investment in other equity

instrument

Other non-current financial

assets

Investment real estate 45928414.57 47224662.27

Fixed assets 189772693.25 193605444.53

Construction in progress 740000.00 740000.00

Productive biological asset

Oil and gas asset

Right-of-use assets

Intangible assets 39507770.98 40820657.80

Expense on Research and

Development

Goodwill

Long-term expenses to be

568577.9377445.31

apportioned

Deferred income tax asset 7383734.13 7383734.13

Other non-current asset 66000.00 66000.00

8Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Total non-current asset 283967190.86 289917944.04

Total assets 669050137.81 627779621.06

Current liabilities:

Short-term loans 39841600.00 12527808.00

Loan from central bank

Capital borrowed

Trading financial liability

Derivative financial liability

Note payable 33139828.80 37416381.20

Account payable 131338903.49 98318239.88

Accounts received in advance

Contractual liability 574325.56 287140.66

Selling financial asset of

repurchase

Absorbing deposit and interbank

deposit

Security trading of agency

Security sales of agency

Wage payable 4376465.86 5737366.59

Taxes payable 11979156.41 14204642.62

Other account payable 22295013.77 27608281.01

Including: Interest payable 124190.30 26335.66

Dividend payable

Commission charge and

commission payable

Reinsurance payable

Liability held for sale

Non-current liabilities due

12000000.00

within one year

Other current liabilities 16135044.00 18322972.81

Total current liabilities 259580337.89 226422832.77

Non-current liabilities:

Insurance contract reserve

Long-term loans 61000000.00 61000000.00

Bonds payable

Including: Preferred stock

Perpetual capital

securities

Lease liability

Long-term account payable

Long-term wages payable

Accrual liability 64411.00 64411.00

Deferred income 4043640.00 4043640.00

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 65108051.00 65108051.00

Total liabilities 324688388.89 291530883.77

Owner’s equity:

9Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Share capital 283161227.00 283161227.00

Other equity instrument

Including: Preferred stock

Perpetual capital

securities

Capital public reserve 146577771.50 146577771.50

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus public reserve 77391593.25 77391593.25

Provision of general risk

Retained profit -162768842.83 -170881854.46

Total owner’ s equity attributable to

344361748.92336248737.29

parent company

Minority interests

Total owner’ s equity 344361748.92 336248737.29

Total liabilities and owner’ s equity 669050137.81 627779621.06

Legal Representative: Li Zhongqiu

Person in charge of accounting works: Yang Bin

Person in charge of accounting institute: Chuai Guoxu

2. Consolidated Profit Statement (from the year-begin to the period-end)

Unit: Yuan

Item Current period Last period

I. Total operating income 603532726.46 500887222.16

Including: Operating income 603532726.46 500887222.16

Interest income

Insurance gained

Commission charge and

commission income

II. Total operating cost 592280418.87 496032602.64

Including: Operating cost 525693924.66 436770935.85

Interest expense

Commission charge and

commission expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal

of insurance contract reserve

Bonus expense of

guarantee slip

Reinsurance expense

Tax and extras 2180093.13 1697965.55

Sales expense 18991695.17 14895442.53

Administrative expense 33036011.08 29667000.90

10Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

R&D expense 5653280.67 4313254.44

Financial expense 6725414.16 8688003.37

Including: Interest

5977916.476620657.92

expenses

Interest

234372.30-694194.83

income

Add: other income 345453.35 645623.00

Investment income (Loss is

238661.58103172.15

listed with “-”)

Including: Investment

income on affiliated company and joint

venture

The termination of

income recognition for financial assets

measured by amortized cost (Loss is

listed with “-”)

Exchange income (Loss is

listed with “-”)

Net exposure hedging

income (Loss is listed with “-”)

Income from change of fair

value (Loss is listed with “-”)

Loss of credit impairment

(Loss is listed with “-”)

Losses of devaluation of

-1350000.00

asset (Loss is listed with “-”)

Income from assets disposal

21059.60-93373.67

(Loss is listed with “-”)

III. Operating profit (Loss is listed with

10507482.125510041.00

“-”)

Add: Non-operating income 394744.60 681877.61

Less: Non-operating expense 219887.56 7302.38

IV. Total profit (Loss is listed with “-”) 10682339.16 6184616.23

Less: Income tax expense 2569327.53 1333529.74

V. Net profit (Net loss is listed with

8113011.634851086.49

“-”)

(i) Classify by business continuity

1.continuous operating net profit

8113011.634851086.49(net loss listed with ‘-”)

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

(ii) Classify by ownership

1.Net profit attributable to

8113011.634851086.49

owner’s of parent company

2.Minority shareholders’ gains

and losses

VI. Net after-tax of other

comprehensive income

Net after-tax of other comprehensive

income attributable to owners of parent

company

(i) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

11Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

1.Changes of the defined

benefit plans that re-measured

2.Other comprehensive

income under equity method that

cannot be transfer to gain/loss

3.Change of fair value of

investment in other equity instrument

4.Fair value change of

enterprise's credit risk

5. Other

(ii) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1.Other comprehensive

income under equity method that can

transfer to gain/loss

2.Change of fair value of

other debt investment

3.Amount of financial

assets re-classify to other

comprehensive income

4.Credit impairment

provision for other debt investment

5.Cash flow hedging

reserve

6.Translation differences

arising on translation of foreign

currency financial statements

7.Other

Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income 8113011.63 4851086.49

Total comprehensive income

attributable to owners of parent 8113011.63 4851086.49

Company

Total comprehensive income

attributable to minority shareholders

VIII. Earnings per share:

(i) Basic earnings per share 0.0288 0.0171

(ii) Diluted earnings per share 0.0288 0.0171

Enterprise combine under the same control in the Period the combined party realized net profit of 0.00 Yuan before combination and

realized 0.00 Yuan at last period for combined party

Legal Representative: Li Zhongqiu

Person in charge of accounting works: Yang Bin

Person in charge of accounting institute: Chuai Guoxu

3. Consolidated Cash Flow Statement (from the year-begin to the period-end)

Unit: Yuan

Item Current period Last period

12Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor 383981831.41 404327921.90

services

Net increase of customer deposit

and interbank deposit

Net increase of loan from

central bank

Net increase of capital borrowed

from other financial institution

Cash received from original

insurance contract fee

Net cash received from

reinsurance business

Net increase of insured savings

and investment

Cash received from interest

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Net cash received by agents in

sale and purchase of securities

Write-back of tax received 2159861.95 105447.58

Other cash received concerning

35130159.4018415376.92

operating activities

Subtotal of cash inflow arising from

421271852.76422848746.40

operating activities

Cash paid for purchasing

commodities and receiving labor 291924059.89 316753970.40

service

Net increase of customer loans

and advances

Net increase of deposits in

central bank and interbank

Cash paid for original insurance

contract compensation

Net increase of capital lent

Cash paid for interest

commission charge and commission

Cash paid for bonus of guarantee

slip

Cash paid to/for staff and

54527895.4943987629.67

workers

Taxes paid 19266205.32 6909436.73

Other cash paid concerning

79607341.6441506986.55

operating activities

Subtotal of cash outflow arising from

445325502.34409158023.35

operating activities

Net cash flows arising from operating

-24053649.5813690723.05

activities

II. Cash flows arising from investing

activities:

13Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

Cash received from recovering

investment

Cash received from investment

275579.9085357.08

income

Net cash received from disposal

of fixed intangible and other 100950.00 213913.05

long-term assets

Net cash received from disposal

of subsidiaries and other units

Other cash received concerning

45000000.00

investing activities

Subtotal of cash inflow from

376529.9045299270.13

investing activities

Cash paid for purchasing fixed

3919845.123628023.06

intangible and other long-term assets

Cash paid for investment

Net increase of mortgaged loans

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

45000000.00

investing activities

Subtotal of cash outflow from

3919845.1248628023.06

investing activities

Net cash flows arising from investing

-3543315.22-3328752.93

activities

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Including: Cash received from

absorbing minority shareholders’

investment by subsidiaries

Cash received from loans 86967694.00 20610902.80

Other cash received concerning

financing activities

Subtotal of cash inflow from

86967694.0020610902.80

financing activities

Cash paid for settling debts 71384425.00 40370812.20

Cash paid for dividend and

5510317.286089776.45

profit distributing or interest paying

Including: Dividend and profit

of minority shareholder paid by

subsidiaries

Other cash paid concerning

financing activities

Subtotal of cash outflow from

76894742.2846460588.65

financing activities

Net cash flows arising from financing

10072951.72-25849685.85

activities

IV. Influence on cash and cash

equivalents due to fluctuation in -495777.96 -509270.83

exchange rate

V. Net increase of cash and cash

-18019791.04-15996986.56

equivalents

Add: Balance of cash and cash 60968053.58 36645061.61

14Shenzhen Zhongheng Huafa Co.Ltd. Third quarter 2021 report

equivalents at the period-begin

VI. Balance of cash and cash

42948262.5420648075.05

equivalents at the period-end

(ii) Explanation on financial statement adjustment

1. Financial statement adjustment at the beginning of the first year when implementation of new leasing

standards from 2021

□ Applicable √ Not applicable

2. Retrospective adjustment of the comparative data for initial implementation of new leasing standards

from 2021

□ Applicable √ Not applicable

(iii) Audit report

Whether the 3rd quarterly report has been audited or not

□Yes √ No

The 3rd quarterly report of the Company has not been audited.Board of Directors of

Shenzhen Zhongheng Huafa Co. Ltd.October 22 2021

15