Annual Report 2019 Contents

CHANGHONG JIAHUA HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) Stock Code : 3991 ANNUAL REPORT 2019 CONTENTS CONTENTS Corporate Information 2 Biographies of Directors and Senior Management 4 Chairman’s Statement 7 Management Discussion and Analysis 10 Corporate Governance Report 14 Report of the Directors 29 Independent Auditor’s Report 56 Consolidated Statement of Profit or Loss and Other Comprehensive Income 62 Consolidated Statement of Financial Position 63 Consolidated Statement of Changes in Equity 65 Consolidated Statement of Cash Flows 67 Notes to the Consolidated Financial Statements 69 Five-year Summary of Financial Information 153 Changhong Jiahua Holdings Limited ANNUAL REPORT 2019 1 CORPORATE INFORMATION CORPORATE INFORMATION Registered office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head office and principal place of business Unit 1412, 14/F, West Tower, Shun Tak Centre 168-200 Connaught Road Central Hong Kong Bermuda principal share registrar Conyers Corporate Services (Bermuda) Limited and transfer office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Hong Kong branch share registrar Hong Kong Registrars Limited and transfer office 1712-1716, Hopewell Centre 183 Queen’s Road East Hong Kong Principal bankers The Hongkong and Shanghai Banking Corporation Limited China Insurance Group Building 141 Des Voeux Road Central, Sheung Wan Hong Kong Stock exchange Main Board of The Stock Exchange of Hong Kong Limited Stock code 3991 Website www.changhongit.com.hk E-mail address [email protected] Board of Directors Executive Directors Mr. ZHAO Yong (Chairman) Mr. ZHU Jianqiu (President) Mr. YANG Jun Mr. LUO Yongping 2 Changhong Jiahua Holdings Limited ANNUAL REPORT 2019 CORPORATE INFORMATION Independent Non-executive Directors Mr. Jonathan CHAN Ming Sun Mr. GAO Xudong Mr. MENG Qingbin Authorised representatives Mr. ZHU Jianqiu Mr. ZHAO Qilin Joint Company Secretaries Mr. CHENG Ching Kit Mr. ZHAO Qilin Audit Committee Mr. Jonathan CHAN Ming Sun (Chairman) Mr. GAO Xudong Mr. MENG Qingbin Remuneration Committee Mr. Jonathan CHAN Ming Sun (Chairman) Mr. ZHU Jianqiu Mr. MENG Qingbin Nomination Committee Mr. ZHAO Yong (Chairman) Mr. Jonathan CHAN Ming Sun Mr. GAO Xudong Auditor Deloitte Touche Tohmatsu 35/F, One Pacific Place 88 Queensway, Admiralty Hong Kong Changhong Jiahua Holdings Limited ANNUAL REPORT 2019 3 BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT EXECUTIVE DIRECTORS Mr. ZHAO Yong, aged 56, joined Changhong Jiahua Holdings Limited (the “Company”, and collectively with its subsidiaries, the “Group”) as an executive Director and the chairman of the Board in April 2013. Mr. Zhao is the chairman and director both Sichuan Changhong Electronics Holding Group Company Limited (“Sichuan Changhong Holding”, and collectively with its subsidiaries, the “Sichuan Changhong Electric Group”) and Sichuan Changhong Electric Co., Limited (“Sichuan Changhong”) and also served as the deputy mayor of Mianyang, Sichuan Province, the People’s Republic of China (the “PRC”) from June 2001 to June 2004. He is also the chairman and director of the Company’s subsidiaries of Suchuan Changhong IT Information Products Company Limited (“Changhong IT”), Suchuan Changhong IT Digital Technology Co., Ltd. (“Changhong IT Digital”), Beijing Changhong IT Intelligence System Co., Ltd. (“Changhong IT Intelligence”) and Sichuan Changhong IT Duolayouhuo E-Commerce Co., Ltd. (“Duolayouhuo”). He holds a Master Degree in Mechanical Engineering and a Doctoral Degree in Engineering and Thermal Dynamics Engineering from Tsinghua University（清華大學）in the PRC and has more than 27 years of experience in general management. Mr. ZHU Jianqiu, aged 57, joined the Company as an executive Director and the president of the Company in April 2013. Mr. Zhu is responsible for the overall operation and management of the Group. Mr. Zhu is also the director and chief executive officer of each of the following subsidiaries of the Company, namely Changhong IT, Changhong IT Digital, Changhong IT Intelligence, Changhong IT (Hong Kong) Information Products Co., Ltd. (“Changhong IT Information”) and Duolayouhuo, the chairman of Sichuan Changhong Cloud Computing Company Limited*（四川長虹雲計算有限公司, “OPCO”）, executive director of Changhong (Hong Kong) Enterprises Limited, and director of Sufficient Value Group Limited and Wide Miracle Limited. He obtained a Doctoral Degree in Economics from Renmin University and a Bachelor Degree in 1984 from Northeast University in the PRC and has more than 22 years of experience in information technology (“IT”) industry management. Mr. YANG Jun, aged 50, joined the Company as an executive Director in May 2017. Mr. Yang is primarily responsible for the capital operation of the Group. He is a director of Sichuan Changhong, and is also the vice general manager of Sichuan Changhong Holding. He serves in various positions within the Sichuan Changhong Electronics Group. He is also a director of Changhong IT, Changhiong IT Digital, Changhong IT Intelligence, Changhong IT Information and Duolayouhuo, which are subsidiaries of the Company. He graduated from Chengdu Technological University（成都工業學院）in June 1991 and completed a Master Degree programme in business administration at the Business School of Sichuan University（四川工商管理學院）in July 2005. He has over 21 years of experience in corporate investment and corporate governance. Mr. LUO Yongping, aged 44, joined the Company as an executive Director in January 2019. Mr. Luo is principally responsible for the investment and business merger of the Group. He is vice general manager of Sichuan Provincial Investment Group Co., Ltd. (“Sichuan Provincial Investment Group”) and serves as directors in certain subsidiaries of Sichuan Provincial Investment Group. Mr. Luo obtained a Bachelor’s Degree in Archival science from Sichuan University in June 1997 and a master’s degree in historical literature from Sichuan University in July 2000 and has over 19 years experience in corporate management. * The English translation is for identification purpose only. 4 Changhong Jiahua Holdings Limited ANNUAL REPORT 2019 BIOGRAPHIES OF DIRECTORS AND SENIOR MANAGEMENT INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Jonathan CHAN Ming Sun, aged 47, joined the Company as an independent nonexecutive Director in February 2007. Mr. Chan was appointed as the chairman of each of the audit committee and remuneration committee of the Company, and a member of the nomination committee of the Company. He is an investment manager of Sprint Asset Management Limited. He is also acting as the independent non-executive director of each of the following listed companies on the Stock Exchange, namely Shenyang Public Utility Holdings Company Limited (stock code: 747), China Dredging Environment Protection Holdings Limited (stock code: 871), Hao Tian Development Group Limited (stock code: 474), Up Energy Development Group Limited (stock code: 307)（Note）and Fujian Nuoqi Co., Ltd. (stock code: 1353). He was the independent non-executive director of each of the following listed companies on the Stock Exchange, namely Far East Holdings International Limited (stock code: 36), from 14 November 2014 to 18 July 2017, L&A International Holdings Limited (stock code: 8195), from 25 September 2014 to 3 March 2017, Focus Media Network Limited (currently known as Cornerstone Financial Holdings Limited) (stock code: 8112) from 21 April 2015 to 27 November 2015, and Dining Concepts Holdings Limited (currently known as Life Concepts Holdings Limited) (stock code: 8056) from 14 July 2016 to 12 December 2018. He obtained his Bachelor Degree of Commerce in Accounting and Information System from University of New South Wales, Australia. He is also a fellow member of the Hong Kong Institute of Directors and a member of Hong Kong Institute of Certified Public Accountants and CPA, Australia. He has over 19 years of experience in investment and corporate finance. Mr. GAO Xudong, aged 54, joined the Company as an independent non-executive Director in May 2019. Mr. Gao was appointed as the member of each of the audit committee and nomination committee of the Company. He has been an independent director of Gridsum Holding Inc. (a company listed on NASDAQ, stock code: GSUM) since 2006. Mr. Gao obtained a bachelor’s degree in engineering from Harbin Institute of Technology in 1988, a master’s degree in economics from Renmin University of China in 1991, and a doctor’s degree in management from Sloan School of Management in Massachusetts Institute of Technology in 2003. Mr. Gao is a vice director of Research Center for Technological Innovation, Tsinghua University, a chair professor at Schwarzman College, Tsinghua University and a professor at School of Economics and Management, Tsinghua University. He has been a member of the Expert Committee for Telecommunication Economy of the Ministry of Industry and Information Technology since January 2010. He has over 29 years of experience in economics and corporate governance research. Mr. MENG Qingbin, aged 39, joined the Company as an independent non-executive Director in May 2019. Mr. Meng was appointed as the member of each of the audit committee and remuneration committee of the Company. Mr. Meng obtained a bachelor’s degree in engineering and a bachelor’s degree in science from Tianjin University in June 2003, a master’s degree in science from Nankai University in June 2006, and a doctor’s degree in finance from Nankai University in June 2009. Mr. Meng is a professor

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