Stock Code: 688007 Stock Short Name: Appotronics
Appotronics Corporation Limited
Annual Report 2020
Hold Fast to Long-term Value Whenever to Change or Persevere
Dear Shareholders,Like many other companies, Appotronics has experienced an extraordinary year of2020. Our performance has inevitably been affected under the circumstances of thepandemic.The good news is that most of our business sectors were advancing steadily in the firsthalf of the year and the cinema sector quickly rebounded in the second half of the year.And the overall annual revenue was basically the same as the previous year, which is morethan RMB100 million, demonstrating good resilience.Instead of the figures in the annual report, I would like to share with you where suchstrong resilience comes from, what we have done to seek a breakthrough in those dayswhen we were “besieged” by the pandemic, and what we have done to prepare for the nextyear and even longer term.
Insist on Technology Innovation for Long-term Value
In 2020, the pandemic brought tremendous uncertainty to the world. For companieslike Appotronics who pursues long-term values, we experienced unprecedented pressure toadhere to our original goal, which is insisting on technology innovation and striving tocontinuous evolution. We believe that only by meeting basic needs of customers andcreating long-term profits for investors can we go through the ups and downs in thisturbulent market.Since the original invention of ALPD? fluorescent laser display technology in 2007,Appotronics has never stopped the evolution of this technology. We launched the world’sfirst laser TV in 2013, installed the world’s first ALPD? laser cinema projector in 2014,introduced the world’s first laser TV priced under RMB10,000 in 2017, became the firstcompany in China to manufacture laser digital cinema projectors with DCI certification in
2019, and launched the world’s first highly profitable Fresnel flexible screen in 2020, all ofwhich cannot materialize without the long-term technology innovation that we have beenpursuing.
While completing a number of “0 to 1” technological breakthroughs, we alsopromoted the market applications, such as in the fields of cinema, engineering, educationand household markets, thus creating new fast-growing tracks.Our efforts in technology innovation can be evidenced by the following figures: From2016 to 2019, Appotronics invested RMB70.12 million, RMB93.30 million, RMB136million and RMB201 million in R&D, respectively. Even in 2020, we still investedRMB204 million in R&D, accounting for 10.49% of our annual revenue despite theperformance pressure.By the end of 2020, Appotronics had a total of 2,191 patent applications worldwide, ofwhich about 70% are invention patents. The original ALPD? technology has been regardedas the development direction of new-generation laser display by the international industry,and has been cited by the industry and domestic and foreign enterprises more than 600times.
From ALPD? 1.0 to ALPD? 4.0, Appotronics has continuously iterated and upgradedthe technology, not only by significantly improving visual effects such as brightness,contrast ratio and color gamut, but also by achieving high efficiency in many areas such assafety, energy saving and environmental protection, and industrialization. We aredeveloping ALPD?5.0 and ALPD?6.0 technologies, which will strengthen the laserdisplay effect and further reduce the cost of laser display, truly realizing the value creationfor users through continuous technology innovation.
All of the above builds up the confidence that we can maintain our profitabilityfundamentals, adjust quickly in the crisis, and find a new growth curve in the midst of themajor changes brought about by the pandemic in 2020.
Capture Industry Trends and Explore New Growth Curves
In the first half of 2020, we kept an eye on the changes in the market. With the rise ofthe “In-house Economy”, large-screen displays such as laser TVs and smart pico-projectorsbegun to attract public attentions although the laser projection business, which has always
been our advantage, was greatly affected by the pandemic, and the global economicdownturn caused by the pandemic also affected our overseas business.From this perspective, we continued to strengthen our advantages in core devices,actively adjusted our business structure and focused on TO C business, recording revenueof more than RMB1 billion from our consumer business during the year, accounting formore than 50% of our total revenue for the first time.We adopted the business division system for our operation. On the one hand, weimplemented separate accounting for each business unit, which can strengthen internalcompetition, enhance the ability of independent management and decision-making, andspeed up our market response, improve our business resilience and flexibility under thepandemic. On the other hand, we realized the interconnection of information systems,improving the coordination efficiency between supply, production and sales within thebusiness divisions.In the meantime, we have completed the optimization of the R&D organizationalstructure. While retaining the research institute that continues to focus on long-termtechnology development, we have established R&D centers that correspond to businessunits, which have been divided into TO B, TO C and Solution Departments to integrate theoperation of R&D, product and sales, thus forming a two-wheel-driven management modelof upgrading R&D driven by market demand and promoting sales with R&D.
We are striving to establish a dynamic and entrepreneurial team. In the past year, wecontinued to attract and retain young talents and teams that would support the long-termdevelopment of our core business, and enhanced their sense of ownership through equityincentives and other means. In addition, we consciously improved the structure of ourmanagement layer by attracting more young talents to stimulate its vitality.In the context of “De-globalization” catalyzed by the pandemic, we realize thatprofessional IP operation will be an effective means to protect our own products, which hasprompted us to pay more attention to IP protection and management. The year of 2020 hasalso witnessed a breakthrough in IP operation. We look forward to working with morepartners to make the industry bigger and stronger.It has to be admitted that the pandemic has slowed down the momentum of our rapiddevelopment in the past few years. However, we have also further optimized ourorganizational structure, improved our operational efficiency, and adjusted ourdevelopment direction as we move forward under pressure. And we adjusted the
development direction, improved the strategic position of TO C business and find a newgrowth curve based on our judgment of future market trends.
Time tells everythingAlthough the pandemic hit the macro economy badly, it also gave rise to many newgrowth oppotunities in the field of technology innovation. The pandemic was more like an“accelerator” for Appotronics , pushing us to transform strategically in pain.We are effectively executing the strategic transformation of our consumer businesswith productization and commercialization at the core. We are working harder than ever toidentify opportunities in overseas markets and we are placing the highest priority on marketgrowth as we believe that a certain level of scale is the most central foundation for realizingour business model.
Looking ahead to 2021, innovation and change will remain the key words of ourdevelopment, while technology and commercialization will be the main focus of ourdevelopment.
We will continue to devote ourselves to the breakthrough innovation, productizationand industrialization promotion of laser display technology, so as to develop a technologyreserve and patent layout of the whole technology chain of laser display from key systemstructure, core devices to key algorithms.
We will focus on technology development and services that can bring long-term usagevalue to users, provide more excellent products and applications for our consumers,promote the expansion of application scenarios of ALPD? technology in the householdfield, and enhance our profitability.
We will continue to increase our IP asset-based operations, combine IP layout, IPprotection, IP licensing with disruptive innovation to maintain our innovation edge, andconduct IP operations with an open mind and seek cooperation with head companies invarious fields worldwide. Meanwhile, we will work with more partners to explore overseasmarkets and look for the next growth curve.
As a corporate citizen, we will also optimize our corporate governance, improve ourtechnology innovation, make adequate information disclosure, and assume our socialresponsibility to our investors, customers and other stakeholders.
We believe that the stock market should be a weighing machine instead of air-blowerfor a company that pursues long-termism, which means the stock market can weigh the realvalue of a company worthy of investment sooner or later. We have been working hard tomake us “a heavier company” that can maintain vitality and continuous progress despite theever-changing external environment.
After more than a decade of development, Appotronics has developed a completecorporate governance system and has an excellent management team led by Mr. BoLianming. As the leader of R&D, I will devote more energy to R&D and lead the technicalteam to promote industrial development with continuous enthusiasm for innovation in thefuture.
It would be a great honor for us to continue to create more value for our company, forour shareholders, and for the world!
Last but not least, I would like to thank all shareholders and friends who have beencaring for Appotronics! Please believe that when you are optimistic about a track and acompany, time will prove it.
Time tells everything!
Li ,YiApril 2021
Important NoteI. The Board of Directors, the Board of Supervisors, directors, supervisors and senior officers of
the Company hereby warrant that the information contained in this Annual Report is true,accurate and complete and this Annual Report is free from any misrepresentation, misleadingstatement or material omission, and agree to assume joint and several liability for this AnnualReport.II. Alert of significant risks
The Company has described in detail the risks that may exist in the production and operation of theCompany. Please refer to “Section IV Discussion and Analysis of Business Situations - Risk factors” forthe relevant risks. We draw the attention of investors to such risks in making investments.III. All directors of the Company attended the meeting of the Board of Directors.IV. Pan-China Certified Public Accountants (Special General Partnership) issued a standardunqualified auditor’s report to the Company.V. BO Lianming, Principal of the Company, ZHAO Ruijin, Person in Charge of the Accounting
Body and LIU Jie, Chief Accountant, hereby represent that the financial statements contained
in this Annual Report are true, accurate and complete.VI. Profit distribution proposal or proposal for capitalization of capital reserve approved by the
Board of Directors during the reporting period
Upon consideration at the 31
st meeting of the 1
st
Board of Directors of the Company, it is approvedto make profit distribution on the basis of the total shares on the record date of interest distribution - theCompany proposed to distribute to all shareholders a cash dividend of RMB 0.55 (tax inclusive) forevery 10 shares. As of December 31, 2020, the Company has a total of 452,756,901 shares, leading tothe total cash dividend of RMB 24,901,629.56 (tax inclusive). The cash dividends proposed by theCompany for this year account for 21.87% of the net profits attributable to the shareholders of the listedcompany in the current consolidated financial statements of the Company. No capitalization of thecapital reserve or bonus shares will be made or distributed in the profit distribution.
The preliminary plan for profit distribution is still subject to approval at the general meeting ofshareholders of the Company.VII. Is there any material event concerning any special arrangement of corporate governance?
□ Applicable√ N/A
VIII. Risk statement regarding forward-looking statements
√ Applicable□ N/A
The forward-looking statements contained herein regarding the future plans, development strategiesor other matters of the Company do not constitute any substantive covenant made by the Company to theinvestors. The investors should be aware of the risk of investment.
IX. Is there any non-operating occupation of funds by the controlling shareholder or its affiliates?NoX. Is there any external guarantee provided in contravention of the stipulated decision-makingprocedure?NoXI. Whether more than half of the directors unable to guarantee the truthfulness, accuracy andcompleteness of the Annual Report disclosed by the CompanyNo
XII. Other information
□ Applicable√ N/A
Table of Contents
Section I Definitions ...... 10
Section II Company Profile and Main Financial Indicators ...... 11
Section III Business Overview...... ...................................................................................................... 16
Section IV Discussion and Analysis of Business Situations ...... 34
Section V Significant Matters ...... ...................................................................................................... 53
Section VI Changes in Shares and Shareholders ...... 95
Section VII Preferred Shares........... ................................................................................................... 109
Section VIII Directors, Supervisors, Senior Officers and Employees ...... 110
Section IX Corporate Governance ...... 126
Section X Corporate Bonds.......... .................................................................................................... 131
Section XI Financial Report........... ................................................................................................... 132
Section XII List of Documents Available for Inspection ...... 311
Section I DefinitionsI. DefinitionsFor purpose of this report, unless the context otherwise requires, the following terms shall have themeanings indicated below:
| Definitions of frequently-used terms | ||
| Company or Appotronics | means | Appotronics Corporation Limited |
| Appotronics Ltd. | means | Appotronics Corporation Ltd., the former name of the Company |
| CINEAPPO | means | CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. |
| Formoive | means | Formoive (Beijing) Technology Co., Ltd. |
| Appotronics HK | means | Appotronics Hong Kong Limited |
| Appotronics Daye | means | Shenzhen Appotronics Daye Investment Partnership (LP) |
| Appotronics Deye | means | Shenzhen Appotronics Deye Consulting Partnership (LP) |
| Appotronics Hongye | means | Shenzhen Appotronics Hongye Investment Partnership (LP) |
| Blackpine | means | Blackpine Investment Corp. Ltd. |
| Jinleijing | means | Shenzhen Jinleijing Investment Limited Partnership (LP) |
| Appotronics Chengye | means | Shenzhen Appotronics Chengye Consulting Partnership (LP) |
| Appotronics Holdings | means | Shenzhen Appotronics Holdings Limited |
| Jiayuan I | means | Huatai Appotronics Employee Stock Ownership Plan - Jiayuan I Collective Asset Management Plan |
| CINIONIC | means | Cinionic Limited (previously known as Barco Cineappo Limited) |
| GDC | means | GDC Technology Limited (British Virgin Islands) |
| IMB | means | Integrated Media Block, embedded inside a digital projector |
| FDP | means | Feng Dynamic Page, dynamic page architecture developed independently by Appotronics |
| DCI | means | Digital Cinema Initiatives of the United States |
Section II Company Profile and Main Financial IndicatorsI. Company profile
| Chinese name | 深圳光峰科技股份有限公司 |
| Short name in Chinese | 光峰科技 |
| English name | Appotronics Corporation Limited |
| Short name in English | Appotronics |
| Legal representative | BO Lianming |
| Registered address | 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road, Yuehai Street, Nanshan District, Shenzhen |
| Postal code of registered address | 518052 |
| Office address | 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road, Yuehai Street, Nanshan District, Shenzhen |
| Postal code of office address | 518052 |
| Website | http://www.appotronics.com |
| ir@appotronics.cn |
II. Contact person and contact information
| Board Secretary (Domestic representative for information disclosure) | Securities affairs representative | |
| Name | YAN Li | CHEN Yasha |
| Address | 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road, Yuehai Street, Nanshan District, Shenzhen | 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road, Yuehai Street, Nanshan District, Shenzhen |
| Telephone | 0755-32950536 | 0755-32950536 |
| Facsimile | 0755-86186299 | 0755-86186299 |
| ir@appotronics.cn | ir@appotronics.cn |
III. Information disclosure and place of reports prepared for inquiry
| Designated media for information disclosure | China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily |
| Websites designated by the China Securities Regulation Commission for publishing the annual reports | www.sse.com.cn |
| Place for keeping the annual reports | Office of the Board of Directors |
IV. Stock and depository receipts of the Company(I) Stock of the Company
√ Applicable□ N/A
| Stock of the Company | ||||
| Type of stock | Stock exchange and board | Stock short name | Stock code | Former stock short name |
| A-shares | Shanghai Stock Exchange, STAR Market | Appotronics | 688007 | N/A |
(II) Depository receipts of the Company
□ Applicable√ N/A
V. Other related information
| Domestic accounting firm appointed by the Company | Name | Pan-China Certified Public Accountants (Special General Partnership) |
| Office address | 9/F, No. 128 Xixi Road, Xihu District, Hangzhou, Zhejiang | |
| Accountants signing the report | YANG Kejing, NIU Chunjun | |
| Sponsor performing the duty of continuous supervision within the reporting period | Name | Huatai United Securities Co., Ltd. |
| Office address | 5/F (01A, 02, 03 and 04), 17A, 18A, 24A, 25A and 26A, Hong Kong China Travel Service Building, Central Plaza, Futian District, Shenzhen | |
| Sponsor representatives signing the report | ZHANG Guanfeng, QIN Lin | |
| Period of continuous supervision | From July 22, 2019 to December 31, 2022 |
VI. Main accounting data and financial indicators in the past three years(I) Main accounting data
In RMB
| Main accounting data | 2020 | 2019 | % Change (2020 v 2019) | 2018 |
| Operating income | 1,948,884,176.83 | 1,979,148,918.89 | -1.53 | 1,385,727,211.09 |
| Net profit attributable to shareholders of the listed company | 113,847,873.06 | 186,457,276.71 | -38.94 | 176,971,092.49 |
| Net profit attributable to shareholders of the listed company after deduction of non-recurring profit or loss | 40,289,988.80 | 134,218,640.96 | -69.98 | 165,011,362.18 |
| Net cash flow from operating activities | 52,390,430.42 | 243,000,903.71 | -78.44 | 117,773,454.30 |
| December 31, 2020 | December 31, 2019 | % Change (2020 v 2019) | December 31, 2018 | |
| Net assets attributable to shareholders of the listed company | 2,091,599,671.75 | 1,974,559,837.64 | 5.93 | 715,913,478.56 |
| Total assets | 3,226,204,326.69 | 3,099,508,090.85 | 4.09 | 2,073,471,490.56 |
(II) Main financial indicators
| Main financial indicators | 2020 | 2019 | % Change (2020 v 2019) | 2018 |
| Basic earnings per share (RMB/share) | 0.25 | 0.45 | -44.44 | 0.73 |
| Diluted earnings per share (RMB/share) | 0.25 | 0.45 | -44.44 | 0.73 |
| Basic earnings per share after | 0.09 | 0.33 | -72.73 | 0.68 |
| deduction of non-recurring profit or loss (RMB/share) | ||||
| Weighted average return on net assets (%) | 5.62 | 14.84 | -9.22 percentage points | 41.25 |
| Weighted average return on net assets after deduction of non-recurring profit or loss (%) | 1.99 | 10.68 | -8.69 percentage points | 38.49 |
| Proportion of R&D investments to operating income (%) | 10.49 | 10.19 | +0.30 percentage points | 9.79 |
Explanation about the main accounting data and main financial indicators in the past three years
√ Applicable□ N/A
1. During the reporting period, the net profit attributable to shareholders of the listed company andthe net profit attributable to shareholders of the listed company after deduction of non-recurring profit orloss decreased by 38.94% and 69.98%, respectively; the basic earnings per share, diluted earnings pershare, and basic earnings per share after deduction of non-recurring profit or loss decreased by 44.44%,
44.44%, and 72.73%, primarily due to the following:
(1) Under the impact of COVID-19, revenues from the cinema business with a higher profit margindecreased despite the substantial increase in revenues from the household business, which reduced theconsolidated gross margin. As a result, the gross profits decreased although the revenues remained at thesame level due to the changes in the product portfolio of the Company.
(2) During the reporting period, the year-on-year increase in non-recurring profit or loss wasprimarily due to the gains of RMB 18.6249 million from wealth management products purchased withtemporarily idle funds, and the government grants of RMB 40.7508 million recognized in the profit orloss for the current period.
2. The decrease in the net cash flow from operating activities by 78.44% year on year was primarilydue to the reduction in revenues from the cinema service business under the impact of COVID-19, andthe increase in payments for procurement of risk-based stocks.VII. Differences in accounting data between domestic and overseas accounting standards(I) Differences in net profit and net assets attributable to shareholders of the listed company
disclosed on the financial statements according to the international accounting standards and
the Chinese accounting standards
□ Applicable√ N/A
(II) Differences in net profit and net assets attributable to shareholders of the listed company
disclosed on the financial statements according to the overseas accounting standards and the
Chinese accounting standards
□ Applicable√ N/A
(III) Explanation about the difference between domestic and overseas accounting standards
□ Applicable√ N/A
VIII. Main financial indicators in 2020 by quarter
In RMB
| 1st quarter (Jan. - Mar.) | 2nd quarter (Apr. - Jun.) | 3rd quarter (Jul. - Sep.) | 4th quarter (Oct. - Dec.) | |
| Operating income | 306,900,748.84 | 409,124,458.50 | 522,373,501.53 | 710,485,467.96 |
| Net profit attributable to shareholders of the listed company | 13,322,216.29 | 1,005,226.67 | 29,810,782.27 | 69,709,647.83 |
| Net profit attributable to shareholders of the listed company after deduction of non-recurring profit or loss | -7,989,708.14 | -22,242,786.99 | 18,410,451.42 | 52,112,032.51 |
| Net cash flow from operating activities | -38,289,185.55 | 101,295,247.35 | 50,310,681.49 | -60,926,312.87 |
From the 3
rd
quarter, the cinema projector business recovered gradually, and in the 4
th
quarter, thesales of laser TVs and smart mini projectors, among other To C products, increased rapidly, leading tosubstantial increase in both the operating income and gross profits. This resulted in the increase by
133.84% and 183.06% quarter on quarter in the net profit attributable to shareholders of the listedcompany and increase in the net profit attributable to shareholders of the listed company after deductionof non-recurring profit or loss, respectively.Explanation about the difference between quarterly data and the data disclosed on regular reports
□ Applicable√ N/A
IX. Items and amounts of non-recurring profit or loss
√ Applicable□ N/A
In RMB
| Item of non-recurring profit or loss | 2020 | Note (if applicable) | 2019 | 2018 |
| Gain or loss on disposal of non-current assets | -1,112,121.13 | -3,214,488.06 | -1,711,797.47 | |
| Government grants recognized in profit or loss for the current period (excluding government grants that are closely related to the business of the Company and are provided in fixed amount or quantity continuously according to the applicable polices and standards of the country) | 40,750,823.51 | 25,782,112.48 | 24,032,705.76 | |
| Profit or loss on entrusted investments or assets management | 18,624,853.96 | |||
| Net profit or loss of subsidiaries from the beginning of the period up to the business combination date recognized as a result of business combination of enterprises involving enterprises under common control | 23,593,500.83 | 23,321,528.06 | 18,765,375.86 | |
| Profit or loss on changes in the fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative | 9,552,990.98 |
| financial liabilities and investment income on disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments, other than those used in the effective hedging activities relating to normal operating business | ||||
| Reversal of impairment loss on accounts receivable and contract assets tested for impairment individually | 238,836.00 | |||
| Other non-operating income and expenses | 2,429,083.25 | 2,981,778.07 | 1,182,062.52 | |
| Other gains or losses meeting the definition of non-recurring profit or loss | 323,003.17 | -22,338,042.90 | ||
| Effect of minority interests | -1,982,929.14 | -1,891,481.86 | -3,860,005.15 | |
| Effect of income taxes | -9,068,330.19 | -4,532,639.92 | -4,110,568.31 | |
| Total | 73,557,884.26 | 52,238,635.75 | 11,959,730.31 |
X. Items at fair value
√ Applicable□ N/A
In RMB
| Item | Opening balance | Closing balance | Change | Effect on profit for the current period |
| Held-for-trading financial assets | 540,000,000.00 | 114,000,000.00 | -426,000,000.00 | 18,624,853.96 |
| Investment in other equity instruments | 11,975,419.38 | 11,975,419.38 | ||
| Total | 551,975,419.38 | 125,975,419.38 | -426,000,000.00 | 18,624,853.96 |
XI. Explanation about performance indicators not under the Accounting Standards for BusinessEnterprises
□ Applicable√ N/A
Section III Business OverviewI. Main business, business model, status of industry and R&D activities during the reportingperiod(I) Main business and main products or services
1. Main business
As a leading laser display technology enterprise in the world, we mainly engage in the research,development, and production of high-end semiconductor display light sources and the provision of solidlight source solutions based on ALPD? laser display technology and architecture.
Since our innovative invention of the ALPD? technology in 2007, we have created new laserdisplay architecture, built core intellectual properties, and mastered the designing and manufacturing ofcore devices. We have upgraded the ALPD? technology continuously, and relying on the advancedALPD? technology, promoted the industrial applications of laser display, and gradually extended theapplication of laser display from laser cinema projection and other high-end applications to large venue,business education, laser TV, smart mini projector and other display applications.
2. Main products
Our diversified products may be classified into core laser display devices and complete laserdisplay equipment, wherein the core devices can be further classified into laser light source (cinema lightsource and large venue light source), laser TV light generator and laser projection screen, and completelaser display equipment can be further classified into laser cinema projector, large venue laser projector,laser video wall, laser education projector, laser TV and smart mini projector.
(1) Products of core devices
Our core devices, including the laser light source and light generator, reflect various advantages andcharacteristics of ALPD? technology, such as high brightness, wide color gamut, high contrast andrelatively low cost. The quality and performance of such products have received recognition ofdownstream customers, which helps us establish our position as a core supplier on the industry chain oflaser display.
Figure 1: Laser light source and laser light generator
Figure 2: Technical effects of the ALFA screen
(2) Products of complete equipment
1) Products for the commercial market
On the basis of laser light source and light generators, we have further developed completeequipment, which has been widely used in cinema projection, cultural and tourism lighting, security and
surveillance, education and training, and other commercial applications, and become the mainstreamchoice for high-quality projection display technology.- In the field of cinema projection, we have created a product portfolio of laser cinema light sourcescovering multiple ranges of lumens from 5,000 lumens to 55,000 lumens, which are compatible with allprojection equipment brands on the market for wide application in large-sized, medium-sized andsmall-sized cinemas. Thanks to the low operating power, the laser cinema light source reduces electricityconsumption by 50% compared with the xenon lamp; moreover, since no bulb replacement is required, ithelps cinemas to minimize their operating costs. We have more than 20,000 laser cinema light sourcesinstalled throughout China.
Figure 3: More than 20,000 halls chose Appotronics’s ALPD laser projection solutions- On the large venue display market, Appotronics’s DLP large venue projector series covers therange of 5,000-60,000 lumens, hence suitable for outdoor lighting, cultural and tourism lighting, themeexhibition halls, corporate exhibition rooms, theater performance, 4D dining hall, conference control,rail transit, and other scenarios.
Figure 4: Appotronics’s laser high-brightness S4K series products- On the education market, in line with the national implementation plan of “Internet + education”,the Company has developed a series of solutions for smart classrooms, including laser smart all-in-oneteaching device, laser synchronous classroom solution, laser interconnected dual-board solution,high-definition high-brightness conference system, etc., making its contribution to promote the buildingof education IT systems with users at the center.
Figure 5: Appotronics multi-screen interactive smart classroom
2) Products for the household market
In recent years, laser TV, smart mini projector and other household projector products have beendeveloping rapidly, due to the ever increasing acceptance of the new mode of movie watching by theconsumers, and rapid decrease of the costs and prices and better performance of products. During thereporting period, Formoive laser TV and smart mini projector continue to gain market shares, leading tothe rapid growth in our household equipment business.
Figure 6: Formoive household laser cinema(II) Main business model
We are mainly engaged in the R&D, production, sale and light source projection of core laserdisplay devices and complete laser display equipment, and provision of customized R&D andmanufacturing services to customers, and have an independent and complete procurement, sales,production and service system.
1. R&D mode
We mainly adopt the independent R&D mode, and separate technology development from productdevelopment in organization structure and development process.
Our technology development focuses on creating and mastering core technologies and keytechnologies. When a kind of technology becomes relatively mature, it will be applied in productdevelopment. Our technology development team comprises a large number of creative scientists, whofollow up the progress of frontier technology in the industry, focus on the key technical problems thaturgently need to be solved in our business development, and develop the technologies required for ourproducts to be launched in the next three years with reference to the prevailing trend of market demands
from the perspective of user requirements on product designing, so as to maintain the Company’s corecompetitive edge in technology and leading position in the industry.Our product development is driven by product planning, and mainly divided into stages offeasibility, EVT, DVT, PVT and MP. We set up product lines and product development teams by marketsegment, and develop series products based on product platform, to rapidly respond to market demands.Our product development team is responsible for developing the products that will be put into massproduction within about one year. The product development team is divided into optical, structure,software, hardware, thermal and other technical departments by profession. Such technical departmentsshare technologies and platforms with each other.
Through matrix management, we realize flexible allocation and sharing of human, operating andother resources among different products, to optimize resource allocation and improve R&D efficiencyand professional and technical capability.
2. Procurement mode
Our Resources Development Department and Supply Chain Center Planning ManagementDepartment are responsible for procurement, of which, the Resources Development Department isresponsible for the selection of suppliers, determination of purchasing prices, building of businesssystem and supplier platform and other front-end procurement affairs, and the Planning ManagementDepartment is responsible for the preparation and implementation of procurement plans and otherback-end procurement affairs. We have formulated the Supplier Development, Management and ControlProcess and other policies, to manage the development of suppliers, implementation of procurementplans, inspection of incoming materials and other business.
3. Production mode
We mainly reply on own production, supplemented by OEM, mainly because of the differentproduction capacity required by different manufacturing processes and different products andconsideration of cost-effectiveness. Our core devices sold or used to provide projection services aremanufactured by us. Laser TV and smart mini projector products are assembled by OEMs. Othercomplete equipment products are also manufactured by us.
With respect to the products manufactured by us, we schedule production pursuant to purchaseorders, taking into account the requirement of safety stock. The production of standard spare parts isscheduled according to the requirement of safety stock and relevant production plans.
With respect to OEM products, we appoint third parties to manufacture PCBA, coating and othersemi-finished products, and assemble laser TV, smart mini projector and other complete equipment.
4. Sales mode
Our sales mode is classified into product sales and provision of projection services, as describedbelow:
(1) Product sales mode
Our products include core laser display devices and complete laser display equipment: the sale ofcore devices is implemented in the mode of customized development and direct sale; the sale of
complete equipment has three modes, which are customized direct sale, non-customized direct sale anddistribution; large venue laser projectors are sold mainly using the off-line direct sale mode; Formoivebranded laser TV and smart mini projector products are sold both at the online retail stores on Tmall, JD,Youpin, Pinduoduo and other platforms, and off-line physical stores; and laser teaching machineproducts are sold through distributors.
(2) Mode of projection services
CINEAPPO, a controlled subsidiary of the Company, provides laser cinema projection services todownstream cinema customers (“laser as a service”), and charges service fees according to the length ofuse of light source by the cinemas (the fees are charged by the hour or a certain period of time), whilethe cinemas do not need to purchase light source equipment, thereby effectively easing their capitalpressure and reducing their labor and maintenance costs.(III) Industry in which the Company operates
1. Development stage, basic characteristics and main technical barriers of the industry
As an emerging industry, laser display is at the early stage of rapid development. The application oflaser display technology in TV and other household products is a wholly new creation.
Currently, picture display technologies are mostly implemented by using DLP, 3LCD, and LCOSdisplay chips as the picture modulator, achieving greatly different actual display effects depending onthe light source. In 2007, the ALPD? technology created by Appotronics’s R&D team made abreakthrough in the application of core devices and imaging solutions of laser display, hence becomingthe mainstream technical route for the laser projector industry and widely used in movie, TV, businesseducation, and large venue fields.
In terms of core technologies, certain companies in the industry may face the problems of lack ofR&D capability and core technology, and reliance on supply chain for core patents and core devices,rendering them unable to compete with leading domestic or international companies that have theirproprietary IP or core technologies and core devices.
In terms of specific applications, the technical barriers for To C market are high efficiency, smallsize and low cost, and the technical barriers for To B market are continuous upgrading of performance.
2. Analysis of the position of the Company in the industry and changes therein
At the beginning of the industrialization of laser display technology, as one of the leadingcompanies in the field of laser display, Appotronics has mastered core technologies. After multipleiterations, our ALPD? technology architecture has gained relatively solid technical advantages in termsof performance, cost, efficiency and size. We have not only created the fundamental key architecture forlaser phosphor display technology, but also built a proprietary IP protection system through patentapplications in China, the United States, Japan, Europe and other countries. On the principle of beingopen for cooperation and striving for win-win development, Appotronics has become a leading supplierof core devices in the laser display industry based on its intellectual property rights and core devices,hence driving the development of the entire industry and ecology.
According to the Research Report on Chinese Laser Projector Market 2020 issued by AVC, bluelaser + phosphor powder technology architecture, represented by ALPD?, is still the mainstream lightsource technical route for the laser display industry at present.
3. Development of new technologies, new industries, new types of operation and new modes
during the reporting period and future trend
(1) Projectors are expanding into the household consumer market at a rapid growth rate in themarket segment
Given the rapid technical advancement and high household demand on large-screen displays, smartprojector devices have become the largest market segment for projector devices in China on the basis ofthe rapid increase in sales thanks to their cost effectiveness and portability compared with large-screenTVs. According to AVC, despite the impact of pandemic in 2020, the sales of laser TVs increased by
15.5% year on year; laser TVs will become a new product type with “millions” installation in two orthree years. In the Guidelines for Myopia Prevention in Children and Adolescents during COVID-19pandemic (Updated Version) released by the National Health Commission, projectors are recommendedas the first choice of devices for use during the teaching sessions. Compared with conventional liquidcrystal screens, some projectors equipped with advanced laser technologies can protect consumersduring long-time online work and study and reduce the harm due to eye fatigue. According to IDC, it isexpected that the projector device market of China will grow at the compound growth rate of 14%between 2020 and 2024.
(2) The accelerated technical upgrade in the smart mini projector industry leads to a promisingprospect for the application of laser light sources
The projector light sources are gradually evolving from bulbs to semiconductor solid light sources.The Report of Market Research and Investment Forecast Analysis of China Projector Industry releasedby Forward Industry Research Institute revealed the rapid growth of projectors within the range of1500-2000 lumens with a rapidly increasing share of smart projectors, and the development trend ofhigh-definition, high-brightness, and smart projects. With respect to market demands, it is expected thatprojectors within the range of 1500-2000 lumens will gain increasing shares in projectors, which mayfurther reducing the survival space of low-brightness projectors. In the future, on the basis of thedevelopment in fundamental hardware technologies such as light sources, lighting technologies, and lenstechnologies, the optimization of overall device design, and the development of software technologiessuch as smart sensing capabilities and image quality optimization technologies, the smart projectormarket will further expand thanks to the greatly improved display performance and use experience ofprojector devices, technical upgrade, and reduced costs.
(3) Laser display is integrated with new technologies for expansion into new display fields
Given the compatibility between the laser display technology and cutting-edge technologies,including human-machine interaction, smart recognition, Internet of Things, cloud platform, and big data,the wide application of 5G mobile phones will create potential demands for supporting laser displayproducts. Therefore, it’s expected there will be huge market demands for supporting mobile products
featuring high efficiency, small size and low cost in the future. In the short term, the developmentpriority of the current display market will witness the development of laser display technology towardsadvantages in cost-performance ratio, high portability, high dynamic range, wide color gamut, and highbrightness for integration with ultra short throw and anti-ambient light screen technologies.
(4) In the recovery of the movie industry, the global film industry may transform into an asset-lightoperating mode
According to the data of China Film Administration, with the box office receipts of USD 2.983billion, and total cinema visits of 548 million in urban cinemas, Chinese film market surpassed NorthAmerica to become the largest film market on the world. In 2020, despite the impact of the pandemic,China still maintained the growth trend in the total number of screens - with 5,794 additional screens,the total number of screens reached 75,581 in China, up by 8.30% on the basis of the 69,787 screens in2019.
Considering the shut-down of cinemas both in and outside of China during the pandemic, morecinemas realized the importance of cash flow and digitalized management. Appotronics released theprojection service mode of “laser as a service”, for which service fees are charged according to thelength of use of light source by the cinemas (the fees are charged by the hour or a certain period of time).This service mode eases the cinemas’ capital pressure caused by purchasing of cinema equipment, hencedriving cinema transformation from input of factors to inherent efficiency.
(IV) Core technologies and progress in R&D of technologies
1. Core technologies and their advancement, and changes during the reporting period
We have been committed in the breakthroughs, innovations, commercialization andindustrialization of laser display technology, and created technology reserves and patent portfolioscovering the whole technology chain of laser display from key system architecture, core devices to keyalgorithm. With the ALPD?4.0 technology matured and the ALPD? 5.0 and 6.0 technology underdevelopment and trial operation at the same time, we constantly maintain our leading advantagescompared with followers and competitors in the industry. In addition, as a Leader Level Member of theLaser Illuminated Projector Association (LIPA), we have participated in and led the preparation of theinternational laser display standard.
During the reporting period, we have poured substantial R&D resources in the preparation andprocessing of thin film materials, micro- & nano- optical structure technology, light source architecture,dynamic control, complete equipment structure, machine perception, miniaturization of laser displaysystem, and battery-powered high-performance mini laser projector technology. The big data, algorithmand design solutions accumulated by us over the years will enable us to rapidly develop products andsolutions meeting the requirements of different application scenarios, such as cinema projection, homeentertainment, outdoor exhibition, ultra large-sized display, and immersive display.
In terms of cutting-edge technologies, the Company has started the development of the ALPD 5.0and 6.0 technology at the same time. The ALPD 5.0 technology will make use of the characteristics of
laser with reference to the creation of content to achieve high dynamic range display and improve visualexperience. The ALPD 6.0 is planned to make breakthrough in the existing display architecture tofurther reduce the cost of laser display systems. By now, with the prototype developed successfully, theCompany is conducting further optimization. This technology has the prospect of entering the stage ofproduct development.
2. R&D achievements during the reporting period
During the reporting period, the Company made the following achievements in product innovation:
1. Core devices
The Company independently developed the advanced light shaping and light absorption ALFAtechnology, and with the micro- & nano- structure and nanometer coating, released Fabulus seriesproducts - the first 100-inch flexible Fresnel anti-light screen on the world. Being made with multiplelayers of nanometer optical films, the screen has superior performance and greatly improves displayeffects. Thanks to its foldable design and small size, it solves the transportation difficulty of large-screenlaser TVs in the industry; moreover, we offer the integrated DIY installation solution to make householdcinema more light-weighted and more convenient. We are far ahead of conventional products of flexibleanti-ambient light screens in terms of costs and performance; being combined with our core devices, thescreen can further improve the space for reducing the costs of the complete equipment. We have filed atotal of 138 domestic and foreign patent applications (including PCT applications) for the ALFA screentechnology, including 87 Chinese patent applications, 12 overseas patent applications, and 39 PCTinternational patent applications, of which 24 have been granted covering multiple fields includingoptical designing, structure, process, and materials.During the reporting period, we completed the product development for the ALPD RGB+technology based on ALPD 4.0, including the trichromatic laser cinema light source platform and thetrichromatic laser TV light generator platform, hence providing more abundant and more competitivesolutions of core devices for the cinema industry and the laser TV industry. Meanwhile, in an effort tocreate the track of smart mini projectors, we developed various laser smart mini projection lightgenerators embedded with the ALPD technology, which greatly upgrade the brightness and energyefficiency while improving color effects.We developed a new-generation cinema RGB+ light source suitable for almost all cinemaapplication scenarios from small-sized projection halls to giant screens. The latest heat radiationtechnology integrated not only reduced the size and costs of the light source, but also reduced themaintenance and use costs of the light source, helping cinema customers reduce operating costs andenhance profitability.
2. Software
Our independently developed projector integrated media block (DCMB/IMB), which has passed theDCI certification, has the capabilities of the independently developed cinema media block and mediaserver.
Formoive, a controlled subsidiary of the Company, released the Feng OS operating system, whichupgraded the experience in page performance by employing the independently developed browser andcore standard components on the basis of the independently developed Feng Dynamic Page (FDP)technical architecture, and provided modular, professional, and customized function experience, henceenhanced the flexibility in content operation, improved the capability of continuous delivery in agileoperation, and realized more complex interaction functions.
3. Complete equipment
We developed high-, medium-, and low-end laser TV products to cater for different user demandson the household market. Having the highest brightness of 4,000 lumens, covering the REC.709, DCI,and REC.2020 color gamuts, and with the maximum color gamut area of 158% NTSC, our products areat the highest level in the industry.
On the commercial market, we developed the ultra-high bright large venue projector S4K60, whichcan reach the highest brightness of 60,000 lumens in the industry; we continuously improved theperformance of ultra short throw business education projector devices on the basis of the previousgeneration of light generators and developed the 4K resolution ultra short throw business educationprojector equipment with the brightness improved by 50% and screen size increased from 100 inch to150 inch, which further improved the application scope and competitiveness of the products.
List of intellectual property rights acquired during the reporting period
| Newly added in the current year | Total | |||
| Applications (pcs) | Granted (pcs) | Applications (pcs) | Granted (pcs) | |
| Patent for invention | 183 | 113 | 1,352 | 601 |
| Patent for utility model | 71 | 72 | 429 | 396 |
| Patent for design | 31 | 36 | 153 | 139 |
| Software copyright | 40 | 33 | 88 | 81 |
| Others | 157 | 97 | 868 | 654 |
| Total | 482 | 351 | 2,890 | 1,871 |
Note: 1. “Others” in the table above refer to trademarks of the Company; 2. During the reporting period,the Company filed 257 PCT international patent applications.
3. R&D investments
In RMB
| Current year | Last year | Change (%) | |
| R&D investments expensed | 204,443,369.10 | 201,697,766.26 | 1.36 |
| R&D investments capitalized | 0.00 | 0.00 | N/A |
| Total R&D investments | 204,443,369.10 | 201,697,766.26 | 1.36 |
| Proportion of R&D investments to operating income (%) | 10.49 | 10.19 | 0.30 |
| Proportion of R&D investments capitalized (%) | 0.00 | 0.00 | N/A |
Reason for the material change in the total R&D investments compared with last year
□ Applicable√ N/A
Reasons of the great change in the proportion of R&D investments capitalized and explanationabout the rationality thereof
□ Applicable√ N/A
4. R&D projects
√ Applicable□ N/A
In RMB
| No. | Item | Estimated total investment | Investment in the current period | Aggregate investment | Progress or interim results | Goals | Technological level | Specific application scenario |
| 1 | Trichromatic Laser Display Complete Equipment Production Demonstration Line | 102,840,000.00 | 15,131,388.57 | 24,535,107.34 | Laboratory test | This project will research the industrialization of the technology of RGB trichromatic laser with phosphor to satisfy the market demands for RGB trichromatic laser display, build a mass production line for trichromatic laser display complete equipment, acquire proprietary IP, and realize large-scale application of trichromatic laser display products. | This project will greatly promote the industrial upgrading of trichromatic laser display technology, and gain international competitive edge for proprietary trichromatic laser display technology. | This project will build a demonstration production line for trichromatic laser display complete equipment, with an annual production capacity of 200,000 sets of trichromatic laser display complete equipment. |
| 2 | Laser TV | 49,770,000.00 | 46,460,846.84 | 46,460,846.84 | Mass production | 4K laser TV with a new generation of light generator technologies, with the independently developed Feng OS system, achieves great improvement in color gamut, brightness, cost effectiveness, and ease of use. | Take the lead in the industry | Household market |
| 3 | Core devices | 40,890,000.00 | 38,765,825.33 | 38,765,825.33 | Mass production | By employing the fourth generation of light generator technologies and making use of the advantages of the APLD technology, create a new generation of high-end but | Take the lead in the industry; the cost effectiveness, color gamut, light effect, and | Upgrading of light source for small-sized cinema projectors, laser TV and other fields. |
| No. | Item | Estimated total investment | Investment in the current period | Aggregate investment | Progress or interim results | Goals | Technological level | Specific application scenario |
| inexpensive light generator products, so as to reduce the cost, improve the color gamut and brightness, hence improve the cost effectiveness of cinema light sources. | other performance are greatly improved, to better satisfy the demands of customers. | |||||||
| 4 | Other complete equipment (large venue + business education) | 41,920,000.00 | 36,629,898.45 | 36,629,898.45 | Mass production | 30,000-lumen, large-size, and wide-color gamut large venue projectors and S4 business projectors with higher brightness and cost effectiveness, which are models for expanding the high-end market in the large venue and business education fields. | The high-end large venue projector and business education projector take the lead in the industry. | High-end large venue projector, business education projector and other fields. |
| 5 | Laser cinema projector | 35,060,000.00 | 31,533,935.11 | 31,533,935.11 | Mass production | DCI-compliant overseas small cinema projector meeting overseas standards. | The first proprietary DCI-compliant cinema projector in China. | Expand to overseas markets. |
| 6 | Key Enterprise Laboratory for Laser Display in Guangdong Province | 34,000,000.00 | 9,815,926.16 | 16,040,897.81 | Pilot test | Development of laser phosphor display optical engine, high-performance fluorescent materials and fluorescent components, portable laser display technology, and laser display technology with high contrast and high color reproduction. | Take the lead in the industry. | Through transformation of lab R&D results, develop multiple laser display terminal products, and promote the development of the entire display |
| No. | Item | Estimated total investment | Investment in the current period | Aggregate investment | Progress or interim results | Goals | Technological level | Specific application scenario |
| industry chain. | ||||||||
| 7 | High-performance mini projector | 18,540,000.00 | 17,661,161.77 | 17,661,161.77 | Mass production | New generation of mini projector products with greatly improved cost effectiveness by employing a new generation of platform display technology. | Smart mini projector with the highest brightness-to-size ratio to take the lead in the industry. | Smart mini projector market. |
| 8 | Screen | 8,830,000.00 | 8,444,386.87 | 8,444,386.87 | Mass production | Low cost, high reflection efficiency, anti-ambient light TV screen, the first flexible Fresnel anti-light screen for laser TV on the world | Take the lead in the industry. | Applied in household laser products in combination with existing laser display. |
| Total | / | 331,850,000.00 | 204,443,369.10 | 220,072,059.52 | / | / | / | / |
RemarkThe Trichromatic Laser Display Complete Equipment Production Demonstration Line is under the “Strategic Advanced Electronic Materials” in the NationalKey Research and Development Programs, for which Appotronics is the undertaking unit, while Formoive and CINEAPPO are the cooperating units. Theexpenditure budgets planned by the three companies are RMB 95.18 million, RMB 4.22 million, and RMB 3.44 million, respectively.
5. R&D staff
In RMB 0’000
| Basic information | ||
| Current period | Previous period | |
| Number of R&D staff (persons) | 369 | 387 |
| Proportion of R&D staff to total employees of the Company (%) | 31.54 | 31.06 |
| Total compensation of R&D staff | 12,090.48 | 11,805.40 |
| Average compensation of R&D staff | 32.77 | 30.50 |
| Education background | ||
| Academic background | Number (persons) | Percentage (%) |
| Doctor | 19 | 5.15 |
| Master | 98 | 26.56 |
| Undergraduate | 202 | 54.74 |
| College or below | 50 | 13.55 |
| Total | 369 | 100.00 |
| Age structure | ||
| Age range | Number (persons) | Percentage (%) |
| 30 years of age or below | 153 | 41.46 |
| 30-40 years of age | 177 | 47.97 |
| 40 years of age or above | 39 | 10.57 |
| Total | 369 | 100.00 |
6. Other issues
□ Applicable√ N/A
II. Material changes in the main assets during the reporting period
√ Applicable□ N/A
The total assets of the Company increased by 4.09% during the reporting period. For specificchanges, refer to “Section IV Discussion and Analysis of Business Situations - III. Main businessactivities during the reporting period - (III) Analysis of assets and liabilities”.Where: overseas assets RMB 387,072,800.58, representing 12.00% of the total assets.
III. Analysis of core competitiveness during the reporting period(I) Analysis of core competitiveness
√ Applicable□ N/A
1. Advantage in proprietary technologies
Since we invented the ALPD? technology, the fundamental key technology architecture has beengradually formed and improved. On the basis of this technology, we have established rich product lines,which have a remarkable substitution effect on the traditional products in cinema, TV, businesseducation, large venue and other fields. The ALPD? technology has become the mainstream technicalroute for laser display. By relying on fundamental research and original innovation rather thanconsumption of resources, we have realized rapid development, continuously improved the performanceand cost-performance ratio of our products, and maintained the competitive advantages in the industry.
2. Sound IP protection system
With our core patents covering laser phosphor display technologies, we have gradually built up apatent system containing the largest number of patents covering the widest scope with the highestquality in the industry. This patent system safeguards our fundamental research and original innovation.With key core patents at the center, we have built a united whole patent system, and is hard to besimulated fully or broken by the competitors.
3. Advantage in full coverage of laser display scenarios
Our ALPD technology has certain demonstration effect in the field of laser display, and itsapplication covers professional market and mass market, and high-end market and low-end market. Ourmultiple product series can satisfy the demands of various scenarios. In addition, we adopted thedifferential development strategy and upgraded ALPD? technology from multiple angles, so as toprovide solutions to satisfy the demands of different market segments and applications.
4. Advantage in layout in the whole industry chain
We have layout in the whole laser display industry - from the development and manufacturing ofindependently developed core devices and complete equipment to laser display solutions. For coredevices, we have released the cinema light source, large venue light source, laser light generator, andlaser projection screen; for complete equipment, we have products for laser cinema projector, largevenue laser projector, laser video wall, laser education projector, laser TV and smart mini projector; oursolutions are widely used in cinemas, cultural and tourism lighting, security and surveillance, educationinteraction, commercial applications, household cinema, and consumer electronic products.
5. Advantage in product performance
Through more than ten years of R&D efforts, our technical advantages have been given full play incinema, household, large venue and other fields. Our products show superior performance in brightness,service life, color gamut, removal of speckle and other aspects. Through sufficient validation at R&Dand quality labs and on-site use for a long time, our product models have become mature. Since itsinstallation in June 2014, the first set of ALPD? cinema light source has been stably operating for oversix years. Our products in other fields have also won trust on the market with their outstandingperformance and reliable quality.
6. Advantage in talents and teams
Our founder and Chairman, Dr. LI Yi, is a well-known expert in the field of laser display. OurGeneral Manager, Dr. BO Lianming is a well-known leader in the display industry. Under the leadershipof our outstanding management team, we now have a sound corporate governance system and stronginternal controls, and have greatly improved our management level and risk prevention capability. Inaddition, we have a group of high-quality R&D talents, including a lot of doctors and masters graduatedfrom famous domestic and foreign universities. Our R&D team has taken the lead in the research of laserdisplay technology in the industry. Through the combination of technology and management, we areable to precisely catch the development trend of the display industry, and continuously release new laserdisplay products with prominent prospects in response to market demands.
7. Advantage in business model
For the cinema projector market, based on our advanced technology and stable productperformance, we took the lead in releasing the “projection service mode” for cinema laser light sourcesin the industry. Under this mode, a cinema only needs to pay for the duration in use instead ofpurchasing a light source. This not only effectively reduced their fund pressure and maintenance cost ofthe cinema, but also maintained the long-term and stable revenues for the Company while promoting therapid application of the ALPD? technology on the cinema projection market.(II) Events occurred during the reporting period that have a material effect on the Company’score competitiveness, analysis of the effect and countermeasures
□ Applicable√ N/A
Section IV Discussion and Analysis of Business SituationsI. Discussion and analysis of business situations
(I) Analysis of the overall business situation during the reporting periodThe year 2020 is an extraordinary year - a year of challenge to the Company; however, weachieved the performance better than expectation by making response to the crisis actively.
Our projection service business was hit badly by the shut-down of cinemas throughout China forhalf a year due to COVID-19. The operating income decreased by 56.85% year on year, and the grossmargin rate decreased by 28.76 percentage points compared with last year. In 2020, thanks to the activeadjustment in the operating strategy in an attempt to eliminate the impact of the pandemic, we achievedstable development of the non-cinema business, especially the rapid growth in the household businessand core device business, which enhanced the Company’s resistance to material risks. The gradualrecovery of the cinema service business resumed the growth of our performance in the 4
thquarter.
During the reporting period, our operating income was RMB 1.949 billion, substantially the sameas that of last year; the total assets of the Company at the end of the reporting period was RMB 3.226billion, up by 4.09% from the beginning of the reporting period; and the equity attributable to owners ofthe Parent Company was RMB 2.092 billion, up by 5.93% from the beginning of the reporting period. Inthe 4
th
quarter, our operating income was RMB 710 million, up by 13.25% year on year; the net profitattributable to the Parent Company was RMB 69.7096 million, up by 11.85% year on year, and the netprofit attributable to the Parent Company after deduction of non-recurring profit or loss was RMB
52.1120 million, up by 18.27% year on year.
The year 2020 was also an important year for the Company to improve our internal strengthand further enhance the foundation in pursuit of a new growth curve.
1. Explore intellectual property operation to scale up and strengthen the ecology of the laserdisplay industry
Given the enhanced top-level design on the protection of intellectual property rights and emphasison technology innovation on the national level, the creation, protection, and exploitation of intellectualproperty rights will become normal operating activities of strategic emerging technology enterprises. Asof December 31, 2020, Appotronics has obtained 1,136 patents throughout the world, had 798 domesticand foreign patents pending (including 751 patent applications for invention) and 257 PCT patentspending, owning a total of 2,191 patents pending and granted throughout the world.
As of December 31, 2020, a total of 23 cases of petition for invalidation were brought up bydomestic and foreign entities against our core patents. By now, we have received the examination resultsfrom China National Intellectual Property Administration (CNIPA) for 22 of the cases, in all of whichthe validity of our patent rights were maintained. Since 2013, Appotronics initiated a total of 49 patentlawsuits against domestic and foreign enterprises during the industrialization of our core technologiesand intellectual property rights, and received favorable results in the 22 cases that have been decided,involving the total amount of RMB 40.45 million as compensation for infringement, settlement fees, orpatent license fees.
On the principle of being open for cooperation and striving for win-win development, and based onour intellectual property rights and core devices, the Company is exploring the mode of patent operationto establish and gradually improve the ecology of the laser display industry chain, showing thecommercial values of step by step. During the reporting period, the Company entered into PatentLicense Agreements and Strategic Cooperation Agreements with partners to grant licenses of our patentsand providing such partners with advanced and highly efficient core devices. In addition, in response tothe current complicated environment of international trade, our strong system of intellectual propertyrights safeguards not only our business development but also the overseas business of our partners.In the future, we will continue our efforts in building our system of intellectual property rights,enhancing patent operation and management, and constantly promoting the formulation of industrialtechnical standards to continuously maintain our competitive advantages in the industry, drive theoverall development of the industry ecology, and scale up and strengthen the laser display industry withour core devices and technical advantages.
2. Focus on the household business to create new momentum for continuous growth
During the reporting period, our household business (laser TV and smart mini projector) realizedthe revenue of RMB 1.065 billion, up by 60.88% year on year, accounting for 54.65% in the totaloperating income, up by 21.20 percentage points compared with the last year. The smart mini projectorbusiness realized the revenue of RMB 518 million, up by nearly 100% year on year with the grossmargin rate improved by 1.80 percentage points, showing improved profitability. Formoive, a controlledsubsidiary of the Company, independently developed the Feng OS operating system to provide userswith innovative and concise large-screen human-machine interaction experience and a variety ofconvenient online services; meanwhile, Formoive introduced a strategic investor and raised the sharecapital of RMB 200 million by issuing additional shares, which capital will be used to enhance R&D andmarket expansion to promote the overall development of the Company.
3. Continuously improve the R&D strength to promote the development of the core devicebusiness
The pandemic in 2020 accelerated the online transformation of consumption all over the world,hence creating a new development opportunity for cross-border e-commerce business. During thereporting period, the Company realized rapid growth in the core device business through businesscooperation with cross-border e-commerce operators by providing customized development services oflaser TV light generators and complete equipment to build up our experience for the overseas market;moreover, with the help of cross-border e-commerce, our products have entered multiple countries andregions in Europe, North America, and Southeast Asia in our active layout for overseas markets.Furthermore, during the reporting period, we continued to improve our R&D strength and makebreakthroughs in R&D. We independently developed the core technology for the ALFA screen, built theworld’s first 100-inch flexible Fresnel anti-light screen with a thickness of only 500 um to facilitateinstallation and transportation, and solved many pain points in conventional projection screens, such as
low gain, bright spots, “image sticking”, transportation of hard screens, to greatly improve displayeffects and promote the development of the core device business.
4. Enhance the management and control over period expenses to maintain the overall profitsin large venue and business education fields
During the reporting period, we actively and rapidly adjusted our services, improved operationquality, implemented the scheme of “broadening sources of incomes and reducing expenses”, improvedoperating efficiency, and enhanced expense management and control. The sales expense ratio is 6.85%,down by 0.81 percentage points year on year; the administration expense ratio is 6.97%, down by 0.75percentage points year on year, and the financial expense ratio is 0.47%, down by 1.02 percentage pointsyear on year.
We rapidly caught the opportunity of the recovery on the commercial market and actively adjustedour product portfolio to maintain the overall profitability. With the revenues from business educationand large venue services of RMB 370 million, down by 5.46% year on year, we achieved the grossprofits of RMB 130 million, up by 8.98% year on year, leading to the consolidated gross margin of
34.81%, up by 4.61 percentage points year on year.
(II) Completion of other key tasks during the reporting period
During the reporting period, we achieved favorable results in R&D innovation, operationmanagement, production operation, and capability building:
1. Insist on making investments in R&D to enhance innovations in product application
Technical innovation is the foundation of an enterprise as well as the industry. Given the adversesituation in which the cinema business was shut down due to the pandemic, we still insisted on makinginvestments in R&D - invested RMB 204 million in R&D this year, up by 1.36% year on year. Wecontinuously upgraded the ALPD technology, stably increased our patents, and released multiple newproducts for the household, business education, and large venue portfolio to continuously improve oursales and market shares.
2. The operation in the form of business units went on well, and the information-basedcorporate operation became more healthy
During the reporting period, all the business units operated well with improved independentdecision-making and accelerated market response capabilities. Our business gradually expanded via theonline channel by enhancing online promotion, training, and channel certification; we constantlyreleased industrial standards and solutions to build our position as a professional expert; and proactivelytook opportunities of recovery to show the resilience of our business under the impact of COVID-19.Meanwhile, we optimized our procedures and systems to intensify informatization efforts. On the basisof the further upgraded ERP system, we implemented the sales management system CRM, improved theproduct life cycle management system PLM, and connected the various information systems to eliminateinformation islands, hence laying the ground for reflecting the true operating conditions in our financialdata and management data and improving the operating efficiency of the overall business procedures.
3. Build the supply chain profit center to reduce costs while improving efficiency, and buildthe quality information systemWe built an agile and efficient supply chain system in pursuit of high standards, high quality, andhigh efficiency. We implemented balanced production scheduling to ensure product delivery; carried outfull lean production to involve every employee in fine improvement; and built a quality informationsystem to create a platform-based, information-oriented, visualized, and IT-based quality system, so asto stably improve customer satisfaction and enhance the competitiveness of our supply chain.
II. Risk factors(I) Risk of not making a profit
□ Applicable√ N/A
(II) Risk of significant decrease in operating performance or loss
□ Applicable√ N/A
(III) Risk related to core competitiveness
√ Applicable□ N/A
Risk of the technology R&D and innovation falling short of expectations
The core of our development is technical innovation. If we fail to effectively judge the direction oftechnical innovations, or to make continuous technical innovations, or to make effective R&Dinvestments due to limited funds, or to successfully commercialize the technologies developed by us, ourcore competitiveness in technical innovation may be impaired, and we may encounter technologicalrisks in future development.(IV) Operating risk
√ Applicable□ N/A
1. Risk related to the supply of important raw materials
The key components of our products include laser devices, chips and lenses, which are mainlypurchased from some key suppliers of the United States and Japan. If such suppliers significantly changethe prices for such components, or are unable to supply such components in a timely manner with bothquality and quantity guaranteed, or fall into difficulties in operation, or are unable to supply suchcomponents in a normal manner due to trade dispute between the relevant countries or any other reason,it may have an adverse effect on our production and operation.
2. Risks related to government grants
During the reporting period, we have received certain government grants pursuant to the applicablepolicies of the country. Along with the growth of our operating performance, though the effect ofgovernment grants on our current net profit decreases year by year, and our operating results do not relyon government grants, the decrease in our revenue from government grants may affect our profit.
3. Risk of unsustainability of rapid growth driven by the mode of cooperation
We adopt the business strategy of joint venture and cooperation, which combines the advantagesand resources of all partners. If our technical and product innovations slow down and cannot satisfy themarket demands, or our innovation capability decreases continuously as a result of which our products
are surpassed by our competitors, such cooperation may bring lower benefits, or become unable to driveour rapid growth or unable to continue.
4. Risk related to the management of cinema light source
In our light source service, we enter into an agreement with a customer, pursuant to which, wecharge a service fee on the customer based on the duration of use of the light source, while the customeruses the light source and pays fees therefor, and is responsible for the day-to-day safekeeping andmaintenance of the light source and damages thereto, but we do not collect any deposit or other similarfees for the light source. The cinemas will use their best endeavors to maintain the light source in goodcondition in order to ensure normal projection of films and continuity of their business operation.However, we still face the risk of impairment of assets due to damage or loss of light source caused byimproper safekeeping on the part of the cinemas.
5. Risk of impairment of inventories
Our inventories mainly comprise raw materials and goods in stock. At the end of the reportingperiod, the carrying amount of our inventories was RMB 418.8121 million, accounting for 12.98% ofour assets, where 33.91% of the inventories are finished goods on hand. If any significant change in thecompetition pattern of the industry, material innovation in laser display technology and products or theimpact of COVID-19 results in a large quantity of unsalable products, the recoverable amount of theinventories will be lower than their carrying amount. The impairment of inventories will have a negativeeffect on our earnings.
6. Risk of impairment of accounts receivable
Our products are generally delivered after receiving the payment therefor. We give certain creditperiod to some major customers. At the end of the reporting period, the carrying amount of our accountsreceivable was RMB 341.6608 million, accounting for 10.59% of our total assets. In case of any materialadverse change in the business condition of our customers, we may be unable to recover certain accountsreceivable, which may have an adverse effect on our operating performance in the future.
7. Management risks from rapid operating scale expansion
The increase of sales revenue and rapid growth of assets and number of employees put forwardchallenges for our management level, structure of corporate governance and effective implementation ofinternal controls. In the future, if our management fails to effectively overcome the difficulties inmanagement caused by continuous expansion of the scale of operation, or to effectively implementinternal controls, we may face management risks during rapid business development, such asout-of-control in management, loss of assets, brain drain, and decrease in operating performance.
8. Risk of IP litigation
IP protection and management includes protection of our proprietary and core technologies, andprevention of infringement on third-party IP. On the one hand, the process of patent application oftenlasts a long time and requires continuous and huge investment. If any proprietary IP in the process ofpatent application is infringed by any third party, it may have an adverse effect on our production andoperation. On the other hand, due to the increasingly fierce competition in the industry, many
manufacturers wish to gain competitive advantages through developing core laser phosphor displaytechnology. If we fail to effectively prevent infringement on our proprietary IP, or inadvertently infringeon any IP of others during the development of products, we may face IP litigations or disputes, whichmay have an adverse effect on our business development and financial condition.
9. Risk of business development on the overseas market
As the outbreak of Covid-19 has not been effectively put under control in the world, the stagnationof economic activities abroad will have certain effect on our export, the business development ofCinionic and GDC on the overseas market, and the efficient operation and marketing of our subsidiariesin Hong Kong and the United States, as a result of which our business development abroad may fallshort of expectations.(V) Industrial risk
√ Applicable□ N/A
Risk of increasingly fierce market competition
Laser display is a new and thriving field in the display device industry. A lot of international anddomestic companies have entered the field, further heating up the market competition. If we cannotmaintain our competitive advantages in technology, product, cost, service and other areas, or thecompetitors combine their advantages and resources through acquisition and merger, or the toptechnology companies in the world increase their investment in the field of laser display, we may facethe risks of decrease in the profitability and market share.(VI) Risk of macro-environment
√ Applicable□ N/A
By now, the pandemic in China has been alleviated. Given the successful development of thevaccine, the domestic economic condition will be further stabilized and improved. However, theprevention and control of the pandemic on the world remain grim, which increased the uncertainty in ourproduction and operation.(VII) Risk related to depository receipts
□ Applicable√ N/A
(VIII) Other significant risks
√ Applicable□ N/A
1. Risk of outflow of key technical personnel
The laser display industry is a technology intensive industry. Along with the rapid development ofthe laser display industry, the competition for high-end technical personnel has been increasingly fierce.If we cannot maintain the stability of the existing R&D staff, continuously train technical personnel, andattract outstanding talents in the world, we may be unable to maintain our technical advantages in theindustry, and the stability and sustainability of our business operation. The outflow of key technicalpersonnel may cause disclosure of know-how, slow-down of R&D process, weakening of competitiveadvantage and other risks, which may have an adverse effect on our ability to operate continuously.
2. Risk of loss on external investments
We attempt to expand the business operation through merger, acquisition or otherwise according tothe development situation of the industry to improve our overall competitiveness. If the environments orpolicies in respect of the industry in which the investee operates undergo any material change, or thetechnological level and market expansion of the investee falls short of our expectation, or the operatingperformance of the investee decreases sharply due to poor management, the profits on investment in theinvestee may fall short of expectation and we may need to recognize an impairment loss on thelong-term equity investment. If we fail to achieve a synergy effect through acquisition of the investee,our strategic plan may be unable to be implemented as scheduled.III. Main business activities during the reporting periodDuring the reporting period, our operating income was RMB 1.949 billion, substantially the sameas that of last year; the net profits attributable to the shareholders of the listed company was RMB 114million, down by 38.94% year on year; the total assets of the Company at the end of the reporting periodwas RMB 3.226 billion, up by 4.09% from the beginning of the reporting period; and the net assetsattributable to shareholders of the listed company was RMB 2.092 billion, up by 5.93% from thebeginning of the reporting period.(I) Analysis of main business
1. Analysis of changes in statement of income and statement of cash flows lines
In RMB
| Item | Current period | Corresponding period in prior year | Changes (%) |
| Operating income | 1,948,884,176.83 | 1,979,148,918.89 | -1.53 |
| Operating costs | 1,393,075,043.93 | 1,183,650,635.25 | 17.69 |
| Selling expenses | 133,588,234.60 | 151,760,111.00 | -11.97 |
| Administrative expenses | 135,757,276.26 | 152,626,530.61 | -11.05 |
| R&D expenses | 204,443,369.10 | 201,697,766.26 | 1.36 |
| Financial expenses | 9,224,974.20 | 29,491,223.42 | -68.72 |
| Net cash flow from operating activities | 52,390,430.42 | 243,000,903.71 | -78.44 |
| Net cash flows from investment activities | 205,906,256.46 | -772,857,910.07 | N/A |
| Net cash flows from financing activities | -99,126,552.86 | 884,616,830.77 | -111.21 |
2. Analysis of revenue and costs
√ Applicable□ N/A
During the reporting period, our operating income was RMB 1.949 billion, substantially the sameas that of last year. Except for the cinema business, all other business achieved stable growth.
(1). Main business by sector, product and region
In RMB 0’000
| Main business by sector | ||||||
| Sector | Operating income | Operating costs | Gross margin | Change in operating | Change in operating | Change in gross |
| (%) | income (%) | cost (%) | margin (%) | |||
| Laser display | 194,888.42 | 139,307.50 | 28.52 | -1.53 | 17.69 | -11.67 percentage points |
| Main business by product | ||||||
| Product | Operating income | Operating costs | Gross margin (%) | Change in operating income (%) | Change in operating cost (%) | Change in gross margin (%) |
| 1. Sales | 174,412.32 | 128,143.44 | 26.53 | 12.27 | 24.96 | -7.46 percentage points |
| (1) Laser optical engine | 20,270.75 | 8,152.95 | 59.78 | -38.44 | -21.79 | -8.56 percentage points |
| (2) Complete laser projector | 146,519.56 | 115,178.71 | 21.39 | 31.39 | 35.85 | -2.58 percentage points |
| Laser cinema projector | 2,969.46 | 1,536.48 | 48.26 | -51.57 | -40.26 | -9.80 percentage points |
| Laser TV | 54,742.37 | 39,860.14 | 27.19 | 35.97 | 35.01 | +0.52 percentage points |
| Laser business education projector | 26,867.45 | 19,271.26 | 28.27 | -10.85 | -14.83 | +3.35 percentage points |
| Laser large venue projector | 10,172.23 | 4,875.04 | 52.08 | 12.50 | 3.22 | +4.31 percentage points |
| Smart mini projector | 51,768.06 | 49,635.79 | 4.12 | 99.54 | 95.87 | +1.80 percentage points |
| (3) Other products | 7,622.01 | 4,811.78 | 36.87 | -30.08 | -34.38 | +4.14 percentage points |
| 2. Lease service | 17,173.26 | 10,775.31 | 37.26 | -56.85 | -20.34 | -28.76 percentage points |
| 3. Other business | 3,302.83 | 388.75 | 88.23 | 19.17 | -83.06 | +71.01 percentage points |
| Total | 194,888.42 | 139,307.50 | 28.52 | -1.53 | 17.69 | -11.67 percentage points |
| Main business by region | ||||||
| Region | Operating income | Operating costs | Gross margin (%) | Change in operating income (%) | Change in operating cost (%) | Change in gross margin (%) |
| Domestic | 185,561.99 | 135,605.70 | 26.92 | 4.23 | 21.88 | -10.59 percentage points |
| Overseas | 9,326.43 | 3,701.80 | 60.31 | -53.07 | -47.89 | -3.95 percentage points |
| Total | 194,888.42 | 139,307.50 | 28.52 | -1.53 | 17.69 | -11.67 percentage points |
Explanation about main business by sector, product and region
1. Our laser display products have been applied in cinema projection, home entertainment,education interaction, commercial applications, outdoor exhibition and other fields. Under the impact ofCOVID-19, the cinema service business decreased by 56.85% year on year. However, due to the strongconsumer demands on the domestic market and driven by the sales of household To C products, ouroperating income in 2020 substantially the same as that of the last year.
2. Our overall gross margin rate was 28.52% in 2020, a decrease of 11.67 percentage pointscompared with 2019. The decrease was primarily caused by the change in the product portfolio - To Cproducts with lower gross margin rates increased greatly in terms of both incomes and proportion;meanwhile, under the impact of COVID-19, there was no income from the cinema service businessdespite the high fixed costs such as depreciation, reducing the gross margin rate by 28.76 percentagepoint.
3. Other business mainly covers the patent license fees received in this year.
4. Our business was mostly operated in China, with the incomes from China and outside Chinaaccounting for 95.21% and 4.79%, respectively. For the overseas business, the sales of laser opticalengine products decreased year on year under the impact of COVID-19.
(2). Analysis of output and sales volume
√ Applicable□ N/A
| Main products | Unit | Output | Sales volume | Stock | Change in output (%) | Change in sales volume (%) | Change in stock (%) |
| Optical engine and complete equipment | Set | 354,890.00 | 360,152.00 | 26,861.00 | 41.16 | 52.42 | -16.38 |
Explanation about output and sales volume
We supplied part of laser light source produced under operating leases, which was not included inthe sales volume and stock, and used part of laser TV light generators produced to manufacture laser TVproducts, which were not included in the production and sales volume.
(3). Analysis of costs
In RMB 0’000
| Costs by sector | |||||||
| Sector | Components of cost | Amount for the current period | Ratio in total costs for the current period (%) | Amount for the prior period | Ratio in total costs for the prior period | Change in amount (%) | Situation Description |
| (%) | |||||||
| Laser display | Operating costs | 139,307.50 | 100 | 118,365.06 | 100 | 17.69 | |
| Costs by product | |||||||
| Product | Components of cost | Amount for the current period | Ratio in total costs for the current period (%) | Amount for the prior period | Ratio in total costs for the prior period (%) | Change in amount (%) | Situation Description |
| 1. Sales | Direct materials | 114,782.91 | 89.57 | 89,655.34 | 87.43 | 28.03 | |
| Direct labor | 3,144.71 | 2.45 | 2,673.66 | 2.61 | 17.62 | ||
| Manufacturing expenses | 10,215.82 | 7.98 | 10,215.69 | 9.96 | 0.00 | ||
| Subtotal | 128,143.44 | 100 | 102,544.69 | 100 | 24.96 | ||
| 2. Lease service | Depreciation of light source | 7,484.65 | 69.46 | 6,759.98 | 49.98 | 10.72 | |
| Software license fee | 844.05 | 7.83 | 2,399.51 | 17.74 | -64.82 | ||
| Technical service fee | 2,070.54 | 19.22 | 3,917.01 | 28.96 | -47.14 | ||
| Labor cost | 376.07 | 3.49 | 449.53 | 3.32 | -16.34 | ||
| Subtotal | 10,775.31 | 100 | 13,526.03 | 100 | -20.34 | ||
| 3. Other business | 388.75 | 100 | 2,294.34 | 100 | -83.06 | ||
| Total | 139,307.50 | 100 | 118,365.06 | 100 | 17.69 | ||
Explanation about cost analysis
1. Sales costs mainly comprise direct materials, direct labor and manufacturing expenses, of which,the costs of direct materials account for 89.57%. Compared with the prior period, the proportion ofmanufacturing expenses decreased while the proportion of direct materials increased mainly due to thechange in the product portfolio for the sales business.
2. The lease service business was hit by COVID-19. In 2020, cinema operating hours decreasedcompared with the prior year, leading to corresponding decrease in variable cost items such as technicalservice fees and software license fees.
(4). Main customers and main suppliers
A. The Company's major customers of the sales
The sales to top 5 customers were RMB 1,088.2434 million, representing 55.84% of the totalannual sales, of which the sales to related parties were RMB 778.7607 million, representing 39.96% ofthe total annual sales.Top 5 customers
√ Applicable□ N/A
In RMB 0’000
| No. | Customer | Sales | of total annual sales (%) |
| 1 | Customer 1 | 65,054.20 | 33.38 |
| 2 | Customer 2 | 14,340.69 | 7.36 |
| 3 | Customer 3 | 11,189.20 | 5.74 |
| 4 | Customer 4 | 9,251.20 | 4.75 |
| 5 | Customer 5 | 8,989.05 | 4.61 |
| Total | / | 108,824.34 | 55.84 |
Description of the change in the constitution of top 5 customersCustomer 2 and customer 3 were newly counted in the top 5 customers.
B. Information on major suppliers of the CompanyThe purchases from top 5 suppliers were RMB 653.4916 million, representing 38.97% of the totalannual purchase cost, of which the purchases from related parties were RMB 205.8851 million,representing 12.28% of the total annual purchase cost.Top 5 suppliers
√ Applicable□ N/A
In RMB 0’000
| No. | Supplier | Procurement cost | of total annual purchase cost (%) |
| 1 | Supplier 1 | 20,588.51 | 12.28 |
| 2 | Supplier 2 | 13,943.93 | 8.31 |
| 3 | Supplier 3 | 13,191.79 | 7.87 |
| 4 | Supplier 4 | 12,164.36 | 7.25 |
| 5 | Supplier 5 | 5,460.57 | 3.26 |
| Total | / | 65,349.16 | 38.97 |
Description of the change in the constitution of top 5 suppliersSupplier 4 and supplier 5 were newly counted in the top 5 suppliers.
3. Expenses
√ Applicable□ N/A
Unit: In RMB
| Item | Current period | Corresponding period in prior year | Change (%) |
| Selling expenses | 133,588,234.60 | 151,760,111.00 | -11.97 |
| Administrative expenses | 135,757,276.26 | 152,626,530.61 | -11.05 |
| R&D expenses | 204,443,369.10 | 201,697,766.26 | 1.36 |
| Financial expenses | 9,224,974.20 | 29,491,223.42 | -68.72 |
(1) The total selling expenses were RMB 133.5882 million in 2020, decreased by 11.97% year onyear because the advertising and business promotion expenses, travel expenses, and businessentertainment expenses decreased due to the pandemic, and the after-sale repair expenses provided forproduct warranty decreased year on year;
(2) The total administrative expenses were RMB 135.7573 million in 2020, decreased by 11.05%year on year, in which rent expenses and travel expenses decreased greatly due to the pandemic, theamortization of land use rights meeting the capitalization criteria was recognized as construction inprogress, the amortization of expenses decreased year on year, and the share-based payment expensesincreased in 2020 because such expenses were recognized from October 2019.
(3) The total R&D expenses were RMB 204.4434 million in 2020, increased by 1.36% year on year,primarily due to the increase in the depreciation and amortization of the equipment and software in usefor R&D;
(4) The total financial expenses were RMB 9.2250 million in 2020, decreased by 68.72% year onyear, primarily because the decrease in loans and capital costs led to the reduction in interest expensesby 39.41% while the interests on deposits increased.
4. Cash flow
√ Applicable□ N/A
Unit: In RMB
| Item | Current period | Corresponding period in prior year | Change (%) |
| Net cash flow from operating activities | 52,390,430.42 | 243,000,903.71 | -78.44 |
| Net cash flows from investment activities | 205,906,256.46 | -772,857,910.07 | N/A |
| Net cash flows from financing activities | -99,126,552.86 | 884,616,830.77 | -111.21 |
Description of reasons for changes in the net cash flows from operating activities: the net cash flowfrom operating activities was RMB 52.3904 million, decreased by RMB 190.6105 million comparedwith last year. This was primarily due to the reduction in revenues from the cinema service businessunder the impact of COVID-19, and the increase in payments for procurement of risk-based stocks.
Description of reasons for changes in the net cash flows from investment activities: the net cashflow from investing activities was RMB 205.9063 million, increased by RMB 978.7642 millioncompared with last year, primarily because the structural deposits purchased became mature and wererecovered in the current period.
Description of reasons for changes in the net cash flow from financing activities: the net cash flowfrom financing activities activities was RMB -99.1266 million, decreased by RMB 983.7434 millioncompared with last year, primarily due to the proceeds from the IPO of the Company on the STARMarket in the previous reporting period.(II) Explanation about material change in profit due to non-main business
□ Applicable√ N/A
(III) Analysis of assets and liabilities
√ Applicable□ N/A
1. Status of assets and liabilities
In RMB
| Item | Balance at the end of the period | Proportion of total assets at the end of the period (%) | Balance as at December 31, 2019 | Proportion of total assets as at December 31, 2019 (%) | Change in amount (%) | Explanation |
| Item | Balance at the end of the period | Proportion of total assets at the end of the period (%) | Balance as at December 31, 2019 | Proportion of total assets as at December 31, 2019 (%) | Change in amount (%) | Explanation |
| Held-for-trading financial assets | 114,000,000.00 | 3.53 | 540,000,000.00 | 17.42 | -78.89 | Primarily due to the wealth management products purchased with idle funds |
| Accounts receivable | 341,660,832.43 | 10.59 | 176,035,155.24 | 5.68 | 94.09 | Primarily due to the impact of the relocation and changes in business and tax registration of Formoive, which resulted in the great increase in the closing balance |
| Receivables financing | 11,959,000.00 | 0.37 | 1,980,500.00 | 0.06 | 503.84 | Primarily due to the increase in bank's acceptance bills received during this period |
| Prepayments | 47,447,601.43 | 1.47 | 35,070,999.13 | 1.13 | 35.29 | Primarily due to the increase in advance payments for goods during the reporting period |
| Other receivables | 12,534,062.15 | 0.39 | 9,618,750.08 | 0.31 | 30.31 | Primarily due to the increase in compensation receivable in connection with patent litigations during the reporting period |
| Inventories | 418,812,140.80 | 12.98 | 299,966,170.35 | 9.68 | 39.62 | Primarily due to the increase in the risk stock and the increase in the inventories prepared for the growing household business |
| Contract assets | 3,744,655.50 | 0.12 | - | - | N/A | Primarily due to the implementation of the new revenue standard |
| Other | 13,002,195.46 | 0.40 | 44,405,513.30 | 1.43 | -70.72 | Primarily due to |
| Item | Balance at the end of the period | Proportion of total assets at the end of the period (%) | Balance as at December 31, 2019 | Proportion of total assets as at December 31, 2019 (%) | Change in amount (%) | Explanation |
| current assets | the decrease in the reclassified input VAT to be deducted | |||||
| Long-term accounts receivable | 13,196,087.78 | 0.41 | - | - | N/A | Primarily due to the increase in patent license fees by installment during the reporting period |
| Long-term equity investment | 262,744,772.48 | 8.14 | 139,534,371.94 | 4.50 | 88.30 | Primarily due to the investment in GDC |
| Construction in progress | 51,576,850.72 | 1.60 | 20,132,004.07 | 0.65 | 156.19 | Primarily due to the increase in the investment for the construction in progress of the headquarters building during the reporting period |
| Long-term prepaid expenses | 11,572,346.79 | 0.36 | 16,908,070.34 | 0.55 | -31.56 | Primarily due to the amortization of long-term prepaid expenses during the reporting period |
| Other non-current assets | 6,299,781.06 | 0.20 | 11,420,185.94 | 0.37 | -44.84 | Primarily due to the settlement of some advanced payments for fixed assets from the prior period |
| Notes payable | 116,822,674.67 | 3.62 | 37,335,841.79 | 1.20 | 212.90 | Primarily due to the increase in settlement by bank's acceptance bills during the reporting period |
| Contract liabilities | 31,518,312.59 | 0.98 | - | - | N/A | Primarily due to the reclassification of receipts in advance to contract liabilities under the implementation of the new revenue |
| Item | Balance at the end of the period | Proportion of total assets at the end of the period (%) | Balance as at December 31, 2019 | Proportion of total assets as at December 31, 2019 (%) | Change in amount (%) | Explanation |
| standard | ||||||
| Taxes payable | 19,871,846.94 | 0.62 | 42,924,647.79 | 1.38 | -53.71 | Primarily due to the decreased payment of enterprise income tax for the prior period and the decline in taxes in the current period |
| Other payables | 59,848,053.83 | 1.86 | 14,364,076.43 | 0.46 | 316.65 | Primarily due to the funds borrowed by the subsidiary CINEAPPO from a minority shareholder and the increase in the share transfer amount pending payment |
| Non-current liabilities due within one year | 181,417,412.46 | 5.62 | 64,968,795.02 | 2.10 | 179.24 | Primarily due to the increase in the long-term borrowings due within one year |
| Other current liabilities | 3,045,831.07 | 0.09 | - | - | N/A | Primarily due to the increase in the output taxes corresponding to contract liabilities under the implementation of the new revenue standard |
| Long-term borrowings | 64,845,281.53 | 2.01 | 279,615,107.27 | 9.02 | -76.81 | Primarily due to the reclassification of long-term borrowings to non-current liabilities due within one year |
Other informationNone
2. Encumbrances on assets as of the end of the reporting period
√ Applicable□ N/A
| In RMB | ||
| Item | Amount | Reason |
| Other monetary funds | 14,057,949.58 | Margins |
| Bank deposits | 40,000,000.00 | Term deposits |
| Land use rights | 303,077,499.90 | Loan mortgage |
3. Other issues
□ Applicable√ N/A
(IV) Analysis of operation information of the industry
□ Applicable√ N/A
(V) Analysis of investments
1. Overall analysis of external equity investments
√ Applicable□ N/A
At the end of the reporting period, the balance of long-term equity investments was RMB262,744,772.48. During the reporting period, the Company acquired 36% equity interests in GDCTechnology Limited (British Virgin Islands) at about USD 18.11 million. The transaction has beencompleted by the end of the reporting period.
(1) Material equity investments
√ Applicable□ N/A
In the 20
thsession of the First Board of Directors held on December 6, 2019, the Proposal onProposed Additional Capital Contribution to the Wholly-owned Subsidiary and Foreign Investments inGDC was discussed and approved, according to which it was agreed to make additional capitalcontribution of USD 18.2 million to the Company’s wholly-owned subsidiary APPOTRONICS HONGKONG LIMITED for acquisition of 36% shares of GDC Technology Limited (British Virgin Islands).Please refer to the Announcement No. 2019-029 issued by the Company on www.sse.com.cn and thedesignated media for information disclosure on December 7, 2019.
In March 2020, the Company completed the approval and filing procedures for overseasinvestments by National Development and Reform Commission and Ministry of Commerce. Aftermeeting the precedent closing conditions of this acquisition, on April 9, 2020, the Company paid thetotal consideration of approximately USD 18.11 million by its own funds. During the reporting period,the Company holds 36% equity interests in GDC BVI, namely, 93,071,822 ordinary shares of GDC BVI.
According to the Share Transfer Agreement, GDC BVI made the the following performancecovenants: the audited net profit after deduction of non-recurring profit or loss in 2020 shall be no lessthan USD 9.35 million; if it fails to achieve the performance objective above, GDC Cayman, theshareholder of GDC BVI, shall make compensation within 15 working days from the submission date ofGDC BVI’s annual auditor’s report within the limit of USD 5.60 million or 46,535,911 ordinary sharesof GDC BVI.
According to the 2020 auditor’s report of GDC BVI issued by Deloitte, GDC BVI achieved the netprofit of USD 926,800 in 2020, and failed to achieve the performance covenant for the year 2020, hencetriggering the performance compensation provisions.
By now, we have officially required GDC Cayman to make performance compensation inaccordance with the provisions. As of the disclosure date of this report, we have reached no consensuswith GDC Cayman on this matter.
(2) Material non-equity investments
□ Applicable√ N/A
(3) Financial assets at fair value
√ Applicable□ N/A
As of December 31, 2020, the balance of held-for-trading financial assets was RMB114,000,000.00, which was structured deposits.
The balance of investment in other equity instruments was RMB 11,975,419.38, which wasinvestment in two investee companies with zero change in the fair value during the reporting period.(VI) Sales of significant assets and equity interests
□ Applicable√ N/A
(VII) Analysis of significant controlled and investee companies
√ Applicable□ N/A
In RMB 0’000
| Company | Main business | Registered capital | Shareholding percentage | Total assets | Net assets | Operating income | Net profit |
| CINEAPPO | Provision of cinema laser light source lease service and sales of projectors | 10,000.00 | 63.20% | 93,130.04 | 37,858.00 | 28,869.92 | 335.81 |
| Formoive | R&D and sale of household display products | 5,000.00 | 55% | 61,940.36 | -7,804.64 | 100,677.01 | -4,974.48 |
| Appotronics HK | R&D and sale of laser light source | 16,357.75 | 100% | 37,604.45 | 32,377.48 | 7,925.27 | -2,550.72 |
The operating income and net profit of CINEAPPO decreased by 51.32% and 97.68% year on year,respectively, primarily because under the impact of COVID-19, there was no income from the cinemaservice business despite the high fixed costs such as depreciation.
The operating income of Formoive increased by 43.71% year on year, primarily due to the highdemands on the household market and the rapid growth in the sales of To C products.
The operating income and net profit of Appotronics HK decreased by 58.16% and 178.09% year onyear, respectively, primarily because the overseas sales of laser light source products decreased underthe impact of COVID-19.(VIII) Structured entities under control of the Company
□ Applicable√ N/A
IV. Discussion and analysis of future development of the Company(I) Structure and trend of the industry
√ Applicable□ N/A
(1) Main market spaces
1. A promising prospect for the household market
In the household field, the application scenarios for home drawing room are of great value, andhave remarkable advantages in large-screen content and human-machine interaction. At present, thereare more and more ultra high definition TV programs; some films have their premiere on line; someonline TV plays and entertainment programs are exclusively broadcast on streaming media, and there’srich content available. According to AVC, the sales volume of laser TV will exceed 1 million sets on theChinese market, so the outlook for the market is promising.Smart projector is becoming a new information access terminal. Through this “entertainmentcenter”, users can search all kinds of network resources, hold remote meetings, watch online videos andcarry out other operations. At present, young consumers are the main users of smart projectors. Themarket is still at the blue sea growth period and has great potentials.
2. Further expansion space for the cinema industry
We will continue to promote the penetration of laser projection to further improve the marketshares of laser projection. With respect to the overseas market, considering the 130,000 existing markets,we will promote the new mode of Cinema as a Service (CaaS) through CINIONIC to provide customerswith a comprehensive digital projection solution, hence effectively reducing the pressure on cash flowscaused by the pandemic and improving the profitability of cinemas. This helps to achieve rapiddevelopment after the pandemic. Furthermore, besides the growth space on the urban cinema market, thedigital cinema projector C5 we released is also suitable for non-urban cinemas, such as new applicationscenarios including household cinemas and community cinemas.
(2) Development trend of the industry
The laser display industry is developing along the trend of using laser, being smart, beingcontent-oriented, and being solution-based:
1. As an emerging technology, laser display technology is upgrading and substituting the traditionalprojection industry on cinema, large venue, education, business and other markets. Laser light source hasbecome increasingly popular. All projector manufacturers have entered the era of laser.
2. The smart products have become more and more practical, and now can provide rapid datatransmission; the Internet of Things realized via wireless connection and smart hi-fi system provideperfect audio & video experience. In addition, such products are embedded with app stores. The smartproducts also provide video conference systems, online education and other functions, so they havegradually become popular consumer electronic products.
3. The software and hardware integration and cross boundary have become the trend. Simpleproduct functions cannot satisfy the demands of consumers, and must provide content support. Achannel from the content side to the technology side will provide core competitiveness for a company.
4. The industrial solutions have been well accepted. As experience economy has become popular inthe world, the outlook for the high-quality image solutions is promising.(II) Development strategy of the Company
√ Applicable□ N/A
For the future, Appotronics is committed to becoming a promoter of the display industry, and underour mission of “New light, New life”, with our persistence on the orientation of customer demands andpersistence on dual-drivers of “technology + market”, we will make use of disruptive technicalinnovations to create new consumption demands and a new growth curve, hence creating value for usersand promoting in-depth industrialization of laser display technologies.
We will intensify efforts on the household market and the layout of the overseas business with afocus on providing users with products and services capable of creating long-term value, and based onthe innovation of core technologies and IP operation, build an open operating platform for thedevelopment of the core device business to scale up and strengthen the ecology of the laser displayindustry.(III) Business plan
√ Applicable□ N/A
With the adjustment and preparation made in 2020, the year 2021 is a key year for the Company toachieve leapfrog development in the next three years. As a result, an essential task of the Company for2021 is to take the opportunity of the economy recovery of the world and work along the developmenttrend of the industry, hence achieving rapid growth in all businesses.
We will focus on the following aspects:
1. Continue to increase the R&D investments in core devices to enhance our leading advantages intechnology, to establish leading advantages in products centering on customers, and to create a newproduct field to become a leading supplier of core devices in the laser display industry; insist on patentlayout and IP operation to further explore and realize the value of patents, hence establishing andgradually improving the ecology of the laser display industry.
2. Intensify efforts on the household market by developing and releasing new products, acceleratingproduct upgrade and iteration, and improving product and service experience; take the opportunity onthe emerging market to create a new product field, and release new product models, including laser TVs,smart mini projectors, and anti-ambient light screens, in consideration of layered consumption to covermore consumers.
3. Improve and enhance our competitive advantages in the field of cinema services, intensifycooperation with partners, make full use of the synergy effects between domestic and foreign cinemamarkets and the technology team to release more cost-effective cinema light source products whileactively exploring community cinema and household cinema markets to accelerate the trend of laserprojection.
4. Steadily promote the layout of the overseas business. By now, our products have penetrated intomany countries and regions in Europe, North America, and Southeast Asia. We plan to further enhance
the efforts of channel building and marketing for overseas markets to take the opportunity of rapiddevelopment on overseas markets.
5. Continue to build an agile and efficient supply chain system in response to the risks of tensionsupply of upstream raw materials, hence guaranteeing product delivery and optimizing the stockstructure.(IV) Other information
□ Applicable√ N/A
V. Information not disclosed according to the standard due to inapplicability of the standard,
involving State secrets or trade secrets or other reasons, and explanation about the relevant
reasons
□ Applicable√ N/A
Section V Significant MattersI. Proposals for profit distribution on ordinary shares and capitalization of the capital reserve(I) Establishment, implementation or adjustment of the cash dividend policy
√ Applicable□ N/A
1. Cash dividend policy
Pursuant to our Articles of Association and the Statement of Appotronics Corporation LimitedRegarding the Initial Public Offering of RMB-denominated Ordinary Shares (A-shares) and the Plan forDistribution of Dividends to Shareholders within Three Years Following the Listing on the STARMarket, we will focus on long-term and sustainable development, and establish a clear profit distributionpolicy taking into consideration our strategic development plan, actual business situation, developmentobjectives, future profitability, status of cash flows, shareholder return, cost of social capital, externalfinancing environment and other relevant factors, and the balance between the reasonable returns oninvestment for shareholders and our sustainable development, to ensure the consistency and stability ofthe profit distribution policy and ensure that we are able to operate continuously and healthily in the longrun.
Subject to the satisfaction of the conditions for distributing cash dividends, we will distribute notless than 10% of the distributable profit made in each year in cash.
The Board of Directors will adopt the following differential cash dividend policy according to theprocedures set forth in our Articles of Association, giving comprehensive consideration to thecharacteristics of the industry in which we operate, our development stage, business model and earnings,material capital expenditure arrangements and other relevant factors:
(1) If the Company is at the mature stage and does not have any material capital expenditurearrangement, at least 80% of the distributable profit will be distributed in cash;
(2) If the Company is at the mature stage and has certain material capital expenditure arrangements,at least 40% of the distributable profit will be distributed in cash;
(3) If we are at the growth stage and have certain material capital expenditure arrangements, at least20% of the distributable profit will be distributed in cash.
If it is hard to determine the development stage but there are certain material capital expenditurearrangements, the policy set forth above may apply.We will formulate or adjust the shareholder returns plan subject to the profit distribution policy setforth above, according to our actual situations and the opinions of the shareholders (in particular, theminority shareholders) and the independent directors.
2. Preliminary plan on profit distribution for 2020
According to our consolidated financial statements 2019 as audited by Pan-China Certified PublicAccountants (Special General Partnership), Appotronics Corporation Limited (hereinafter referred to asthe “Company”) realized the net profit of RMB 86,657,198.57 in the consolidated financial statementsfor 2020, including the net profit attributable to the shareholders of the listed company of RMB113,847,873.06, and the distributable profit of the parent company is RMB 289,684,566.58.
In accordance with the provision of the Notice of China Securities Regulatory Commission onFurther Implementing Cash Dividend Distribution by Listed Companies, the Guidelines of ShanghaiStock Exchange on Cash Dividend Distribution by Listed Companies, Regulatory Guidelines for ListedCompanies No. 3 - Cash Dividend Distribution by Listed Companies, and the Articles of Association, inconsideration of the current overall operation and development stage, the Company proposes todistribute the cash dividend of RMB 0.55 (tax inclusive) per 10 shares to all shareholder. As ofDecember 31, 2020, the Company has a total of 452,756,901 shares, leading to the total cash dividend ofRMB 24,901,629.56 (tax inclusive). The cash dividends proposed by the Company for this year accountfor 21.87% of the net profits attributable to the shareholders of the listed company in the currentconsolidated financial statements of the Company. No capitalization of the capital reserve or bonusshares will be made or distributed in the profit distribution.
If, prior to the record date of interest distribution, changes are caused to the total shares of theCompany due to conversion of convertible bonds/repurchase of shares/granting of share incentives/sharerepurchase and cancellation/share repurchase and cancellation for material assets restructuring, theCompany intends to maintain the total distribution amount unchanged, and correspondingly adjust thedistribution ratio per share. In the event of changes in the total shares, an announcement will beseparately released to disclose the specific adjustment.
Reasons for distribution of cash dividends lower than 30% of the distributable profit: Being in thegrowth stage, the Company needs a large amount of funds. We plan to use the retained profit to satisfythe working capital requirements in our R&D and marketing activities and day-to-day management, andsupport the implementation of our medium-to-long term development strategy and continuous andhealthy development.
The profit distribution proposal for the year of 2020 has been approved at the 31
st
meeting of thefirst Board of Directors and the 18
th
meeting of the first Board of Supervisors of the Company. Theindependent directors of the Company have reviewed the preliminary plan on profit distribution,expressed their independent opinions on and given explicit consent to the proposal. The preliminary plan
for profit distribution is still subject to approval at the annual general meeting of shareholders of theCompany.
3. Implementation of the policy on cash dividend distribution
During the reporting period, we have strictly complied with the dividend principles and policies.Our dividend distribution criteria and ratio are clear, and the relevant decision-making procedures andmechanism comply with the applicable regulations. Our independent directors have duly performed theirduties in the review of the preliminary plan on profit distribution by the Board of Directors, to ensurethat the legitimate rights and interests of the minority shareholders are fully protected.
(II) Proposals for profit distribution on ordinary shares and capitalization of the capital reserve in
the past three years (including the reporting period)
In RMB
| Distribution year | Number of bonus shares distributed per 10 shares | Cash dividends distributed per 10 shares (inclusive of tax) | Number of shares distributed out of the capital reserve | Amount of cash dividends (Tax inclusive) | Net profit attributable to the shareholders of ordinary shares of the listed company reported in the consolidated financial statements for the year | Proportion of the net profit attributable to the shareholders of ordinary shares of the listed company reported in the consolidated financial statements (%) |
| 2020 | 0 | 0.55 | 0 | 24,901,629.56 | 113,847,873.06 | 21.87 |
| 2019 | 0 | 0.75 | 0 | 33,866,580.83 | 186,457,276.71 | 18.16 |
| 2018 | 0 | 0 | 0 | 0 | 176,971,092.49 | 0 |
(III) Repurchase of shares by cash included in cash dividends
□ Applicable√ N/A
(IV) If the Company made a profit in the reporting period and there’s profit distributable by the
parent company to the shareholders of its ordinary shares, but the Company does not propose
to distribute profits on ordinary shares in cash, the Company shall explain the reason in detail
and use of the undistributed profit.
□ Applicable√ N/A
II. Fulfillment of covenants(I) Covenants made by the actual controller, shareholders, affiliates and acquirer of the Company, the Company itself and other related parties during
the reporting period or the outstanding covenants made by them in the prior periods
√ Applicable□ N/A
| Background of covenant | Covenant Type | Covenantor | Covenant Content | Validity period of covenant | Whether there’s a time limit for the fulfillment of the covenant | Whether the covenant has been strictly fulfilled on time | Reason for failure to fulfill the covenant on time (if applicable) | Action plan if failing to fulfill the covenant on time |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the controlling shareholder regarding restriction on the sale of shares held by him, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 36 months after completion of the IPO and the extended period stated below | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the actual controller regarding restriction on the sale of shares held by him, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of | Refer to IPO Prospectus | 36 months after completion of the IPO and the extended period stated below, and 6 months after termination of employment | Yes | Yes | N/A | N/A |
| shares and other issues | with the Company | |||||||
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the concert parties of the actual controller regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 36 months after completion of the IPO and the extended period stated below | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the directors regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 12 months after completion of the IPO and the extended period stated below | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the supervisors regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and | Refer to IPO Prospectus | 12 months after completion of the IPO | Yes | Yes | N/A | N/A |
| dispose of shares and other issues | ||||||||
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by HU Fei, as a senior officer and member of key technical staff, regarding restriction on the sale of shares held by him, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 12 months after completion of the IPO and the extended period stated below, and 6 months after termination of employment with the Company | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the senior officers BO Lianming, WU Bin, LI Lu, ZHAO Ruijin and XIAO Yangjian regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 12 months after completion of the IPO and the extended period stated below | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the key technical staff YU Xin, WU Xiliang, WANG Lin and | Refer to IPO Prospectus | 12 months after completion of the IPO and | Yes | Yes | N/A | N/A |
| GUO Zuqiang regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | listing of stock and the extended period stated below | |||||||
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the holders of more than 5% shares regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 12 months after completion of the IPO and listing of stock | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by the other shareholders regarding restriction on the sale of shares held by them, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | 12 months after completion of the IPO and listing of stock | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Restriction on the sale of shares | Covenant by senior officers and core employees participating in strategic allotment regarding restriction on the sale of shares held by him, voluntary lock-up of such shares, extension of lock-up period, intention to hold and dispose of shares and other issues | Refer to IPO Prospectus | At least 12 months after completion of the IPO and listing of stock | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Issuer’s plan for stabilizing the Company’s stock price and covenant regarding share repurchase measures within three years after the listing | Refer to IPO Prospectus | 36 months after completion of the IPO and listing of stock | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Controlling shareholder and the actual controller’s plan for stabilizing the Company’s stock price and covenant regarding share repurchase measures within three years after the listing | Refer to IPO Prospectus | 36 months after completion of the IPO and listing of stock | Yes | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Directors and senior officers’ plan for | Refer to IPO Prospectus | 36 months after | Yes | Yes | N/A | N/A |
| stabilizing the Company’s stock price and covenant regarding share repurchase measures within three years after the listing | completion of the IPO and listing of stock | |||||||
| Covenant relating to IPO | Others | Issuer’s covenant regarding measures against fraud in IPO | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Controlling shareholder, actual controller and their concert parties’ covenant regarding measures against fraud in IPO | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Directors, supervisors and senior officers’ covenant regarding measures against fraud in IPO | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Issuer’s covenant regarding remedial measures for diluted earnings in the current period | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Controlling shareholder, actual controller and their concert parties’ covenant regarding remedial measures for diluted earnings | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| in the current period | ||||||||
| Covenant relating to IPO | Others | Directors, supervisors and senior officers’ covenant regarding remedial measures for diluted earnings in the current period | Refer to IPO Prospectus | Term of office | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Issuer’s covenant regarding profit distribution policy | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Issuer’s covenant regarding restraint measures and liability for compensation in the event of failure to fulfill its covenants | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Controlling shareholder, actual controller and their concert parties’ covenant regarding restraint measures and liability for compensation in the event of failure to fulfill their covenants | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Others | Directors, supervisors and senior officers’ covenant regarding restraint measures and liability for compensation in the | Refer to IPO Prospectus | Term of office | No | Yes | N/A | N/A |
| event of failure to fulfill their covenants | ||||||||
| Covenant relating to IPO | Resolve horizontal competition issues | Controlling shareholder’s covenant on avoiding horizontal competition and regulating and reducing related-party transactions | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant relating to IPO | Resolve related-party transaction issues | Actual controller’s covenant on avoiding horizontal competition and regulating and reducing related-party transactions | Refer to IPO Prospectus | Permanent | No | Yes | N/A | N/A |
| Covenant related to share incentives | Others | Covenant by the grantee of share incentives regarding information disclosure documents | Refer to the 2019 Restricted Share Incentive Plan (Draft) of the Company | Permanent | No | Yes | N/A | N/A |
| Others | Company’s covenant on refraining from providing financial assistance | Refer to the 2019 Restricted Share Incentive Plan (Draft) of the Company | Permanent | No | Yes | N/A | N/A |
(II) If the Company has made any profit forecast on its assets or project and the reporting
period falls within the period of such profit forecast, explanation about whether the goal hasbeen achieved and the relevant reasons
□ Reached√ Not reached□ N/A
According to the Share Transfer Agreement, GDC made the the following performance covenants:
The net profit after deduction of non-recurring profit or loss shall be no less than USD 9.35 million in2020. According to the 2020 auditor’s report of GDC issued by Deloitte, GDC achieved the net profit ofUSD 0.9268 million in 2020, and failed to achieve the performance covenant for the year 2020.
(III) Fulfillment of performance covenant and the relevant effect on goodwill impairment test
√ Applicable□ N/A
According to the 2020 auditor’s report of GDC issued by Deloitte, GDC achieved the net profit ofUSD 0.9268 million in 2020, and failed to achieve the performance covenant for the year 2020.
The Company holds 36% equity interests in GDC, which were recognized as long-term equityinvestments. At the beginning of 2021, the Company made impairment test on the long-term equityinvestment in the GDC asset group. According to the Assets Evaluation Report issued by ShenzhenPengxin Assets Land and Real Estate Appraisal Co., Ltd. (Peng Xin Zi Ping Bao [2021] No. S064), theevaluation of the 36% equity interests held by the Company in GDC was USD 21.06 million. Therefore,the Company made no provision for impairment with respect to the long-term equity investment in theGDC asset group.
III. Occupation of funds during the reporting period and return of such funds
□ Applicable√ N/A
IV. Explanation about the “Modified Audit Opinion” issued by the accounting firm
□ Applicable√ N/A
V. Explanation about the reasons and effect of changes in accounting policies and accounting
estimates and correction of material accounting errors(I) Analysis of the reasons of changes in accounting policies and accounting estimates and the
relevant effect
√ Applicable□ N/A
Refer to “Section XI. Financial Report - V. Significant accounting policies and accountingestimates - 44 Changes in significant accounting policies and accounting estimates”.
(II) Explanation about the reasons and effect of correction of material accounting errors
□ Applicable√ N/A
(III) Communication with the former accounting firm
□ Applicable√ N/A
(IV) Other information
□ Applicable√ N/A
VI. Appointment and termination of appointment of accounting firm
In RMB
| Current accounting firm | |
| Name of domestic accounting firm | Pan-China Certified Public Accountants (Special General Partnership) |
| Fee payable to domestic accounting firm | 950,000 |
| Audit period of domestic accounting firm | 5 years |
| Name | Fee | |
| Sponsor | Huatai United Securities Co., Ltd. | / |
Explanation about the appointment and termination of appointment of accounting firm
√ Applicable□ N/A
The annual general meeting of shareholders of the Company for the year of 2019 approved theresolution to continue to appoint Pan-China Certified Public Accountants (Special General Partnership)as the auditor of the Company for the year of 2020 for a term of one year. Pan-China Certified PublicAccountants (Special General Partnership) has issued auditor’s reports for the Company between 2016to 2019.
Explanation about re-appointment of accounting firm during the audit period
□ Applicable√ N/A
VII. Risk of delisting and the reason
□ Applicable√ N/A
VIII. Matters relating to bankruptcy and reorganization
□ Applicable√ N/A
IX. Material litigations and arbitrations
√ The Company was involved in material litigations or arbitration during the current year
□ The Company was not involved in material litigations or arbitration during the current year
(I) Litigations and arbitrations already disclosed in interim announcements about which no new information is available
√ Applicable□ N/A
| Summary and type of case | Reference |
| I. Cases of dispute over infringement on patents for invention [2019] Yue 03 Min Chu No. 2942-2951 In July 2019, the Company initiated a civil litigation on the ground that Delta Electronics, Inc infringed the patent for invention ZL200810065225.X and ZL200880107739.5 owned by the Company, requesting the court to order to stop the acts of infringing the Company’s patent right and the damages for infringement in the amount of RMB 56.00 million. | Refer to the Announcement on Litigation disclosed on July 31, 2019 (No. 2019-006). |
| II. Case for changing the inventor of patent 19-cv-00466-RGD-LRL in the United States District Court for the Eastern District of Virginia The Company brings a suit against Delta in the United States District Court for the Eastern District of Virginia for breach of non-disclosure agreement, wrongful appropriation of the technical solutions actually invented by the Company’s employees LI Yi and HU Fei, and filing for patent application in the United States without authorization, and petitions the court to order that the inventors of the patent-in-suit US 9,024,241 shall be changed from WANG Bo, ZHANG Kesu and HUA Jianhao into LI Yi and HU Fei. | Refer to the Announcement on Litigation disclosed on September 9, 2019 (No. 2019-012). |
| III. Cases of dispute over infringement on patents for invention [2019] Jing 73 Min Chu No. 1275, 1276, and 1278 In September 2019, Delta Electronics, Inc. initiated a civil litigation on the ground that the Company and its controlled subsidiary Formoive infringed the patent for invention ZL201410249663.7, ZL201610387831.8, and ZL201010624724.5, requesting the court to order to stop the acts of infringing the patent rights and the damages for infringement in the amount of RMB 48.03 million. | Refer to the Announcement on Litigation disclosed on September 21, 2019 (No. 2019-014), and the Announcement on Litigation disclosed on June 13, 2020 (No. 2020-022). |
| IV. Case of dispute over title to patents [2019] Yue 03 Min Chu No. 4309 In November 2019, the Company initiated a civil litigation, alleging that the Delta Electronics, Inc. filed a patent application in respect of the technical solution owned by the Plaintiff and named WANG Bo, ZHANG Kesu and HUA Jianhao as the inventors of such technical solution without authorization, thereby infringed on the technical achievements made by the Plaintiff and the right of authorship of LI Yi and HU Fei, the actual inventors, and petitions the court to declare that the patent ZL201610387831.8 “phosphor color wheel and its applicable light source | Refer to the Announcement on Litigation disclosed on November 8, 2019 (No. 2019-028). |
| system” is owned by the Company. | |
| V. (2020) Yue 73 Min Chu No. 1335-1341, 1353, 1355-1361 In July 2019, the Company initiated a civil litigation on the ground that Delta Electronics, Inc infringed the patent for invention ZL200880107739.5 and ZL200810065225.X owned by the Company, requesting the court to order to stop the acts of infringing the Company’s patent right and the damages for infringement in the amount of RMB 80.00 million. | Refer to the Announcement on Litigation Against Delta Electronics (Shanghai) Co., Ltd. and Other Entities disclosed on August 11, 2020 (No. 2020-037). |
(II) Litigations and arbitrations that have not been disclosed in interim announcements or about which there’s new information available
√ Applicable□ N/A
In RMB 0’000
| During the reporting period: | |||||||||
| Plaintiff/claimant | Defendant/respondent | Party jointly and severally liable | Type of litigation/arbitration | Background | Amount claimed | Whether any provision is recognized and the amount | Status | Result and effect | Enforcement of judgment/award |
| Delta Electronics, Inc. | Appotronics Corporation Limited | Futian SPN Projector & Video System Firm of Shenzhen | Infringement on patent for invention | [2019] Yue 73 Zhi Min Chu No. 662, the Plaintiff alleges that it is the owner of the patent for invention ZL201610387831.8 and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | 1,614.53 | No | RMB 10.00 million released and trial suspended | Stayed | |
| Delta Electronics, Inc. | Appotronics Corporation Limited | Futian SPN Projector & Video System Firm of Shenzhen | Infringement on patent for invention | [2019] Yue 73 Zhi Min Chu No. 663, the Plaintiff alleges that it is the owner of the | 1,614.53 | No | Trial of the first instance completed | Judgment of first instance: All claims | |
| patent for invention ZL201310017478.0 and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | made by the Plaintiff were dismissed. | ||||||||
| Delta Electronics, Inc. | Appotronics Corporation Limited | Futian SPN Projector & Video System Firm of Shenzhen | Infringement on patent for invention | [2019] Yue 73 Zhi Min Chu No. 664, the Plaintiff alleges that it is the owner of the patent for invention ZL20310625063.1 and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | 1,614.53 | No | Trial of the first instance completed | Judgment of first instance: All claims made by the Plaintiff were dismissed. | |
| Delta Electronics, Inc. | Formoive (Beijing) Technology Co., Ltd. | Appotronics Corporation Limited | Infringement on patent for invention | [2019] Jing 73 Min Chu No. 1277, the Plaintiff alleges that it is the owner of the patent for invention ZL201310017478.0 and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | 1,601.00 | No | Trial of the first instance completed | Ruling of the first instance The case of the Plaintiff was rejected. | |
| Chengdu Jimi Technology | Chengdu Jingying Times | Formoive (Beijing) Technology Co., Ltd. | Infringement on patent for invention | [2020] Chuan 01 Zhi Min Chu No. 252, the Plaintiff alleges that the | 5,000.00 | No | Settled | The Plaintiff withdraw |
| Co., Ltd. | Communication Device Co., Ltd. | Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | its case, and the court has issued a civil ruling | ||||||
| Chengdu Jimi Technology Co., Ltd. | Appotronics Corporation Limited | Formoive (Beijing) Technology Co., Ltd. | Unfair competition | [2020] Chuan 01 Min Chu No. 4391 unfair competition case, the Plaintiff alleged that the Defendant conducted unfair competition and caused economic losses to the Plaintiff. | 1,000.00 | No | Settled | The Plaintiff withdraw its case, and the court has issued a civil ruling | |
| Haining Ningjia Electronics Technology Co., Ltd. | Shenzhen Appotronics Xiaoming Technology Co., Ltd. | Appotronics Corporation Limited; Zhejiang Tmall Network Co., Ltd. | Infringement on patent for invention | [2020] Zhe 01 Zhi Min Chu No. 540, the Plaintiff alleges that it is the owner of the patent for invention ZL200710037859X and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | 205.00 | No | The Plaintiff withdraw its case | The Plaintiff withdraw its case, and the court has issued a civil ruling | |
| Casio Computer Co., Ltd. | Appotronics Corporation Limited | AV Design (Beijing) Technology Development Co., Ltd. | Infringement on patent for invention | In the cases of dispute over infringement on patents for invention [2016] Jing 73 Min Chu No. 59-60, the Plaintiff alleges that it is the owner of the patents for invention | 2,049.95 | No | Settled | The Plaintiff withdraw its case, and the court has issued a civil |
| 201210334155.X and 201010293730.7, and the production, sale and offer for sale of Laser TV APUS-20(S) by Defendant 1 and Defendant 2 for purpose of production and operation has infringed on such patents for invention of the Plaintiff and caused economic losses to the Plaintiff. | ruling | ||||||||
| Appotronics Corporation Limited | Dehao Electronic Technology Ltd. | Shenzhen Super Network Technology Co., Ltd. | Infringement on patent for invention | In the cases of dispute over infringement on patents for invention [2018] Yue 03 Min Chu No. 1899-1907, the Plaintiff alleges that the production, sale and offer for sale of a variety of projector products by Defendant 1 and Defendant 2 for purpose of production and operation has infringed on the Plaintiff’s patent for invention and caused economic losses to the Plaintiff. | 2,081.52 | No | Trial of the second instance completed | Judgment of second instance: The Defendant should stop its act of infringement and pay the Plaintiff for the economic losses and reasonable expenses, RMB 3,577,279.61 in total. | In March 2021, the Company received the compensation and reasonable expenditures paid by the Defendant in the amount of RMB 3,577,279.61. |
| Appotronic | Dehao | Shenzhen Super | Infringement | In the cases of dispute | 2,081.52 | No | Trial of the | The |
| s Corporation Limited, and Shenzhen YLX Technology Development Co., Ltd. | Electronic Technology Ltd. | Network Technology Co., Ltd. | on patent for invention | over infringement on patents for invention [2018] Yue 03 Min Chu No. 1891-1898 and 1940, the Plaintiff alleges that the production, sale and offer for sale of a variety of projector products by Defendant 1 and Defendant 2 for purpose of production and operation has infringed on the Plaintiff’s patent for invention and caused economic losses to the Plaintiff. | second instance completed | Plaintiff withdraw its case, and the court has issued a civil ruling | |||
| Appotronics Corporation Limited | Casio Computer Co., Ltd. | Casio (China) Co., Ltd. and Beijing Hongyang Jiye Technology Co., Ltd. | Infringement on patent for invention | [2018] Jing 73 Min Chu No. 1239 and 1240, the Plaintiff alleges that it is the owner of the patent for invention ZL200810065225.X and the Defendant infringed such patent for invention of the Plaintiff and caused economic losses to the Plaintiff. | 760.00 | No | Settled | The Plaintiff withdraw its case, and the court has issued a civil ruling | |
| Formoive (Beijing) Technology Co., Ltd. | Chengdu XGIMI Vision E-commerce Co., Ltd. | Chengdu Jimi Technology Co., Ltd. | Infringement on patent for invention | (2020) Jin 03 Zhi Min Chu No. 159, case of dispute over infringement on patents | 4,600.00 | No | Settled | The Plaintiff withdraw its case, |
| Tianjin Second Branch | for invention, the Plaintiff alleges that the Defendant infringed rights of the Plaintiff and caused economic losses to the Plaintiff. | and the court has issued a civil ruling | |||||||
| Formoive (Beijing) Technology Co., Ltd. | Chengdu Jimi Technology Co., Ltd. | Fuding Juqiyi Electronic Product Operation | Infringement on patent for invention | (2020) Min 01 Min Chu No. 1312, case of dispute over infringement on patents for invention, the Plaintiff alleges that the Defendant infringed rights of the Plaintiff and caused economic losses to the Plaintiff. | 200.00 | No | Settled | The Plaintiff withdraw its case, and the court has issued a civil ruling |
(III) Other issues
√ Applicable□ N/A
A total of 14 invalidation petitions has been raised against the Company’s patent for invention ZL200880107739.5, and a total of 9 invalidation petitions hasbeen raised against the Company’s patent for invention ZL200810065225.X. At the end of the reporting period, 22 invalidation cases with the Company as thepatentee have been decided by the National Intellectual Property Administration, with the patent sustained, or withdrawn by the petitioner, and only 1 case is in trialat the National Intellectual Property Administration. At the end of the reporting period, there was 1 invalidation case where the Company acted as a petitioner. Thecase is in trial at the National Intellectual Property Administration, and is related to the invalidation petition against patents held by Delta Electronics, Inc.
X. Penalties imposed on the listed company and its directors, supervisors, senior officers,controlling shareholder, actual controller and acquirer and rectification of the relevantviolations
□ Applicable√ N/A
XI. Credit standing of the Company and its controlling shareholder and actual controller duringthe reporting period
□ Applicable√ N/A
XII. Share incentive plan, employee stock ownership plan and other employee incentive measures
of the Company and their effect(I) Overview of share incentives
√ Applicable□ N/A
1. Share incentive plan during the reporting period
In RMB
| Name of plan | Type of incentive | Number of target shares | Proportion of target shares (%) | Number of grantees | Proportion of grantees (%) | Price of target shares granted |
| 2019 Restricted Share Incentive Plan | Type II restricted shares | 5,500,000 | 1.21 | 206 | 17.61% | 17.425 |
Note: The proportion of grantees is calculated with the total number of employees of the Companyas of December 31, 2020 as the denominator.
2. Implementation progress of the share incentive during the reporting period
√ Applicable□ N/A
1. On October 13, 2020, the Company held the 27
th
meeting of the first Board of Directors and the
th
meeting of the first Board of Supervisors, at which the Proposal on Adjusting the Grant Price ofRestricted Shares under the 2019 Restricted Share Incentive Plan and the Proposal on GrantingReserved Restricted Shares to Grantees of Share Incentives under the 2019 Restricted Share IncentivePlan were reviewed and passed.
(1) Considering that the 2019 profit distribution plan of the Company has been completelyimplemented, in accordance with the relevant provisions of the incentive plan, the Company madecorresponding adjustment to the grant price of restricted shares to adjust the grant price from RMB 17.5to RMB 17.425.
(2) The vesting conditions for reserved restricted shares have been met; therefore, October 13, 2020was determined as the grant date to grant 1.10 million restricted shares to 38 grantees of shareincentives.
2. On October 27, 2020, the Company held the 28
th
meeting of the first Board of Directors and the
thmeeting of the first Board of Supervisors, at which the Proposal on Invalidating Partial Granted butNot Vested 2019 Restricted Shares and the Proposal on Vesting Criteria for the First Vesting Period inthe Initial Grant under 2019 Restricted Share Incentive Plan were reviewed and passed.
(1) Considering that 13 grantees of share incentives in the initial grant under the 2019 RestrictedShare Incentive Plan have left the Company, in accordance with the relevant provisions of the incentiveplan, such grantees are no longer qualified as grantees. Therefore, the restricted shares granted but notvested should not be vested, but should be invalidated by the Company. The grantees of restricted sharesin the initial grant are adjusted from 169 to 156, the number of restricted shares in the initial grant isadjusted from 4.40 million to 4.1283 million, with 0.2717 million invalidated.
(2) Substantial vesting conditions for the first vesting period with respect to the 156 grantees in theinitial grant under the 2019 incentive plan have been met. Therefore, the Company vested 1.23849million restricted shares to the 156 qualified grantees.
3. As of November 11, 2020, the Company has received the subscription amount of RMB20,953,388.25 paid in cash by 147 grantees, including RMB 1,202,490.00 recognized as the sharecapital, and RMB 19,750,898.25 recognized as the capital reserve. On November 24, 2020, the shareregistration formalities for the first vesting period of the initial grant under the 2019 Restricted ShareIncentive Plan have been completed, and China Securities Depository and Clearing Corporation LimitedShanghai Branch has issued the Certificate of Securities Change Registration. After the vesting of therestricted share, the total shares of the Company increased from 451,554,411 to 452,756,901, with1,202,490 additional tradable shares.
3. Share-based payment recognized due to the share incentive during the reporting period
In RMB
| Total share-based payment recognized for the current period | 20,581,939.14 |
(II) Incentives already disclosed in the interim announcements about which no new information
is available
√ Applicable□ N/A
| Summary | Reference |
| On October 13, 2020, the Company held the 27th meeting of the first Board of Directors and the 14th meeting of the first Board of Supervisors, at which the Proposal on Adjusting the Grant Price of Restricted Shares under the 2019 Restricted Share Incentive Plan and the Proposal on Granting Reserved Restricted Shares to Grantees of Share Incentives under the 2019 Restricted Share Incentive Plan were reviewed and passed. | Refer to the relevant announcement issued by the Company on www.sse.com.cn and the designated media for information disclosure on October 14, 2020. |
| On October 27, 2020, the Company held the 28th meeting of the first Board of Directors and the 15th meeting of the first Board of Supervisors, at which the Proposal on Invalidating Partial Granted but Not Vested 2019 Restricted Shares and the Proposal on Vesting Criteria for the First Vesting Period in the Initial Grant under 2019 Restricted Share Incentive Plan were reviewed and passed. | Refer to the relevant announcement issued by the Company on www.sse.com.cn and the designated media for information disclosure on October 29, 2020. |
| On November 24, 2020, the share registration formalities for the first vesting period of the initial grant under the 2019 Restricted Share Incentive Plan have been completed, and China Securities Depository and Clearing Corporation Limited Shanghai Branch has issued the Certificate of | Refer to the relevant announcement issued by the Company on www.sse.com.cn and the designated media for information disclosure on November 25, 2020. |
Other information
□ Applicable√ N/A
Employee stock ownership plan
□ Applicable√ N/A
Other incentives
□ Applicable√ N/A
XIII. Material related-party transactions(I) Related-party transactions in connection with day-to-day operation
1. Matters already disclosed in the interim announcements about which no new information isavailable
√ Applicable□ N/A
Securities Change Registration. After the vesting of therestricted share, the total shares of the Company increasedfrom 451,554,411 to 452,756,901.Summary
| Summary | Reference |
| On April 28, 2020, the Company held the 21st meeting of the first Board of Directors, at which the Proposal on Daily Related-party Transactions in 2020 was reviewed and passed. This proposal has been reviewed and passed on May 22, 2020 at the annual general meeting of shareholders in 2019. It’s expected that the Company will have daily related-party transactions in the amount of RMB1.2531 billion in 2020. | Refer to the Announcement No. 2020-014 “Announcement on expected routine related-party transactions in 2020” issued by the Company on www.sse.com.cn and the designated media for information disclosure on April 29, 2020. |
| On October 27, 2020, the Company held the 28th meeting of the first Board of Directors and the 15th meeting of the first Board of Supervisors, at which the Proposal on Increasing the Amount of Daily Related-party Transactions in 2020 was reviewed and passed. This proposal has been reviewed and passed on November 13, 2020 at the third interim general meeting of shareholders in 2020, approving to increase the amount of related-party transactions by RMB 40.00 million for 2020. | Refer to the Announcement No. 2020-059 “Announcement on increasing the amount of related-party transactions in 2020” issued by the Company on www.sse.com.cn and the designated media for information disclosure on October 29, 2020. |
2. Matters already disclosed in the interim announcements about which there’s new informationavailable
□ Applicable√ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable√ N/A
(II) Related-party transactions involving acquisition or sale of assets or equities
1. Matters already disclosed in the interim announcements about which no new information is
available
□ Applicable√ N/A
2. Matters already disclosed in the interim announcements about which there’s new information
available
□ Applicable√ N/A
3. Matters that have not been disclosed in any interim announcement
√ Applicable□ N/A
In RMB
| Related party | Relationship | Type | Subject matter | Pricing principle | Carrying amount of assets transferred | Evaluation of assets transferred | Transfer price | Method of settlement | Income from the transfer of assets | Impact of the transaction on the operating results and financial conditions of the Company | Reason for great difference between the transaction price and the carrying amount, evaluation, or market fair value |
| Shenzhen YLX Technology Development Co., Ltd. | Related person (same Chairman as the Company) | Sales of assets except for goods | Fixed assets | Negotiation | 740,617.73 | N/A | 740,617.73 | Cash | 0 | Revitalize the assets | N/A |
Description of related-party transactions involving acquisition or sale of assetsIn December 2020, the Company sold idle fixed assets in the amount of RMB 740,617.73 to itsrelated party Shenzhen YLX Technology Development Co., Ltd., whose actual controller is Mr. Li Yi.In accordance with Article 132 of the Articles of Association, this transaction did not reach thedisclosure standard and was not subject to the approval by the Board of Directors or general meeting,and may be implemented with the internal approval of the Company.
4. Fulfillment of performance covenants (if any) during the reporting period
□ Applicable√ N/A
(III) Related-party transactions involving joint external investments
1. Matters already disclosed in the interim announcements about which no new information isavailable
√ Applicable□ N/A
| Summary | Reference |
| The Company held the 24th meeting of the first Board of Directors on August 17, 2020 and the second interim general meeting for 2020 on September 3, 2020, at which the Proposal on Increasing the Capital of a Controlled Subsidiary by Issuing Additional Shares and Introducing a Strategic Investor was reviewed and passed, approving the controlled subsidiary Formoive to introduce a strategic investor. | Refer to the Announcement No. 2020-038 “Announcement on Increasing the Capital of a Controlled Subsidiary by Issuing Additional Shares & Related-party Transaction” issued by the Company on www.sse.com.cn on August 18, 2020. |
2. Matters already disclosed in the interim announcements about which there’s new informationavailable
√ Applicable□ N/A
As of February 2021, the plan of capital increase by issuing additional shares has not been dulyimplemented. The parties negotiated to optimize and adjust the original transaction plan. In February2021, the Company held the 29
thmeeting of the first Board of Directors and the first interim generalmeeting for 2021, at which the Proposal on Adjusting the Plan of Increasing the Capital of a ControlledSubsidiary by Issuing Additional Shares & Related-party Transaction was reviewed and passed. Refer tothe Announcement No. 2021-002 “Announcement on Adjusting the Plan for Increasing the Capital of aControlled Subsidiary by Issuing Additional Shares & Related-party Transaction” issued by theCompany on www.sse.com.cn on February 10, 2021.
3. Matters that have not been disclosed in any interim announcement
□ Applicable√ N/A
(IV) Accounts receivable from and payable to related parties
1. Matters already disclosed in the interim announcements about which no new information is
available
□ Applicable√ N/A
2. Matters already disclosed in the interim announcements about which there’s new information
available
□ Applicable√ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable√ N/A
(V) Others
□ Applicable√ N/A
XIV. Material contracts and performance thereof(I) Trusteeship, contracting and lease
1. Trusteeship
□ Applicable√ N/A
2. Contracting
□ Applicable√ N/A
3. Lease
√ Applicable□ N/A
In RMB 0’000
| Name of lessor | Name of lessee | Leased assets | Amount of leased assets | Lease start date | Lease end date | Lease income | Basis for determining lease income | Impact of lease income on the Company | Related-party transaction or not | Relationship |
| Shenzhen Meisheng Industry Co., Ltd. | Appotronics Corporation Limited | Office, R&D, factory, employee dormitory | 1,265.96 | December 1, 2018 | November 30, 2022 | / | / | / | No | None |
Description of leaseNone
(II) Guarantees
√ Applicable□ N/A
In RMB 0’000
| Total amount of guarantees provided during the reporting period (excluding those provided for the subsidiaries) | 0 | ||||||||||||
| Balance of guarantees at the end of the reporting period (excluding those provided for the subsidiaries) (A) | 0 | ||||||||||||
| Guarantees provided by the Company or its subsidiaries for the subsidiaries of the Company | |||||||||||||
| Guarantor | Relationship between the guarantor and the listed company | Obligor | Relationship between the obligor and the listed company | Guaranteed amount | Commencement date of guarantee (signing date of agreement) | Inception date of guarantee | Expiry date of guarantee | Type of guarantee | Whether the obligation guaranteed has been discharged | Whether the obligation guaranteed has become overdue | Amount of the overdue obligation guaranteed | Whether there’s a counter guarantee | |
| Appotronics Corporation Limite | Headquarters | CINEAPPO Laser Cinema | Controlled subsidiary | 70,000 | May 31, 2020 | May 31, 2020 | Three years after the due | Joint and several liabil | No | No | No | ||
| d | Technology (Beijing) Co., Ltd. | date for the obligations under the master contract | ity | |||||||||
| Appotronics Corporation Limited | Headquarters | CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | Controlled subsidiary | 6,000 | June 27, 2019 | June 27, 2019 | June 26, 2023 | Joint and several liability | No | No | No | |
| Appotronics Corporation Limited | Headquarters | Formoive (Beijing) Technology Co., Ltd. | Controlled subsidiary | 16,500 | October 21, 2019 | October 21, 2019 | Two years after the due date for the obligations | Joint and several liability | No | No | No | |
| Appotronics Corporation Limited | Headquarters | Formoive (Beijing) Technology Co., Ltd. | Controlled subsidiary | 10,000 | December 1, 2020 | Initial utilization date or actual date of utilization under the financing letter | Two years after the latest due date of the loans under the financing letter | Joint and several liability | No | No | No | |
| Appotronics Corporation Limited | Headquarters | Formoive (Beijing) Technology Co., Ltd. | Controlled subsidiary | 10,000 | July 1, 2020 | July 1, 2020 | Three years after the due date for the oblig | Joint and several liability | No | No | No |
| ations under the master contract | |||
| Total amount of guarantees provided for the subsidiaries during the reporting period | 42,030 | ||
| Balance of guarantees provided for the subsidiaries at the end of the reporting period (B) | 39,938 | ||
| Total amount of guarantees provided by the Company (including those provided for the subsidiaries) | |||
| Total amount guaranteed (A+B) | 39,938 | ||
| Proportion of total amount guaranteed to the net assets of the Company (%) | 19.09 | ||
| Where: | |||
| Total amount of guarantees provided for the shareholders, actual controller and their affiliates (C) | 0 | ||
| Total amount of debt guarantees directly or indirectly provided for the obligors whose equity-debt ratio exceeds 70% (D) | 36,500 | ||
| Total amount guaranteed in excess of 50% of the net assets of the Company (E) | 0 | ||
| Total amount guaranteed (C+D+E) | 36,500 | ||
| Explanation about outstanding guarantees for which the Company may assume joint and several liability | N/A | ||
| Explanation about guarantees | N/A | ||
(III) Entrusted cash asset management
1. Entrusted wealth management
(1) Overall situation of entrusted wealth management
√ Applicable□ N/A
In RMB
| Type | Source of funds | Total amount | Outstanding amount | Overdue amount |
| Bank wealth management amount | Offering proceeds | 584,000,000 | 114,000,000 | 0 |
| Bank wealth management amount | Self-funded capital | 50,000,000 | 0 | 0 |
Other information
□ Applicable√ N/A
(2) Single entrusted wealth management
□ Applicable√ N/A
Other information
□ Applicable√ N/A
(3) Provision for impairment of entrusted wealth management products
□ Applicable√ N/A
2. Entrusted loans
(1) Overall situation of entrusted loans
□ Applicable√ N/A
Other information
□ Applicable√ N/A
(2) Single entrusted loans
□ Applicable√ N/A
Other information
□ Applicable√ N/A
(3) Provision for impairment of entrusted loans
□ Applicable√ N/A
3. Other information
□ Applicable√ N/A
(IV) Other material contracts
□ Applicable√ N/A
XV. Use of offering proceeds
√ Applicable□ N/A
In RMB 0’000
| Total offering proceeds | 106,247.08 | Total offering proceeds used in this year | 12,624.40 | |||||||||
| Total offering proceeds with the purpose changed | 0 | Cumulative total offering proceeds used | 45,223.24 | |||||||||
| Proportion of total offering proceeds with the purpose changed (%) | 0 | |||||||||||
| Investment project promised | Changed project, including partial change (if any) | Total offering proceeds committed | Post-adjustment total investment | Committed investment amount by the end of the period① | Amount invested in this year | Cumulative amount invested by the end of the period② | Difference between the cumulative amount invested and the committed investment amount by the end of the period ③=②-① | Investment progress by the end of the period (%) ④=②/① | Date for the project to reach the working condition for its intended use | Benefits realized in the current year | Whether exceed expected benefits | Material changes in the project feasibility |
| R&D and industrialization of new generation of laser display products | No change | 31,300.00 | 31,300.00 | 31,300.00 | 5,725.36 | 8,871.47 | -22,428.53 | 28.34 | March 2022 | - | N/A | No |
| R&D center at the head office of Appotronics | No change | 28,400.00 | 28,400.00 | 28,400.00 | 1,044.70 | 1,307.10 | -27,092.90 | 4.6 | August 2022 | N/A | N/A | No |
| Information system upgrade and building | No change | 7,000.00 | 7,000.00 | 7,000.00 | 750.61 | 1,505.17 | -5,494.83 | 21.5 | March 2022 | N/A | N/A | No |
| Supplementary working capital | No change | 33,300.00 | 33,300.00 | 33,300.00 | 5,103.73 | 33,539.50 | 100.72 | N/A | N/A | N/A | No | |
| Total | - | 100,000.00 | 100,000.00 | 100,000.00 | 12,624.40 | 45,223.24 | -55,016.26 | - | - | - | - | |
| Reason for not reaching the planned progress (by specific investment project) | 1. The head office of the Company is still in construction; as a result, the R&D center at the head office and the information system upgrade and building cannot be implemented in a large scale. 2. Under the impact of COVID-19, during the implementation of the R&D and industrialization of new generation of laser display products, based on the principle of ensuring quality, controlling costs, and reducing risks, the Company acted more diligently in the specific planning and use of funds for the projects, which delayed the overall implementation progress expected. | |||||||||||
| Description of material changes in project feasibility | No material change | |||||||||||
| Early investment and replacement of offering proceeds | On July 29, 2019, the Proposal on Replacing Early Funds Invested with Offering Proceeds was reviewed and passed at the 16th meeting of the first Board of Directors, approving the Company to replace the invested funds of RMB 18.9584 million as of July 19, 2019 with the offering proceeds, and replace the offering expenses paid in the amount of RMB 3.1056 million with the offering proceeds. The matters above have been assured by Pan-China Certified Public Accountants (Special General Partnership), which issued the Assurance Report on Replacement of Funds with Offering Proceeds by Appotronics Corporation Limited (Tian Jian Shen [2019] No. 7-393). | |||||||||||
| Supplement the working capital with idle offering proceeds | None | |||||||||||
| Cash management of idle offering proceeds, and investment in relevant products | On July 29, 2019, the Proposal on Cash Management of Temporarily Idle Offering Proceeds was reviewed and passed at the 16th meeting of the first Board of Directors. It was approved that, without affecting the normal implementation of the investment plan for offering proceeds, a maximum of RMB 900 million temporarily idle offering proceeds may be put under cash management to purchase investment products featuring high security, good liquidity, and guarantee of the principal (including but not limited to structural deposits, agreement deposits, notice deposits, term deposits, large-amount deposit note, and return notes), where the total amount for purchasing return notes shall be no more than RMB 200 million for no more than 12 months, which shall be effective within 12 months from the review and approval by the Board of Directors and Board of Supervisors. On July 21, 2020, the Proposal on Cash Management of Temporarily Idle Offering Proceeds was reviewed and passed at the 23rd | |||||||||||
| meeting of the first Board of Directors. It was approved that, without affecting the normal implementation of the investment plan for offering proceeds, a maximum of RMB 670 million temporarily idle offering proceeds may be put under cash management to purchase investment products featuring high security, good liquidity, and guarantee of the principal (including but not limited to structural deposits, agreement deposits, notice deposits, term deposits, large-amount deposit note, and return notes), where the total amount for purchasing return notes shall be no more than RMB 200 million for no more than 12 months, which shall be effective within 12 months from the review and approval by the Board of Directors and Board of Supervisors. | |
| Supplement working capital or repay bank loans with excess offering proceeds | None |
| Balance of offering proceeds and reasons thereof | N/A |
| Other use of offering proceeds | None |
[Note] During the project, the total wealth management returns of RMB 2.3950 million were realized from the special account of supplementary working capital,which have been put into use in the project (supplementary working capital). As of the date of approval for issue of this Report, the special account (Huaxia BankCo., Ltd. Houhai Branch, account number: 10869000000251463) has been deregistered. The interest RMB 1,418.11 incurred after the project has been paid to thebasic account of the Company to be used as supplementary working capital.
XVI. Other significant matters
□ Applicable√ N/A
XVII. Active performance of social responsibilities(I) Poverty alleviation of listed companies
□ Applicable√ N/A
(II) Performance of social responsibilities
1. Protection of the rights and interests of shareholders and creditors
√ Applicable□ N/A
1. Welcome regulations and make compliant disclosure to respond to concerns ofshareholdersThe Board Secretary of the Company is responsible for external information disclosure. TheCompany has designated Shanghai Securities News, China Securities Journal, Securities Times, andSecurities Daily as the newspaper and website for information disclosure. During the reporting period,we have always duly performed our obligation of information disclosure in accordance with the RulesGoverning the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai Stock Exchange, theGuidelines on the Application of Self-Regulation Rules for Companies Listed on the STAR Market No. 1- Regulated Operation and other applicable laws and regulations, and our Information Disclosure Policy,to ensure that all shareholders and other stakeholders have equal access to the information of theCompany. In 2020, we disclosed 4 true, accurate, and complete regular reports; promptly disclosed 147interim announcements on the resolutions of the general meeting and use of offering proceeds, andvoluntarily disclosed the English version of our regular reports, announcement on the recovery of thecinema business, and social responsibility report. We performed the information disclosure obligationsin accordance with law to promptly notify investors of significant operating updates of the Company andprogress of major matters, hence protecting the legitimate rights of investors.
2. Innovate channels for communicating with investors to deliver the investment value of thecompany from multiple perspectives
In 2020, we made 30+ roadshows in the form of strategy meetings with securities companies,on-site reception at the Company, teleconferences, online Q&A, etc., and communicated with 110+buyer and seller institutions and over 240 person-times. We held performance briefings via video ortelephone for the annual report, semiannual report, and third quarter report to build the bridge for
communication between the management of the Company and the capital market. We communicatedwith and answered the queries of 190+ investors via the investor hotline. We received 30+ queries inSSE E-Interaction, and replied to all the queries. Meanwhile, in consideration of the video dissemination,we opened a WeChat video account to deliver performance interpretation, business progress,management interview, and other updates of the Company to investors more vividly.
3. Improve the profit distribution policy and enhance the mechanism of returns to investors
The Company reviews the shareholder returns plan at least once every three years, makeappropriate and necessary amendments to its profit distribution policy and decide on the shareholderreturns plan for the giving period according to the opinions of the shareholders (in particular, holders ofpublic shares), the independent directors and supervisors, subject to the applicable laws, rules,regulations and normative documents.
2. Protection of the rights and interests of employees
√ Applicable□ N/A
2.1 Employee structure
At the end of 2020, we have a total of 1,170 employees at the average age of 32, including 456employees below 30, representing 44% of the total employees. The ratio of male to female employees is7:3. Male employees are slightly more than female employees, which is in line with the characteristics ofthe technology industry.
The company has 369 R&D persons, accounting for 31.54% of the total number of employees.
31.71% R&D persons hold a master or doctor degree, while nearly 90% R&D persons hold a bachelor’sor higher degree. The core R&D team is led by the internationally leading talent in the laser display field,and attracted R&D staff graduated from well-known domestic and foreign universities covering optical,electronics, materials, physics, mechanical designing, fine manufacturing, etc.
2.2 Compensation and benefits of employees
Based on the development objective and talent policy of the Company, we regulate theremuneration management on the basic idea of “matching the market environment, reflecting the valueof talents, and achieving incentive effects”. We combine guaranteed benefits with incentives in balancedconsideration of internal fairness and market competitiveness to achieve “consistency betweenresponsibilities and rights, consistency between capabilities and value, and consistency betweenperformance and benefits” in the allotment of employee remunerations.
With reference to the operating conditions, objective achievement, and business characteristics ofthe Company, we have formulated a corresponding incentive plan focusing on performance to inspireteams and individuals with outstanding performance, containing profit sharing bonus, patent rewards,major innovation rewards, sales commissions, sales rewards, ranking rewards (outstanding employee,quarterly/annual honour awards), and talent spotter rewards.
2.3 Career development of employees
We classified all positions into 5 position groups according to the position contribution, nature ofwork, and the professional knowledge and skills required - management group, technology group,professional group, marketing group, and operation group, set separate career development channels fordifferent position groups, and formulated the Provisions on Employee Promotion Management toprovide effective guidelines for the development of employees.
Meanwhile, we make every effort for resource building, helping talents to achieve rapiddevelopment on the Appotronics platform. After the efforts for years, we have gradually established asound talent training system: the “Star Light Program” for the development of college graduates, the“Sharp Light Program” for the development of grassroots managers, and the “Polar Light Program” forthe development of middle managers. The continuous talent input and intensive culture inheritance inthe training at both the primary and middle level effectively support the stable development of theCompany.
2.4 Diversified training mechanisms
We comprehensively implement the three-level training management system - training programs atthe Company level, universal capability training at the central level, and field-specific capability trainingat the department level. The layered and multiple-perspective trainings provide a learning and exchangeplatform for employees, hence cultivating all-round talents required by our business and achievingwin-win results of corporate development and personal development. In 2020, we organized 608 trainingsessions for a total of 16,500 training hours, which effectively meet the demands for employee personalcapability development and organization capability improvement, which received the employeesatisfaction of 9 out of 10 scores.
2.5 Other employee benefits
2.5.1 Elect employee representatives to participate in the governance of the Company
The trade union started the registration of representative candidates for the “Second Meeting ofEmployee Representatives” on April 29, 2020 and carried out the election on May 7, 2020 to elect 100employee representatives and 27 representative candidates. During the term of three years, employeerepresentatives exercise democratic management rights and participate in the review of policies andrules involving employee interests. All regular employees are qualified for the election.
2.5.2 Safeguarding the travel safety at night
We have enabled the Didi corporate version so that all employees may call for cars free of chargeby using the Didi corporate version; this solves the safety concerns of employees after overtime work atnight. To ensure equal benefits for employees driving to work, the Company negotiated with theproperty management company to provide employees leaving at night with the benefit of free parkingfor the day.
2.5.3 Annual physical examination for all employees
We cooperate with physical examination institutions to provide all employees with health physicalexamination. In 2020, under the impact of COVID-19, the physical examination of all employees isplanned between the middle of December to the middle of March 2021. All employees who have joinedthe Company for three months are qualified for this benefit.
2.5.4 Free dinner
We provide free dinners for all employees. Employees may claim for a dinner ticket after 6:30 inthe evening to take the free dinner at the designated dining hall with the ticket.
3. Protection of the rights and interests of suppliers, customers and consumers
√ Applicable□ N/A
1. Implement strict quality control to ensure quality output
We are committed to providing the customers with high-quality products through strict qualitycontrol. Our production base has passed ISO9001 quality management system certification. Thecontracts executed by us with the customers generally contain quality assurance clauses, pursuant towhich we have the obligation to repair the products sold by us that are found to have quality problemsduring the warranty period (which is 1-3 years generally) free of charge.
2. Continuously optimize services to improve customer experience
Our service team implements the service idea of “customer foremost” and abide by the nationalstandard Evaluation System for After-sales Service of Commodity and our internal after-sales service
management requirements to carryout internal inspection and management review, constantly optimizethe service procedure, enhance monitoring and management, and continuously improve the servicesystem. We safeguard the legitimate rights and interests of the suppliers, customers and consumersthrough the measures stated above.
3. Innovate the service mode to support customers in reducing costs and improving efficiencyFor the cinema projector market, we took the lead in releasing “Laser as a Service” for cinema laserlight sources in the industry. The cinemas just need to pay rents according to the length of use, withoutneeding to purchase light sources, which will help the cinemas not only effectively reduce equipmentpurchase costs, labor costs and maintenance costs, but also improve their market competitivenessthrough the high luminance, wide color gamut, high contrast and good picture quality and othertechnical advantages provided by the laser light source of Appotronics, therefore truly achieve “costreduction and efficiency improvement”.
4. Product safety
√ Applicable□ N/A
We attach great importance to ensuring safety of products, and have passed the following productsafety certifications in the manufacturing field at home and abroad, which provides assurance for thesafety of our products.
| Abbreviation | Description |
| CCC | China Compulsory Certification, a compulsory safety certification required by the Certification and Accreditation Administration of the People’s Republic of China for the products covered. |
| ETL | Electrical Testing Laboratories, a generally accepted product safety certification in the North America. |
| CE | Conformite Europeenne, a compulsory certification required by EU. |
| FCC | Federal Communications Commission, a certification required by the Federal Communications Commission for the radio products, communication products and digital products entering the American market. |
| CB | Certification Bodies, a global system established by the International Electrotechnical Commission (IECEE). CB test reports and CB test certificates are recognized in all member states of IECEE. |
| TUV | Technischer ?berwachungs-Verein, a generally accepted safety certification of electronic components in Germany and Europe. |
4. Public relations and public welfare activities
√ Applicable□ N/A
1. Good faith in operation
We insist on good faith in our operation. During the reporting period, neither the Company nor anydirector, supervisor, or senior officer was subject to investigation by a competent authority, enforcementby a judicial or disciplinary authority, or transferred to judicial authority or investigated for criminalliabilities.
2. Actively perform the duties as a corporate citizen
2.1 Compliant operation and tax payment. We abide by the relevant national laws andregulations, operate in compliance with requirements, obey the management of the local government,accept the supervision of local regulatory authorities, and strictly fulfill our obligations as a taxpayer.
2.2 Continuously promote employment. We strictly abide by relevant provisions of the LaborLaw and the Labor Contract Law, attach importance to the protection of employee rights and interests,follow the principles of equality, voluntariness, and coordination to provide employees with equalemployment opportunities in accordance with law, so as to establish a regulated and orderly, mutuallybeneficial, harmonious and stable relationship to make our contributions for the national objective of“stable employment”.
3. Healthcare for employees in prevention of COVID-19
At the beginning of COVID-19, we made quick judgement to establish the “pandemic-fightingPanel” to implement preventive measures such as environment sterilization, issuance of facial masks, etc.We implemented comprehensive control and prevention measures on an ongoing basis as normalactivities, so as to provide employees with prevention instructions, materials, and mental care tosafeguard the health and lives of all employees. None of our employees were verified or suspected ofbeing infected in 2020.
4. Take the lead in resume production to facilitate economy recovery
With a series of prevention measures and preparation made, Appotronics duly resumed productionon February 10 as one of the first high-tech enterprises resuming production in Shenzhen, hence settingan exemplary role in resuming production and promoting economy recovery with safety guaranteed. OnMarch 3, 2020, European Pressphoto Agency (EPA) took a picture of Appotronics’s cinema productshop, depicting our employees inspecting products carefully with text description. After being forwarded
by Wall Street Journal, the Guardian, Bajapress, ShuttersStock, The Top 10 News, and otherauthoritative media, this picture was widely disseminated in the western world as the “Chinese power”amid the pandemic.
5. Donate materials to empower scientific pandemic prevention and controllingAfter the occurrence of the pandemic, we immediately offered our support to the front line byproviding large laser display screens to Shenzhen Disease Control Center to facilitate visualization ofmedical data, hence offering our help in releasing pandemic information, patient diagnosis, and trackingof suspected patients and traces in real time, and in video conferences with governments at variouslevels and medical institutions.Meanwhile, we donated customized laser smart projectors equipped with keyboards and mouse forinteraction to medical teams went to Wuhan. Such mobile, portable, high-definition, and high-brightnesssmart mini projectors adopt the principle of reflection display, hence generating no direct lights to eyesand no blue lights to avoid visual fatigue after viewing for a long period of time. During the period ofpreventing and controlling the pandemic, smart mini projectors may be used as auxiliary devices foronline education to help children of those went to Wuhan take “online lessons” in a safe way, solvingthe concerns of the medical staff so that they may focus on fighting COVID-19 without worrying abouttheir home, and being a reassuring and hart-warming “rear area” for the frontline soldiers fighting thepandemic.
6. Care eyes with laser display to protect the vision of teenagers
At the beginning of 2020, student learning never stopped despite the shut down of schools. Parentswere worried about the eyes of children since children had to take lessons using display screens. ThePeople’s Daily, Health Times, and many ophthalmology professions and education experts advocatedhigh-definition projector for taking online lessons, and recommended, in order, projectors, liquid crystalTVs, and LED displays. Formoive, a subsidiary of Appotronics, intensified efforts on smart miniprojector products to release Formoive projector Smartpro, Voguepro, and other products. Such productshave the features of reflection light and diffuse reflection for eyes, hence protecting teenagers from bluelight damages from mobile phones, tablet computers, liquid crystal display screens, helping children takelessons effectively while caring for eyes, so parents are more reassured.
7. Innovate application scenarios for laser display to care about the mental health of children
In 2020, Appotronics cooperated with Shenzhen Children’s Hospital to build a creative anesthesiainduction room with laser display technologies. The integrated solution created a virtual 3D dynamicspace for children to achieve the natural and immersive effects, hence realizing “no physical pain” and“no mental hurt” in children anesthesia. Children may be accompanied by their parents through a“underwater world” before entering the operating room and go into sleep step by step. Such druglessanesthesia induction effectively relieves the anxiety of children to protect their mental health.
8. Establish a system to support social welfare as normal activities
By combining the strategic objectives with the actual requirements for social development, theCompany made a plan for social welfare to support industry development, environment protection,education grants, charity donation, and employee care. We make the plan and budget for social welfareactivities every year, which activities will be implemented and organized by the trade union and theHuman Resources Department.
9. Be awarded as the “Most Socially Responsible Listed Company”
In November 2020, National Business Daily released the 10
th
ranking of Chinese listed companiescovering companies listed on Chinese mainland, Hong Kong, and US stock markets. Appotronicsdistinguished itself as the “Most Socially Responsible Listed Company” on the ranking of Chinese listedcompanies. Moreover, at the Second Social Responsibility Forum of Shenzhen Enterprises & AwardCeremony sponsored by Nanfang Daily, Appotronics was granted the “Award of Social Responsibility”.(III) Environment
1. Environmental protection information of the Company and its major subsidiaries that are
identified as major polluters by the environmental protection authority
□ Applicable√ N/A
2. Environmental protection information of the Company that is not identified as a majorpolluter
√ Applicable□ N/A
We have not been identified as a major polluter during the reporting period. We attach importanceto environmental protection and have taken the following environmental protection measures to fulfillour social responsibility:
Disposal of solid wastes
Our solid wastes include consumer wastes, general industrial solid wastes and hazardous wastes.The consumer wastes are collected and then handed over to the environmental sanitation entity forcentralized treatment. The general industrial solid wastes mainly consist of leadless waste scruff andwaste packing materials generated in the production process, which are collected by category and thenhanded over to the relevant resource recycling entities for recycling. The hazardous wastes mainlyconsist of waste active carbon generated in the waste gas treatment process, and wastes containingindustrial alcohol and waste packing materials containing cleaning agents that are generated in theproduction process, which are collected and then handed over to the qualified entities for treatment.Sewage treatmentOur sewage includes domestic sewage and industrial sewage. The domestic sewage is pre-treatedthrough septic tank or otherwise, and after meeting the relevant standard, discharged to the municipalsewage treatment pipelines and sewage treatment plant. The industrial sewage is handed over to thequalified entities for treatment. In addition, we have optimized the technologies currently used to reducethe sewage discharged. We appoint a third party to inspect our domestic sewage every year.Waste gas treatmentOur waste gas mainly includes waste gas containing tin and organic waste gas generated in theproduction process. We have built a waste gas treatment system, comprising UV photolysis, activecarbon adsorption plant, air purification equipment and other equipment. After the treatment, theconcentration of tin and NmHc in the waste gas discharged by us to the air meets the local standard forAtmospheric Pollutant Emission Limit. In addition, we appoint a third party to conduct the relevantinspections every year.
Certifications relating to environmental protection
We passed ISO14001 environmental management system certification in 2008, and has maintainedsuch certification to date. In 2019, we passed QC080000 hazardous substance process managementsystem certification. All of our products are green products and have passed RoHS, REACH and Chinaenvironmental labeling product certification, among others.
3. Reason for failure to disclose environmental protection information of the Company that is
not identified as a major polluter
□ Applicable√ N/A
4. New information about the environmental protection information disclosed during thereporting period
□ Applicable√ N/A
(IV) Other information
□ Applicable√ N/A
XVIII Convertible corporate bonds
□ Applicable√ N/A
Section VI Changes in Shares and ShareholdersI. Changes in ordinary shares(I) Statement of changes in ordinary shares
1. Statement of changes in ordinary shares
Unit: Share
| Before the change | +/- | After the change | |||||||
| Number | Percentage (%) | New shares | Bonus shares | Capitalization of capital reserve | Others | Subtotal | Number | Percentage (%) | |
| I. Non-tradable shares | 394,361,498 | 87.33 | -224,904,732 | -224,904,732 | 169,456,766 | 37.43 | |||
| 1. Shares held by the State | |||||||||
| 2. Shares held by State-owned corporations | |||||||||
| 3. Shares held by other domestic investors | 243,665,462 | 53.96 | -78,202,707 | -78,202,707 | 165,462,755 | 36.55 | |||
| Where: Shares held by domestic non-stated-owned corporations | 233,615,923 | 51.73 | -68,153,168 | -68,153,168 | 165,462,755 | 36.55 | |||
| Shares held by domestic natural persons | 10,049,539 | 2.23 | -10,049,539 | -10,049,539 | 0 | 0.00 | |||
| 4. Shares held by foreign investors | 150,696,036 | 33.37 | -146,702,025 | -146,702,025 | 3,994,011 | 0.88 | |||
| Where: Shares held by foreign corporations | 135,203,427 | 29.94 | -131,209,416 | -131,209,416 | 3,994,011 | 0.88 | |||
| Shares held by foreign | 15,492,609 | 3.43 | -15,492,609 | -15,492,609 | 0 | 0.00 | |||
| natural persons | |||||||||
| II. Tradable shares | 57,192,913 | 12.67 | 1,202,490 | 224,904,732 | 226,107,222 | 283,300,135 | 62.57 | ||
| 1. RMB-denominated ordinary shares | 57,192,913 | 12.67 | 1,202,490 | 224,904,732 | 226,107,222 | 283,300,135 | 62.57 | ||
| 2. Foreign currency-denominated shares listed domestically | |||||||||
| 3. Foreign currency-denominated shares listed overseas | |||||||||
| 4. Others | |||||||||
| III. Total ordinary shares | 451,554,411 | 100 | 1,202,490 | 1,202,490 | 1,202,490 | 452,756,901 | 100 |
2. Explanation about changes in ordinary shares
√ Applicable□ N/A
During the reporting period, we completed the share registration for the first vesting period in theinitial grant of the restricted share incentive plan 2019. On November 27, 2020, 147 grantees of shareincentives completed vesting registration with 1.20249 million shares eligible for trading on the market,representing 0.27% of the Company total shares prior to the vesting. After this vesting was completed,the total shares of the Company changed from 451,554,411 shares to 452,756,901 shares. For details,refer to the Announcement of Appotronics Corporation Limited on the Vesting Result for the FirstVesting Period in the Initial Grant of the Restrict Share Incentive Plan 2019 and Listing of Sharespublished on www.sse.com.cn on November 25, 2020 (No. 2020-067).
1. Effect of the changes in ordinary shares on the earnings per share, net assets per share andother financial indicators of the most recent year and the most recent reporting period (if any)
√ Applicable□ N/A
During the reporting period, we completed the share registration for the first vesting period in theinitial grant of the restricted share incentive plan 2019, which increased the share capital by RMB1,202,490 and the capital reserve by RMB 19,750,898.25.
In RMB
| Item | 2020 | 2020 (calculated on the same basis) (Note) |
| Basic earnings per share | 0.25 | 0.25 |
| Diluted earnings per share | 0.25 | 0.25 |
| Net assets per share attributable to the shareholders of ordinary shares of the listed company | 4.62 | 4.59 |
Note: The basic earnings per share, diluted earnings per share and net assets per share attributableto the shareholders of ordinary shares of the listed company in 2020 calculated on the same basis arecalculated supposing that the ordinary shares remained unchanged in 2020.
2. Other information disclosed as the Company deems necessary or required by the securitiesregulatory authority
□ Applicable√ N/A
(II) Changes in non-tradable shares
√ Applicable□ N/A
Unit: Share
| Shareholder | Balance of non-tradable shares as at January 1, 2020 | Number of non-tradable shares unlocked in 2020 | Number of non-tradable shares increased in 2020 | Balance of non-tradable shares as at December 31, 2020 | Reason for restriction | Unlock date |
| SAIF IV Hong Kong (China Investments) Limited | 62,980,676 | 62,980,676 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| CITIC PE Investment (Hong Kong) 2016 Limited | 41,774,562 | 41,774,562 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Fuzhou Haixia Appotronics Investment Partnership (LP) | 25,064,737 | 25,064,737 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Green Future Holdings Limited | 16,504,518 | 16,504,518 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Changzhou Lisheng Equity Investment Partnership (LP) | 11,667,635 | 11,667,635 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Shenzhen Guochuang Chenggu Capital Management Co., Ltd. - Shenzhen Chengguhui Equity Investment Partnership (LP) | 10,443,640 | 10,443,640 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| CAI Kunliang | 10,049,539 | 10,049,539 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| CUI Jingtao | 9,658,792 | 9,658,792 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Smart Team Investment Limited | 6,799,660 | 6,799,660 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| ZHENG Yongshi | 5,833,817 | 5,833,817 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Shenzhen Liansong Capital Management Partnership (LP) | 5,833,817 | 5,833,817 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Shenzhen Shanqiao Capital Management Partnership (LP) | 5,320,000 | 5,320,000 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Huatai Appotronics Employee Stock Ownership Plan - Jiayuan I Collective Asset Management Plan | 4,548,685 | 4,548,685 | 0 | 0 | Non-tradable strategic allotted shares in IPO | July 22, 2020 |
| LIGHTZONE LIMITED | 3,150,000 | 3,150,000 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Shenzhen Hongtu Kongque Venture Capital Investment Co., Ltd. | 1,736,252 | 1,736,252 | 0 | 0 | Non-tradable pre-IPO shares | July 22, 2020 |
| Off-line allotment plan | 3,538,402 | 3,538,402 | 0 | 0 | Non-tradable off-line allotted shares in IPO | January 22, 2020 |
| Total | 224,904,732 | 224,904,732 | 0 | 0 | / | / |
II. Issuance and listing of securities(I) Securities issued during the reporting period
□ Applicable√ N/A
Explanation about the securities issued during the reporting period (in case of any outstanding bondswith different interest rates, please explain separately):
□ Applicable√ N/A
(II) Changes in total number of ordinary shares, shareholding structure, and structure of assetsand liabilities of the Company
√ Applicable□ N/A
During the reporting period, we completed the share registration for the first vesting period in theinitial grant of the restricted share incentive plan 2019. On November 27, 2020, 147 grantees of shareincentives completed vesting registration with 1.20249 million shares eligible for trading on the market,representing 0.27% of the Company total shares prior to the vesting. After this vesting was completed,the total shares of the Company changed from 451,554,411 shares to 452,756,901 shares. For details,refer to the Announcement of Appotronics Corporation Limited on the Vesting Result for the FirstVesting Period in the Initial Grant of the Restrict Share Incentive Plan 2019 and Listing of Sharespublished on www.sse.com.cn on November 25, 2020 (2020-067).
III. Shareholders and actual controller(I) Total number of shareholders
| Total number of shareholders of ordinary shares as of the end of the reporting period | 15,616 |
| Total number of shareholders of ordinary shares as of the end of the month immediately prior to the issue date of this annual report | 13,653 |
| Total number of shareholders of preferred shares whose voting right has been restituted as of the end of the reporting period | 0 |
| Total number of shareholders of preferred shares whose voting right has been restituted as of the end of the month immediately prior to the issue date of this annual report | 0 |
Number of holders of depository receipts
□ Applicable√ N/A
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares as of the end of the
reporting period
Unit: Share
| Shares held by top 10 shareholders | ||||||||
| Shareholder (Full name) | Change during the reporting period | Balance of shares held as at the end of the reporting period | Percentage (%) | Number of non-tradable shares held | Number of non-tradable shares held, including the shares lent out under the refinancing arrangement | Shares pledged or frozen | Shareholder nature | |
| Share status | Number | |||||||
| Shenzhen Appotronics Holdings Limited | 0 | 79,762,679 | 17.62 | 79,762,679 | 79,762,679 | None | 0 | Domestic non-stated owned corporation |
| SAIF IV Hong Kong (China Investments) Limited | -9,066,941 | 53,913,735 | 11.91 | 0 | 0 | None | 0 | Foreign corporation |
| CITIC PE Investment (Hong Kong) 2016 Limited | -4,361,530 | 37,413,032 | 8.26 | 0 | 0 | None | 0 | Foreign corporation |
| Nantong Strait Appotronics Investment Partnership (LP) | 0 | 25,064,737 | 5.54 | 0 | 0 | None | 0 | Domestic non-stated owned corporation |
| Shenzhen Yuanshi Laser Industrial Investment Consulting Partnership (LP) | 0 | 24,139,500 | 5.33 | 24,139,500 | 24,139,500 | None | 0 | Domestic non-stated owned corporation |
| Shenzhen Appotronics Daye Investment Partnership (LP) | 0 | 20,430,250 | 4.51 | 20,430,250 | 20,430,250 | None | 0 | Domestic non-stated owned corporation |
| GREEN FUTURE HOLDINGS LIMITED | 0 | 16,504,518 | 3.65 | 0 | 0 | None | 0 | Foreign corporation | ||
| Shenzhen Appotronics Hongye Investment Partnership (LP) | 0 | 15,662,374 | 3.46 | 15,662,374 | 15,662,374 | None | 0 | Domestic non-stated owned corporation | ||
| Shenzhen Jinleijing Investment Limited Partnership (LP) | 0 | 12,353,106 | 2.73 | 12,353,106 | 12,353,106 | None | 0 | Domestic non-stated owned corporation | ||
| Shenzhen Chengguhui Equity Investment Partnership (LP) | 0 | 10,443,640 | 2.31 | 0 | 0 | None | 0 | Domestic non-stated owned corporation | ||
| Shares held by top 10 holders of tradable shares | ||||||||||
| Shareholder | Number of tradable shares held | Type and number of shares | ||||||||
| Category | Number | |||||||||
| SAIF IV Hong Kong (China Investments) Limited | 53,913,735 | RMB-denominated ordinary share | 53,913,735 | |||||||
| CITIC PE Investment (Hong Kong) 2016 Limited | 37,413,032 | RMB-denominated ordinary share | 37,413,032 | |||||||
| Nantong Strait Appotronics Investment Partnership (LP) | 25,064,737 | RMB-denominated ordinary share | 25,064,737 | |||||||
| GREEN FUTURE HOLDINGS LIMITED | 16,504,518 | RMB-denominated ordinary share | 16,504,518 | |||||||
| Shenzhen Chengguhui Equity Investment Partnership (LP) | 10,443,640 | RMB-denominated ordinary share | 10,443,640 | |||||||
| Smart Team Investment Limited | 6,799,660 | RMB-denominated ordinary share | 6,799,660 | |||||||
| CAI Kunliang | 6,096,243 | RMB-denominated ordinary share | 6,096,243 |
| ShenZhen Xiaoxiang Junyi Asset Management Co., Ltd. - Junyi Hongcheng Private Securities Investment Fund | 5,849,872 | RMB-denominated ordinary share | 5,849,872 |
| Shenzhen Liansong Capital Management Partnership (LP) | 5,833,817 | RMB-denominated ordinary share | 5,833,817 |
| Huaxia SSE STAR Market 50 Constituent Trading Open-end Index Securities Investment Fund | 4,713,113 | RMB-denominated ordinary share | 4,713,113 |
| Affiliates or concert parties among the shareholders stated above | 1. As of December 31, 2020, among our top 10 shareholders, Appotronics Holdings, Yuanshi, Appotronics Daye, Appotronics Hongye and Jinleijing are concert parties. We have not received any notice about affiliates or concert parties among other shareholders stated above. 2. We are not aware whether there are affiliates or concert parties as defined in the Administrative Measures for the Acquisition of the Listed Companies among other shareholders. | ||
| Holders of preferred shares whose voting right has been restituted and the number of shares held by them | N/A | ||
Top 10 holders of non-tradable shares and lock-up period
√ Applicable□ N/A
Unit: Share
| No. | Holder of non-tradable shares | Number of non-tradable shares held | Unlocking of non-tradable shares | Lock-up period | |
| Unlock date | Number of shares newly unlocked | ||||
| 1 | Shenzhen Appotronics Holdings Limited | 79,762,679 | July 22, 2022 | 0 | 36 months after the listing date |
| 2 | Shenzhen Yuanshi Laser Industrial Investment Consulting Partnership (LP) | 24,139,500 | July 22, 2022 | 0 | 36 months after the listing date |
| 3 | Shenzhen Appotronics Daye Investment Partnership (LP) | 20,430,250 | July 22, 2022 | 0 | 36 months after the listing date |
| 4 | Shenzhen Appotronics Hongye Investment Partnership (LP) | 15,662,374 | July 22, 2022 | 0 | 36 months after the listing date |
| 5 | Shenzhen Jinleijing Investment Limited Partnership (LP) | 12,353,106 | July 22, 2022 | 0 | 36 months after the listing date |
| 6 | Shenzhen Appotronics Chengye Consulting Partnership (LP) | 10,394,846 | July 22, 2022 | 0 | 36 months after the listing date |
| 7 | BLACKPINE Investment Corp. Limited | 3,994,011 | July 22, 2022 | 0 | 36 months after the listing date |
| 8 | Huatai Venture Capital Investment Co., Ltd. | 2,720,000 | July 22, 2021 | 0 | 24 months after the listing date |
| Affiliates or concert parties among the shareholders stated above | As of December 31, 2020, among the shareholders of the restricted shares above, Appotronics Holdings, Yuanshi, Appotronics Daye, Appotronics Hongye, Jinleijing, Appotronics Chengye, and BLACKPINE Investment Corp. Limited are concert parties. We have not received any notice about affiliates or concert parties among other shareholders stated above. | ||||
Statement of top 10 holders of domestic depository receipts as of the end of the reporting period
□ Applicable√ N/A
Number of non-tradable depository receipts held by top 10 holders and lock-up period
□ Applicable√ N/A
(III) Statement of top 10 shareholders by number of votes held as of the end of the reportingperiod
□ Applicable√ N/A
(IV) Strategic investors or general corporations that become top shareholders as a result of
allotment of new shares/depository receipts
□ Applicable√ N/A
(V) Strategic allotment in IPO
1. Participation by any special asset management plan established by senior officers and keyemployees in the strategic allotment in IPO
√ Applicable□ N/A
Unit: Share
| Shareholder | Number of shares/depository | Unlock date | Changes during the reporting period | Closing number of non-tradable |
| receipts allotted | shares held, including the shares/depository receipts lent out under the refinancing arrangement | |||
| Huatai Appotronics Employee Stock Ownership Plan - Jiayuan I Collective Asset Management Plan | 4,548,685 | July 22, 2020 | 0 | 4,548,685 |
2. Participation by any subsidiary of the sponsor in the strategic allotment in IPO
√ Applicable□ N/A
Unit: Share
| Shareholder | Relationship with the sponsor | Number of shares/depository receipts allotted | Unlock date | Changes during the reporting period | Closing number of non-tradable shares held, including the shares/depository receipts lent out under the refinancing arrangement |
| Huatai Venture Capital Investment Co., Ltd. | Subsidiary of the sponsor | 2,720,000 | July 22, 2021 | 0 | 2,720,000 |
IV. Controlling shareholder and actual controller(I) Controlling shareholder1 Legal person
√ Applicable□ N/A
| Name | Shenzhen Appotronics Holdings Limited |
| Principal or legal representative | LI Yi |
| Date of establishment | January 17, 2014 |
| Main business | Investment holding |
| Shares held in other domestic or foreign listed companies during the reporting period | None |
| Other information | N/A |
2 Natural person
□ Applicable√ N/A
3 Special explanation if the Company does not have a controlling shareholder
□ Applicable√ N/A
4 Reference to and date of change in the controlling shareholder during the reporting period
□ Applicable√ N/A
5 Block diagram of the controlling shareholder’s ownership of and control over the Company
√ Applicable□ N/A
(II) Actual controller1 Legal person
□ Applicable√ N/A
2 Natural person
√ Applicable□ N/A
| Name | LI Yi |
| Nationality | China |
| Whether or not have right of residence in any other country or region | Yes |
| Main occupation and title | Chairman of Appotronics |
| Whether or not control any domestic or foreign listed company in the past 10 years | None |
AppotronicsAppotronics
Holdings
3 Special explanation if the Company does not have an actual controller
□ Applicable√ N/A
4 Reference to and date of change in the actual controller during the reporting period
□ Applicable√ N/A
5 Illustration of shareholding and controlling relation between the Company and its ultimatecontrolling shareholder
√ Applicable□ N/A
6 The actual controller controls the Company by means of trust or other assets management
□ Applicable√ N/A
(III) Other information about the controlling shareholder and the actual controller
□ Applicable√ N/A
V. Other corporate shareholders holding more than 10% shares
√ Applicable□ N/A
In RMB
| Corporate shareholder | Principal or legal representative | Date of establishment | Organization code | Registered capital | Main business or management activity |
| SAIF IV Hong Kong (China Investments) Limited | YAN Yan, PakTaoWan | August 9, 2013 | N/A | N/A | Equity investment |
| Explanation | N/A | ||||
VI. Restrictions on the disposal of shares/depository receipts
□ Applicable√ N/A
VII. Implementation of and changes in arrangements relating to depository receipts during the
reporting period
□ Applicable√ N/A
| Appotronics Holdings | Yuanshi | Appotronics Daye | Appotronics Hongye | Jinleijing | Appotronics Chengye |
LI YiAppotronics
VIII. Shares with special voting rights
□ Applicable√ N/A
Section VII Preferred Shares
□ Applicable√ N/A
Section VIII Directors, Supervisors, Senior Officers and EmployeesI. Changes in shareholding and remunerations(I) Changes in shareholding and remunerations of current directors, supervisors, senior officers and key technical staff and the former directors,supervisors, senior officers and key technical staff who left the Company during the reporting period
√ Applicable□ N/A
Unit: Share
| Name | Title (Note) | Whether key technical staff | Gender | Age | Beginning date of term of office | Expiry date of term of office | Number of shares held as at January 1, 2020 | Number of shares held as at December 31, 2020 | Change in shareholding | Cause of change | Total remuneration (inclusive of tax) received from the Company during the reporting period (in RMB 0’000) | Whether or not receive any remuneration from any affiliate of the Company |
| LI Yi | Chairman of the Board of Directors & key technical staff | Yes | Male | 50 | July 18, 2018 | July 17, 2021 | / | / | / | / | 319.39 | No |
| YAN Yan | Director | No | Male | 64 | July 18, 2018 | July 17, 2021 | / | / | / | / | 10.00 | Yes |
| WU Bin | Director | No | Male | 50 | July 18, 2018 | July 17, 2021 | / | / | / | / | 0.00 | Yes |
| BO Lianming | Director & General Manager | No | Male | 58 | July 18, 2018 | July 17, 2021 | 0 | 30,000 | 30,000 | Share incentive | 332.40 | No |
| NING Xiangdo | Independent | No | Male | 55 | July 18, 2018 | July 17, 2021 | / | / | / | / | 17.00 | No |
| ng | director | |||||||||||
| TANG Guliang | Independent director | No | Male | 58 | July 18, 2018 | July 17, 2021 | / | / | / | / | 17.00 | No |
| ZHANG Wei | Independent director | No | Male | 45 | July 18, 2018 | July 17, 2021 | / | / | / | / | 17.00 | No |
| WU Bin | Deputy General Manager | No | Male | 56 | July 18, 2018 | July 17, 2021 | 0 | 30,000 | 30,000 | Share incentive | 100.05 | No |
| HU Fei | Deputy General Manager & key technical staff | Yes | Male | 40 | July 18, 2018 | July 17, 2021 | 0 | 30,000 | 30,000 | Share incentive | 157.68 | No |
| LI Lu | Deputy General Manager | No | Male | 50 | July 18, 2018 | July 18, 2021 | 0 | 30,000 | 30,000 | Share incentive | 142.56 | No |
| ZHAO Ruijin | Financial Director | No | Male | 43 | July 18, 2018 | July 17, 2021 | 0 | 15,000 | 15,000 | Share incentive | 70.27 | No |
| YAN Li | Board Secretary | No | Female | 37 | May 19, 2020 | July 17, 2021 | 0 | 15,000 | 15,000 | Share incentive | 58.29 | No |
| GAO Lijing | Chairman of the Board of Supervisors | No | Female | 41 | July 18, 2018 | July 17, 2021 | / | / | / | / | 96.99 | No |
| LIANG Rong | Supervisor | No | Male | 50 | July 18, 2018 | July 17, 2021 | / | / | / | / | 52.35 | No |
| WANG Yanyun | Supervisor | No | Female | 44 | July 18, 2018 | July 17, 2021 | / | / | / | / | 39.40 | No |
| YU Xin | Key technical staff | Yes | Male | 41 | / | / | 0 | 15,000 | 15,000 | Share incentive | 76.96 | No |
| WU Xiliang | Key technical staff | Yes | Male | 46 | / | / | 0 | 9,000 | 9,000 | Share incentive | 53.74 | No |
| WANG Lin | Key technical staff | Yes | Male | 40 | / | / | 0 | 15,000 | 15,000 | Share incentive | 58.03 | No |
| GUO Zuqiang | Key technical staff | Yes | Male | 31 | / | / | 0 | 12,000 | 12,000 | Share incentive | 64.10 | No |
| ZENG Luhai | Former Deputy General Manager | No | Male | 45 | April 16, 2019 | January 23, 2020 | / | / | / | / | 9.89 | No |
| XIAO Yangjian | Former Board Secretary & Deputy General Manager | No | Male | 37 | July 18, 2018 | May 19, 2020 | / | / | / | / | 22.84 | No |
| Total | / | / | / | / | / | / | / | 201,000 | 201,000 | / | 1,715.94 | / |
Note: The table above shows shares directly held by the directors, supervisors, senior officers, and key technical staff personally in the Company.At the end of the reporting period, indirect shareholding is as follows: LI Yi holds shares as described in “Section VI IV (II) Actual controller”; YAN Yanholds shares in the Company indirectly through Light Zone; BO Lianming holds shares in the Company by directly and indirectly holding shares in AppotronicsDaye; WU Bin holds shares in the Company indirectly through Appotronics Hongye, Liansong Capital, and Jinleijing; HU Fei, GAO Lijing, LIANG Rong, WANGYanyun, and WU Xiliang hold shares in the Company through Appotronics Hongye and by indirectly holding shares in Appotronics Daye; ZHAO Ruijin holdsshares in the Company by indirectly holding shares in Appotronics Daye; YU Xin and GUO Zuqiang hold shares in the Company indirectly through AppotronicsDaye; WANG Lin holds shares in the Company indirectly through Appotronics Hongye. No change occurred to the indirect shareholding above during the reportingperiod. During the reporting period, LI Yi, BO Lianming, WU Bin, LI Lu, and GAO Lijing participated in the IPO strategic allotment through “Jiayuan I”.
| Name | Main work experience |
| LI Yi | Mr. LI Yi holds a bachelor’s degree from Tsinghua University, and a master’s degree and a doctor’s degree from the University of Rochester. He was previously CTO of O-Net Communications (HK) Limited. In October 2006, LI Yi founded Appotronics Corporation Ltd. He has served as Chairman of the Company since December 2010. |
| YAN Yan | Mr. YAN Yan holds a master’s degree from Princeton University. He was previously Economist of Washington Headquarter of the World Bank, researcher of American Thinker Hudson Institute, Director of Strategic Planning and Business Development of Sprint International Corporation in Asia Pacific, Managing Director of Emerging Markets Partnership in the Management Company of AIG Asian Infrastructure Investment Fund and Director of Hong Kong Office. He has served as Founding Managing Partner of SAIF Partners since October 2001. He has been a Director of the Company since December 2016. |
| WU Bin | Mr. WU BIN holds a master’s degree from Stanford University. He was previously Global Associate Director of McKinsey & Company and Chief Inspector of Legend Holdings Corporation. He has served as Managing Director of CITIC Private Equity Funds since 2010. He has been a Director of the Company since December 2016. |
| BO Lianming | Mr. BO Lianming holds a doctor’s degree from Xi’an Jiaotong University. He was previously Chief Accountant of Shenzhen Airlines Co., Ltd., President and CEO of Shenzhen Chinastar Optoelectronic Co., Limited, Director and President of TCL Technology Group Corporation and Chairman and CEO of TCL Multimedia Technology Holdings Limited. He joined the Company in March 2018, responsible for the management and operation of the Company. He has been a Director and General Manager of the Company since July 2018, and Legal Representative of the Company since December 2018. |
| NING Xiangdong | Mr. NING Xiangdong holds a doctor’s degree from Tsinghua University. He previously served as teaching assistant, lecturer and associate professor at Tsinghua University and Executive Deputy Director of National Center for Economic Research, Tsinghua University, and currently is a professor and doctoral tutor of Tsinghua University, School of Economic and Management. He has been an independent director of the Company since July 2018. |
| TANG Guliang | Mr. TANG Guliang holds a doctor’s degree from Chinese Academy of Fiscal Sciences. He previously served as Dean and professor of Beijing Technology and Business University, School of Accounting (formerly known as Beijing College of Commerce), and currently is a professor and doctoral tutor of the Business School, University of International Business and Economics. He has been an independent director of the Company since July 2018. |
| ZHANG Wei | Mr. ZHANG Wei holds a doctor’s degree from Indiana University. He was previously Legal Director of Legend Holdings Corporation and General Manager of the Legal Affairs Department of China Vanke Co., Ltd. He has served as Vice President, Legal Affairs of Qifei International Development Co., Limited since February 2019. He has been an independent director of the Company since July 2018. |
| WU Bin | Mr. WU Bin holds a master’s degree from Party School of the CPC. He was previously a non-executive director of Shenzhen Gotonly Investment Ltd. and Vice President of Shenzhen Lighting Institute. He has been Deputy General Manager of the Company since October 2018. |
| HU Fei | Mr. HU Fei holds a bachelor’s degree and a master’s degree from Tsinghua University and a master’s degree from Rensselaer Polytechnic Institute. He was previously a software engineer at Optical Research Associates, and Deputy President, R&D of Shenzhen YLX Technology Development Co., Ltd. and Appotronics Ltd. He has served as CTO of the Company since February 2018, and Deputy General Manager of the Company since July 2018. |
| LI Lu | Mr. LI Lu holds a master’s degree from Cheung Kong Graduate School of Business. He was previously Deputy President of TCL Multimedia Technology Holdings Limited., General Manager of TCL (China) Sales Company, and General Manager of White Goods Business Division of TCL Technology Group Corporation. He has been Deputy General Manager of the Company since October 2018, and Legal Representative and Chairman of Formoive since December 2018. |
| ZHAO Ruijin | Mr. ZHAO Ruijin holds a master’s degree from Peking University. He was previously Financial Manager of ZTE Corporation, Financial Director and Assistant to General Manager of Shenzhen ZNV Technology Co., Ltd. He joined the Company in February 2018 as Director of the Department |
| of Financial Management, and has been Financial Director of the Company since July 2018. | |
| YAN Li | Ms. YAN Li, Chinese, holding no overseas permanent residence rights, holds a bachelor’s degree. She previously worked as the securities affairs representative at Midea Appliances (000527) and Midea Group (000333), and board secretary at Yinghe Technology (300457). She joined Appotronics in May 2017, and has been working as the Board Secretary since May 2020. |
| GAO Lijing | Ms. GAO Lijing holds a bachelor’s degree from Tianjin University of Technology and Education. She previously worked at Southern China IP Office of Foxconn Technology Group, and Center for IP and Legal Affairs of Netac Technology Co., Ltd. She has served as a supervisor of Netac Technology Co., Ltd. from 2008 to 2020, and Director of IP and Legal Department of the Company since May 2017, and a Supervisor of the Company since July 2018. |
| LIANG Rong | Mr. LIANG Rong holds a master’s degree from Shanghai University of Finance and Economics. He joined the Company in 2013, and served as Assistant to Chairman of Appotronics Ltd. He has been Director of Public Affairs of the Company since March 2018, and a Supervisor of the Company since November 2017. |
| WANG Yanyun | Ms. WANG Yanyun holds a bachelor’s degree from Tianjin University of Commerce. She has been a senior manager of the Company since July 2013, and a Supervisor of the Company since July 2018. |
| YU Xin | Mr. YU Xin holds a doctor’s degree from Tsinghua University. He was previously a senior software engineer at Schlumberger Ltd. and senior researcher at Shenzhen Lighting Institute. He has been a senior researcher and Software Director of the R&D Center of the Company since February 2018. |
| WU Xiliang | Mr. WU Xiliang holds a bachelor’s degree from Huazhong University of Science and Technology. He served as R&D Manager and Technology Director of the Company between 2007 and 2016, and has been Deputy General Manager of Formoive since 2016. |
| WANG Lin | Mr. WANG Lin holds a bachelor’s degree from University of Science and Technology of China, a master’s degree from Tsinghua University, and a doctor’s degree from Universidad Politécnica de Madrid. He was previously a senior optical engineer at Shanghai Phillips Lighting (China) Investment Co., Ltd. He has been a senior optical research of the Company since February 2017. |
| GUO Zuqiang | Mr. GUO Zuqiang holds a master’s degree from Tsinghua University. He was previously an optical engineer at Shenzhen YLX Technology Development Co., Ltd. He has been R&D Manager of the Company since March 2017. |
Other information
□ Applicable√ N/A
(II) Share incentives granted to directors, senior officers and key technical staff during the reporting period
1. Share options
□ Applicable√ N/A
2. Type I restricted shares
□ Applicable√ N/A
3. Type II restricted shares
√ Applicable□ N/A
Unit: Share
| Name | Title | Number of restricted shares already granted as at the beginning of the reporting period | Number of restricted shares granted during the reporting period | Exercise price of the restricted shares granted (RMB per share) | Number of restricted shares that could be vested in the reporting period | Number of restricted shares actually vested in the reporting period | Number of restricted shares already granted as of the end of the reporting period | Market price as of the end of the reporting period (RMB per share) |
| BO Lianming | Director & General Manager | 100,000 | 0 | 17.425 | 30,000 | 30,000 | 70,000 | 18.55 |
| WU Bin | Deputy General Manager | 100,000 | 0 | 17.425 | 30,000 | 30,000 | 70,000 | 18.55 |
| HU Fei | Deputy General Manager & CTO | 100,000 | 0 | 17.425 | 30,000 | 30,000 | 70,000 | 18.55 |
| LI Lu | Deputy General Manager | 100,000 | 0 | 17.425 | 30,000 | 30,000 | 70,000 | 18.55 |
| ZHAO Ruijin | Financial Director | 50,000 | 0 | 17.425 | 15,000 | 15,000 | 35,000 | 18.55 |
| YAN Li | Board Secretary | 50,000 | 100,000 | 17.425 | 15,000 | 15,000 | 135,000 | 18.55 |
| YU Xin | Key technical staff | 50,000 | 0 | 17.425 | 15,000 | 15,000 | 35,000 | 18.55 |
| WANG Lin | Key technical staff | 50,000 | 0 | 17.425 | 15,000 | 15,000 | 35,000 | 18.55 |
| GUO Zuqiang | Key technical staff | 40,000 | 0 | 17.425 | 12,000 | 12,000 | 28,000 | 18.55 |
| WU Xiliang | Key technical staff | 30,000 | 0 | 17.425 | 9,000 | 9,000 | 21,000 | 18.55 |
| Total | / | 670,000 | 100,000 | / | 201,000 | 201,000 | 569,000 | / |
II. Posts held by current directors, supervisors and senior officers and the former directors, supervisors and senior officers who left the Company duringthe reporting period(I) Posts held at corporate shareholders of the Company
√ Applicable□ N/A
| Name | Corporate shareholder | Posts held at corporate | Beginning date of | Expiry date of |
| shareholder | term of office | term of office | ||
| LI Yi | Shenzhen Appotronics Holdings Limited | Executive Director & General Manager | January 2014 | / |
| LI Yi | Shenzhen Appotronics Daye Investment Partnership (LP) | Representative of Managing Partner | October 2016 | / |
| LI Yi | Shenzhen Appotronics Hongye Investment Partnership (LP) | Representative of Managing Partner | December 2015 | / |
| LI Yi | Shenzhen Jinleijing Investment Limited Partnership (LP) | Representative of Managing Partner | October 2016 | / |
| LI Yi | Shenzhen Yuanshi Laser Industrial Investment Consulting Partnership (LP) | Representative of Managing Partner | June 2016 | / |
| LI Yi | Shenzhen Appotronics Chengye Consulting Partnership (LP) | Representative of Managing Partner | July 2017 | / |
| LI Yi | Blackpine Investment Corp. Limited | Director | September 2018 | / |
| YAN Yan | SAIF IV Hong Kong (China Investments) Limited | Director | August 2013 | |
| YAN Yan | Light Zone Limited | Director | March 2017 | |
| WU Bin | Beijing Panmao Consulting Co., Ltd. | Managing Director | January 2010 | |
| Explanation about the posts held at corporate shareholders of the Company | None | |||
(II) Posts held at other entities
√ Applicable□ N/A
| Name | Other entity | Posts held at other entity | Beginning date of term of office | Expiry date of term of office |
| LI Yi | Shenzhen Appotronics Deye Consulting Partnership (LP) | Representative of Managing Partner | May 2018 | |
| LI Yi | CINIONIC | Director | November 2018 | |
| LI Yi | Shenzhen Appotronics Technical Consulting Co., Ltd. | Executive Director & General Manager | October 2017 | |
| LI Yi | Jiangsu Yisheng Technology Co., Ltd. | Chairman | September 2017 | |
| LI Yi | Shenzhen YLX Technology Development Co., Ltd. | Chairman | January 2007 | |
| LI Yi | Shenzhen Qingda Yifeng Equity Investment Fund | General Manager & Executive | January 2017 |
| Management Enterprise (LP) | Director | |||
| LI Yi | Shenzhen Qingda Yifeng Investment Consulting Partnership (LP) | Managing Partner | October 2016 | |
| LI Yi | Shenzhen Lighting Institute | Director & Sponsor | November 2016 | October 2019 |
| LI Yi | APEX Fund Managed Limited | Director | November 2013 | |
| LI Yi | Atria Light Ltd. | Director | April 2018 | |
| LI Yi | Atria Light Hong Kong Limited | Director | April 2018 | |
| LI Yi | Long Pine Investment Ltd. | Director | September 2016 | |
| LI Yi | Longpines Financial Investment Ltd. | Director | May 2018 | |
| LI Yi | YLX (Hong Kong) Limited | Director | June 2008 | |
| LI Yi | WeCast Technology Corp. | Executive Director | August 2020 | |
| YAN Yan | SAIF Partners | Founding Managing Partner | October 2001 | |
| YAN Yan | Atria Light Ltd. | Director | May 2018 | |
| YAN Yan | SAIF Investment Management Consulting (Shanghai) Co., Ltd. | General Manager | June 2002 | |
| YAN Yan | Beijing Daotong Changjing Investment Management Center (LP) | Representative of Managing Partner | July 2011 | |
| YAN Yan | Beijing SAIF Chuangyuan Investment Center (LP) | Representative of Managing Partner | August 2010 | |
| YAN Yan | Beijing SAIF Hongyuan Investment Center (LP) | Representative of Managing Partner | October 2010 | |
| YAN Yan | Beijing SAIF Ruiyi Investment Management Center (LP) | Representative of Managing Partner | July 2012 | August 2019 |
| YAN Yan | Beijing SAIF Ruizhi Investment Center (LP) | Representative of Managing Partner | July 2012 | August 2019 |
| YAN Yan | Beijing SAIF Xiangrui Investment Center (LP) | Representative of Managing Partner | April 2010 | |
| YAN Yan | Changzhou SAIF High-Tech Venture Capital Center (LP) | Representative of Managing Partner | December 2009 | |
| YAN Yan | Guangzhou SAIF Guangdong Fortune Radio and Television Network Investment Limited Partnership (LP) | Representative of Managing Partner | December 2011 | |
| YAN Yan | Hefei SAIF Heyuan Venture Capital Center (LP) | Representative of Managing Partner | January 2011 | |
| YAN Yan | Qingdao Haier-Saifu Intelligent Family Venture Capital Center (LP) | Representative of Managing Partner | October 2014 |
| YAN Yan | SAIF Songyuan (Shanghai) Equity Investment Fund Partnership (LP) | Representative of Managing Partner | September 2012 | |
| YAN Yan | Xiamen SAIF Equity Investment Partnership (LP) | Representative of Managing Partner | August 2012 | |
| YAN Yan | Xiamen SAIF Keyuan Equity Investment Partnership (LP) | Representative of Managing Partner | August 2012 | |
| YAN Yan | Xiamen SAIF Xiayuan Equity Investment Partnership (LP) | Representative of Managing Partner | November 2013 | May 2019 |
| YAN Yan | Tianjin SAIF Venture Capital Fund (LP) | Representative of Managing Partner | July 2008 | |
| YAN Yan | Tianjin SAIF Composite Equity Investment Center (LP) | Representative of Managing Partner | May 2010 | |
| YAN Yan | Tianjin SAIF Hanyuan Equity Investment Partnership (LP) | Representative of Managing Partner | June 2010 | |
| YAN Yan | Tianjin SAIF Shengyuan Investment Management Center (LP) | Representative of Managing Partner | July 2008 | |
| YAN Yan | Hefei SAIF Venture Capital Management Co., Ltd. | Legal Representative & Executive Director & General Manager | November 2010 | |
| YAN Yan | Nanjing SAIF Hengzhun Venture Capital Fund (LP) | Representative of Managing Partner | July 2017 | |
| YAN Yan | China Resources Land Limited | Independent Non-executive Director | July 2006 | |
| YAN Yan | Shanghai SAIF Yanyuan Equity Fund Management Co. Ltd. | Legal Representative & Executive Director & General Manager | January 2013 | |
| YAN Yan | Tianjin Himalaya Investment Consulting Co. Ltd. | Legal Representative & Executive Director & Manager | June 2008 | |
| YAN Yan | Shanghai SAIF Xinpai Investment Management Co. Ltd. | Legal Representative & Executive Director | March 2014 | |
| YAN Yan | Qingdao SAIF Investment Management Co. Ltd. | Legal Representative & Chairman & General Manager | September 2014 | |
| YAN Yan | Changzhou SAIF High-Tech Venture Capital Management Co. Ltd. | Legal Representative & Chairman | October 2009 | |
| YAN Yan | Tianjin SAIF Zhongyuan Investment Advisory Co. Ltd. | Legal Representative & | July 2008 |
| Chairman | ||||
| YAN Yan | Shenzhen SAIF Qianyuan Equity Investment Fund Management Co. Ltd. | Legal Representative & Chairman | August 2013 | |
| YAN Yan | TCL Technology Group Corporation | Independent director | March 2015 | November 2020 |
| YAN Yan | Beijing Blue Focus Brand Management Co. Ltd. | Independent director | March 2014 | May 2020 |
| YAN Yan | Beijing Softbank SAIF Investment Advisory Co., Ltd. | Chairman | February 2001 | |
| YAN Yan | Huangshan SAIF Fund Management Co., Ltd. | Chairman | November 2016 | |
| YAN Yan | Youth Happy (Beijing) Business Management Co., Ltd. | Chairman | July 2012 | |
| YAN Yan | Shanghai TopxGun Robotics Co., Ltd. | Chairman | September 2015 | |
| YAN Yan | CYPA (Beijing) Investment Management Co., Ltd. | Chairman | June 2012 | |
| YAN Yan | Foreign Tribes (Beijing) Business Management Consulting Co., Ltd. | Chairman | September 2012 | September 2019 |
| YAN Yan | Leqicheng Technology (Beijing) Co., Ltd. | Vice Chairman | June 2015 | May 2019 |
| YAN Yan | Suzhou Beiang Technology Co., Ltd. | Vice Chairman | October 2013 | |
| YAN Yan | Xi’an Maike Metal International Group Co., Ltd. | Vice Chairman | April 2014 | |
| YAN Yan | Anqing SAIF Huanxin Auto Parts Co., Ltd. | Director | August 2015 | |
| YAN Yan | SAIF IV Mauritius (China Investment) Ltd. | Director | July 2010 | |
| YAN Yan | ATA Creativity Global | Director | March 2005 | |
| YAN Yan | Anqing SAIF Huanxin Enterprise Management Consultant Co., Ltd. | Director | November 2014 | |
| YAN Yan | Beijing Hanyuan Capital Management Co., Ltd. | Director | December 2015 | |
| YAN Yan | Beijing Xiaodu Entertainment Technology Co., Ltd. | Director | January 2018 | |
| YAN Yan | Guangdong Cable Co., Ltd. | Director | February 2017 | |
| YAN Yan | Guangzhou SAIF Heyin Asset Management Co., Ltd. | Director | August 2013 | |
| YAN Yan | Guodian Technology & Environmental Protection Group Co., Ltd. | Non-executive Director | June 2012 | August 2020 |
| YAN Yan | Heilongjiang Dazheng Derun Investment Management Co., Ltd. | Director | February 2017 | |
| YAN Yan | Heilongjiang Dazheng SAIF Investment Management Co., Ltd. | Director | November 2009 | |
| YAN Yan | Pacoo (Beijing) Technology Co., Ltd. | Director | September 2016 | |
| YAN Yan | Xiamen SAIF Venture Capital Management Co., Ltd. | Director | February 2012 | |
| YAN Yan | Shanghai Wenxi Enterprise Management Co., Ltd. | Director | June 2017 | |
| YAN Yan | Shanghai Yingxun Technology Co., Ltd. | Director | August 2017 | |
| YAN Yan | Shenzhen Orbbec Technology Co., Ltd. | Director | May 2018 | August 2020 |
| YAN Yan | Xinyong Computing Information Technology (Shanghai) Co., Ltd. | Director | September 2017 | |
| YAN Yan | Zhejiang Daily Interaction Network Technology Co., Ltd. | Director | December 2015 | May 2019 |
| YAN Yan | COFCO Haiyou Trading Co., Ltd. | Director | July 2013 | |
| YAN Yan | COFCO Womai Investment Co., Ltd. | Director | November 2018 | |
| YAN Yan | Khorgos Big Color Information Technology Co., Ltd. | Director | November 2018 | July 2019 |
| YAN Yan | Shenzhen Digital Media Technology Co., Ltd. | Director | October 2018 | |
| YAN Yan | Yinda International Holding Company Limited | Director | August 2014 | |
| YAN Yan | Wisers Information Holdings Company Limited | Director | May 2016 | |
| YAN Yan | Haier Smart Home Co., Ltd. | Director | June 2019 | November 2020 |
| YAN Yan | Shanghai Welltech Automation Co., Ltd. | Director | June 2019 | October 2020 |
| YAN Yan | 360 Finance, Inc. | Independent director | July 2019 | |
| YAN Yan | COFCO Haiyou (Beijing) Co., Ltd. | Director | November 2018 | |
| YAN Yan | COFCO Youcai Kitchen Food (Shanghai) Co., Ltd. | Director | November 2018 | |
| WU Bin | Shaanxi Xifeng Liquor Co., Ltd. | Director | 2012 | July 2020 |
| WU Bin | Shaanxi Xifeng 15-Year and 6-Year Liquor Marketing Co., Ltd. | Director | 2013 | |
| WU Bin | Hangzhou BroadLink Electronic Technology Co., Ltd. | Director | 2018 | |
| WU Bin | Pine Medical Limited | Director | 2019 | |
| WU Bin | Hong Kong Excellence Limited | Director | 2019 | |
| NING Xiangdong | Tsinghua University | Professor & Doctoral Tutor | 1990 | |
| NING Xiangdong | Weichai Power Co., Ltd. | Independent director | June 2018 | |
| NING Xiangdong | Sinopec Sales Co., Ltd. | Independent director | December 2018 | |
| NING Xiangdong | China Life Asset Management Co., Ltd. | Independent director | March 2018 | |
| NING Xiangdong | Sinochem Energy Co., Ltd. | Independent director | August 2018 | |
| NING Xiangdong | Xiamen Bank Co., Ltd. | Director | July 2017 | |
| NING Xiangdong | Shandong Heavy Industry Group Co., Ltd. | Director | January 2018 | |
| TANG Guliang | University of International Business and Economics | Professor | March 2006 |
| TANG Guliang | China JIC Leasing Co., Ltd. | Independent director | April 2017 | |
| TANG Guliang | Three Gorges Capital Holdings Co., Ltd. | Independent director | February 2018 | |
| TANG Guliang | Shanghai Fosun Pharmaceutical (Group) Co., Ltd. | Independent director | March 2019 | |
| TANG Guliang | Jointown Pharmaceutical Group Co., Ltd. | Independent director | November 2020 | |
| ZHANG Wei | Qifei International Development Co. Limited | Deputy President, Legal Affairs | February 2019 | |
| ZHANG Wei | AVIC Vanke Co., Ltd. | Director | January 2018 | |
| ZHANG Wei | Hengqin Vanke Cloudland Commercial Services Co., Ltd. | Director & General Manager | May 2017 | |
| ZHANG Wei | Shenzhen Yingda Investment Fund Management Co., Ltd. | Director | April 2016 | August 2020 |
| ZHANG Wei | Tian’an Xincheng Development (Hengqin) Co., Ltd. | Director | July 2017 | |
| ZHANG Wei | Shenzhen Wanhu Management Consulting Co., Ltd. | Supervisor | November 2017 | |
| ZHANG Wei | Shenzhen Wanhu Quanyuan Management Consulting Co., Ltd. | Supervisor | November 2017 | |
| ZHANG Wei | Shenzhen Wanshuzhimiao Management Consulting Co., Ltd. | Supervisor | November 2017 | |
| ZHANG Wei | Shenzhen Wanqing Management Consulting Co., Ltd. | Supervisor | November 2017 | |
| ZHANG Wei | Shenzhen Wanmazhengxian Management Consulting Co., Ltd. | Supervisor | November 2017 | |
| ZHANG Wei | Dongguan Vanke Real Estate Co., Ltd. | Supervisor | October 2015 | |
| ZHANG Wei | Lijiang Banyan Tree Property Services Co., Ltd. | Director | May 2018 | |
| ZHANG Wei | Lijiang Banyan Tree Hotel Co., Ltd. | Director | March 2018 | |
| ZHANG Wei | Lijiang Banyan Tree International Travel Agency Co., Ltd. | Director | March 2018 | |
| ZHANG Wei | Lijiang Angsana Real Estate Development Co., Ltd. | Director | July 2018 | |
| ZHANG Wei | Huangshan Banyan Tree Property Management Co., Ltd. | Director | September 2018 | |
| ZHANG Wei | Huangshan Banyan Tree Tourism Development Co., Ltd. | Director | September 2018 | |
| ZHANG Wei | Chengdu Banyan Tree No. 1 Real Estate Co., Ltd. | Director | June 2018 | |
| ZHANG Wei | Chengdu Banyan Tree No. 3 Real Estate Co., Ltd. | Director | June 2018 | |
| ZHANG Wei | Chengdu Banyan Tree No. 4 Real Estate Co., Ltd. | Director | June 2018 | |
| ZHANG Wei | Beijing 6.cn Technology Co., Ltd. | Director | December 2019 | August 2020 |
| ZHANG Wei | 360 Security Technology Inc. | Vice President | February 2019 | |
| ZHANG Wei | 360 Technology Group Co., Ltd. | Director | January 2021 | |
| ZHANG Wei | Tianjin 360 Technology Development Co., Ltd. | Director | February 2021 | |
| ZHANG Wei | Hangzhou Qifei Huachuang Technology Co., Ltd. | Director | January 2021 | |
| ZHANG Wei | Shanghai Jiehu Network Technology Co., Ltd. | Executive Director & Manager & Legal Representative | January 2021 | |
| ZHANG Wei | Shanghai 360 Changfeng Technology Co., Ltd. | Director & Legal Representative | November 2020 | |
| ZHANG Wei | Shenzhen Zhuoying Technology Co., Ltd. | Director | June 2020 | |
| ZHANG Wei | Lida Lianma (Zhuhai) Equity Investment Management Co., | Director | July 2020 |
| Ltd. | ||||
| ZHANG Wei | Dongguan Vanke City Development Co., Ltd. | Supervisor | October 2015 | |
| ZHANG Wei | Yangshuo Banyan Tree Hotel Co., Ltd. | Director | September 2018 | |
| ZHANG Wei | Zhenro Services Group Co., Ltd. | Director | June 2020 | |
| GAO Lijing | Netac Technology Co., Ltd. | Supervisor | January 2008 | July 2020 |
| LIANG Rong | Shanghai QianKun Photoelectric Technology Co., Ltd. | Supervisor | May 2015 | April 2019 |
| WU Bin | Shenzhen Shangzuo Charity Foundation | Secretary-General | November 2015 | |
| WU Bin | Shenzhen Lighting Institute | Director | November 2016 | |
| Explanation about the posts held at other entities | None | |||
III. Remunerations of directors, supervisors, senior officers and key technical staff
√ Applicable□ N/A
In RMB 0’000
| Decision-making procedure regarding the remunerations of directors, supervisors and senior officers | Pursuant to the Company’s Articles of Association, the Compensation and Performance Assessment Committee consider and review the compensation policy and proposal for directors and senior officers; the compensation proposal for senior officers is implemented after being approved by the Board of Directors; the compensation proposal for directors is implemented after being adopted by the Board of Directors and then approved by the general meeting of shareholders; and the compensation proposal for supervisors is implemented after being adopted by the Board of Supervisors and then approved by the general meeting of shareholders. |
| Basis for determining the remunerations of directors, supervisors and senior officers | The Company’s directors and supervisors who hold posts in the Company shall receive remunerations for such posts pursuant to the relevant provisions of the Company, but will not receive remunerations in their capacity as director or supervisor. Each independent director will receive a fixed amount of director’s emoluments. Non-independent directors not holding posts in the Company will receive director’s emoluments pursuant to the compensation proposal approved by the general meeting of shareholders. Remunerations paid to senior officers comprise salaries and bonuses, where the salaries are paid on a monthly basis according to the ranks and duties of the senior officers, and the bonuses are paid according to the operating results of the Company and their performance in the given year. |
| Remunerations actually paid to directors, supervisors and senior officers | During the reporting period, the remunerations actually paid to directors, supervisors and senior officers are consistent with the relevant information disclosed by the Company. |
| Total remunerations paid to directors, | 1,463.12 |
| supervisors and senior officers as of the end of the reporting period | |
| Total remunerations paid to key technical staff as of the end of the reporting period | 729.91 |
Note: Dr. LI Yi, Chairman of the Company, and Dr. HU Fei, Deputy General Manager of the Company, are key technical staff of the Company, and theremunerations actually paid to key technical staff at the end of the reporting period contain their remunerations.
IV. Changes in directors, supervisors, senior officers and key technical staff
√ Applicable□ N/A
| Name | Position | Change | Cause of change |
| ZENG Luhai | Deputy General Manager | Left the Company | Personal career development |
| XIAO Yangjian | Board Secretary & Deputy General Manager | Left the Company | Personal reason |
V. Penalties imposed by the securities regulatory authorities in the past three years
□ Applicable√ N/A
VI. Employees of the parent company and major subsidiaries(I) Employees
| Number of active employees of the parent company | 858 | ||
| Number of active employees of major subsidiaries | 312 | ||
| Total number of active employees | 1,170 | ||
| Number of retired employees for whom the parent company and major subsidiaries need to pay certain expenses | 2 | ||
| Profession | |||
| Category | Current period | Previous period | |
| Production staff | 492 | 473 | |
| Sales staff | 138 | 166 | |
| R&D staff | 369 | 387 | |
| Financial staff | 35 | 33 | |
| Management staff and administrative staff | 136 | 187 | |
| Total | 1,170 | 1,246 | |
| Education | |||
| Level of education | Current period | Previous period | |
| Doctor | 24 | 29 | |
| Master | 158 | 154 | |
| Undergraduate | 458 | 486 | |
| College or below | 530 | 577 | |
| Total | 1,170 | 1,246 | |
(II) Compensation policy
√ Applicable□ N/A
In order to ensure the market competitiveness externally and fairness internally of ourremunerations, on the principle of performance-based distribution to create and share corporate valueand improve the effectiveness of employee incentives, we have designed a compensation system basedon post, capability and performance, according to the design concept and approaches of internationalcompensation system, and by reference to the compensation level on the market. Our compensationsystem is based on position hierarchy, wherein different positions and ranks correspond to differentlevels of compensation, so that the employees’ compensation corresponds to the value of their positionand their capability and experience. The employees’ overall compensation is linked to their performanceand contribution to the Company, thereby establishing a performance-based compensation and incentivesystem. In addition to fixed salaries and bonuses, our employees enjoy a variety of benefits. We adjustthe salaries of all employees or promote certain employees to higher ranks or positions or adjust thesalaries of certain employees every year according to the compensation level on the market, changes inthe ranks of employees, performance and other relevant factors.
(III) Training programs
√ Applicable□ N/A
We gradually improved the talent development system, including the “Star Light Program” for thedevelopment of college graduates, the “Sharp Light Program” for the development of grassrootsmanagers, and the “Polar Light Program” for the development of middle managers. The continuoustalent input and intensive culture inheritance in the training at both the primary and middle leveleffectively support the stable development of the Company.In 2020, the pandemic stimulated online learning and sharing internally. By applying the onlinelearning platform, combining various training forms, and integrating theory with practice in training, wefurther enhance the three-level training and management system to integrate training programs at theCompany level, universal capability training at the central level, and field-specific capability training atthe department level, which received the employee satisfaction of 9 out of 10 scores. We organized 608training sessions for a total of 16,500 training hours this year, which effectively meet the demands foremployee personal capability development and organization capability improvement. In 2020, weintensified the efforts of improving the lecturer system - nearly 300 internal lecturers presented trainingsessions for their departments or for other departments. The system of internal lecturers provides a stagefor backbone employees to share their knowledge and experience, and helps to cultivate the teamatmosphere of sharing with and learning from each other.In 2021, we will further improve the training system - with the core objective of improving theorganization performance and product development intended for solving problems, we will empowerkey personnels with capabilities to solve actual problems and develop various professionalknowledge/skill courses for backbone elites in various fields. With project-based capability developmentand professional skill-based course learning, we will build a complete ecology chain of internal talentprovision within 2 years. With backbone talents trained internally combined with elites attractedexternally, we can build a hierarchical system consisting of outstanding talents with a reasonablestructure to promote the sustainable rapid development of the Company.
(IV) Outsourced workers
√ Applicable□ N/A
| Total man-hours of outsourced workers | 35,299 hours |
| Total remunerations paid to outsourced workers | RMB 784,381.85 |
VII. Other information
□ Applicable√ N/A
Section IX Corporate Governance
I. Corporate governance
√ Applicable□ N/A
We have continuously improved our corporate governance structure and operated in strictaccordance with the requirement of the Company Law, the Securities Law and the relevant rules andregulations of the CSRC and the SSE, taking into account our actual business situations, and establisheda corporate governance structure comprising the general meeting of shareholders, the Board of Directors,the Board of Supervisors and the management, and a mechanism in which the highest authority, thedecision-making body, the supervisory body and the management coordinate with and hold up eachother. We have established a sound corporate governance system, to effectively protect the interests ofinvestors.(I) Shareholders and general meeting of shareholdersThe general meeting of shareholders is the highest authority of the Company. During the reportingperiod, we have convened and held general meetings of shareholders in strict accordance with ourArticles of Association (“AOA”), the Rules of Procedure of the General Meeting of Shareholders andother applicable laws and regulations. The notices, convening, resolutions, voting, signing andinformation disclosures in respect of the general meeting of shareholders comply with the relevantprovisions of the Company Law, the Securities Law, the CSRC and the SSE, and the resolutions of thegeneral meeting of shareholders are legal and valid. We have fully protected the rights of allshareholders, especially the minority shareholders, and ensured that each shareholder can enjoy the rightto know and participate in the affairs of the Company and fully exercise his voting rights according tolaw.
(II) Directors and the Board of Directors
The Board of Directors is the standing decision-making and management body of the Company,and has set up four committees, namely the Strategy Committee, the Compensation and PerformanceAssessment Committee, the Nomination Committee and the Audit Committee. During the reportingperiod, the number of directors and the composition of the Board of Directors comply with therequirements of the applicable laws and regulations and the AOA; the Board of Directors has exercisedits functions and powers in strict accordance with the requirements of the applicable laws andregulations, the AOA, the Rules of Procedure of the Board of Directors, and the Work Regulations forIndependent Directors, and each director has been assiduous in his duties and actively received therelevant trainings. In order to improve the objectivity and scientificness of the decisions made by theBoard of Directors, we have appointed the independent directors to participate in and supervise thedecision-making process of the Board of Directors. The independent directors have performed theirduties independently, actively safeguarded the interests of the Company and the shareholders, andexpressed their opinions on important and material matters of the Company. The committees of theBoard of Directors have fully exercised their relevant functions, to ensure that the Board of Directorsmakes scientific and reasonable decisions for the Company.
(III) Supervisors and the Board of SupervisorsThe Board of Supervisors is the supervisory body of the Company and comprises three supervisors.The Board of Supervisors has exercised its functions and powers according to the procedures set forth inthe AOA and the Rules of Procedure of the Board of Supervisors, effectively supervised the legal andregulatory compliance of the performance of duties by the financial staff, directors and senior officers ofthe Company, and actively safeguarded the interests of the Company and the shareholders.(IV) Management of information disclosuresDuring the reporting period, we have disclosed the relevant information truthfully, accurately,promptly, fairly and completely, and duly performed our obligation of information disclosure inaccordance with the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of theShanghai Stock Exchange, the Administrative Measures for Information Disclosure by the ListedCompanies and other applicable laws and regulations, and our Information Disclosure Policy, to ensurethat all shareholders and other stakeholders have equal access to the information of the Company.
(V) Registration of insidersDuring the reporting period, we have registered and filed the insiders in connection with the mattersdisclosed in our regular reports in strict accordance with the applicable laws and regulations and ourInsider Management Policy.
During the reporting period, we have defined the respective responsibilities of the general meetingof shareholders, the Board of Directors, the Board of Supervisors and the management. According to therequirements of the Board of Directors, the management has continuously improved the managementcycle led by mechanism, guaranteed by system, guided by culture and supported by capacity. Ourmanagement level and governance capability have been improved remarkably, providing furtherassurance for our healthy and sustainable development. The directors, supervisors and senior officershave been assiduous in their duties, and seriously exercised the rights and performed the obligationsunder the Company Law and the AOA, to ensure the safe, steady and sustainable development of theCompany and safeguard the interests of the shareholders to the maximum extent practicable.
Control structure by agreement and other special arrangements in respect of corporategovernance
□ Applicable√ N/A
Explanation about the material deviations (if any) of the Company’s corporate governance from therelevant requirements of the CSRC
□ Applicable√ N/A
II. General meetings of shareholders held
| Session | Date of meeting | Reference to resolutions published on the designated website | Date of disclosure of resolutions |
| Annual general meeting of shareholders in 2019 | May 22, 2020 | www.sse.com.cn | May 23, 2020 |
| 1st extraordinary general | August 7, 2020 | www.sse.com.cn | August 8, 2020 |
| meeting of shareholders in 2020 | |||
| 2nd extraordinary general meeting of shareholders in 2020 | September 3, 2020 | www.sse.com.cn | September 4, 2020 |
| 3rd extraordinary general meeting of shareholders in 2020 | November 13, 2020 | www.sse.com.cn | November 14, 2020 |
Explanation about the general meetings of shareholders
√ Applicable□ N/A
All proposals submitted to the general meeting have been reviewed and passed.
III. Performance of duties by the directors(I) Attendance by the directors of the meetings of the Board of Directors and shareholders
| Director Name | Whether or not an independent director | Attendance of the meetings of the Board of Directors | Attendance of the general meetings of shareholders | |||||
| Meetings the director should have attended in 2020 | Meetings attended in person | Meetings attended through communication equipment | Meetings attended by proxy | Absence times | Whether the director has been absent from two consecutive meetings | General meetings of shareholders attended | ||
| LI Yi | No | 8 | 2 | 6 | 0 | 0 | No | 4 |
| YAN Yan | No | 8 | 0 | 8 | 0 | 0 | No | 4 |
| WU Bin | No | 8 | 1 | 7 | 0 | 0 | No | 4 |
| BO Lianming | No | 8 | 2 | 6 | 0 | 0 | No | 4 |
| NING Xiangdong | Yes | 8 | 0 | 8 | 0 | 0 | No | 4 |
| TANG Guliang | Yes | 8 | 1 | 7 | 0 | 0 | No | 4 |
| ZHANG Wei | Yes | 8 | 1 | 7 | 0 | 0 | No | 4 |
Explanation about absence from two consecutive meetings of the Board of Directors
□ Applicable√ N/A
| Meetings of the Board of Directors held in 2020 | 8 |
| Where: Face-to-face meetings | 0 |
| Meeting held through communication equipment | 6 |
| Meetings held both in the form of face-to-face meeting and through communication equipment | 2 |
(II) Objections raised by the independent directors to matters of the Company
□ Applicable√ N/A
(III) Others
□ Applicable√ N/A
IV. Important opinions and suggestions put forward by the committees of the Board of Directorsduring the reporting period and objections thereto (if any)
√ Applicable□ N/A
The Board of Directors has set up the Strategy Committee, the Audit Committee, the Compensationand Performance Assessment Committee, and the Nomination Committee. Each committee has dulyexercised its functions in strict accordance with the AOA, the Rules of Procedure of the Board ofDirectors, the rules of procedure of such committee and other relevant regulations. During the reportingperiod, the Strategy Committee has held one meeting; the Audit Committee has held three meetings; theCompensation and Performance Assessment Committee has held one meeting, and the NominationCommittee has held one meeting. The members of each committee have actively attended the meetingsof such committee, been assiduous in their duties, duly exercised the functions and powers delegated bythe Board of Directors to such committee, put forward guidance and advice for the proper functioning ofsuch committee and the long-term development of the Company, and played active roles in improvingthe corporate governance structure and promoting the development of the Company.During the reporting period, the members of the Strategy Committee have seriously performed theirduties, fully communicated with the management of the Company with respect to the futuredevelopment direction, external investments and other affairs of the Company from the prospective oftheir profession and put forward reasonable suggestions on the basis of the actual operations of thecompany; the Audit Committee has duly exercised its functions, and played an active role in theappointment of the auditor, review of regular financial reports, examination of related-party transactions,establishment of internal controls, and other relevant affairs of the Company; the Compensation andPerformance Assessment Committee has assessed the performance of the senior officers of the Company,examined the compensation proposal for the senior officers, and reviewed and expressed its opinions onthe 2019 restrictive share incentive plan of the Company; and the Nomination Committee has examinedthe qualifications of the senior officers of the Company, and reviewed and expressed its opinions on thecriteria and procedures in respect of the appointment of the senior officers. Each committee of the Boardof Directors has duly performed the duty of care.
V. Risks of the Company identified by the Board of Supervisors
□ Applicable√ N/A
VI. Give an explanation if the Company cannot guarantee its dependence and ability to operate
independently due to its relationship with the controlling shareholder in business, personnel,
assets, organization, financial and other affairs
□ Applicable√ N/A
Solutions to horizontal competition with the Company (if any) and the relevant progress and subsequentaction plans
□ Applicable√ N/A
VII. Performance assessment mechanism for senior officers and the establishment andimplementation of incentive mechanism for senior officers during the reporting period
√ Applicable□ N/A
The remunerations of the senior officers comprise salaries and bonuses. The Compensation andPerformance Assessment Committee of the Board of Directors is responsible for formulating andimplementing the compensation proposal and performance assessment proposal for senior officers. Thecompensation proposal for senior officers has been reviewed in accordance with the AOA and otherrelevant corporate governance policies. During the reporting period, the remunerations paid to the seniorofficers of the Company have been reviewed and approved by the Board of Directors. During thereporting period, the senior officers have been assiduous in their duties in strict accordance with therequirements of the Company Law and other applicable laws and regulations and the AOA, andcontinuously enhanced internal management of the Company under the guidance of the Board ofDirectors, to lay a solid foundation for future development of the Company.
VIII. Whether a self-assessment report on internal controls has been disclosed
√ Applicable□ N/A
For details, refer to the 2020 Assessment Report on Internal Controls of Appotronics CorporationLimited disclosed on www.SSE.com.cn on April 24, 2021.Explanation about material loopholes in internal controls during the reporting period
□ Applicable√ N/A
IX. Explanation about the auditor’s report on internal controls
√ Applicable□ N/A
For details, refer to the Audit Report on Internal Controls of Appotronics Corporation Limiteddisclosed on www.SSE.com.cn on April 24, 2021.Whether an auditor’s report on internal controls has been disclosed: YesOpinions in the audit report on internal controls: Standard unqualified opinion
X. Others
□ Applicable√ N/A
Section X Corporate Bonds
□ Applicable√ N/A
Section XI Financial Report
I. Auditor's report
√ Applicable□ N/A
I. OpinionWe have audited the financial statements of Appotronics Corporation Limited(hereinafter referred to as “Appotronics”), which comprise the consolidated and the ParentCompany's balance sheets as at December 31, 2020, and the consolidated and the ParentCompany's income statements, the consolidated and the Parent Company's statements ofcash flow and the consolidated and the Parent Company's statements of changes in owners'equity for the year then ended, and the notes to the relevant financial statements.In our opinion, the accompanying financial statements of Appotronics are preparedand present fairly, in all material respects, the consolidated and the Parent Company'sfinancial position as of December 31, 2020, and the consolidated and the Parent Company'sresults of operations and cash flows for the year then ended in accordance with AccountingStandards for Business Enterprises.
II. Basis for opinionWe conducted our audit in accordance with Auditing Standards for Certified PublicAccounts of China. Our responsibilities under those standards are further described in the“Auditors' Responsibilities for Audit of Financial Statements” section of our report. We areindependent of Appotronics Corporation in accordance with the code of ethics for ChineseCertified Public Accountants, and we have fulfilled our other ethical responsibilities inaccordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
III. Key audit itemsKey audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.(I) Revenue recognition
1. Description
Details of relevant information are disclosed in V.38, VII.61, and XVI.6 of Section XI.
Appotronics Corporation is mainly engaged in research, development, production,sales and leasing of laser display core devices and complete equipment. In 2020, theoperating income of Appotronics Corporation amounted to RMB 1,948,884,176.83, ofwhich sales and other incomes were RMB 1,777,151,562.17, representing 91.19% of thetotal operating income, and lease incomes were RMB 171,732,614.66, representing 8.81%of the total operating income.The specific methods for revenue recognition in the current period are as follows:
(1) Revenue from sales of goods
Revenue from sales of goods denotes contractual obligations to be performed at a timepoint. Our sales include sales to the domestic market and sales to foreign markets.
Goods sold to the domestic market: 1) Under the direct sale model and the distributionmode, the Company recognizes the revenue when the goods sent have been delivered tocustomers with customers' receipt given to the Company. For goods sold attached withreturn conditions, the Company recognizes the revenue according to the amount of theconsideration expected to be received by the Company on the basis of transferring goods tothe customer, and recognizes liabilities to write off the revenue according to the expectedamount to be refunded due to the return of goods; for goods required for installment andinspection after sales, the Company recognizes the revenue when such goods have beeninstalled and inspected with customers' acceptance certificate given to the Company. If theCompany shares profits from sales of product to downstream end customers, the Companyrecognizes the revenue at the goods price agreed between the parties upon the delivery ofgoods to the customer and reconciliation, and recognizes shared revenue according to theshare profit reconciliation statement when the profits from sales of goods are realized. 2)Under the commissioned sales mode, the Company recognizes the revenue when it receivesthe list of commissioned sales from the customer.
Goods exported to overseas markets: The Company mainly adopts FCA for export ofgoods. Under this mode, the Company recognizes revenue when it delivers goods at thedesignated location with export customs clearance procedures completed.
(2) Other incomes
Other revenues of the Company denote contractual obligations to be performed at atime point/during a specific period of time. For installation services provided by theCompany, the Company recognizes the revenue when it has completed the services andreceived customers’ acceptance certificate; for repair and maintenance services provided by
the Company, the Company recognizes the revenue when it has completed the services andreceived payments; for patent license services provided by the Company, the Companyrecognizes the revenue when the patent license is delivered; for technology developmentservices provided by the Company, the Company recognizes the revenue when it hascompleted the services or when the agreed time point of service acceptance is reached.
(3) Lease incomes
The Company recognizes rents in profit or loss for the current period over the wholelease term on a straight line basis. Contingent rents are recognized in profit or loss in theperiod in which they are incurred.As the operating income is one of Appotronics Corporation 's KPIs, there may be aninherent risk that the management of Appotronics Corporation (hereinafter referred to as"management”) may recognize the revenue inappropriately to achieve specific objectives orexpectations. Therefore, we identified revenue recognition as a key audit matter.
2. Description of how the key audit matter was addressed in the audit
For revenue recognition, our audit procedures include, inter alia:
(1) Understand the key internal controls related to revenue recognition, evaluate thedesign of those controls, determine whether they are implemented, and test the operationaleffectiveness of the relevant internal controls;
(2) Examine major sales contracts and lease contracts, understand the major provisionsor conditions thereof, and evaluate whether revenue recognition methods are appropriate;
(3) Implement analysis procedures for operating income and gross margin by month,product, customer, etc., to identify whether there are significant or unusual fluctuations andto find out the causes of such fluctuations;
(4) For sales income, sample supporting documents related to revenue recognition,including sales contracts or orders, sales invoices, warehouse receipts, delivery notes,transport information, customer signature forms, export declarations and electronic portsystem information; for lease income, sample supporting documents including, amongother things, lease contracts, orders, installation orders, unit lease price per hour, andnumber of hours consumed;
(5) In conjunction with accounts receivable confirmation procedures, sendconfirmation to major customers to recognize the current incomes on a sample basis;
(6) Conduct the cut-off test on the operating incomes recognized on or after thebalance sheet date to evaluate whether the operating incomes are recognized during theappropriate period;
(7) Obtain a record of sales returns after the balance sheet date to check if there is anyinstance that conditions for revenue recognition were not met at the balance sheet date;
(8) Check whether information relative to operating income is properly presented inthe financial statements.
(II) Net realizable value of inventories
1. Description
Details of relevant information are disclosed in V.15 and VII.9 of Section XI.
As of December 31, 2020, the carrying amount of inventories of Appotronicsamounted to RMB 449,109,297.76, and provisions for decline in value of inventoriesamounted to RMB 30,297,156.96, hence the book value of inventories amounted to RMB418,812,140.80.
At the balance sheet date, inventories are measured at the lower of cost and netrealisable value. If the net realisable value is below the cost of inventories, a provision fordecline in value of inventories is made. In view of the purpose of holding inventories, themanagement determines the estimated selling price of inventories based on historical oractual selling prices, and the net realizable value of inventories in accordance with thebalance of the estimated selling price less the sum of the estimated costs of completion andthe estimated costs necessary to make the sale and relevant taxes. The amount ofinventories is material and the determination of the net realizable value of inventoriesinvolves significant management judgment, therefore, we identified the determination ofthe net realizable value of inventories as a key audit matter.
2. Description of how the key audit matter was addressed in the audit
For the net realizable value of inventories, our audit procedures include, inter alia:
(1) Understand the key internal controls related to the net realizable value ofinventories, evaluate the design of those controls, determine whether they are implemented,and test the operational effectiveness of the relevant internal controls;
(2) Review the management's forecast of the estimated selling price of inventories ona sample basis, comparing the estimated selling price with historical data and subsequentsituations, etc.;
(3) Evaluate the appropriateness of the management's estimates on the estimated costsof completion of inventories and the estimated costs necessary to make the sale andrelevant taxes;
(4) Test the accuracy of the management's calculation on the net realizable value ofinventories;
(5) Evaluate the reasonableness of the management's estimates on the net realizablevalue of inventories by checking inventories recognized at the end of the period in terms oflong age, obsolescence, changes in technology or market demand in conjunction withinventory monitoring;
(6) Check whether information relative to the net realizable value of inventories isproperly presented in the financial statements.
IV. Other information
The management is responsible for other information. The other informationcomprises the information included in the annual report, but does not include the financialstatements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a materialmisstatement of this other information, we are required to report that fact. We have nothingto report in this regard.
V. Responsibilities of the Management and governance with respect to thefinancial statements
The management is responsible for the preparation and fair presentation of thefinancial statements in accordance with Accounting Standards for Business Enterprises, anddesigning, implementing and maintaining internal control that is necessary to enable thefinancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessingAppotronics’s ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unless themanagement either intends to liquidate Appotronics or to cease operations, or has norealistic alternative but to do so.
Those charged with governance of Appotronics (hereinafter referred to as “ThoseCharged with Governance”) are responsible for overseeing Appotronics’s financialreporting process.
VI. Responsibilities of Certified Public Accountants with respect to the financialstatements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud or error,and to issue an auditor's report that includes our opinion solely to you. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan that resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management's use of the going concernbasis of accounting. Meanwhile, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt onAppotronics Corporation's ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required by audit standards to draw users’ attention inour auditor’s report to the related disclosures in the financial statements. If such disclosuresare inadequate, we are supposed to express an unqualified opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor's report. However, futureevents or conditions may cause Appotronics Corporation to cease to continue as a goingconcern.(V) Evaluate the overall presentation, structure and content of the financial statements,and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financialinformation of the entities or business activities within Appotronics Corporation to expressan opinion on the financial statements. We are responsible for the direction, supervisionand performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicatewith them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determinethose matters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
Pan-China Certified Public Accountants (Special General Partnership)Chinese Certified Public Accountant:
(Partner in Charge)
Hangzhou City, China Chinese Certified Public Accountant:
April 22, 2021
II. Financial statements
Consolidated Balance Sheet
December 31, 2020Prepared by: Appotronics Corporation Limited
In RMB
| Item | Note | December 31, 2020 | December 31, 2019 |
| Current Assets: | |||
| Cash and bank balances | 1 | 1,037,760,573.27 | 875,858,784.58 |
| Balances with clearing agencies | |||
| Placements with banks and other financial institutions | |||
| Held-for-trading financial assets | 2 | 114,000,000.00 | 540,000,000.00 |
| Derivative financial assets | |||
| Notes receivable | 3 | 3,726,328.91 | 4,042,559.63 |
| Accounts receivable | 4 | 341,660,832.43 | 176,035,155.24 |
| Receivables financing | 5 | 11,959,000.00 | 1,980,500.00 |
| Prepayments | 6 | 47,447,601.43 | 35,070,999.13 |
| Premiums receivable | |||
| Amounts receivable under reinsurance contracts | |||
| Reinsurer’s share of insurance contract reserves | |||
| Other receivables | 7 | 12,534,062.15 | 9,618,750.08 |
| Where: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 8 | 418,812,140.80 | 299,966,170.35 |
| Contract assets | 9 | 3,744,655.50 | |
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 10 | 13,002,195.46 | 44,405,513.30 |
| Total current assets | 2,004,647,389.95 | 1,986,978,432.31 | |
| Non-current Assets: | |||
| Loans and advances | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term accounts receivable | 11 | 13,196,087.78 | |
| Long-term equity investment | 12 | 262,744,772.48 | 139,534,371.94 |
| Investment in other equity instruments | 13 | 11,975,419.38 | 11,975,419.38 |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 14 | 447,571,328.91 | 471,204,340.95 |
| Construction in progress | 15 | 51,576,850.72 | 20,132,004.07 |
| Productive biological assets | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 16 | 320,488,235.60 | 332,331,324.07 |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | 17 | 11,572,346.79 | 16,908,070.34 |
| Deferred tax assets | 18 | 96,132,114.02 | 109,023,941.85 |
| Other non-current assets | 19 | 6,299,781.06 | 11,420,185.94 |
| Total non-current assets | 1,221,556,936.74 | 1,112,529,658.54 | |
| Total assets | 3,226,204,326.69 | 3,099,508,090.85 | |
| Current Liabilities: | |||
| Short-term borrowings | 20 | 88,778,852.86 | 76,765,319.05 |
| Loans from the central bank | |||
| Taking from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 21 | 116,822,674.67 | 37,335,841.79 |
| Accounts payable | 22 | 226,494,815.90 | 176,624,445.46 |
| Advance from customers | 23 | 153,258,189.88 | 184,444,643.33 |
| Contract liabilities | 24 | 31,518,312.59 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and deposits from banks and other financial institutions | |||
| Funds from securities trading agency | |||
| Funds from underwriting securities agency | |||
| Employee benefits payable | 25 | 46,105,566.15 | 50,586,932.71 |
| Taxes payable | 26 | 19,871,846.94 | 42,924,647.79 |
| Other payables | 27 | 59,848,053.83 | 14,364,076.43 |
| Where: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Amounts payable under reinsurance contracts | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 28 | 181,417,412.46 | 64,968,795.02 |
| Other current liabilities | 29 | 3,045,831.07 | |
| Total current liabilities | 927,161,556.35 | 648,014,701.58 | |
| Non-current Liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | 30 | 64,845,281.53 | 279,615,107.27 |
| Bonds payable | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Leasing liabilities | |||
| Long-term payables | 31 | 3,262,450.00 | 3,488,100.00 |
| Long-term employee benefits payable | |||
| Estimated liabilities | 32 | 28,799,354.65 | 27,072,676.49 |
| Deferred income | 33 | 16,723,257.15 | 17,108,361.69 |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 113,630,343.33 | 327,284,245.45 | |
| Total liabilities | 1,040,791,899.68 | 975,298,947.03 | |
| Owners’ Equity (Shareholders’ Equity): | |||
| Paid-in capital (or share capital) | 34 | 452,756,901.00 | 451,554,411.00 |
| Other equity instruments | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 35 | 1,249,020,991.15 | 1,207,942,318.37 |
| Less: Treasury shares | |||
| Other comprehensive income | 36 | -3,214,291.93 | 3,287,063.85 |
| Special reserve | |||
| Surplus reserve | 37 | 35,242,179.57 | 22,800,224.13 |
| General risk reserve | |||
| Undistributed profit | 38 | 357,793,891.96 | 288,975,820.29 |
| Total owners’ (or shareholders’) equity attributable to owners of the parent company | 2,091,599,671.75 | 1,974,559,837.64 | |
| Minority interests | 93,812,755.26 | 149,649,306.18 | |
| Total owners’ (or shareholders’) equity | 2,185,412,427.01 | 2,124,209,143.82 | |
| Total liabilities and owners’ (or shareholders’) equity | 3,226,204,326.69 | 3,099,508,090.85 |
Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Balance Sheet of the Parent Company
December 31, 2020Prepared by: Appotronics Corporation Limited
In RMB
| Item | Note | December 31, 2020 | December 31, 2019 |
| Current Assets: | |||
| Cash and bank balances | 709,932,686.71 | 570,479,390.49 | |
| Held-for-trading financial assets | 114,000,000.00 | 540,000,000.00 | |
| Derivative financial assets | |||
| Notes receivable | 2,314,628.91 | 3,542,559.63 | |
| Accounts receivable | 1 | 567,539,506.79 | 299,315,776.44 |
| Receivables financing | 100,000.00 | 442,500.00 | |
| Prepayments | 11,001,439.23 | 6,410,257.48 | |
| Other receivables | 2 | 71,654,117.57 | 67,227,575.21 |
| Where: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 169,022,971.44 | 135,617,379.22 | |
| Contract assets | 3,720,160.50 | ||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 1,297,388.01 | 12,280,164.39 | |
| Total current assets | 1,650,582,899.16 | 1,635,315,602.86 | |
| Non-current Assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term accounts receivable | 13,196,087.78 | ||
| Long-term equity investment | 3 | 421,648,284.99 | 257,795,276.13 |
| Investment in other equity instruments | 7,075,419.38 | 7,075,419.38 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 57,409,189.33 | 60,391,512.92 | |
| Construction in progress | 37,982,329.74 | 1,385,496.59 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 319,438,893.42 | 330,796,423.87 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | 9,562,162.36 | 12,771,126.83 | |
| Deferred tax assets | 6,680,188.67 | 9,545,438.20 | |
| Other non-current assets | 5,411,561.28 | 6,744,453.85 | |
| Total non-current assets | 878,404,116.95 | 686,505,147.77 | |
| Total assets | 2,528,987,016.11 | 2,321,820,750.63 | |
| Current Liabilities: | |||
| Short-term borrowings | 11,410,560.27 | 10,217,738.36 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 32,313,678.21 | 37,335,841.79 |
| Accounts payable | 210,885,240.65 | 162,596,838.45 | |
| Advance from customers | 2,688,210.54 | 11,116,659.11 | |
| Contract liabilities | 20,609,190.34 | ||
| Employee benefits payable | 28,514,763.09 | 26,985,668.92 | |
| Taxes payable | 5,830,858.89 | 1,534,242.70 | |
| Other payables | 23,058,804.83 | 42,599,703.36 | |
| Where: Interest payable | |||
| Dividend payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 1,001,024.66 | ||
| Other current liabilities | 1,918,391.60 | ||
| Total current liabilities | 338,230,723.08 | 292,386,692.69 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 29,029,715.07 | ||
| Bonds payable | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Leasing liabilities | |||
| Long-term payables | 3,262,450.00 | 3,488,100.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | 16,345,891.60 | 14,631,273.00 | |
| Deferred income | 14,450,411.10 | 15,724,174.30 | |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 63,088,467.77 | 33,843,547.30 | |
| Total liabilities | 401,319,190.85 | 326,230,239.99 | |
| Owners’ Equity (Shareholders’ Equity): | |||
| Paid-in capital (or share capital) | 452,756,901.00 | 451,554,411.00 | |
| Other equity instruments | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,351,261,718.84 | 1,310,939,867.82 | |
| Less: Treasury shares | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 33,964,638.84 | 21,522,683.40 | |
| Undistributed profit | 289,684,566.58 | 211,573,548.42 | |
| Total owners’ (or shareholders’) equity | 2,127,667,825.26 | 1,995,590,510.64 | |
| Total liabilities and owners’ (or shareholders’) equity | 2,528,987,016.11 | 2,321,820,750.63 |
Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Consolidated Income StatementJanuary to December 2020
In RMB
| Item | Note | 2020 | 2019 |
| I. Total operating income | 1 | 1,948,884,176.83 | 1,979,148,918.89 |
| Where: Operating income | 1 | 1,948,884,176.83 | 1,979,148,918.89 |
| Interest income | |||
| Premiums earned | |||
| Fee and commission income | |||
| II. Total operating costs | 1,882,807,642.88 | 1,726,836,417.68 | |
| Where: Operating costs | 1 | 1,393,075,043.93 | 1,183,650,635.25 |
| Interest expenses | |||
| Fee and commission expenses | |||
| Surrenders | |||
| Claims and policyholder benefits (net of amounts recoverable from reinsurers) | |||
| Net withdrawal of insurance contract reserves | |||
| Insurance policyholder dividends | |||
| Expenses for reinsurance accepted | |||
| Taxes and additions | 2 | 6,718,744.79 | 7,610,151.14 |
| Selling expenses | 3 | 133,588,234.60 | 151,760,111.00 |
| Administrative expenses | 4 | 135,757,276.26 | 152,626,530.61 |
| R&D expenses | 5 | 204,443,369.10 | 201,697,766.26 |
| Financial expenses | 6 | 9,224,974.20 | 29,491,223.42 |
| Where: Interest expense | 20,066,451.02 | 33,120,484.94 | |
| Interest income | 10,322,478.28 | 4,079,231.03 | |
| Add: Other income | 7 | 45,255,000.90 | 34,124,614.12 |
| Investment income (loss is indicated by “-”) | 8 | 17,945,571.02 | 9,549,063.05 |
| Where: Income from investments in associates and joint ventures | -679,282.94 | -3,927.93 | |
| Gains from derecognition of financial assets at amortized assets | |||
| Foreign exchange gains (loss is indicated by “-”) | |||
| Gains from net exposure hedges (loss is indicated by “-”) | |||
| Gains from changes in fair values (loss is indicated by “-”) | |||
| Losses of credit impairment (loss is indicated by “-”) | 9 | -9,121,278.95 | -3,771,572.38 |
| Impairment losses of assets (loss is indicated by “-”) | 10 | -11,590,694.43 | -12,623,251.67 |
| Gains from disposal of assets (loss is indicated by “-”) | 11 | 281,040.26 | 41,420.84 |
| III. Operating profit (loss is indicated by “-”) | 108,846,172.75 | 279,632,775.17 | |
| Add: Non-operating income | 12 | 4,638,435.10 | 3,926,066.73 |
| Less: Non-operating expense | 13 | 2,063,172.96 | 4,200,197.56 |
| IV. Total profits (total losses are indicated by “-”) | 111,421,434.89 | 279,358,644.34 | |
| Less: Income tax expenses | 14 | 24,764,236.32 | 54,982,221.63 |
| V. Net profits (net losses are indicated by | 86,657,198.57 | 224,376,422.71 |
| “-”) | |||
| (I) Categorized by the continuity of operation | |||
| 1. Net profits from continuing operations (net losses are indicated by "-") | 86,657,198.57 | 224,376,422.71 | |
| 2. Net profits from discontinued operations (net losses are indicated by “-”) | |||
| (II) Categorized by the ownership | |||
| 1. Net profits attributable to shareholders of the Parent Company (net losses are indicated by "-") | 113,847,873.06 | 186,457,276.71 | |
| 2. Profits or losses attributable to minority shareholders (net losses are indicated by “-”) | -27,190,674.49 | 37,919,146.00 | |
| VI. Other comprehensive income, net of tax | 15 | -6,496,909.69 | 2,311,885.81 |
| (I) Other comprehensive income that can be attributable to owners of the Parent Company, net of tax | -6,501,355.78 | 2,242,360.85 | |
| 1. Other comprehensive income that cannot be reclassified subsequently to profit or loss | |||
| (1) Changes from remeasurement of defined benefit plans | |||
| (2) Other comprehensive income that cannot be reclassified to profit or loss under the equity method | |||
| (3) Changes in fair value of investments in other equity instruments | |||
| (4) Changes in fair value of enterprises’ own credit risks | |||
| 2. Other comprehensive income that will be reclassified to profit or loss | -6,501,355.78 | 2,242,360.85 | |
| (1) Other comprehensive income that will be reclassified to profit or loss under the equity method | |||
| (2) Changes in fair value of other debt investments | |||
| (3) Amount of financial assets reclassified to other comprehensive income | |||
| (4) Provision for credit impairment of other debt investments | |||
| (5) Reserve for cash flow hedges | |||
| (6) Exchange differences on translation of financial statements denominated in foreign currencies | -6,501,355.78 | 2,242,360.85 | |
| (7) Others | |||
| (II) Other comprehensive income that can be attributable to minority shareholders, net of tax | 4,446.09 | 69,524.96 | |
| VII. Total comprehensive income | 80,160,288.88 | 226,688,308.52 | |
| (I) Total comprehensive income that can be attributable to owners of the Parent Company | 107,346,517.28 | 188,699,637.56 | |
| (II) Total comprehensive income that can be attributable to minority shareholders | -27,186,228.40 | 37,988,670.96 | |
| VIII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | 0.25 | 0.45 | |
| (II) Diluted earnings per share (RMB/share) | 0.25 | 0.45 |
In the event of business combinations involving enterprises under common control, the net profitsrealized prior to the combination by the party being absorbed is: RMB 0, and the net profits realized inthe last period by the party being absorbed is: RMB 0.Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Income Statement of the Parent Company
January to December 2020
In RMB
| Item | Note | 2020 | 2019 |
| I. Operating income | 1 | 1,064,149,969.51 | 1,070,365,243.34 |
| Less: Operating costs | 1 | 720,452,860.84 | 728,135,468.64 |
| Taxes and additions | 4,809,443.68 | 4,961,497.25 | |
| Selling expenses | 68,169,938.33 | 82,052,362.77 | |
| Administrative expenses | 94,065,391.84 | 104,579,027.77 | |
| R&D expenses | 104,873,635.92 | 113,795,005.25 | |
| Financial expenses | -16,982,053.25 | -5,955,117.03 | |
| Where: Interest expense | 432,518.40 | 4,340,274.90 | |
| Interest income | 16,041,306.76 | 10,208,837.58 | |
| Add: Other income | 34,560,094.28 | 13,016,565.69 | |
| Investment income (loss is indicated by “-”) | 2 | 18,624,853.96 | 55,488,448.65 |
| Where: Income from investments in associates and joint ventures | |||
| Gains from derecognition of financial assets at amortized assets | |||
| Gains from net exposure hedges (loss is indicated by “-”) | |||
| Gains from changes in fair values (loss is indicated by “-”) | |||
| Losses of credit impairment (loss is indicated by “-”) | -627,070.09 | -1,682,540.09 | |
| Impairment losses of assets (loss is indicated by “-”) | -7,565,039.37 | -11,985,107.53 | |
| Gains from disposal of assets (loss is indicated by “-”) | 1,318.53 | ||
| II. Operating profit (loss is indicated by “-”) | 133,754,909.46 | 97,634,365.41 | |
| Add: Non-operating income | 4,409,022.52 | 3,686,726.20 | |
| Less: Non-operating expense | 1,228,453.52 | 2,291,107.75 | |
| III. Total profits (total losses are indicated by “-”) | 136,935,478.46 | 99,029,983.86 | |
| Less: Income tax expenses | 12,515,924.03 | -2,015,128.17 | |
| IV. Net profits (net losses are indicated by “-”) | 124,419,554.43 | 101,045,112.03 | |
| (I) Net profits from continuing operations (net losses are indicated by “-”) | 124,419,554.43 | 101,045,112.03 | |
| (II) Net profits from discontinued operations (net losses are indicated by “-”) | |||
| V. Other comprehensive income, net of tax | |||
| (I) Other comprehensive income that cannot be reclassified subsequently to profit or loss | |||
| 1. Changes from remeasurement of defined benefit plans | |||
| 2. Other comprehensive income |
| that cannot be reclassified to profit or loss under the equity method | |||
| 3. Changes in fair value of investments in other equity instruments | |||
| 4. Changes in fair value of enterprises’ own credit risks | |||
| (II) Other comprehensive income that will be reclassified to profit or loss | |||
| 1. Other comprehensive income that will be reclassified to profit or loss under the equity method | |||
| 2. Changes in fair value of other debt investments | |||
| 3. Amount of financial assets reclassified to other comprehensive income | |||
| 4. Provision for credit impairment of other debt investments | |||
| 5. Reserve for cash flow hedges | |||
| 6. Exchange differences on translation of financial statements denominated in foreign currencies | |||
| 7. Others | |||
| VI. Total comprehensive income | 124,419,554.43 | 101,045,112.03 | |
| VII. Earnings per share: | |||
| (I) Basic earnings per share (RMB/share) | |||
| (II) Diluted earnings per share (RMB/share) |
Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Consolidated Cash Flow Statement
January to December 2020
In RMB
| Item | Note | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from the sale of goods and the rendering of services | 1,974,492,309.02 | 2,141,322,935.57 | |
| Net increase in customer deposits and deposits from banks and other financial institutions | |||
| Net increase in loans from the central bank | |||
| Net increase in taking from banks and other financial institutions | |||
| Cash receipts from premiums under direct insurance contracts | |||
| Net cash receipts from reinsurance business | |||
| Net cash receipts from policyholders’ deposits and investment contract liabilities | |||
| Cash receipts from interest, fees and commissions | |||
| Net increase in taking from banks | |||
| Net increase in financial assets sold under repurchase arrangements | |||
| Net cash received from securities trading agencies | |||
| Receipts of tax refunds | 6,524,647.54 | 9,567,790.75 | |
| Other cash receipts relating to operating activities | 1 | 140,364,333.47 | 78,562,934.95 |
| Subtotal of cash inflows from operating activities | 2,121,381,290.03 | 2,229,453,661.27 | |
| Cash payments for goods purchased and services received | 1,450,758,815.22 | 1,318,597,298.92 | |
| Net increase in loans and advances to customers | |||
| Net increase in balance with the central bank and due from banks and other financial institutions | |||
| Cash payments for claims and policyholders' benefits under direct insurance contracts | |||
| Net increase in placements with banks and other financial institutions | |||
| Cash payments for interest, fees and commissions | |||
| Cash payments for insurance policyholder dividends | |||
| Cash payments to and on behalf of employees | 294,069,230.11 | 285,393,667.92 | |
| Payments of various types of taxes | 79,174,713.78 | 125,550,662.05 | |
| Other cash payments relating to operating activities | 2 | 244,988,100.50 | 256,911,128.67 |
| Subtotal of cash outflows from | 2,068,990,859.61 | 1,986,452,757.56 |
| operating activities | |||
| Net cash flow from operating activities | 52,390,430.42 | 243,000,903.71 | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | 2,704,000,000.00 | 1,312,700,000.00 | |
| Cash receipts from investment income | 18,624,853.96 | 9,552,990.98 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 1,365,554.96 | 257,846.73 | |
| Net cash receipts from disposals of subsidiaries and other business units | |||
| Other cash receipts relating to investing activities | |||
| Subtotal of cash inflows from investing activities | 2,723,990,408.92 | 1,322,510,837.71 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 66,273,509.36 | 243,918,747.78 | |
| Cash payments to acquire investments | 2,436,196,580.78 | 1,851,450,000.00 | |
| Net increase in pledged loans receivables | |||
| Net cash payments for acquisitions of subsidiaries and other business units | 15,614,062.32 | ||
| Other cash payments relating to investing activities | |||
| Subtotal of cash outflows from investing activities | 2,518,084,152.46 | 2,095,368,747.78 | |
| Net cash flows from investment activities | 205,906,256.46 | -772,857,910.07 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 20,953,388.25 | 1,094,215,094.34 | |
| Where: Cash receipts from capital contributions from minority shareholders of subsidiaries | |||
| Cash receipts from borrowings | 205,991,111.29 | 405,787,875.56 | |
| Other cash receipts relating to financing activities | 3 | 19,320,000.00 | |
| Subtotal of cash inflows from financing activities | 246,264,499.54 | 1,500,002,969.90 | |
| Cash repayments of borrowings | 290,953,213.70 | 541,704,799.90 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 54,437,838.70 | 34,285,290.48 | |
| Where: Payments for distribution of dividends or profits to minority shareholders of subsidiaries | |||
| Other cash payments relating to financing activities | 4 | 39,396,048.75 | |
| Subtotal of cash outflows from financing activities | 345,391,052.40 | 615,386,139.13 | |
| Net cash flows from financing activities | -99,126,552.86 | 884,616,830.77 |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | -5,434,532.44 | 2,521,113.05 | |
| V. Net Increase in Cash and Cash Equivalents | 153,735,601.58 | 357,280,937.46 | |
| Add: Opening balance of cash and cash equivalents | 829,789,487.86 | 472,508,550.40 | |
| VI. Closing Balance of Cash and Cash Equivalents | 983,525,089.44 | 829,789,487.86 |
Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Cash Flow Statement of the Parent Company
January to December 2020
In RMB
| Item | Note | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from the sale of goods and the rendering of services | 919,034,315.48 | 1,084,739,304.57 | |
| Receipts of tax refunds | 3,108,523.77 | 4,102,468.55 | |
| Other cash receipts relating to operating activities | 125,185,112.12 | 76,574,005.12 | |
| Subtotal of cash inflows from operating activities | 1,047,327,951.37 | 1,165,415,778.24 | |
| Cash payments for goods purchased and services received | 776,294,426.96 | 722,868,487.80 | |
| Cash payments to and on behalf of employees | 175,144,803.35 | 180,775,409.02 | |
| Payments of various types of taxes | 28,453,770.47 | 46,036,572.76 | |
| Other cash payments relating to operating activities | 120,311,024.70 | 180,658,173.58 | |
| Subtotal of cash outflows from operating activities | 1,100,204,025.48 | 1,130,338,643.16 | |
| Net cash flow from operating activities | -52,876,074.11 | 35,077,135.08 | |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | 2,704,000,000.00 | 1,313,635,457.67 | |
| Cash receipts from investment income | 18,624,853.97 | 55,552,990.98 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 844,985.38 | 117,985.66 | |
| Net cash receipts from disposals of subsidiaries and other business units | |||
| Other cash receipts relating to investing activities | 71,725,375.54 | 124,900,000.00 | |
| Subtotal of cash inflows from investing activities | 2,795,195,214.89 | 1,494,206,434.31 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 40,725,074.65 | 227,902,344.94 | |
| Cash payments to acquire investments | 2,464,734,756.73 | 1,886,364,000.00 | |
| Net cash payments for acquisitions of subsidiaries and other business units | |||
| Other cash payments relating to investing activities | 75,345,631.45 | 166,020,000.00 | |
| Subtotal of cash outflows from investing activities | 2,580,805,462.83 | 2,280,286,344.94 | |
| Net cash flows from investment activities | 214,389,752.06 | -786,079,910.63 | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 20,953,388.25 | 1,094,215,094.34 | |
| Cash receipts from borrowings | 82,259,570.15 | 132,000,000.00 | |
| Other cash receipts relating to financing activities | 114,000,000.00 | ||
| Subtotal of cash inflows from financing activities | 103,212,958.40 | 1,340,215,094.34 | |
| Cash repayments of borrowings | 50,000,000.00 | 246,440,000.00 | |
| Cash payments for distribution of dividends | 34,374,706.92 | 5,416,064.64 |
| or profits or settlement of interest expenses | |||
| Other cash payments relating to financing activities | 39,403,824.29 | 110,396,048.75 | |
| Subtotal of cash outflows from financing activities | 123,778,531.21 | 362,252,113.39 | |
| Net cash flows from financing activities | -20,565,572.81 | 977,962,980.95 | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 1,031,900.06 | 2,638,810.20 | |
| V. Net Increase in Cash and Cash Equivalents | 141,980,005.20 | 229,599,015.60 | |
| Add: Opening balance of cash and cash equivalents | 524,648,100.62 | 295,049,085.02 | |
| VI. Closing Balance of Cash and Cash Equivalents | 666,628,105.82 | 524,648,100.62 |
Legal representative: BO LianmingChief Accountant: ZHAO RuijinPerson in Charge of the Accounting Body: LIU Jie
Consolidated Statement of Changes in Owners’ Equity
January to December 2020
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the Parent Company | Minority interests | Total owner’s equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of last year | 451,554,411.00 | 1,207,942,318.37 | 3,287,063.85 | 22,800,224.13 | 288,975,820.29 | 1,974,559,837.64 | 149,649,306.18 | 2,124,209,143.82 | |||||||
| Add: Changes in accounting policies | 1,278,734.88 | 1,278,734.88 | -646,507.57 | 632,227.31 | |||||||||||
| Corrections of prior period errors | |||||||||||||||
| Business combination involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current year | 451,554,411.00 | 1,207,942,318.37 | 3,287,063.85 | 22,800,224.13 | 290,254,555.17 | 1,975,838,572.52 | 149,002,798.61 | 2,124,841,371.13 | |||||||
| III. Changes | 1,202,490.00 | 41,078,672.78 | -6,501,355.78 | 12,441,955.44 | 67,539,336.79 | 115,761,099.23 | -55,190,043.35 | 60,571,055.88 | |||||||
| for the year (decrease is indicated by “-”) | |||||||||||||||
| (I) Total comprehensive income | -6,501,355.78 | 113,847,873.06 | 107,346,517.28 | -27,186,228.40 | 80,160,288.88 | ||||||||||
| (II) Owners’ contributions and reduction in capital | 1,202,490.00 | 41,078,672.78 | 42,281,162.78 | -28,003,814.95 | 14,277,347.83 | ||||||||||
| 1. Ordinary shares contributed by owners | 1,202,490.00 | 19,750,898.25 | 20,953,388.25 | 20,953,388.25 | |||||||||||
| 2. Capital contribution from holders of other equity instruments | |||||||||||||||
| 3. Share-based payment recognized in owners’ equity | 18,783,763.38 | 18,783,763.38 | 1,787,189.38 | 20,570,952.76 | |||||||||||
| 4. Others | 2,544,011.15 | 2,544,011.15 | -29,791,004.33 | -27,246,993.18 | |||||||||||
| (III) Profit distribution | 12,441,955.44 | -46,308,536.27 | -33,866,580.83 | -33,866,580.83 | |||||||||||
| 1. Transfer to surplus | 12,441,955.44 | -12,441,955.44 |
| reserve | |||||||||||||||
| 2. Transfer to general reserve | |||||||||||||||
| 3. Distributions to owners (or shareholders) | -33,866,580.83 | -33,866,580.83 | -33,866,580.83 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within owners’ equity | |||||||||||||||
| 1. Capitalization of capital reserve | |||||||||||||||
| 2. Capitalization of capital reserve | |||||||||||||||
| 3. Loss offset by surplus reserve | |||||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings carried forward |
In RMB
| Item | 2019 | ||||||||||||||
| Equity attributable to owners of the Parent Company | Minority interests | Total owner’s equity | |||||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of last year | 383,554,411.00 | 205,995,596.85 | 1,044,703.00 | 12,695,712.93 | 112,623,054.78 | 715,913,478.56 | 110,985,548.13 | 826,899,026.69 | |||||||
| Add: Changes in accounting policies | |||||||||||||||
| Corrections of prior period errors | |||||||||||||||
| from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Transfer to special reserve in the period | |||||||||||||||
| 2. Amount utilized in the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance of the current year | 452,756,901.00 | 1,249,020,991.15 | -3,214,291.93 | 35,242,179.57 | 357,793,891.96 | 2,091,599,671.75 | 93,812,755.26 | 2,185,412,427.01 |
| Business combination involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current year | 383,554,411.00 | 205,995,596.85 | 1,044,703.00 | 12,695,712.93 | 112,623,054.78 | 715,913,478.56 | 110,985,548.13 | 826,899,026.69 | |||||||
| III. Changes for the year (decrease is indicated by “-”) | 68,000,000.00 | 1,001,946,721.52 | 2,242,360.85 | 10,104,511.20 | 176,352,765.51 | 1,258,646,359.08 | 38,663,758.05 | 1,297,310,117.13 | |||||||
| (I) Total comprehensive income | 2,242,360.85 | 186,457,276.71 | 188,699,637.56 | 37,988,670.96 | 226,688,308.52 | ||||||||||
| (II) Owners’ contributions and reduction in capital | 68,000,000.00 | 1,001,946,721.52 | 1,069,946,721.52 | 675,087.09 | 1,070,621,808.61 | ||||||||||
| 1. Ordinary shares contributed by owners | 68,000,000.00 | 994,470,797.73 | 1,062,470,797.73 | 1,062,470,797.73 | |||||||||||
| 2. Capital contribution from holders of other equity instruments | |||||||||||||||
| 3. Share-based payment recognized in owners’ equity | 7,475,923.79 | 7,475,923.79 | 675,087.09 | 8,151,010.88 | |||||||||||
| 4. Others | |||||||||||||||
| (III) Profit distribution | 10,104,511.20 | -10,104,511.20 | |||||||||||||
| 1. Transfer to surplus reserve | 10,104,511.20 | -10,104,511.20 | |||||||||||||
| 2. Transfer to general reserve | |||||||||||||||
| 3. Distributions to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within owners’ equity |
| 1. Capitalization of capital reserve | |||||||||||||||
| 2. Capitalization of capital reserve | |||||||||||||||
| 3. Loss offset by surplus reserve | |||||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings carried forward from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Transfer to special reserve in the period | |||||||||||||||
| 2. Amount utilized in the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance of the current year | 451,554,411.00 | 1,207,942,318.37 | 3,287,063.85 | 22,800,224.13 | 288,975,820.29 | 1,974,559,837.64 | 149,649,306.18 | 2,124,209,143.82 |
Legal representative: BO Lianming Chief Accountant: ZHAO Ruijin Person in Charge of the Accounting Body: LIU Jie
Statement of Changes in Owners’ Equity of the Parent Company
January to December 2020
In RMB
| Item | 2020 | ||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total owner’s equity | |||
| Preferred shares | Perpetual bonds | Others | |||||||||
| I. Closing balance of last year | 451,554,411.00 | 1,310,939,867.82 | 21,522,683.40 | 211,573,548.42 | 1,995,590,510.64 | ||||||
| Add: Changes in accounting policies | |||||||||||
| Corrections of prior period errors | |||||||||||
| Others | |||||||||||
| II. Opening balance of the current year | 451,554,411.00 | 1,310,939,867.82 | 21,522,683.40 | 211,573,548.42 | 1,995,590,510.64 | ||||||
| III. Changes for the year (decrease is indicated by “-”) | 1,202,490.00 | 40,321,851.02 | 12,441,955.44 | 78,111,018.16 | 132,077,314.62 | ||||||
| (I) Total comprehensive income | 124,419,554.43 | 124,419,554.43 | |||||||||
| (II) Owners’ contributions and reduction in capital | 1,202,490.00 | 40,321,851.02 | 41,524,341.02 | ||||||||
| 1. Ordinary shares contributed by owners | 1,202,490.00 | 19,750,898.25 | 20,953,388.25 | ||||||||
| 2. Capital contribution from holders of other equity instruments | |||||||||||
| 3. Share-based payment recognized in owners’ equity | 20,570,952.77 | 20,570,952.77 | |||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 12,441,955.44 | -46,308,536.27 | -33,866,580.83 | ||||||||
| 1. Transfer to surplus reserve | 12,441,955.44 | -12,441,955.44 | |||||||||
| 2. Distributions to owners (or shareholders) | -33,866,580.83 | -33,866,580.83 | |||||||||
| 3. Others | |||||||||||
| (IV) Transfers within owners’ equity | |||||||||||
| 1. Capitalization of capital reserve | |||||||||||
| 2. Capitalization of capital reserve | |||||||||||
| 3. Loss offset by surplus reserve | |||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||
| 5. Retained earnings carried forward from other comprehensive income | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Transfer to special reserve in the period | |||||||||||
| 2. Amount utilized in the period | |||||||||||
| (VI) Others | |||||||||||
| IV. Closing balance of the current year | 452,756,901.00 | 1,351,261,718.84 | 33,964,638.84 | 289,684,566.58 | 2,127,667,825.26 |
| Item | 2019 | ||||||||||
| Paid-in capital (or share capital) | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Total owner’s equity | |||
| Preferred shares | Perpetual bonds | Others | |||||||||
| I. Closing balance of last year | 383,554,411.00 | 308,318,059.21 | 11,418,172.20 | 120,632,947.59 | 823,923,590.00 | ||||||
| Add: Changes in accounting policies | |||||||||||
| Corrections of prior period errors | |||||||||||
| Others | |||||||||||
| II. Opening balance of the current year | 383,554,411.00 | 308,318,059.21 | 11,418,172.20 | 120,632,947.59 | 823,923,590.00 | ||||||
| III. Changes for the year (decrease is indicated by “-”) | 68,000,000.00 | 1,002,621,808.61 | 10,104,511.20 | 90,940,600.83 | 1,171,666,920.64 | ||||||
| (I) Total comprehensive income | 101,045,112.03 | 101,045,112.03 | |||||||||
| (II) Owners’ contributions and reduction in capital | 68,000,000.00 | 1,034,366,105.22 | 1,102,366,105.22 | ||||||||
| 1. Ordinary shares contributed by owners | 68,000,000.00 | 1,026,215,094.34 | 1,094,215,094.34 | ||||||||
| 2. Capital contribution from holders of other equity instruments | |||||||||||
| 3. Share-based payment recognized in owners’ equity | 8,151,010.88 | 8,151,010.88 | |||||||||
| 4. Others | |||||||||||
| (III) Profit distribution | 10,104,511.20 | -10,104,511.20 | |||||||||
| 1. Transfer to surplus reserve | 10,104,511.20 | -10,104,511.20 | |||||||||
| 2. Distributions to owners (or shareholders) | |||||||||||
| 3. Others | |||||||||||
| (IV) Transfers within owners’ equity | |||||||||||
| 1. Capitalization of capital reserve | |||||||||||
| 2. Capitalization of capital reserve | |||||||||||
| 3. Loss offset by surplus reserve | |||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||
| 5. Retained earnings carried forward from other comprehensive income | |||||||||||
| 6. Others | |||||||||||
| (V) Special reserve | |||||||||||
| 1. Transfer to special reserve in the period | |||||||||||
| 2. Amount utilized in the period | |||||||||||
| (VI) Others | -31,744,296.61 | -31,744,296.61 | |||||||||
| IV. Closing balance of the current year | 451,554,411.00 | 1,310,939,867.82 | 21,522,683.40 | 211,573,548.42 | 1,995,590,510.64 |
Legal representative: BO Lianming Chief Accountant: ZHAO Ruijin Person in Charge of the Accounting Body: LIU Jie
III. Company profile
1. Profile
√ Applicable□ N/A
Appotronics Corporation Limited (hereinafter referred to as “Company” or “the Company”),formally named as Shenzhen Appotronics Optoelectronics Technology Inc. (hereinafter referred to as“Appotronics Inc.”), was jointly invested and established by LI Yi and XU Yanzheng and registered inNanshan Branch of Market Supervision and Regulation Bureau of Shenzhen Municipality on October 24,2006 with the business license numbered in 4403011245637. Upon establishment, the registered capitalof Appotronics Inc. was RMB 100,000. On May 31, 2018, the benchmark date, Appotronics Inc waschanged into a company limited by shares entirety. On July 20, 2018, the Company completed theregistration in Nanshan Branch of Market Supervision and Regulation Bureau of Shenzhen Municipalityand headquartered in Shenzhen City, Guangdong Province. The Company holds the business licensebearing the credibility code 91440300795413991N. The Company’s registered capital is RMB452,756,901.00 divided into 452,756,901 shares (RMB 1 Yuan per share), including 169,456,766outstanding shares subject to sale restrictions and 283,300,135 outstanding shares not subject to salerestrictions. The Company’s shares were listed for trading on Shanghai Stock Exchange on July 22,2019.The Company can be classified into the computer, communication and other electronic equipmentmanufacturing industry. It mainly engages in research and development, production, sales and leasing oflaser display core devices and whole machines, and can provide customers with technical research anddevelopment services and customized products. Its products mainly include laser business and educationprojectors, smart mini projectors, laser TV, laser large venue projector and laser digital cinema projector.This financial statements have been approved by the Company’s 31
stsession of the first board ofdirectors on April 22, 2021 for public disclosure.
2. Scope of consolidated financial statements
√ Applicable□ N/A
The Company has included 21 subsidiaries into the consolidated financial statements for the currentperiod, including Appotronics Timewaying (Beijing) Technology Co., Ltd., Shenzhen AppotronicsSoftware Technology Co., Ltd., Shenzhen City Appotronics Xiaoming Technology Co., Ltd., BeijingOrient Appotronics Technology Co., Ltd., Formoive (Beijing) Technology Co., Ltd., CINEAPPO LaserCinema Technology (Beijing) Co., Ltd., Shenzhen Appotronics Laser Display Technology Co., Ltd.,Shenzhen Appotronics Laser Technology Co., Ltd., Qingda Appotronics (Xiamen) Technology Co., Ltd.,Shenzhen Appotronics Home Line Technology Co., Ltd., Appotronics Hong Kong Limited, AppotronicsUSA, Inc., Fabulus Technology Hong Kong Limited, JoveAI Limited, JoveAI Innovation, Inc.,FORMOVIE TECHNOLOGY INC, WEMAX LLC, Shenzhen Appotronics Display Device Co., Ltd.,JoveAI Asia Company Limited, Tianjin Bonian Film Partnership (LP) and other subsidiaries. Refer todescriptions in VIII and IX of Section XI for details.
IV. Basis of preparation of financial statements
1. Basis of preparation
The Company’s financial statements are prepared on a going-concern basis.
2. Going concern
√ Applicable□ N/A
The Company has detected no events or circumstances that may cast significant doubt upon itsability to continue as a going concern within 12 months from the reporting period.
V. Significant accounting policies and accounting estimatesSpecific accounting policies and accounting estimates:
√ Applicable□ N/A
Important note: The Company establishes the specific accounting policies and makes the specificaccounting estimates with respect to the impairment of financial instruments, depreciation of fixed assets,amortization of intangible assets, recognition of revenues and other transactions and events according tothe actual production and operation characteristics of the Company.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company conform to the requirements of the AccountingStandards for Business Enterprises and truly and completely reflect the Company’s financial position,operating results, changes in shareholders' equity, cash flows and other related information.
2. Accounting period
The Company’s accounting year is from January 1 to December 31 of each calendar year.
3. Operating cycle
√ Applicable□ N/A
The Company has a relatively short operating cycle, and determines the liquidity of assets andliabilities on the basis of 12 months.
4. Functional currency
The Company adopts RMB as its functional currency.
5. The accounting treatment of business combinations involving entities under common control
and not involving entities under common control
√ Applicable□ N/A
1. Accounting method for business combinations involving enterprises under common control
Assets and liabilities acquired from a business combination by the Company are measured at thecarrying amounts of the assets and liabilities of the acquiree in the consolidated financial statements ofthe ultimate controller at the date of combination. The Company made adjustment to capital reservesaccording to the differences between the shares in the owners' equity of the combined party on theconsolidated financial statements of the ultimate controlling party and the book value of paidcombination considerations or the face value of issued shares; In case the capital reserve is not sufficientto absorb the difference, the remaining balance is adjusted against the retained earnings.
2. Accounting method for business combinations not involving enterprises under common controlWhere the cost of combination exceeds the Company’s interest in the fair value of the acquiree’sidentifiable net assets, the difference is recognized as goodwill. Where the cost of combination is lessthan the Company’s interest in the fair value of the acquiree’s identifiable net assets, the Companyfirstly reassesses the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilitiesand the measurement of the cost of combination. If after that reassessment, the cost of combination isstill less than the Company’s interest in the fair value of the acquiree’s identifiable net assets, theacquirer recognizes the remaining difference immediately in profit or loss for the current period.
6. Method of preparation of consolidated financial statements
√ Applicable□ N/A
The parent company includes all of its controlled subsidiaries in its consolidated financialstatements. The consolidated financial statements are prepared by the parent company in accordancewith the Accounting Standards for Business Enterprises No. 33 -- Consolidated Financial Statements, onthe basis of the respective financial statements of the parent company and its subsidiaries, by referenceto other relevant data.
7. Classification of joint arrangements and accounting treatment of joint operations
√ Applicable□ N/A
1. Joint arrangements are classified into joint operations and joint ventures.
2. When the Company is a party to a joint operation, the Company recognizes the following itemsrelating to its interest in the joint operation:
(1) the assets individually held by the Company, and the Company’s share of the assets held jointly;
(2) the liabilities incurred individually by the Company, and the Company’s share of the liabilitiesincurred jointly;
(3) the Company’s revenue from the sale of its share of output of the joint operation;
(4) the Company’s share of revenue from the sale of assets by the joint operation; and
(5) the expenses incurred individually by the Company, and the Company’s share of the expensesincurred jointly.
8. Recognition of cash and cash equivalents
Cash represented in the statement of cash flows comprises cash on hand and deposits that can bereadily withdrawn on demand. Cash equivalents are the Group's short-term (generally due within 3months from the acquisition date), highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value.
9. Translation of transactions and financial statements denominated in foreign currencies
√ Applicable□ N/A
1. Transactions denominated in foreign currencies
A foreign currency transaction is recorded in RMB, on initial recognition, by applying the spotexchange rate on the date of the transaction. At the balance sheet date, foreign currency monetary items
are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differencesarising from such translations are recognized in profit or loss for the current period, except for thoseattributable to foreign currency borrowings that have been taken out specifically for the acquisition orconstruction of qualifying assets and accrued interest. Non-monetary items denominated in foreigncurrencies that are measured at historical cost are translated using the foreign exchange rates ruling atthe transaction dates, without adjusting the amounts in RMB. Non-monetary items denominated inforeign currencies that are measured at fair value are translated using the foreign exchange ratesprevailing at the dates when the fair value was determined, with exchange differences arising from suchtranslations recognized in profit or loss for the current period or other comprehensive income.
2. Translation of financial statements denominated in foreign currencies
Asset and liability items on the balance sheet are translated at the spot exchange rate prevailing atthe balance sheet date; shareholders' equity items other than "undistributed profits” are translated at thespot exchange rates at the dates on which such items arose; income and expense items in the incomestatement are translated at the exchange rates that approximate the actual spot exchange rates on thedates of the transactions. Exchange differences arising from such translations are recognized in othercomprehensive income.
10. Financial instruments
√ Applicable□ N/A
1. Classification of financial assets and financial liabilities
On initial recognition, the Company’s financial assets are classified into three categories, including
(1) financial assets at amortized cost; (2) financial assets at fair value through other comprehensiveincome; and (3) financial assets at fair value through profit or loss for the current period.
Upon initial recognition, the Company’s financial liabilities are classified into four categories,including (1) financial liabilities at fair value through profit or loss for the current period; (2) financialliabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition orcontinuing involvement in the financial assets transferred; (3) financial guarantee contracts not fallingunder Clauses (1) and (2), and loan commitments not falling under Clause (1) and below market interestrate; and (4) financial liabilities at amortized cost.
2. Recognition, measurement and derecognition of financial assets and financial liabilities
(1) Recognition and initial measurement of financial assets and financial liabilities
When the Company becomes a party to a financial instrument contract, a financial asset or liabilityis recognized. Financial assets and liabilities are initially measured at fair value. Transaction costsrelating to financial assets or liabilities at fair value through profit or loss are directly recognized inprofit or loss for the current period. Transaction costs relating to other kinds of financial assets orliabilities are included in their initially recognized amount. However, the accounts receivable, if do notcontain any significant financing component or are recognized by the Company without taking intoconsideration the financing components under the contracts with a term of less than one year upon initial
recognition, are initially measured at transaction price defined in Accounting Standards for BusinessEnterprises No.14 - Revenue.
(2) Subsequent measurement of financial assets
1) Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured at amortized cost using the effectiveinterest method. Gains or losses arising from financial assets at amortized cost that do not belong to anyhedging relationship are recognized in profit or loss for the current period upon derecognition,reclassification, amortization using the effective interest method or recognition of impairment.
2) Investments in debt instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are subsequentlymeasured at fair value. Interest, impairment losses or gains and exchange gains or losses calculatedusing the effective interest method are recognized in profit or loss for the current period, and other gainsor losses are recognized in other comprehensive income. Upon derecognition, the aggregate gains orlosses previously recognized in other comprehensive income are transferred to profit or loss for thecurrent period.
3) Investments in equity instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are subsequentlymeasured at fair value. Dividends received (other than those received as recovery of investment cost) arerecognized in profit or loss for the current period, and other gains or losses are recognized in othercomprehensive income. Upon derecognition, the accumulated gains or losses previously recognized inother comprehensive income are transferred to retained earnings.
4) Financial assets at fair value through profit or loss for the current period
Financial assets at fair value through profit or loss for the current period are subsequently measuredat fair value, with gains or losses arising therefrom, including interest and dividend income, recognizedin profit or loss for the current period, except the financial assets belonging to any hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss for the current period
Financial liabilities at fair value through profit or loss for the current period include financialliabilities held for trading (including derivatives classified as financial liabilities), and financial liabilitiesdirectly designated as at fair value through profit or loss for the current period. Such financial liabilitiesare subsequently measured at fair value. Changes in the fair value of financial liabilities designated as atfair value through profit or loss for the period arising out of changes in the Company’s own credit riskare recognized in other comprehensive income, unless such treatment will result in or increase anyaccounting mismatch in profit or loss. Other gains or losses arising from such financial liabilities,including interest expenses and changes in fair value not arising out of changes in the Company’s owncredit risk, are recognized in profit or loss for the current period, except the financial liabilitiesbelonging to any hedging relationship. Upon derecognition, the accumulated gains or losses previouslyrecognized in other comprehensive income are transferred to retained earnings.
2) Financial liabilities arising as a result of the transfer of financial assets not meeting the criteriafor derecognition or continuing involvement in the financial assets transferredSuch financial liabilities are measured in accordance with the Accounting Standards for BusinessEnterprises No. 23 -- Transfer of Financial Assets.
3) Financial guarantee contracts not falling under Clauses 1) and 2), and loan commitments notfalling under Clause 1) and below market interest rate
Such financial liabilities are subsequently measured at the higher of ① provision for impairmentlosses determined according to the policy for impairment of financial instruments; and ② balance of theinitially recognized amount after deduction of the accumulated amortization determined in accordancewith the relevant provisions of the Accounting Standards for Business Enterprises No.14 - Revenue.
4) Financial liabilities at amortized cost
Financial liabilities at amortized cost are subsequently measured at amortized cost using theeffective interest method. Gains or losses on financial liabilities at amortized cost that do not belong toany hedging relationship are recognized in profit or loss for the current period upon derecognition oramortization using the effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
① the contractual right to receive cash flows from the financial assets has expired; or
② the financial assets have been transferred and such transfer meets the criteria for derecognitionof financial assets as set forth in the Accounting Standards for Business Enterprises No. 23 -- Transfer ofFinancial Assets.
2) A financial liability (or part thereof) is derecognized when all or part of the outstandingobligations thereon have been discharged.
3. Recognition and measurement of financial assets transferred
When a financial asset of the Company is transferred, if substantially all the risks and rewardsincidental to the ownership of the financial asset have been transferred, the financial asset isderecognized, and the rights and obligations incurred or retained in such transfer are separatelyrecognized as assets or liabilities (as the case may be); if substantially all the risks and rewardsincidental to the ownership of the financial asset have been retained, the financial asset transferredcontinues to be recognized. If the Company neither transferred nor retained a substantial portion of allrisks and rewards incidental to the ownership of the financial asset, then: (1) if the Company does notretain control over the financial asset, the financial asset is derecognized, and the rights and obligationsincurred or retained in such transfer are separately recognized as assets or liabilities (as the case may be);and (2) if the Company retains control over the financial asset, the financial asset continues to berecognized to the extent of the Company’s continuing involvement in the financial asset transferred, anda corresponding liability is recognized.
If an entire transfer of a financial asset meets the criteria for derecognition, the difference between
(1) the carrying amount of the financial asset transferred at the date of derecognition; and (2) the sum of
the consideration received from the transfer and the portion of the accumulated amount of changes infair value directly recorded as other comprehensive income originally that corresponds to the partderecognized (where the financial asset transferred is an investment in debt instruments at fair valuethrough other comprehensive income) is recognized in profit or loss for the current period. If part of afinancial asset is transferred and the part transferred entirely meets the criteria for derecognition, thetotal carrying amount of the financial asset immediately prior to the transfer is allocated between the partderecognized and the part not derecognized in proportion to their relative fair value at the date oftransfer, and the difference between (1) the carrying amount of the part derecognized; and (2) the sum ofthe consideration received from the transfer of the part derecognized and the portion of the accumulatedamount of changes in fair value directly recorded as other comprehensive income originally thatcorresponds to the part derecognized (where the financial asset transferred is an investment in debtinstruments at fair value through other comprehensive income) is recognized in profit or loss for thecurrent period.
4. Determination of fair value of financial assets and financial liabilities
The Company adopts the valuation techniques applicable to the current situations and withsufficient data available and support of other information, to determine the fair value of financial assetsand financial liabilities. The Company classifies the inputs used by the valuation techniques in thefollowing levels and uses them in turn:
(1) Level 1 inputs: quoted market price (unadjusted) in an active market for an identical asset orliability available at the date of measurement;
(2) Level 2 inputs: inputs other than inputs included within Level 1 that are observable directly orindirectly. This category includes quoted prices for similar assets or liabilities in active markets, quotedprices for identical or similar assets or liabilities in inactive markets, observable inputs other than quotedprices (such as interest rate and yield curves observable during regular intervals of quotation), and inputsvalidated by the market;
(3) Level 3 inputs: inputs that are unobservable. This category includes interest rate or stockvolatility that cannot be directly observed or validated by observable market data, future cash flows fromretirement obligation incurred in business combinations, and financial forecasts made using own data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
The Company determines the impairment and assesses provision for impairment losses of financialassets at amortized cost, investments in debt instruments at fair value through other comprehensiveincome, contract assets, lease receivable, loan commitments other than financial liabilities designated atfair value through profit or loss for the current period, and financial guarantee contracts other thanfinancial liabilities designated at fair value through profit or loss for the current period and financialliabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition orcontinuing involvement in the financial assets transferred, on the basis of expected credit losses.
Expected credit loss is the weighted average of credit losses on financial instruments taking intoaccount the possibility of default. Credit loss is the difference between all contractual cash flowsreceivable under the contract and estimated future cash flows discounted at the original effective interestrate, i.e. the present value of all cash shortage, wherein the Company’s purchased or originated financialassets that have become credit impaired are discounted at their credit-adjusted effective interest rate.With respect to purchased or originated financial assets that have become credit impaired, at thebalance sheet date, the Company recognizes a loss allowance equal to the accumulated amount ofchanges in lifetime expected credit losses since initial recognition.With respect to accounts receivable and contract assets that are formed from transactions under theAccounting Standards for Business Enterprises No.14 - Revenue and do not contain any significantfinancing component or are recognized by the Company without taking into consideration the financingcomponents under the contracts with a term of less than one year, the Company uses the simplemeasurement method and recognizes a loss allowance equal to the lifetime expected credit loss.With respect to lease receivable, accounts receivable and contract assets that are formed fromtransactions under the Accounting Standards for Business Enterprises No. 14 - Revenue and containsignificant financing component, the Company uses the simple measurement method and recognizes aloss allowance equal to the lifetime expected credit loss.With respect to financial assets not using the measurement methods stated above, at each balancesheet date, the Company assesses whether the credit risk has increased significantly since initialrecognition, and recognizes a loss allowance equal to the lifetime expected credit loss if the credit riskhas increased significantly since initial recognition, or to the expected credit losses within the next 12months if the credit risk has not increased significantly since initial recognition.The Company uses reasonable and supportable information, including forward-looking information,and compares the possibility of default at the balance sheet date with the possibility of default uponinitial recognition, to determine whether the credit risk of the financial instruments has increasedsignificantly since initial recognition.
At the balance sheet date, if the Company determines that a financial instrument only has low creditrisk, the Company assumes that its credit risk has not increased significantly since initial recognition.
The Company assesses expected credit risk and measures expected credit losses of financialinstruments individually or collectively. When assessing the financial instruments collectively, theCompany includes the financial instruments in different groups according to their common riskcharacteristics.
At each balance sheet date, the Company re-assesses the expected credit losses, with the amount ofincrease in or reversal of loss allowance recognized in profit or loss for the current period as impairmentlosses or gains. With respect to a financial asset at amortized cost, its carrying amount recorded in thebalance sheet is written off against the loss allowance. With respect to an investment in debt instrumentsat fair value through other comprehensive income, the Company recognizes the loss allowance in othercomprehensive income, without reducing its carrying amount.
(2) Financial instruments for which expected credit risk is assessed and expected credit losses aremeasured collectively
| Item | Basis for determining a group | Method for measuring expected credit losses |
| Other receivables - group of deposit and security receivable | Nature of receivables | By reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions, calculate the expected credit losses according to the default risk exposure and 12-month or rate of lifetime expected credit loss. |
| Other receivables- group of withholding receivable | ||
| Other receivables - group of receivables from related parties in the scope of consolidation | Receivables from related parties in the scope of consolidation | |
| Other receivables - grouping by aging | Aging | |
| Long-term receivables - grouping by aging | Aging |
(3) Accounts receivable for which expected credit losses are measured collectively and contractassets
1) Groups and method for measuring expected credit losses
| Item | Basis for determining a group | Method for measuring expected credit losses |
| Bank acceptance bills receivable | Type of notes | By reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions, calculate the expected credit losses according to the default risk exposure and rate of lifetime expected credit loss. |
| Commercial acceptance bills receivable | ||
| Accounts receivable - group of receivables from related parties in the scope of consolidation | Receivables from related parties in the scope of consolidation | |
| Accounts receivable - grouping by aging | Aging | By reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions, prepare a comparison table of the aging of accounts receivable and rate of lifetime expected credit loss, and calculate the expected credit |
| losses. | ||
| Contract assets - group of receivables from related parties in the scope of consolidation | Receivables from related parties in the scope of consolidation | By reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions, calculate the expected credit losses according to the default risk exposure and rate of lifetime expected credit loss. |
| Contract assets - group of aging | Aging | By reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions, prepare a comparison table of the aging of contract assets and rate of lifetime expected credit loss, and calculate the expected credit losses. |
2) Accounts receivable - comparison table of the age of accounts receivable and rate of lifetimeexpected credit loss
| Aging | Accounts receivable Rate of expected credit loss for accounts receivable (%) |
| Within 1 year (including, the same below) | 5.00 |
| 1-2 years | 25.00 |
| 2-3 years | 50.00 |
| Over 3 years | 100.00 |
6. Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are presented in the balance sheet separately, withoutoffsetting each other. However, the Company may represent the financial assets and financial liabilitieson a net basis in the balance sheet only if: (1) the Company has a legal right that is currently enforceableto set off the recognized financial assets and financial liabilities, and (2) the Company intends either tosettle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.
With respect to the transfer of financial assets not meeting the criteria for derecognition, theCompany does not offset the financial assets transferred against the relevant liabilities.
11. Notes receivable
Method for recognition of expected credit losses of notes receivable and relevant accountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of notes receivable and relevantaccounting treatments are disclosed in V. 10 of Section XI in details.
12. Accounts receivable
Method for recognition of expected credit losses of accounts receivable and relevant accountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of accounts receivable and relevantaccounting treatments are disclosed in V. 10 of Section XI in details.
13. Receivables financing
√ Applicable□ N/A
The Company's accounting policies on receivables financing are disclosed in V. 10 of Section XI indetails.
14. Other receivables
Method for recognition of expected credit losses of other receivables and relevant accountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of other receivables and relevantaccounting treatments are disclosed in V. 10 of Section XI in details.
15. Inventories
√ Applicable□ N/A
1. Categories of inventories
Inventories mainly include finished goods or commodities held for sale in the ordinary course ofbusinesses, work in progress in the process of production or materials and supplies consumed in theprocess of production or rendering service.
2. Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted averagemethod.
3. Basis for determining net realizable value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. Ifthe net realisable value is below the cost of inventories, a provision for decline in value of inventories ismade. For inventories directly used for sale, the net realizable value is determined as the estimatedselling price in the ordinary course of business less the estimated costs necessary to make the sale andrelevant taxes. For inventories required for processing, the net realizable value is determined as theestimated selling price of finished goods in the ordinary course of business less the estimated costs ofcompletion, and the estimated costs necessary to make the sale and relevant taxes. As at the balancesheet date, if in the same item of inventories, some are agreed with contractual prices while the othersare not, the net realizable value for such inventories is determined separately, and compared with thecosts of the two parts of inventories distinctively, as to determine the provisions or reversal of provisionsfor decline in value of inventories separately.
4. Inventory count system
The perpetual inventory system is maintained for stock system.
5. Amortization method for low cost and short-lived consumable items and packaging materials
(1) Low cost and short-lived consumable items
Low cost and short-lived consumable items are amortized using the immediate write-off method.
(2) Packaging materials
Low cost and short-lived consumable items are amortized using the immediate write-off method.
16. Contract assets
(1). Recognition method and criteria of contract assets
√ Applicable□ N/A
The Company presents contract assets or contract liabilities in the balance sheet according to therelationship between the performance of contractual obligations and payment by customers. Contractassets and contract liabilities under a same contract are presented at the net amount after offsetting eachother.Rights owned by the Company for unconditionally collecting the consideration from customers (that is,depending only on the time) are presented as receivables, and rights for collecting the consideration forgoods that have been transferred to customers (depending on other factors than the time) are presented ascontract assets.
(2). Method for recognition of expected credit losses of contract assets and relevant accountingtreatments
√ Applicable□ N/A
The method for recognition of expected credit losses of contract assets and relevant accountingtreatments are disclosed in V. 10 of Section XI in details.
17. Held-for-sale assets
□ Applicable√ N/A
18. Debt investments
(1). Method for recognition of expected credit losses of debt investments and relevant accounting
treatments
□ Applicable√ N/A
19. Other debt investments
(1). Method for recognition of expected credit losses of other debt investments and relevantaccounting treatments
□ Applicable√ N/A
20. Long-term receivables
(1). Method for recognition of expected credit losses of long-term receivables and relevantaccounting treatments
√ Applicable□ N/A
The method for recognition of expected credit losses of long-term receivables and relevant accountingtreatments are disclosed in V10 of Section XI in details.
21. Long-term equity investments
√ Applicable□ N/A
1. Judgments on joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists onlywhen decisions about the relevant activities of such arrangement require unanimous consent of theparties sharing control. Significant influence is the power to participate in the financial and operatingpolicy making of an entity, but does not control or jointly control over those policies.
2. Determination of investment cost
(1) In case of an equity investment acquired through a business combination involving entitiesunder common control, if the acquirer pays consideration for the business combination by cash, transferof non-monetary assets, assumption of liabilities or issuance of equity securities, the initial investmentcost of the long-term equity investment is the Company’s share of the carrying amount of the owners’equity of the acquiree in the consolidated financial statements of the ultimate controller at the date ofcombination. The difference between: (i) the initial investment cost of the long-term equity investment;and (ii) the carrying amount of the consideration paid for the combination or the total par value of theshares issued is treated as an adjustment to the capital reserve. In case the capital reserve is not sufficientto absorb the difference, the remaining balance is adjusted against the retained earnings.
For a long-term equity investment acquired through business combination involving enterprisesunder common control that is achieved through multiple transactions by steps, the Company shall judgewhether such transactions constitute “a package deal”. If such transactions constitute “a package deal”,the Company accounts for such transactions as one transaction to acquire control. If such transactions donot constitute “a package deal”, the initial investment cost is the Company’s share of the carryingamount of the owners’ equity of the acquiree in the consolidated financial statements of the ultimatecontroller at the date of combination. The difference between: (i) the initial investment cost of thelong-term equity investment at the date of combination; and (ii) the sum of the carrying amount oflong-term equity investment before the combination and the carrying amount of the consideration paidfor acquisition of the additional shares at the date of combination is adjusted against the capital reserve.In case the capital reserve is not sufficient to absorb the difference, the remaining balance is adjustedagainst the retained earnings.
(2) In case of an equity investment acquired through a business combination not involving entitiesunder common control, the initial investment cost is the fair value of the carrying amount of theconsideration paid for the combination at the date of acquisition.
For a long-term equity investment acquired through a business combination not involving entitiesunder common control and achieved through multiple transactions by steps, the accounting treatmentthereof in the separate financial statements is different from that in the consolidated financial statementsas stated below:
1) In the separate financial statements, the sum of the carrying amount of the equity investmentoriginally held in the acquiree and the additional investment cost incurred is recorded as the initialinvestment cost of the equity investment changed into the cost method.
2) In the consolidated financial statements, it is required to judge whether such transactionsconstitute “a package deal”. If such transactions constitute “a package deal”, the Company accounts forsuch transactions as one transaction to acquire control. If such transactions do not constitute “a packagedeal”, the Company re-measures the fair value of the equity held in the acquiree prior to the date ofacquisition, and records the difference between the fair value and the carrying amount as investmentincome for the current period; if the equity held in the acquiree prior to the date of acquisition involves
other comprehensive income under equity method, such other comprehensive income is transferred tothe income of the period in which the date of acquisition falls, except for other comprehensive incomearising from re-measurement of changes in net liabilities or net assets of defined benefit plans.
(3) In the event of no business combination: The initial investment cost is the purchase priceactually paid if it is acquired by cash, or the fair value of the equity securities issued if it is acquiredthrough issuance of equity securities, or determined in accordance with the Accounting Standards forBusiness Enterprises No. 12 -- Debt Restructuring if it is acquired through debt restructuring, ordetermined in accordance with the Accounting Standards for Business Enterprises No. 7 -- Exchange ofNon-monetary Assets if it is acquired through exchange of non-monetary assets.
3. Subsequent measurement and recognition of profit or loss
Long-term equity investments in investees are measured using the cost method. Long-term equityinvestments in associates and joint ventures are measured using the equity method.
4. Disposal of investment in a subsidiary through multiple transactions by steps until loss of controlover the subsidiary
(1) Separate financial statements
The difference between the carrying amount of the equity disposed of and the proceeds of disposalactually received is recognized in profit or loss for the current period. If the remaining equity empowersthe Company to exercise significant influence or joint control over the investee, the remaining equity isaccounted for using the equity method; if the remaining equity does not empower the Company toexercise control, joint control or significant influence over the investee, the remaining equity isaccounted for in accordance with the Accounting Standards for Business Enterprises No. 22 --Recognition and Measurement of Financial Instruments.
(2) Consolidated financial statements
1) Disposal of investment in a subsidiary through multiple transactions by steps until loss of controlover the subsidiary which does not constitute “a package deal”
Prior to the loss of control, the difference between the proceeds from disposal and the share ownedby the Company in the net assets of the subsidiary in relation to the long-term equity investmentdisposed of that is calculated continuously from the date of acquisition or combination is adjustedagainst the capital reserve (capital premium). In case the capital premium is not sufficient to absorb thedifference, the remaining balance is adjusted against the retained earnings.
When losing control over a subsidiary, the remaining equity is re-measured at its fair value at thedate of loss of control. The sum of the consideration received from the disposal of the equity and the fairvalue of the remaining equity, net of the share owned by the Company in the net assets of the subsidiaryin relation to the long-term equity investment disposed of as calculated continuously from the date ofacquisition or combination according to the previous shareholding ratio, is recognized in the investmentincome for the period in which the control is lost, and the goodwill is reduced accordingly. Othercomprehensive income relating to the equity investment in the subsidiary is transferred to the investmentincome for the current period in which the control is lost.
2) Disposal of investment in a subsidiary through multiple transactions by steps until loss of controlover the subsidiary which constitutes a package dealThe Company accounts for such transactions as one transaction to dispose of and lose its controlover the subsidiary. However, the difference between the proceeds from each disposal before loss ofcontrol and the share owned by the Company in the net assets of the subsidiary in relation to theinvestment disposed of is recognized in other comprehensive income in the consolidated financialstatements, which is wholly transferred to the profit or loss in the current period in which the control islost.
22. Investment properties
N/A
23. Fixed assets
(1). Criteria for recognition
√ Applicable□ N/A
Fixed assets are tangible assets held for production of goods, rendering of service, lease oroperation and management with a useful life of more than one accounting year. A fixed asset isrecognized if the economic benefits relating to it are very likely to flow to the Company and its cost canbe reliably measured.
(2). Method of depreciation
√ Applicable□ N/A
| Category | Depreciation | Depreciation period (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Machinery and equipment | Straight line method | 5 | 5.00 | 19.00 |
| Transportation equipment | Straight line method | 5 | 5.00 | 19.00 |
| Electronic equipment and others | Straight line method | 3-5 | 5.00 | 19.00-31.67 |
| Operating leased equipment | Straight line method | 3, 7 | 5.00 | 31.67, 13.57 |
(3). Identification basis, valuation method and depreciation method for fixed assets acquired
under finance leases
□ Applicable√ N/A
24. Construction in progress
√ Applicable□ N/A
1. A construction in progress is recognized if the economic benefits relating to it are very likely toflow to the Company and its cost can be reliably measured. A construction in progress is measured at theactual cost incurred before it is completed and ready for intended use.
2. When a construction in progress is ready for intended use, it is transferred to fixed assets at itsactual construction cost. A construction in progress that is ready for intended use but the final settlementof which has not yet been completed is transferred to fixed assets at estimated value first, and after thecompletion of final settlement, the estimated value is adjusted according to the actual cost, but theaccrued depreciation is not adjusted.
25. Borrowing costs
□ Applicable√ N/A
26. Biological assets
□ Applicable√ N/A
27. Oil and gas assets
□ Applicable√ N/A
28. Use right assets
□ Applicable√ N/A
29. Intangible assets
(1). Measurement, service life and impairment test
√ Applicable□ N/A
1. Intangible assets include land use rights, patents, and software etc. and are measured at costinitially.
2. An intangible asset with a finite useful life is amortized over its useful life in a systematical andrational expected realization of economic benefits relative to the intangible asset, or is amortized usingthe straight-line method if it is impossible to determine expected realization reliably. The specific yearsare as follows:
| Item | Amortization period (years) |
| Land use rights | 30 |
| Patents | 10 |
| Software | 3-5 |
(2). Accounting policy on internal research and development expenditures
□ Applicable√ N/A
30. Impairment of long-term assets
√ Applicable□ N/A
For long-term equity investments, fixed assets, construction in progress, intangible assets with afinite useful life and other long-term assets, if there’s an indication of impairment at the balance sheetdate, the Company assesses their recoverable amount. Goodwill arising from business combinations andintangible assets with an infinite useful life are tested for impairment every year regardless of whetherthere’s an indication of impairment. Goodwill is tested for impairment together with the relevant groupsof assets or combinations of groups of assets.
If the recoverable amount of a long-term asset is less than its carrying amount, the difference ismeasured as impairment loss of the asset and recognized in profit or loss for the current period.
31. Long-term prepaid expenses
√ Applicable□ N/A
Long-term prepaid expenses are expenses that have already been incurred but should be amortizedover a period of more than one year (excluding one year). Long-term prepaid expenses are stated as theamount actually incurred and shall be amortized evenly by stages within the benefit period or specifiedperiod. If an item of long-term prepaid expenses will not benefit the subsequent periods, the amortizedvalue of the item that has not yet been amortized is wholly transferred to profit or loss for the currentperiod.
32. Contract liabilities
(1). Recognition method for contract liabilities
√ Applicable□ N/A
The Company presents contract assets or contract liabilities in the balance sheet according to therelationship between the performance of contractual obligations and payment by customers. Contractassets and contract liabilities under a same contract are presented at the net amount after offsetting eachother.
The obligations of the Company for transferring goods to customers corresponding toconsiderations that have been received or receivable are presented as contract liabilities.
33. Employee benefits
(1). Accounting treatment of short-term employee benefits
√ Applicable□ N/A
1. Employee benefits include short-term benefits, post-employment benefits, termination benefitsand other long-term employee benefits.
2. Accounting treatment of short-term employee benefits
The short-term employee benefits actually incurred are recognized as liabilities in the accountingperiod during which employee services are rendered, and included in profit or loss for the current periodor the cost of related assets.
(2). Accounting treatment of post-employment benefits
√ Applicable□ N/A
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
(1) In the accounting period during which employee services are rendered, the amount incontribution as calculated according to the defined contribution plan is recognized as liabilities andincluded in profit or loss for the current period or the cost of related assets.
(2) The accounting treatment of a defined benefit plan generally involves the following steps:
1) According to the projected unit credit method, use the unbiased and consistent actuarialassumptions to estimate demographic variables and financial variables, measure the obligation arisingfrom the defined benefit plan and determine the period to which the relevant obligation belongs.
Meanwhile, discount the obligation arising from the defined benefit plan, in order to determine thepresent value of the defined benefit plan obligation and the current service cost;
2) If the defined benefit plan has assets, the deficit or surplus resulting after reducing the presentvalue of the defined benefit plan obligation by the fair value of the defined benefit plan is recognized asa net liability or asset of the defined benefit plan. If the defined benefit plan has a surplus, the net assetsof the defined benefit plan are measured at the lower of surplus in the defined benefit plan and assetceiling;
3) At the end of the reporting period, the cost of employee benefits arising from the defined benefitplan is recorded as service cost, net interest on the net liabilities or net assets of the defined benefit plan,and changes arising from re-measurement of the net liabilities or net assets of the defined benefit plan,wherein the service cost and the net interest on the net liabilities or net assets of the defined benefit planare included in profit or loss for the current period or the cost of related assets, and the changes arisingfrom re-measurement of the net liabilities or net assets of the defined benefit plan are included in othercomprehensive income, which will not be reserved to profit or loss in subsequent periods, but may betransferred within the scope of equity.
(3). Accounting treatment of termination benefits
√ Applicable□ N/A
When the Company can no longer withdraw the offer of termination benefits as a result oftermination of employment or redundancy, or recognizes the restructuring costs or expenses relating topayment of termination benefits, whichever the earlier, the employee benefit liabilities arising fromrecognition of termination benefits are recognized in profit or loss for the current period.
(4). Accounting treatment of other long-term employee benefits
√ Applicable□ N/A
Other long-term employee benefits are accounted for in accordance with the provisions applicableto defined contribution plans if they are qualified as defined contribution plans, otherwise, are accountedfor in accordance with the provisions applicable to defined benefit plans. In order to simplify theaccounting treatment, the total net amount of the cost of employee benefits arising from the definedbenefit plans that is recorded as service cost, net interest on the net liabilities or net assets of otherlong-term employee benefits, changes arising from re-measurement of the net liabilities or net assets ofother long-term employee benefits and other components is included in profit or loss for the currentperiod or the cost of related assets.
34. Leasing liabilities
□ Applicable√ N/A
35. Provisions
√ Applicable□ N/A
1. An obligation arising from any external guarantee, litigation, product quality warranty, onerouscontract or other contingencies is recognized as a provision if it is a present obligation assumed by the
Company, and it is probable that an outflow of resources embodying economic benefits will be requiredto settle the obligation, and the amount of the obligation can be reliably measured.
2. The amount recognized as a provision is the best estimate of the consideration required to settlethe present obligation. The carrying amount of provisions is reviewed at the balance sheet date.
36. Share-based payments
√ Applicable□ N/A
1. Categories of share-based payments
Share-based payments include equity-settled share-based payments and cash-settled share-basedpayments.
2. Accounting treatment for implementation, modification and termination of share-based paymentplan
(1) Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees that can beexecuted immediately upon being granted, are measured at the fair value of the equity instruments at thegrant date, and recognized as related costs or expenses with a corresponding adjustment to capitalreserve. At each balance sheet date during the vesting period, equity-settled share-based payments inexchange for services rendered by employees that cannot be executed until services in the vesting periodare completed or required performance conditions are satisfied, are measured at the fair value of theequity instruments at the grant date based on the best estimate of exercisable numbers of equityinstruments, and recognized as related costs or expenses with a corresponding adjustment to capitalreserve.
For equity-settled share-based payments in exchange for services rendered by other parties, if thefair value of services from other parties can be measured reliably, they are measured at the fair value ofservices from other parties at the date when such services are received. If the fair value of services fromother parties cannot be measured reliably but the fair value of the equity instruments can be measuredreliably, they are measured at the fair value of the equity instruments at the date when such services arereceived. The fair value of the equity instruments are recognized as related costs or expenses, with acorresponding increase in owners' equity.
(2) Cash-settled share-based payments
Cash-settled share-based payments in exchange for services rendered by employees that can beexecuted immediately upon being granted, are recognized as related costs or expenses based on the fairvalue of liabilities assumed by the Company at the grant date, with a corresponding increase in liability.At each balance sheet date during the vesting period, cash-settled share-based payments in exchange forservices rendered by employees that cannot be executed until services in the vesting period arecompleted or required performance conditions are satisfied, are measured at the fair value of liabilitiesassumed by the Company based on the best estimate of exercisable conditions, and recognized as relatedcosts or expenses and relevant liabilities.
(3) Modification and termination of share-based payment plan
In case the Company modifies a share-based payment plan, if the modification increases the fairvalue of the equity instruments granted, the Company will include the incremental fair value of theequity instruments granted in the measurement of the amount recognized for services received. If themodification increases the number of the equity instruments granted, the Company will include the fairvalue of additional equity instruments granted in the measurement of the amount recognized for servicesreceived. If the Company modifies the exercisable conditions of the share-based payment plan in amanner beneficial to the employee, the Company will consider the modified exercisable conditions whendealing with exercisable conditions.
If the modification decreases the fair value of the equity instruments granted, the Company willcontinue to measure the amount recognized for services received at the fair value of the equityinstruments at the grant date without including the decremental fair value of the equity instruments. Ifthe modification decreases the number of the equity instruments granted, the Company will treat thedecreased number as the cancelled number of equity instruments granted. If the Company modifies theexercisable conditions in a manner unbeneficial to the employee, the Company will not consider themodified exercisable conditions when dealing with exercisable conditions.
If cancellation or settlement of the equity instruments granted occurs (not due to unsatisfaction ofexercisable conditions) during the vesting period, the Company will account for the cancellation orsettlement of the equity instruments granted as an acceleration of vesting, and recognize immediately theamount that otherwise would have been recognized over the remainder of the vesting period.
37. Preferred shares, perpetual bonds and other financial instruments
□ Applicable√ N/A
38. Income
(1). Accounting policies adopted for income recognition and measurement
√ Applicable□ N/A
1. Principles for revenue recognition
At the beginning date of a contract, the Company assesses the contract to identify individualperformance obligations contained in the contract and determine whether individual obligations are to beperformed during a period of time or at a specific time point.
An obligation meeting one of the following conditions is one to be performed within a period oftime, and the remaining are obligations to be performed at a specific time point: (1) the customerreceives and consumes the economic benefits from the performance of the Company when the Companyperforms its obligations; (2) the customer can control the goods in progress during the performance ofthe Company; or (3) the goods generated during the performance process of the Company haveirreplaceable uses, and the Company is entitled to payment for the portion completed during the entirecontract term.
The Company recognizes revenue according to the performance progress during the period of timefor obligations to be performed during a period of time. If the performance progress cannot be
determined reasonably, and the Company is expected to be paid based on the costs incurred, theCompany recognizes revenue according to the amount of costs incurred until the performance progresscan be determined reasonably. For obligations to be performed at a specific time point, the Companyrecognizes revenue when the customer receives the control over the relevant goods or services. Thefollowing will be considered when determining whether the customer has obtained the control over thegoods: (1) the Company has the present rights of receiving payments for such goods, that is, thecustomer has the present obligation of making payment for the goods; (2) the Company has transferredthe legal title in the goods to the customer, that is, the customer has acquired the legal title in the goods;
(3) the Company has transferred the physical goods to the customer, that is, the customer is inpossession of the physical goods; (4) the Company has transferred major risks and rewards of the legaltitle in the goods to the customer, that is, the customer has acquired the major risks and rewards of thelegal title in the goods; (5) the customer has accepted the goods; and (6) there are other signs indicatingthat the customer has acquired the control over the goods.
2. Principles of revenue measurement
(1) The Company measures the revenue according to the transaction price allocated to individualperformance obligations. The transaction price refers to the amount of the consideration expected to bereceived by the Company on the basis of transferring goods or providing services to the customer,excluding amounts collected on behalf of a third party and amounts expected to be refunded to thecustomer.
(2) If a contract contains a variable consideration, the Company determines the best estimate of thevariable consideration according to the expected value or the most likely amount; however, thetransaction price containing the variable consideration does not exceed the amount for which no materialreversal of recognized revenue is highly probable when relevant uncertainty is eliminated.
(3) If a contract contains a major financing portion, the Company determines the transaction priceas the amount payable in cash when the customer obtains the control over the goods or services. Thedifference between the transaction price and contract consideration is amortized using the effectiveinterest method during the term of the contract. If the Company expects that the interval between theacquisition of the goods or services by the customer and the payment of prices by the customer will notexceed one year from the commencement date of the contract, no significant financing factor isconsidered.
(4) If a contract contains two or more performance obligations, at the beginning date of the contract,the Company allocates the transaction price to individual performance obligations according to therelative proportion of the individual sale prices of the goods promised under such individualperformance obligations.
3. Specific methods for revenue recognition
(1) Revenue from sales of goods
Revenue from sales of goods denotes contractual obligations to be performed at a time point. Oursales include sales to the domestic market and sales to foreign markets.
Goods sold to the domestic market: 1) Under the direct sale model and the distribution mode, theCompany recognizes the revenue when the goods sent have been delivered to customers with customers'receipt given to the Company. For goods sold attached with return conditions, the Company recognizesthe revenue according to the amount of the consideration expected to be received by the Company on thebasis of transferring goods to the customer, and recognizes liabilities to write off the revenue accordingto the expected amount to be refunded due to the return of goods; for goods required for installment andinspection after sales, the Company recognizes the revenue when such goods have been installed andinspected with customers' acceptance certificate given to the Company. If the Company shares profitsfrom sales of product to downstream end customers, the Company recognizes the revenue at the goodsprice agreed between the parties upon the delivery of goods to the customer and reconciliation, andrecognizes shared revenue according to the share profit reconciliation statement when the profits fromsales of goods are realized. 2) Under the commissioned sales mode, the Company recognizes therevenue when it receives the list of commissioned sales from the customer.Goods exported to overseas markets: The Company mainly adopts FCA for export of goods. Underthis mode, the Company recognizes revenue when it delivers goods at the designated location withexport customs clearance procedures completed.
(2) Other incomes
Other revenues denote contractual obligations to be performed at a time point/during a specificperiod of time. For installation services provided by the Company, the Company recognizes the revenuewhen it has completed the services and received customers’ acceptance certificate; for repair andmaintenance services provided by the Company, the Company recognizes the revenue when it hascompleted the services and received payments; for patent license services provided by the Company, theCompany recognizes the revenue when the patent license is delivered; for technology developmentservices provided by the Company, the Company recognizes the revenue when it has completed theservices or when the agreed time point of service acceptance is reached.
(2). Description of differences in the accounting policies in revenue recognition due to different
operating modes adopted for the same business type
□ Applicable√ N/A
39. Contract costs
□ Applicable√ N/A
40. Government grants
√ Applicable□ N/A
1. Government grants are recognized if (1) the Company meets the conditions attaching to thegovernment grants; and (2) the Company will receive the government grants. Government grants in theform of monetary assets are measured at the amount received or receivable. Government grants in theform of non-monetary assets are measured at fair value, or if their fair value is unavailable, at nominalamount.
2. Determination and accounting treatment of government grants related to assetsGovernment grants related to assets are government grants which are offered for purchasing,constructing or otherwise acquiring long-term assets as provided by the applicable governmentdocuments. In the absence of such express provision in the applicable government documents,government grants related to assets are those with a primary condition that the Company shouldpurchase, construct or otherwise acquire long-term assets. Government grants related to assets are offsetagainst the carrying amount of the relevant assets or recognized as deferred income. Government grantsrelated to assets recognized as deferred income shall be included in profit or loss over the service life ofthe relevant assets on a reasonable and systemic basis. Government grants measured at nominal amountare directly recognized in profit or loss for the current period. In case of sale, transfer, retirement ordamage of the relevant assets before the end of intended service life, the balance of the unallocateddeferred income is transferred to profit or loss for the period in which the assets are disposed of.
3. Determination and accounting treatment of government grants related to incomeGovernment grants related to income are government grants other than those related to assets.Government grants related to both assets and income in which it is difficult to make a distinctionbetween the portion related to assets and the portion related to income are wholly classified asgovernment grants related to income. Government grants related to income as compensation forexpenses or losses to be incurred in subsequent periods are recognized as deferred income and in theperiod for recognizing the relevant costs, expenses or losses, included in profit or loss for the currentperiod or offset against the relevant costs. Government grants related to income as compensation forexpenses or losses already incurred are directly included in profit or loss for the current period or offsetagainst the relevant costs.
4. Government grants related to daily operations of the Company are recognized in other income oroffset against the relevant costs and expenses depending on the nature of economic business.Government grants not related to daily operations of the Company are recognized in non-operatingincome or expenses.
5. Accounting treatment of policy preferential loans and interest subsidies
(1) If the Ministry of Finance appropriates the interest subsidies to the lending bank, who thengrants the loan to the Company at the policy preferential rate, the loan is stated as the amount actuallyreceived, and the borrowing cost is calculated according to the principal of the loan and the policypreferential rate.
(2) If the Ministry of Finance directly appropriates the interest subsidies to the Company, theinterest subsidies are offset against the borrowing cost.
41. Deferred tax assets and deferred tax liabilities
√ Applicable□ N/A
1. The difference between the tax base of an asset or liability and its carrying amount (or in case ofan item not recognized as asset or liability whose tax base can be determined according to the applicabletax law, the difference between its tax base and carrying amount) is recognized as a deferred tax asset or
deferred tax liability according to the tax rate applicable to the period in which the asset or liability isexpected to be recovered or settled.
2. Deferred tax assets are recognized to the extent of the amount of income tax payable that will beavailable in future periods against which deductible temporary differences are deductible. At the balancesheet date, deferred tax assets not recognized in prior periods are recognized if there’s conclusiveevidence that it is probable that sufficient taxable income will be available in future periods againstwhich the deductible temporary differences are deductible.
3. At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced tothe extent that it is no longer probable that sufficient taxable income will be available in future periods toallow the benefit of the deferred tax assets to be utilized. If it is probable that sufficient taxable incomewill be available, the reduced amount is reversed.
4. The income taxes and deferred income taxes are included in profit or loss for the current periodas income tax expenses or gains, except the income taxes arising from any: (1) business combination; or
(2) transaction or event directly recognized in owners’ equity.
42. Leases
(1). Accounting treatment of operating leases
√ Applicable□ N/A
If the Company is a lessee, the rents paid by the Company are included in the costs of the relevantassets or in profit or loss for the current period over the whole lease term on a straight line basis. Theinitial direct cost incurred by the Company is directly recognized in profit or loss for the current period.Contingent rents are recognized in profit or loss in the period in which they are incurred.
If the Company is a lessor, the rents received by the Company are recognized in profit or loss forthe current period over the whole lease term on a straight line basis. The initial direct cost incurred bythe Company is directly recognized in profit or loss for the current period. However, if such initial directcost is of a large amount, the initial direct cost is capitalized and recognized in profit or loss byinstallments. Contingent rents are recognized in profit or loss in the period in which they are incurred.
(2). Accounting treatment of finance leases
√ Applicable□ N/A
If the Company is a lessee, the lower of the fair value of the leased asset at the inception of thelease and the present value of the minimum lease payments is recorded as the carrying amount of therented assets, with the minimum lease payments as the carrying amount of long-term payables and thedifference charged to unrecognized financing fees at the commencement date of the lease term. Theinitial direct cost incurred by the Company is directly recognized in the value of the rented assets. Ineach period of the lease term, the financing fees for the period is recognized by using the effectiveinterest method.
If the Company is a lessor, the aggregate of the minimum lease receivable at the inception of thelease and the initial direct costs is recognized as the carrying amount of the finance lease receivable andthe unguaranteed residual value is recorded at the same time at the commencement date of the lease term;
the difference between the aggregate of the minimum lease receivable, the initial direct costs and theunguaranteed residual value, and the aggregate of their present values is recognized as unearnedfinancing income. In each period of the lease term, the financing income for the period is recognized byusing the effective interest method.
(3). Method for determination and accounting treatments of lease under new lease standards
□ Applicable√ N/A
43. Other significant accounting policies and accounting estimates
□ Applicable√ N/A
44. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
√ Applicable□ N/A
| Changes in accounting policies and associated reasons | Approval procedures | Remarks (name and amount of line items in financial statements that have been materially affected) |
| Implement the Accounting Standards for Business Enterprises No. 14 - Revenue amended and released by the Ministry of Finance | Approved by the management | Refer to the table below for details |
| Implement the Interpretation of the Accounting Standards for Business Enterprises No. 13 | Approved by the management | None |
Other information
(1) Changes in accounting policies caused by changes in the Accounting Standards for BusinessEnterprises
1) The Company has implemented the Accounting Standards for Business Enterprises No. 14 -Revenue (hereinafter referred to as the New Revenue Standard) revised by the Ministry of Finance sinceJanuary 1, 2020. As required by transition provisions to adopt the New Revenue Standard, informationin the comparative period cannot be adjusted, but the opening balances of retained earnings in the reportor other relevant amounts in the financial statements shall be adjusted retrospectively for any cumulativeimpact of the new standards at the first implementation date.
The New Revenue Standard mainly causes the following influences to the Company’s financialstatements as at January 1, 2020:
| Item | Balance sheet | ||
| December 31, 2019 | Adjustment influence of the New Revenue Standard | January 1, 2020 | |
| Accounts receivable | 176,035,155.24 | 15,587,556.77 | 191,622,712.01 |
| Inventories | 299,966,170.35 | -16,355,310.22 | 283,610,860.13 |
| Contract assets | 3,740,605.96 | 3,740,605.96 | |
| Other current assets | 44,405,513.30 | -2,340,625.20 | 42,064,888.10 |
| Advance from customers | 184,444,643.33 | -16,910,443.03 | 167,534,200.30 |
| Contract liabilities | 15,777,305.81 | 15,777,305.81 | |
| Other current liabilities | 1,133,137.22 | 1,133,137.22 | |
| Undistributed profit | 288,975,820.29 | 1,278,734.88 | 290,254,555.17 |
| Total equity attributable to owners of the parent company | 1,974,559,837.64 | 1,278,734.88 | 1,975,838,572.52 |
| Minority interests | 149,649,306.18 | -646,507.57 | 149,002,798.61 |
2) The Company has implemented the Interpretation of the Accounting Standards for BusinessEnterprises No. 13 released in 2019 by the Ministry of Finance since January 1, 2020. This change in theaccounting policy is handled by using the prospective application method.
(2). Changes in significant accounting estimates
□ Applicable√ N/A
(3). Description of adjustments in opening balances of line items in financial statements of the
year due to the first implementation of the New Revenue Standard and new lease standard
since 2020
√ Applicable□ N/A
Consolidated Balance Sheet
In RMB
| Item | December 31, 2019 | January 1, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and bank balances | 875,858,784.58 | 875,858,784.58 | |
| Balances with clearing agencies | |||
| Placements with banks and other financial institutions | |||
| Held-for-trading financial assets | 540,000,000.00 | 540,000,000.00 | |
| Derivative financial assets | |||
| Notes receivable | 4,042,559.63 | 4,042,559.63 | |
| Accounts receivable | 176,035,155.24 | 191,622,712.01 | 15,587,556.77 |
| Receivables financing | 1,980,500.00 | 1,980,500.00 | |
| Prepayments | 35,070,999.13 | 35,070,999.13 | |
| Premiums receivable | |||
| Amounts receivable under |
| reinsurance contracts | |||
| Reinsurer’s share of insurance contract reserves | |||
| Other receivables | 9,618,750.08 | 9,618,750.08 | |
| Where: Interest receivable | |||
| Dividend receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 299,966,170.35 | 283,610,860.13 | -16,355,310.22 |
| Contract assets | 3,740,605.96 | 3,740,605.96 | |
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 44,405,513.30 | 42,064,888.10 | -2,340,625.20 |
| Total current assets | 1,986,978,432.31 | 1,987,610,659.62 | 632,227.31 |
| Non-current Assets: | |||
| Loans and advances | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term accounts receivable | |||
| Long-term equity investment | 139,534,371.94 | 139,534,371.94 | |
| Investment in other equity instruments | 11,975,419.38 | 11,975,419.38 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 471,204,340.95 | 471,204,340.95 | |
| Construction in progress | 20,132,004.07 | 20,132,004.07 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 332,331,324.07 | 332,331,324.07 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | 16,908,070.34 | 16,908,070.34 | |
| Deferred tax assets | 109,023,941.85 | 109,023,941.85 | |
| Other non-current assets | 11,420,185.94 | 11,420,185.94 | |
| Total non-current assets | 1,112,529,658.54 | 1,112,529,658.54 | |
| Total assets | 3,099,508,090.85 | 3,100,140,318.16 | 632,227.31 |
| Current Liabilities: | |||
| Short-term borrowings | 76,765,319.05 | 76,765,319.05 | |
| Loans from the central bank | |||
| Taking from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 37,335,841.79 | 37,335,841.79 | |
| Accounts payable | 176,624,445.46 | 176,624,445.46 | |
| Advance from customers | 184,444,643.33 | 167,534,200.30 | -16,910,443.03 |
| Contract liabilities | 15,777,305.81 | 15,777,305.81 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and deposits from banks and other financial | |||
| institutions | |||
| Funds from securities trading agency | |||
| Funds from underwriting securities agency | |||
| Employee benefits payable | 50,586,932.71 | 50,586,932.71 | |
| Taxes payable | 42,924,647.79 | 42,924,647.79 | |
| Other payables | 14,364,076.43 | 14,364,076.43 | |
| Where: Interest payable | |||
| Dividend payable | |||
| Fees and commissions payable | |||
| Amounts payable under reinsurance contracts | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 64,968,795.02 | 64,968,795.02 | |
| Other current liabilities | 1,133,137.22 | 1,133,137.22 | |
| Total current liabilities | 648,014,701.58 | 648,014,701.58 | |
| Non-current Liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | 279,615,107.27 | 279,615,107.27 | |
| Bonds payable | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Leasing liabilities | |||
| Long-term payables | 3,488,100.00 | 3,488,100.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | 27,072,676.49 | 27,072,676.49 | |
| Deferred income | 17,108,361.69 | 17,108,361.69 | |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 327,284,245.45 | 327,284,245.45 | |
| Total liabilities | 975,298,947.03 | 975,298,947.03 | |
| Owners’ Equity (Shareholders’ Equity): | |||
| Paid-in capital (or share capital) | 451,554,411.00 | 451,554,411.00 | |
| Other equity instruments | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,207,942,318.37 | 1,207,942,318.37 | |
| Less: Treasury shares | |||
| Other comprehensive income | 3,287,063.85 | 3,287,063.85 | |
| Special reserve | |||
| Surplus reserve | 22,800,224.13 | 22,800,224.13 | |
| General risk reserve | |||
| Undistributed profit | 288,975,820.29 | 290,254,555.17 | 1,278,734.88 |
| Total owners’ (or shareholders’) equity attributable to owners of the parent company | 1,974,559,837.64 | 1,975,838,572.52 | 1,278,734.88 |
| Minority interests | 149,649,306.18 | 149,002,798.61 | -646,507.57 |
| Total owners’ (or shareholders’) equity | 2,124,209,143.82 | 2,124,841,371.13 | 632,227.31 |
| Total liabilities and owners’ (or shareholders’) equity | 3,099,508,090.85 | 3,100,140,318.16 | 632,227.31 |
Description of adjustments on each line item:
√ Applicable□ N/A
In accordance with the Accounting Standards for Business Enterprises No. 14 - Revenue (Cai Kuai[2017] No. 2) issued by the Ministry of Finance on July 5, 2017, for enterprises listed in domestic andoversea stock exchange concurrently and enterprises listed overseas with the financial statementsprepared under international financial reporting standards or accounting standards for businessenterprises, the New Revenue Standard shall be implemented from January 1, 2018; and for otherenterprises listed in domestically, the New Revenue Standard shall be implemented from January 1,2020. As a domestic listed company, the Company adopted the New Revenue Standard as at January 1,2020, and made adjustment on the opening balance of relevant item recognized in the financialstatements, but the data in comparable period can be unadjusted: (1) the goods payments received inadvance originally qualified for conditions of “receipts in advance” were charged to the line item of“contract liability”; (2) the rights of the Company for collecting the considerations for goods that havebeen transferred to customers, which rights depend on factors other than the lapse of time, werepresented as “contract assets”; and (3) in the goods sales mode of “profit sharing”, the revenue that hasbeen received by the customer but has not been recognized at the beginning of the period wasrecognized according to the New Revenue Standard.
Balance Sheet of the Parent Company
In RMB
| Item | December 31, 2019 | January 1, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and bank balances | 570,479,390.49 | 570,479,390.49 | |
| Held-for-trading financial assets | 540,000,000.00 | 540,000,000.00 | |
| Derivative financial assets | |||
| Notes receivable | 3,542,559.63 | 3,542,559.63 | |
| Accounts receivable | 299,315,776.44 | 295,616,359.63 | -3,699,416.81 |
| Receivables financing | 442,500.00 | 442,500.00 | |
| Prepayments | 6,410,257.48 | 6,410,257.48 | |
| Other receivables | 67,227,575.21 | 67,227,575.21 | |
| Where: Interest receivable | |||
| Dividend receivable | |||
| Inventories | 135,617,379.22 | 135,617,379.22 | |
| Contract assets | 3,699,416.81 | 3,699,416.81 | |
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 12,280,164.39 | 12,280,164.39 | |
| Total current assets | 1,635,315,602.86 | 1,635,315,602.86 | |
| Non-current Assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term accounts receivable | |||
| Long-term equity investment | 257,795,276.13 | 257,795,276.13 | |
| Investment in other equity instruments | 7,075,419.38 | 7,075,419.38 | |
| Other non-current financial | |||
| assets | |||
| Investment property | |||
| Fixed assets | 60,391,512.92 | 60,391,512.92 | |
| Construction in progress | 1,385,496.59 | 1,385,496.59 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Use right assets | |||
| Intangible assets | 330,796,423.87 | 330,796,423.87 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | 12,771,126.83 | 12,771,126.83 | |
| Deferred tax assets | 9,545,438.20 | 9,545,438.20 | |
| Other non-current assets | 6,744,453.85 | 6,744,453.85 | |
| Total non-current assets | 686,505,147.77 | 686,505,147.77 | |
| Total assets | 2,321,820,750.63 | 2,321,820,750.63 | |
| Current Liabilities: | |||
| Short-term borrowings | 10,217,738.36 | 10,217,738.36 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 37,335,841.79 | 37,335,841.79 | |
| Accounts payable | 162,596,838.45 | 162,596,838.45 | |
| Advance from customers | 11,116,659.11 | 4,387,326.61 | -6,729,332.50 |
| Contract liabilities | 6,485,831.14 | 6,485,831.14 | |
| Employee benefits payable | 26,985,668.92 | 26,985,668.92 | |
| Taxes payable | 1,534,242.70 | 1,534,242.70 | |
| Other payables | 42,599,703.36 | 42,599,703.36 | |
| Where: Interest payable | |||
| Dividend payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 243,501.36 | 243,501.36 | |
| Total current liabilities | 292,386,692.69 | 292,386,692.69 | |
| Non-current Liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Leasing liabilities | |||
| Long-term payables | 3,488,100.00 | 3,488,100.00 | |
| Long-term employee benefits payable | |||
| Estimated liabilities | 14,631,273.00 | 14,631,273.00 | |
| Deferred income | 15,724,174.30 | 15,724,174.30 | |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 33,843,547.30 | 33,843,547.30 | |
| Total liabilities | 326,230,239.99 | 326,230,239.99 | |
| Owners’ Equity (Shareholders’ Equity): | |||
| Paid-in capital (or share capital) | 451,554,411.00 | 451,554,411.00 | |
| Other equity instruments | |||
| Where: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,310,939,867.82 | 1,310,939,867.82 | |
| Less: Treasury shares | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 21,522,683.40 | 21,522,683.40 | |
| Undistributed profit | 211,573,548.42 | 211,573,548.42 | |
| Total owners’ (or shareholders’) equity | 1,995,590,510.64 | 1,995,590,510.64 | |
| Total liabilities and owners’ (or shareholders’) equity | 2,321,820,750.63 | 2,321,820,750.63 |
Description of adjustments on each line item:
√ Applicable□ N/A
In accordance with the Accounting Standards for Business Enterprises No. 14 - Revenue (Cai Kuai[2017] No. 2) issued by the Ministry of Finance on July 5, 2017, for enterprises listed in domestic andoversea stock exchange concurrently and enterprises listed overseas with the financial statementsprepared under international financial reporting standards or accounting standards for businessenterprises, the New Revenue Standard shall be implemented from January 1, 2018; and for otherenterprises listed in domestically, the New Revenue Standard shall be implemented from January 1,2020. As a domestic listed company, the Company adopted the New Revenue Standard as at January 1,2020, and made adjustment on the opening balance of relevant item recognized in the financialstatements, but the data in comparable period can be unadjusted: (1) the goods payments received inadvance originally qualified for conditions of “receipts in advance” were charged to the line item of“contract liability”; (2) the rights of the Company for collecting the considerations for goods that havebeen transferred to customers, which rights depend on factors other than the lapse of time, werepresented as “contract assets”.
(4). Description of retrospective adjustments on comparable data in previous periods upon the
first adoption of the New Revenue Standard and new lease standard from 2020
□ Applicable√ N/A
45. Others
□ Applicable√ N/A
VI. Taxes
1. Major categories of taxes and tax rates
Description of major categories of taxes and tax rates
√ Applicable□ N/A
| Category of tax | Basis of tax computation | Tax rate |
| Value-added tax (VAT) | VAT payable is the difference of the output tax calculated based on the incomes from selling goods and taxable services in accordance with the Tax Law, less the input tax allowed to be reduced in the period | 3%, 6%, 9%, 13% |
| City maintenance and construction tax | Turnover tax payable | 5%, 7% |
| Education surcharges | Turnover tax payable | 3% |
| Local education surcharges | Turnover tax payable | 2% |
| Enterprise income tax | Taxable income | 8.25%, 8.70%, 8.84%, 12.5%, 15%, 16.5%, 20%, 21%, 25% |
Disclosure of taxpayers with different rates of enterprise income tax:
√ Applicable□ N/A
| Taxpayer | Rate of enterprise income tax (%) |
| Appotronics Corporation Limited | 15.00 |
| Formoive (Beijing) Technology Co., Ltd. | 15.00 |
| Shenzhen Appotronics Software Technology Co., Ltd. | 12.50 |
| Appotronics Hong Kong Limited | 8.25, 16.50 |
| Beijing Orient Appotronics Technology Co., Ltd. | 20.00 |
| Fabulus Technology HongKong Limited | 16.50 |
| JoveAI Innovation, Inc. | 8.70, 8.84, 21.00 |
| Appotronics USA, Inc. | 21.00 |
| FORMOVIE TECHNOLOGY INC | 21.00 |
| JoveAI Limited | Tax exemption |
| WEMAXLLC | 21.00 |
| Shenzhen Appotronics Display Device Co., Ltd. | 20.00 |
| Appotronics Technology (Changzhou) Co., Ltd. | 20.00 |
| Appotronics Timewaying (Beijing) Technology Co., Ltd. | 20.00 |
| Qingda Appotronics (Xiamen) Technology Co., Ltd. | 20.00 |
| Shenzhen Appotronics Home Line Technology Co., Ltd. | 20.00 |
| Shenzhen Appotronics Laser Technology Co., Ltd. | 20.00 |
| Shenzhen Appotronics Xiaoming Technology Co., Ltd. | 20.00 |
| JoveAI Asia Company Limited | 20.00 |
| Tianjin Bonian Film Partnership (LP) | Tax exemption |
| Other taxpayers except above | 25.00 |
Note:
1. Appotronics Hong Kong Limited, as domiciled in Hong Kong, one of which can apply thetwo-level income tax system, namely, applying the tax rate of 8.25% for the first HKD 2 million taxableincome and 16.50% for the remaining taxable income.
2. JoveAI Limited, as domiciled in the Cayman Islands, is exempt from enterprise income tax.
3. Appotronics USA, Inc., as domiciled in the United States, applies the federal enterprise incometax rate of 21%.
4. JoveAI Innovation, Inc., as domiciled in the United States, applies the federal enterprise incometax rate of 21%, the California state enterprise income tax rate of 8.84%, and the Delaware stateenterprise income tax rate of 8.70%.
5. FORMOVIE TECHNOLOGY INC, as domiciled in the United States, applies the federalenterprise income tax rate of 21%.
6. JoveAI Asia Company Limited, as domiciled in Vietnam, applies the enterprise income tax rateof 20%.
7. WEMAX LLC, as domiciled in the United States, applies the federal enterprise income tax rateof 21%.
2. Tax incentives
√ Applicable□ N/A
1. On December 9, 2019, the Company obtained the High-tech Enterprise Certificate (CertificateNo.: GR201944204257) jointly issued by Shenzhen Science and Technology Innovation Commission,Shenzhen Finance Bureau and Shenzhen Tax Service of State Taxation Administration with a valid termof three years. Therefore, the Company can pay the enterprise income tax at a rate of 15% from 2019 to2021.
2. On November 30, 2018, Formoive (Beijing) Technology Co., Ltd. obtained the High-techEnterprise Certificate (Certificate No.: GR201811009590) jointly issued by Beijing Municipal Scienceand Technology Commission, Beijing Finance Bureau and Beijing Tax Service of State TaxationAdministration with a valid term of three years. It can pay the enterprise income tax at a rate of 15%since 2019.
3. In accordance with the Notice of the Ministry of Finance and the State Administration ofTaxation on Enterprise Income Tax Policies for Further Encouraging the Development of Software andIntegrated Circuit Industries (Cai Shui (2012) No. 27), commencing from the first year of earningprofits prior to December 31,2017, a qualified company can be exempted from the enterprise income taxfor the first two years and enjoy a 50% tax reduction on the statutory tax rate of 25% from the third tothe fifth year until the tax incentive period expires. Therefore, Shenzhen Appotronics SoftwareTechnology Co., Ltd. is qualified for the tax incentive policy of “exemption from income tax for the firsttwo years and 50% reduction for next three years”, which means, it can be exempted from enterpriseincome tax from 2016 to 2017, and pay the enterprise income tax at a rate of 12.5% from 2018 to 2020.
4. In accordance with the Notice of the Ministry of Finance and the State Administration ofTaxation on Value-added Tax Policies for Software Products (Cai Shui [2011] No. 100), forself-developed and produced software products sold by general VAT taxpayers, thetax-refund-upon-collection policy is applicable to the part of their actual VAT burden in excess of 3%after the VAT has been collected at a tax rate of 17%. Shenzhen Appotronics Software Technology Co.,Ltd. is qualified for enjoying such tax incentive from January 1, 2015.
5. In accordance with Article 1 (26) of Annex 3 of the Notice of the Ministry of Finance and theState Administration of Taxation on Implementing the Pilot Program of Replacing Business Tax withValue-Added Tax in an All-round Manner (Cai Shui [2016] No. 36), taxpayers are exempted from VATif they provide technology transfer, technology development, and technology consultation and servicesin connection therewith. The Company is qualified for enjoying such tax incentive from January 26,2018.
6. In accordance with the Notice of the Ministry of Finance and the State Administration ofTaxation on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro and SmallEnterprises (Cai Shui [2019] No. 13), the annual taxable income of a small low-profit enterprise that is
not more than RMB 1 million shall be levied with the enterprise income tax rate at a discount of 25%,namely, for which the applicable enterprise income tax rate is 20%; The following companies arequalified for enjoying such tax incentives: Beijing Orient Appotronics Technology Co., Ltd., ShenzhenAppotronics Display Device Co., Ltd., Appotronics Technology (Changzhou) Co., Ltd., AppotronicsTimewaying (Beijing) Technology Co., Ltd., Qingda Appotronics (Xiamen) Technology Co., Ltd.,Shenzhen Appotronics Home Line Technology Co., Ltd., Shenzhen Appotronics Laser Technology Co.,Ltd., and Shenzhen City Appotronics Xiaoming Technology Co., Ltd.
3. Others
□ Applicable√ N/A
VII. Notes to items in the consolidated financial statements
1. Cash and bank balances
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 5,858.56 | 3,348.57 |
| Bank deposits | 1,020,747,657.62 | 857,708,997.58 |
| Other monetary funds | 17,007,057.09 | 18,146,438.43 |
| Total | 1,037,760,573.27 | 875,858,784.58 |
| Where: Total oversea deposits | 78,611,378.23 | 132,334,643.95 |
Other information
In other monetary funds, an amount of RMB 14,057,949.58, as security deposits, is subject torestriction in use; in bank deposits, an amount of RMB 40,000,000.00, as 3-year term deposits, is subjectto restriction in use, including the the deposit interests of RMB 177,534.25 which have been recognizedyet not matured.
2. Held-for-trading financial assets
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 114,000,000.00 | 540,000,000.00 |
| Where: | ||
| Structural deposits | 114,000,000.00 | 540,000,000.00 |
| Total | 114,000,000.00 | 540,000,000.00 |
Other information:
□ Applicable√ N/A
3. Derivative financial assets
□ Applicable√ N/A
4. Notes receivable
(1). Categories of notes receivable
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Bank acceptances | 950,000.00 | 3,891,456.00 |
| Commercial acceptances | 2,776,328.91 | 151,103.63 |
| Total | 3,726,328.91 | 4,042,559.63 |
(2). Notes receivable pledged by the Company at the end of the period
□ Applicable√ N/A
(3). Notes receivable which are undue as at the balance sheet date but endorsed or discounted by
the Company at the end of the period
□ Applicable√ N/A
(4). Notes transferred to accounts receivable due to drawer's failure in cashing at the end of the
period
□ Applicable√ N/A
(5). Disclosure by categories of provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage of provision (%) | Amount | Percentage (%) | Amount | Percentage of provision (%) | |||
| Provision for bad debts made by group | 3,872,451.48 | 100.00 | 146,122.57 | 3.77 | 3,726,328.91 | 4,050,512.45 | 100.00 | 7,952.82 | 0.20 | 4,042,559.63 |
| Where: | ||||||||||
| Bank acceptance bills | 950,000.00 | 24.53 | 950,000.00 | 3,891,456.00 | 96.07 | 3,891,456.00 | ||||
| Commercial acceptance bills | 2,922,451.48 | 75.47 | 146,122.57 | 5.00 | 2,776,328.91 | 159,056.45 | 3.93 | 7,952.82 | 5.00 | 151,103.63 |
| Total | 3,872,451.48 | / | 146,122.57 | / | 3,726,328.91 | 4,050,512.45 | / | 7,952.82 | / | 4,042,559.63 |
Provision for bad debts made individually:
□ Applicable√ N/A
Provision for bad debts made by group:
√ Applicable□ N/A
Item by group: Commercial acceptance bills and bank acceptance bills
In RMB
| Name | Closing balance | ||
| Notes receivable | Bad debt provision | Proportion of provision (%) | |
| Commercial acceptance bills | 2,922,451.48 | 146,122.57 | 5.00 |
| Bank acceptance bills | 950,000.00 | ||
| Total | 3,872,451.48 | 146,122.57 | 3.77 |
Recognition criterion to make the bad debt provision by group and explanation
□ Applicable√ N/A
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
(6). Provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Opening balance | Changes for the current period | Closing balance | ||
| Provision | Recovery or reversal | Write off or cancellation | |||
| Commercial acceptance bills | 7,952.82 | 138,169.75 | 146,122.57 | ||
| Total | 7,952.82 | 138,169.75 | 146,122.57 | ||
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
Other information:
None
(7). Notes receivable actually canceled in the current period
□ Applicable√ N/A
Other information
□ Applicable√ N/A
5. Accounts receivable
(1). Disclosure by aging
√ Applicable□ N/A
In RMB
| Aging | Closing balance of carrying amount |
| Within 1 year | |
| Where: Subitems within 1 year | |
| Subtotal of items within 1 year | 356,184,003.08 |
| 1 to 2 years | 3,172,319.46 |
| 2 to 3 years | 1,813,579.86 |
| Over 3 years | 176,358.49 |
| Total | 361,346,260.89 |
(2). Disclosure by categories of provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage of provision (%) | Amount | Percentage (%) | Amount | Percentage of provision (%) | |||
| Provision for bad debts made by group | 361,346,260.89 | 100.00 | 19,685,428.46 | 5.45 | 341,660,832.43 | 203,746,783.87 | 100.00 | 12,124,071.86 | 5.95 | 191,622,712.01 |
| Where: | ||||||||||
| Accounts receivable for which the provision for bad debts is made by aging group | 361,346,260.89 | 100.00 | 19,685,428.46 | 5.45 | 341,660,832.43 | 203,746,783.87 | 100.00 | 12,124,071.86 | 5.95 | 191,622,712.01 |
| Total | 361,346,260.89 | / | 19,685,428.46 | / | 341,660,832.43 | 203,746,783.87 | / | 12,124,071.86 | / | 191,622,712.01 |
Provision for bad debts made individually:
□ Applicable√ N/A
Provision for bad debts made by group:
√ Applicable□ N/A
Item by group: Amounts for which provisions for bad debts are made by aging group
In RMB
| Name | Closing balance | ||
| Accounts receivable | Bad debt provision | Proportion of provision (%) | |
| Within 1 year | 356,184,003.08 | 17,809,200.17 | 5.00 |
| 1-2 years | 3,172,319.46 | 793,079.87 | 25.00 |
| 2-3 years | 1,813,579.86 | 906,789.93 | 50.00 |
| Over 3 years | 176,358.49 | 176,358.49 | 100.00 |
| Total | 361,346,260.89 | 19,685,428.46 | 5.45 |
Recognition criterion to make the bad debt provision by group and explanation:
√ Applicable□ N/A
[Note]: The difference between the opening balance of the year and the closing balance of the prior year(as of December 31, 2019) can refer to V.44 of Section XI for details.
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
(3). Provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write off or cancellation | Other changes | |||
| Provision for bad debts made by group | 12,124,071.86 | 7,932,055.78 | 370,699.18 | 19,685,428.46 | ||
| Total | 12,124,071.86 | 7,932,055.78 | 370,699.18 | 19,685,428.46 | ||
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(4). Accounts receivable actually canceled in the current period
√ Applicable□ N/A
In RMB
| Item | Cancellation amount |
| Accounts receivable actually canceled | 370,699.18 |
Accounts receivable actually canceled in the current period are RMB 370,699.18.In which significant amounts canceled are described as below:
□ Applicable√ N/A
Description of accounts receivable cancellation:
□ Applicable√ N/A
(5). Top five closing balances of accounts receivable categorized by debtors
√ Applicable□ N/A
| Entity | Carrying amount | Proportion to the balance of accounts receivable (%) | Bad debt provision |
| Xiaomi Communications Technologies Co., Ltd. and its affiliates | 248,915,862.75 | 68.89 | 12,445,793.14 |
| Beijing Jingdong Century Trading Co., Ltd. | 28,421,997.22 | 7.87 | 1,421,099.86 |
| Shenzhen Sunvalley Technology Development Co., Ltd. | 22,790,393.35 | 6.31 | 1,139,519.67 |
| CFEC and its affiliates | 6,125,422.64 | 1.70 | 306,402.16 |
| BARCO | 5,797,205.70 | 1.60 | 289,860.29 |
| Subtotal | 312,050,881.66 | 86.37 | 15,602,675.12 |
The total of top five closing balances of accounts receivable is RMB 312,050,881.66, representing
86.37% of the total closing balance of accounts receivable; the total provision for bad debts is RMB15,602,675.12.
(6). Accounts receivable derecognized due to transfer of financial assets
□ Applicable√ N/A
(7). Assets and liabilities arising from transfer of accounts receivable and continued involvement
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
6. Receivables financing
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Bank acceptance bills receivable | 11,959,000.00 | 1,980,500.00 |
| Total | 11,959,000.00 | 1,980,500.00 |
Changes in amount and fair value of receivables financing:
□ Applicable√ N/A
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
Other information:
√ Applicable□ N/A
1) Receivables financing for which provision for impairment is made by group
| Item | Closing balance | ||
| Carrying amount | Provision for impairment | Percentage of provision (%) | |
| Group of bank acceptance bills | 11,959,000.00 | ||
| Subtotal | 11,959,000.00 | ||
2) Receivables financing which is undue as at the balance sheet date but endorsed or discounted bythe Company at the end of the period
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Group of bank acceptance bills | 1,014,000.00 | |
| Subtotal | 1,014,000.00 |
The acceptors of bank acceptance bills are commercial banks. Because commercial banks always havehigh credit ratings, it is less probable that bank acceptance bills will not get paid upon maturity;therefore, the Company has derecognized endorsed or discounted bank acceptance bills. However, ifsuch notes are unable to be paid at maturity, the Company will still be jointly and severally liable to thenote holders pursuant to the Negotiable Instruments Law.
7. Prepayments
(1). Disclosure of prepayments by aging
√ Applicable□ N/A
In RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 43,761,018.81 | 92.23 | 34,948,314.45 | 99.65 |
| 1 to 2 years | 3,686,582.62 | 7.77 | 122,684.68 | 0.35 |
| Total | 47,447,601.43 | 100.00 | 35,070,999.13 | 100.00 |
Reasons for overdue settlement of prepayments with significant amounts aged more than 1 year:
| Entity | Closing balance | Reason for not settled |
| CFEC and its affiliates | 2,341,035.38 | Not mature |
| Subtotal | 2,341,035.38 |
(2). Top five closing balances of prepayments categorized by receivers
√ Applicable□ N/A
| Entity | Carrying amount | Proportion to the balance of prepayments (%) |
| CVTE and its affiliates | 22,408,429.84 | 47.23 |
| Soraa Laser Diode, Inc | 5,872,410.00 | 12.38 |
| CFEC and its affiliates | 3,107,696.59 | 6.55 |
| GDC and its affiliates | 2,883,384.53 | 6.08 |
| Shenzhen Colorwin Optical Technology Co., Ltd. | 1,263,328.23 | 2.66 |
| Subtotal | 35,535,249.19 | 74.90 |
Other information
□ Applicable√ N/A
8. Other receivables
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 12,534,062.15 | 9,618,750.08 |
| Total | 12,534,062.15 | 9,618,750.08 |
Other information:
□ Applicable√ N/A
Interest receivable
(1). Categories of interest receivable
□ Applicable√ N/A
(2). Significant interests overdue
□ Applicable√ N/A
(3). Provision for bad debts
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
Dividends receivable
(4). Dividends receivable
□ Applicable√ N/A
(5). Dividends receivable with significant amounts aged more than 1 year
□ Applicable√ N/A
(6). Provision for bad debts
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
Other receivables
(7). Disclosure by aging
√ Applicable□ N/A
In RMB
| Aging | Closing balance of carrying amount |
| Within 1 year | |
| Where: Subitems within 1 year | |
| Subtotal of items within 1 year | 6,425,814.44 |
| 1 to 2 years | 5,229,091.10 |
| 2 to 3 years | 551,775.00 |
| Over 3 years | 967,062.60 |
| Total | 13,173,743.14 |
(8). Categories by the nature of other receivables
√ Applicable□ N/A
In RMB
| Nature of other receivables | Closing balance of carrying amount | Opening balance of carrying amount |
| Deposits/margins/petty cash | 8,832,850.67 | 8,772,420.22 |
| Withholding | 380,123.97 | 1,275,175.63 |
| Temporary receivables | 383,488.89 | 10,289.71 |
| Compensation receivable | 3,577,279.61 | |
| Total | 13,173,743.14 | 10,057,885.56 |
(9). Provision for bad debts
√ Applicable□ N/A
In RMB
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL in the future | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2020 | 439,035.48 | 100.00 | 439,135.48 | |
| Balance as at January 1, 2020 in the current period | ||||
| --transferred to Stage II | ||||
| --transferred to Stage III | -6,300.00 | 6,300.00 | ||
| --reversed to Stage II | ||||
| --reversed to Stage I | 100.00 | -100.00 | ||
| Provision | 206,845.51 | 206,845.51 | ||
| Reversal | ||||
| Write-off | ||||
| Cancellation | 6,300.00 | 6,300.00 | ||
| Other changes | ||||
| Balance as at December 31, 2020 | 639,680.99 | 639,680.99 |
Description of significant changes in the balance of other receivables with changed provisions for lossesin the current period:
□ Applicable√ N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period:
□ Applicable√ N/A
(10). Provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write off or cancellation | Other changes | |||
| Provision for bad debts made by group | 439,135.48 | 206,745.51 | 100.00 | 6,300.00 | 639,680.99 | |
| Total | 439,135.48 | 206,745.51 | 100.00 | 6,300.00 | 639,680.99 | |
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(11). Other receivables actually canceled in the current period
√ Applicable□ N/A
In RMB
| Item | Cancellation amount |
| Other receivables actually canceled | 6,300.00 |
In which significant amounts canceled are described as below:
□ Applicable√ N/A
Description of other receivables cancellation:
□ Applicable√ N/A
(12). Top five closing balances of other receivables categorized by debtors
√ Applicable□ N/A
In RMB
| Entity | Nature of other receivables | Closing balance | Aging | Proportion to the balance of other receivables (%) | Closing balance of bad debt provision |
| Creator Community (Guangzhou) Co., Ltd. | Compensation receivable | 3,577,279.61 | Within 1 year | 27.15 | 178,863.98 |
| Shenzhen Meisheng Industry Co., Ltd. | Deposits/margins/petty cash | 3,574,618.00 | 2-3 years | 27.13 | 178,730.89 |
| Shenzhen Science and Technology Assessment Management Center | Deposits/margins/petty cash | 1,310,675.20 | Within 1 year, 1-3 years, over 3 years | 9.95 | 65,533.76 |
| Hong Kong Science & Technology Parks Corporation | Deposits/margins/petty cash | 1,022,956.60 | 1-2 years | 7.77 | 51,147.86 |
| Beijing Dongsheng Bozhan Technology Development Co., Ltd. | Deposits/margins/petty cash | 652,594.38 | Within 1 year | 4.95 | 32,629.72 |
| Total | / | 10,138,123.79 | / | 76.95 | 506,906.21 |
(13). Accounts receivable involving government grants
□ Applicable√ N/A
(14). Other receivables derecognized due to transfer of financial assets
□ Applicable√ N/A
(15). Assets and liabilities arising from transfer of other receivables and continued involvement
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
9. Inventories
(1). Categories of inventories
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for decline in value of inventories/impairment of contract performance cost | Book value | Carrying amount | Provision for decline in value of inventories/impairment of contract performance cost | Book value | |
| Raw materials | 243,262,463.77 | 12,343,116.67 | 230,919,347.10 | 169,021,593.23 | 18,901,716.15 | 150,119,877.08 |
| Work in progress | 23,130,163.72 | 533,475.37 | 22,596,688.35 | 12,337,519.02 | 686,431.07 | 11,651,087.95 |
| Goods on hand | 152,306,656.10 | 17,204,698.44 | 135,101,957.66 | 95,889,640.29 | 20,855,142.36 | 75,034,497.93 |
| Goods upon delivery | 15,345,357.08 | 15,345,357.08 | 40,421,349.51 | 40,421,349.51 | ||
| Materials for consigned processing | 15,064,657.09 | 215,866.48 | 14,848,790.61 | 6,405,637.99 | 21,590.33 | 6,384,047.66 |
| Total | 449,109,297.76 | 30,297,156.96 | 418,812,140.80 | 324,075,740.04 | 40,464,879.91 | 283,610,860.13 |
[Note]: The difference between the opening balance of the year and the closing balance of the prioryear (as of December 31, 2019) can refer to V.44 of Section XI for details.
(2). Provision for decline in value of inventories and impairment of contract performance cost
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance | ||
| Provision | Others | Reversal or write-off | Others | |||
| Raw materials | 18,901,716.15 | 1,311,601.56 | 7,870,201.04 | 12,343,116.67 | ||
| Work in progress | 686,431.07 | 549,183.59 | 702,139.29 | 533,475.37 | ||
| Goods on hand | 20,855,142.36 | 8,112,748.17 | 11,763,192.09 | 17,204,698.44 | ||
| Materials for consigned processing | 21,590.33 | 200,516.97 | 6,240.82 | 215,866.48 | ||
| Total | 40,464,879.91 | 10,174,050.29 | 20,341,773.24 | 30,297,156.96 | ||
Specify reasons for specific determination basis of net realizable value, and reversal or write-off of theprovision for decline in value of inventories
| Item | Specific basis for determining the net realizable value | Reason for writing off the provisions for decline in value of inventories in the current period |
| Raw materials | The net realizable value of raw materials is determined as the historical average selling price or actual average selling price of finished goods in the ordinary course of business less the estimated costs of completion, and the estimated costs necessary to make the sale and relevant taxes. | The Company has consumed/sold the inventories for which a provision for decline in value has been made at the beginning of the current period. |
| Work in progress | The net realizable value of work in progress is determined as the historical average selling price or actual average selling price of finished goods in the ordinary course of business less the estimated costs of completion, and the estimated costs necessary to make the sale and relevant taxes. | The Company has consumed the inventories for which a provision for decline in value has been made at the beginning of the current period. |
| Goods on hand | For inventories directly used for sale, the net realizable value is determined as the historical average selling price or actual average selling price less the estimated costs necessary to make the sale and relevant taxes. | The Company has consumed/sold the inventories for which a provision for decline in value has been made at the beginning of the current period. |
(3). Description of capitalized amount of borrowing costs included in the closing balance ofinventories
□ Applicable√ N/A
(4). Description of amortization of contract performance cost during the period
□ Applicable√ N/A
Other information
□ Applicable√ N/A
10. Contract assets
(1). Description of contract assets
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Warranty security receivable | 492,467.50 | 181,635.38 | 310,832.12 | 150,233.80 | 7,511.69 | 142,722.11 |
| Goods payment | 4,842,771.16 | 1,408,947.78 | 3,433,823.38 | 3,787,246.16 | 189,362.31 | 3,597,883.85 |
| Total | 5,335,238.66 | 1,590,583.16 | 3,744,655.50 | 3,937,479.96 | 196,874.00 | 3,740,605.96 |
[Note]: The difference between the opening balance of the year and the closing balance of the prioryear (as of December 31, 2019) can refer to V.44 of Section XI for details.Amount and reasons of major changes in the book value during the reporting period
□ Applicable√ N/A
(2). Description of provision for impairment made on contract assets during the period
√ Applicable□ N/A
In RMB
| Item | Provision | Reversal | Write-off/cancellation | Reason |
| in the period | ||||
| Provision made by group | 1,393,709.16 | |||
| Total | 1,393,709.16 | / |
If a provision for bad debts of accounts receivable is made in accordance with the general model ofECL, please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
Other information:
√ Applicable□ N/A
Contract assets for which provision for impairment is made by aging group
| Aging | Closing balance | ||
| Carrying amount | Bad debt provision | Percentage of provision (%) | |
| Within 1 year | 163,132.50 | 8,156.63 | 5.00 |
| 1-2 years | 4,014,506.16 | 1,003,626.53 | 25.00 |
| 2-3 years | 1,157,600.00 | 578,800.00 | 50.00 |
| Subtotal | 5,335,238.66 | 1,590,583.16 | 29.81 |
11. Held-for-sale assets
□ Applicable√ N/A
12. Non-current assets due within one year
□ Applicable√ N/A
Debt investments and other debt investments with significant amounts at the end of the period
□ Applicable√ N/A
Other informationNone
13. Other current assets
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Cost of returned goods receivable | 1,381,990.01 | |
| Input VAT to be deducted | 11,338,961.82 | 37,976,562.19 |
| Prepaid enterprise income tax | 281,243.63 | 4,088,325.91 |
| Total | 13,002,195.46 | 42,064,888.10 |
Other information[Note]: The difference between the opening balance of the year and the closing balance of the prior year(as of December 31, 2019) can refer to V.44 of Section XI for details.
14. Debt investments
(1). Description of debt investments
□ Applicable√ N/A
(2). Debt investments with significant amounts at the end of the period
□ Applicable√ N/A
(3). Description of provision for impairment
□ Applicable√ N/A
Basis for recognizing the amount of provisions for impairment and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period
□ Applicable√ N/A
Other information
□ Applicable√ N/A
15. Other debt investments
(1). Description of other debt investments
□ Applicable√ N/A
(2). Other debt investments with significant amounts at the end of the period
□ Applicable√ N/A
(3). Description of provision for impairment
□ Applicable√ N/A
Basis for recognizing the amount of provisions for impairment and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
16. Long-term receivables
(1). Description of long-term receivables
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | Range of discount rate | ||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | ||
| Goods sold on installment payment | 15,000,000.00 | 750,000.00 | 14,250,000.00 | ||||
| Less: Financing income not realized | 1,053,912.22 | 1,053,912.22 | |||||
| Total | 13,946,087.78 | 750,000.00 | 13,196,087.78 | / | |||
(2). Provision for bad debts
√ Applicable□ N/A
In RMB
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL in the future | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2020 | ||||
| Balance as at January 1, 2020 in the current period |
| --transferred to Stage II | ||||
| --transferred to Stage III | ||||
| --reversed to Stage II | ||||
| --reversed to Stage I | ||||
| Provision | 750,000.00 | 750,000.00 | ||
| Reversal | ||||
| Write-off | ||||
| Cancellation | ||||
| Other changes | ||||
| Balance as at December 31, 2020 | 750,000.00 | 750,000.00 |
Description of significant changes in the balance of long-term receivables with changed provisions forlosses in the current period:
□ Applicable√ N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period
□ Applicable√ N/A
(3). Long-term receivables derecognized due to transfer of financial assets
□ Applicable√ N/A
(4). Assets and liabilities arising from transfer of long-term receivables and continuedinvolvement
□ Applicable√ N/A
Other information
□ Applicable√ N/A
17. Long-term equity investments
√ Applicable□ N/A
In RMB
| Investees | Opening Balance | Changes for the current period | Closing Balance | Closing balance of provision for impairment | |||||||
| Additional investment | Decreased investment | Investment profit or loss under equity method | Adjustment in other comprehensive income | Other equity changes | Declared cash dividends or profits | Provision for impairment | Others | ||||
| I. Joint venture | |||||||||||
| Subtotal | |||||||||||
| II. Associates | |||||||||||
| Cinionic Limited | 139,534,371.94 | -1,301,454.86 | 2,313,729.34 | -9,140,221.78 | 131,406,424.64 | ||||||
| GDC Technology Limited (BVI) | 118,196,580.78 | 809,247.05 | 12,332,520.01 | 131,338,347.84 | |||||||
| Subtotal | 139,534,371.94 | 118,196,580.78 | -492,207.81 | 14,646,249.35 | -9,140,221.78 | 262,744,772.48 | |||||
| Total | 139,534,371.94 | 118,196,580.78 | -492,207.81 | 14,646,249.35 | -9,140,221.78 | 262,744,772.48 | |||||
Other informationNone
18. Other equity instrument investments
(1). Description of other equity instrument investments
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Shen Zhen Timewaying Technology Co., Ltd. | 7,075,419.38 | 7,075,419.38 |
| Shenzhen Bevix Technology Co., Ltd. | 4,900,000.00 | 4,900,000.00 |
| Total | 11,975,419.38 | 11,975,419.38 |
(2). Description of equity investments not held for trading
√ Applicable□ N/A
In RMB
| Item | Dividends income recognized for the current period | Accumulated gains | Accumulated losses | Amounts to retained earnings from other comprehensive income | Reasons for designating as financial assets at fair value through other comprehensive income | Reasons for transferring to retained earnings from other comprehensive income |
| Shen Zhen Timewaying Technology Co., Ltd. | Subject to the management's intention of holding | |||||
| Shenzhen Bevix Technology Co., Ltd. | Subject to the management's intention of holding |
Other information:
√ Applicable□ N/A
The Company's equity investments in Shen Zhen Timewaying Technology Co., Ltd. and ShenzhenBevix Technology Co., Ltd. are mainly for promoting future business cooperation rather than makingtransactions, hence they are designated as investments in equity instruments at fair value through othercomprehensive income.
19. Other non-current financial assets
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
20. Investment properties
Measurement mode of investment propertiesN/A
21. Fixed assets
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 447,571,328.91 | 471,204,340.95 |
| Disposal of fixed assets | ||
| Total | 447,571,328.91 | 471,204,340.95 |
Other information:
□ Applicable√ N/A
Fixed assets
(1). Description of fixed assets
√ Applicable□ N/A
In RMB
| Item | Machinery and equipment | Transportation equipment | Electronic equipment and others | Operating leased equipment | Total |
| I. Cost | |||||
| 1. Opening balance | 82,619,598.35 | 1,020,400.05 | 31,265,315.39 | 525,597,112.41 | 640,502,426.20 |
| 2. Increase | 29,428,206.55 | 9,038,415.39 | 47,985,469.41 | 86,452,091.35 | |
| (1) Purchase | 28,891,627.63 | 8,898,200.65 | 37,789,828.28 | ||
| (2) Transfer from construction in progress | 47,985,469.41 | 47,985,469.41 | |||
| (3) Transfer from inventories | 536,578.92 | 140,214.74 | 676,793.66 | ||
| 3. Decrease | 8,153,090.95 | 2,985,169.50 | 10,288,683.02 | 21,426,943.47 | |
| (1) Disposal or retirement | 4,074,815.63 | 2,830,201.69 | 1,728,450.18 | 8,633,467.50 | |
| (2) Transfer to inventories | 4,078,275.32 | 154,967.81 | 8,560,232.84 | 12,793,475.97 | |
| 4. Closing balance | 103,894,713.95 | 1,020,400.05 | 37,318,561.28 | 563,293,898.80 | 705,527,574.08 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 29,391,420.36 | 292,223.86 | 12,083,558.96 | 127,530,882.07 | 169,298,085.25 |
| 2. Increase | 17,784,983.00 | 155,448.37 | 6,892,606.16 | 74,396,648.69 | 99,229,686.22 |
| (1) Provision | 17,784,983.00 | 155,448.37 | 6,892,606.16 | 74,396,648.69 | 99,229,686.22 |
| 3. Decrease | 5,647,833.21 | 1,866,778.03 | 3,056,915.06 | 10,571,526.30 | |
| (1) Disposal or retirement | 3,425,829.91 | 1,734,910.89 | 545,039.96 | 5,705,780.76 | |
| (2) Transfer to inventories | 2,222,003.30 | 131,867.14 | 2,511,875.10 | 4,865,745.54 | |
| 4. Closing balance | 41,528,570.15 | 447,672.23 | 17,109,387.09 | 198,870,615.70 | 257,956,245.17 |
| III. Provision for impairment | |||||
| 1. Opening balance | |||||
| 2. Increase | |||||
| (1) Provision | |||||
| 3. Decrease | |||||
| (1) Disposal or retirement | |||||
| 4. Closing balance | |||||
| IV. Book value | |||||
| 1. Closing balance | 62,366,143.80 | 572,727.82 | 20,209,174.19 | 364,423,283.10 | 447,571,328.91 |
| 2. Opening balance | 53,228,177.99 | 728,176.19 | 19,181,756.43 | 398,066,230.34 | 471,204,340.95 |
(2). Temporarily idle fixed assets
□ Applicable√ N/A
(3). Fixed assets acquired under finance lease
□ Applicable√ N/A
(4). Fixed assets leased out under operating lease
√ Applicable□ N/A
In RMB
| Item | Closing balance of carrying amount |
| Operating leased equipment | 364,423,283.10 |
| Total | 364,423,283.10 |
(5). Fixed assets of which certificates of title have not been obtained
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
Disposal of fixed assets
□ Applicable√ N/A
22. Construction in progress
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 51,576,850.72 | 20,132,004.07 |
| Materials for construction | ||
| Total | 51,576,850.72 | 20,132,004.07 |
Other information:
□ Applicable√ N/A
Construction in progress
(1). Description of construction in progress
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Headquarter buildings | 37,982,329.74 | 37,982,329.74 | 1,385,496.59 | 1,385,496.59 | ||
| Light sources to be leased | 13,594,520.98 | 13,594,520.98 | 18,746,507.48 | 18,746,507.48 | ||
| Total | 51,576,850.72 | 51,576,850.72 | 20,132,004.07 | 20,132,004.07 | ||
(2). Changes in significant constructions in progress for the current period
√ Applicable□ N/A
In RMB
| Item | Budget amount | Opening balance | Increase | Amount transferred to fixed assets | Other decreases | Closing balance | Amount injected as a proportion of budget amount (%) | Construction progress | Amount of accumulated capitalized interest | Where: Capitalized interest for the period | Interest capitalization rate for the period (%) | Source of funds |
| Headquarter buildings | 534,635,200.00 | 1,385,496.59 | 36,596,833.15 | 37,982,329.74 | 7.10 | 7.10 | Self-funded capital | |||||
| Light sources to be leased | 18,746,507.48 | 42,833,482.91 | 47,985,469.41 | 13,594,520.98 | Self-funded capital | |||||||
| Total | 534,635,200.00 | 20,132,004.07 | 79,430,316.06 | 47,985,469.41 | 51,576,850.72 | / | / | / | / |
(3). Provision for impairment losses for construction in progress in the current period
□ Applicable√ N/A
Other information
□ Applicable√ N/A
Materials for construction
(4). Description of materials for construction
□ Applicable√ N/A
23. Productive biological assets
(1). Productive biological assets measured at cost
□ Applicable√ N/A
(2). Productive biological assets measured at fair value
□ Applicable√ N/A
Other information
□ Applicable√ N/A
24. Oil and gas assets
□ Applicable√ N/A
25. Use right assets
□ Applicable√ N/A
26. Intangible assets
(1). Description of intangible assets
√ Applicable□ N/A
In RMB
| Item | Land use rights | Patents | Software | Total |
| I. Cost | ||||
| 1. Opening balance | 330,630,000.00 | 23,247,800.00 | 10,196,548.78 | 364,074,348.78 |
| 2. Increase | 3,799,807.03 | 3,799,807.03 | ||
| (1) Purchase | 3,799,807.03 | 3,799,807.03 | ||
| 3. Decrease | ||||
| (1) Disposal | ||||
| 4. Closing balance | 330,630,000.00 | 23,247,800.00 | 13,996,355.81 | 367,874,155.81 |
| II. Accumulated amortization | ||||
| 1. Opening balance | 16,531,500.06 | 12,535,490.06 | 2,676,034.59 | 31,743,024.71 |
| 2. Increase | 11,021,000.04 | 2,324,780.04 | 2,297,115.42 | 15,642,895.50 |
| (1) Provision | 11,021,000.04 | 2,324,780.04 | 2,297,115.42 | 15,642,895.50 |
| 3. Decrease | ||||
| (1) Disposal | ||||
| 4. Closing balance | 27,552,500.10 | 14,860,270.10 | 4,973,150.01 | 47,385,920.21 |
| III. Provision for impairment | ||||
| 1. Opening balance | ||||
| 2. Increase | ||||
| (1) Provision | ||||
| 3. Decrease | ||||
| (1) Disposal |
| 4. Closing balance | ||||
| IV. Book value | ||||
| 1. Closing balance | 303,077,499.90 | 8,387,529.90 | 9,023,205.80 | 320,488,235.60 |
| 2. Opening balance | 314,098,499.94 | 10,712,309.94 | 7,520,514.19 | 332,331,324.07 |
The proportion of intangible assets generated by the Company's internal research and development to thebalance of intangible assets at the end of the period is 0.
(2). Land use rights of which certificates of title have not been obtained
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
27. Development expenditure
□ Applicable√ N/A
28. Goodwill
(1). Original book value of goodwill
□ Applicable√ N/A
(2). Impairment provision of goodwill
□ Applicable√ N/A
(3). Relevant information of groups of assets or combinations of groups of assets where the
goodwill is recognized
□ Applicable√ N/A
(4). Specify test procedure, key parameters of impairment of goodwill (such as increase rate at theprojection period, increase rate at the steady period, profit rate, discount rate, and projectionperiod upon the estimates of the presented value of future cash flow) as well as recognitionmethod for impairment loss
□ Applicable√ N/A
(5). Impacts on test of goodwill impairment
□ Applicable√ N/A
Other information
□ Applicable√ N/A
29. Long-term prepaid expenses
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Amortization | Other decreases | Closing balance |
| Renovation costs | 16,908,070.34 | 943,824.91 | 6,831,616.68 | 11,020,278.57 | |
| Leased software | 844,339.62 | 292,271.40 | 552,068.22 | ||
| Total | 16,908,070.34 | 1,788,164.53 | 7,123,888.08 | 11,572,346.79 |
Other information:
None
30. Deferred tax assets and deferred tax liabilities
(1). Deferred tax assets that are not offset
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for impairment of assets | 28,773,276.08 | 4,625,714.28 | 35,664,470.56 | 5,836,098.21 |
| Unrealized profits for insider transactions | 343,108,987.56 | 85,451,876.99 | 382,370,535.17 | 95,185,982.07 |
| Deductible losses | 3,339,193.87 | 834,798.46 | ||
| Estimated liabilities | 24,854,195.43 | 4,578,959.70 | 25,267,517.71 | 4,667,623.73 |
| Deferred income | 15,797,285.68 | 2,504,280.31 | 16,475,547.96 | 2,546,469.56 |
| Share-based payment expenses | 639,138.44 | 101,038.96 | 4,987,200.41 | 787,768.28 |
| Total | 416,512,077.06 | 98,096,668.70 | 464,765,271.81 | 109,023,941.85 |
(2). Deferred tax liabilities that are not offset
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Appreciation from valuation of assets from business combination not involving enterprises | ||||
| under common control | ||||
| Changes in fair value of other debt investments | ||||
| Changes in fair value of investments in other equity instruments | ||||
| Long-term accounts receivable | 13,097,031.17 | 1,964,554.68 | ||
| Total | 13,097,031.17 | 1,964,554.68 |
(3). Deferred tax assets and deferred tax liabilities that are presented at the net amount afteroffset
√ Applicable□ N/A
In RMB
| Item | Closing set-off amounts of deferred tax assets and liabilities | Closing balance of deferred tax assets or liabilities after set-off | Opening set-off amount of deferred tax assets and liabilities | Opening balance of deferred tax assets or liabilities after set-off |
| Deferred tax assets | 1,964,554.68 | 96,132,114.02 | 109,023,941.85 | |
| Deferred tax liabilities |
(4). Details of unrecognized deferred tax assets
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 47,569,632.05 | 32,593,450.49 |
| Deductible losses | 275,961,696.98 | 155,147,494.11 |
| Total | 323,531,329.03 | 187,740,944.60 |
(5). Deductible losses, for which no deferred tax assets are recognized, will expire in the followingyears
√ Applicable□ N/A
In RMB
| Year | Closing balance | Opening balance | Remark |
| 2021 | 9,487,530.31 | 9,487,530.31 | |
| 2022 | 11,900,329.00 | 11,900,329.00 | |
| 2023 | 47,115,450.59 | 47,115,450.59 | |
| 2024 | 86,745,720.01 | 86,644,184.21 | |
| 2025 | 120,712,667.07 | ||
| Total | 275,961,696.98 | 155,147,494.11 | / |
Other information:
□ Applicable√ N/A
31. Other non-current assets
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Prepayment for purchase of long-term assets | 6,299,781.06 | 6,299,781.06 | 11,420,185.94 | 11,420,185.94 | ||
| Total | 6,299,781.06 | 6,299,781.06 | 11,420,185.94 | 11,420,185.94 | ||
Other information:
None
32. Short-term borrowings
(1). Categories of short-term borrowings
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Pledge borrowings | ||
| Mortgage borrowings | ||
| Guaranteed loans | 77,223,937.39 | 50,000,000.00 |
| Credit loans | 11,299,169.33 | |
| Credit and pledge borrowings | 10,000,000.00 | |
| Guaranteed loans and loans against collateral | 16,337,875.56 | |
| Interest payable | 255,746.14 | 427,443.49 |
| Total | 88,778,852.86 | 76,765,319.05 |
Description for categories of short-term borrowings:
None
(2). Short-term borrowings overdue but not yet repaid
□ Applicable√ N/A
Of which the significant overdue short-term borrowings are described as below:
□ Applicable√ N/A
Other information
□ Applicable√ N/A
33. Held-for-trading financial liabilities
□ Applicable√ N/A
34. Derivative financial liabilities
□ Applicable√ N/A
35. Notes payable
Presented by notes payable
√ Applicable□ N/A
In RMB
| Category | Closing balance | Opening balance |
| Commercial acceptance bills | ||
| Bank acceptance bills | 116,822,674.67 | 37,335,841.79 |
| Total | 116,822,674.67 | 37,335,841.79 |
Total notes payable matured but not paid yet is RMB 0 at the end of the period.
36. Accounts payable
(1). Presented by accounts payable
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Amounts payable for purchase | 226,494,815.90 | 176,624,445.46 |
| Total | 226,494,815.90 | 176,624,445.46 |
(2). Accounts payable with significant amounts aged more than 1 year
□ Applicable√ N/A
Other information
□ Applicable√ N/A
37. Receipts in advance
(1). Presented by receipts in advance
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Advance payments of recharge fees and others | 153,258,189.88 | 167,534,200.30 |
| Total | 153,258,189.88 | 167,534,200.30 |
(2). Receipts in advance with significant amounts aged more than 1 year
√ Applicable□ N/A
In RMB
| Item | Closing balance | Reasons for not repaid or carried-forward |
| Jiangsu Happy Blue Sea Cinema Development Co., Ltd. | 29,654,090.00 | Lease payments received in advance |
| Total | 29,654,090.00 |
Other information
√ Applicable□ N/A
The difference between the opening balance of the year and the closing balance of the prior year (as ofDecember 31, 2019) can refer to V.44 of Section XI for details.
38. Contract liabilities
(1). Description of contract liabilities
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Goods payment | 31,518,312.59 | 15,777,305.81 |
| Total | 31,518,312.59 | 15,777,305.81 |
(2). Amount and reasons of major changes in the book value during the reporting period
□ Applicable√ N/A
Other information:
√ Applicable□ N/A
The difference between the opening balance of the year and the closing balance of the prior year (as ofDecember 31, 2019) can refer to V.44 of Section XI for details.
39. Employee benefits payable
(1). Presented by employee benefits payable
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Short-term benefits | 50,334,348.08 | 281,970,084.14 | 286,272,801.05 | 46,031,631.17 |
| II. Post-employment | 240,147.90 | 1,199,173.75 | 1,365,386.67 | 73,934.98 |
| benefits-defined contribution plan | ||||
| III. Termination benefits | 12,436.73 | 6,038,236.08 | 6,050,672.81 | |
| IV. Other benefits due within one year | ||||
| Total | 50,586,932.71 | 289,207,493.97 | 293,688,860.53 | 46,105,566.15 |
(2). Presented by short-term employee benefits
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Wages or salaries, bonuses, allowances and subsidies | 50,091,330.65 | 254,103,055.46 | 258,237,950.81 | 45,956,435.30 |
| II. Staff welfare | 5,629,232.83 | 5,629,232.83 | ||
| III. Social security contributions | 60,144.93 | 8,164,533.26 | 8,170,691.67 | 53,986.52 |
| Where: Medical insurance | 46,782.99 | 7,934,349.77 | 7,927,949.68 | 53,183.08 |
| Work injury insurance | 4,733.59 | 18,477.01 | 22,424.14 | 786.46 |
| Maternity insurance | 8,628.35 | 211,706.48 | 220,317.85 | 16.98 |
| IV. Housing funds | 2,113.00 | 13,279,496.28 | 13,280,620.28 | 989.00 |
| V. Union running costs and employee education costs | 180,759.50 | 793,766.31 | 954,305.46 | 20,220.35 |
| VI. Short-term paid leaves | ||||
| VII. Short-term profit sharing plan | ||||
| Total | 50,334,348.08 | 281,970,084.14 | 286,272,801.05 | 46,031,631.17 |
(3). Presented by defined contribution plan
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Basic pensions | 232,248.74 | 1,274,384.40 | 1,432,746.16 | 73,886.98 |
| 2. Unemployment insurance | 7,899.16 | -75,210.65 | -67,359.49 | 48.00 |
| 3. Enterprise annuity contribution | ||||
| Total | 240,147.90 | 1,199,173.75 | 1,365,386.67 | 73,934.98 |
Other information:
□ Applicable√ N/A
40. Taxes payable
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Value-added tax (VAT) | 12,205,136.88 | 776,108.18 |
| Enterprise income tax | 5,477,611.87 | 39,874,754.97 |
| Individual income tax | 1,067,512.87 | 1,447,882.44 |
| City maintenance and construction tax | 478,213.88 | 364,569.72 |
| Stamp duty | 294,612.70 | 200,925.53 |
| Education surcharges | 204,948.80 | 156,244.17 |
| Local education surcharges | 136,632.54 | 104,162.78 |
| Annual franchise right tax | 7,177.40 | |
| Total | 19,871,846.94 | 42,924,647.79 |
Other information:
None
41. Other payables
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Interest payable | ||
| Dividend payable | ||
| Other payables | 59,848,053.83 | 14,364,076.43 |
| Total | 59,848,053.83 | 14,364,076.43 |
Other information:
□ Applicable√ N/A
Interest payable
(1). Presented by categories
□ Applicable√ N/A
Dividends payable
(2). Presented by categories
□ Applicable√ N/A
Other payables
(1). Other payables presented by nature
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Withholding | 110,389.10 | 145,265.79 |
| Deposits/margins | 6,600,475.05 | 2,626,034.93 |
| Withdrawals in advance | 22,153,008.25 | 11,539,286.03 |
| Amount of equity transfer payable | 11,548,387.32 | |
| Borrowings | 19,343,613.33 | |
| Temporary receipts payable | 92,180.78 | 53,489.68 |
| Total | 59,848,053.83 | 14,364,076.43 |
(2). Other payables with significant amounts aged more than 1 year
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
42. Liabilities held for sale
□ Applicable√ N/A
43. Non-current liabilities due within one year
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year | 181,057,099.90 | 64,841,740.00 |
| Interest payable | 360,312.56 | 127,055.02 |
| Total | 181,417,412.46 | 64,968,795.02 |
Other information:
None
44. Other current liabilities
Description of other current liabilities
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Taxes to be written off | 3,045,831.07 | 1,133,137.22 |
| Total | 3,045,831.07 | 1,133,137.22 |
Changes in short-term bonds payable:
□ Applicable√ N/A
Other information:
√ Applicable□ N/A
The difference between the opening balance of the year and the closing balance of the prior year (as ofDecember 31, 2019) can refer to V.44 of Section XI for details.
45. Long-term borrowings
(1). Categories of long-term borrowings
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Guaranteed loans | 29,000,000.00 | |
| Credit loans | 2,043,500.81 | |
| Guaranteed loans and loans against collateral | 33,693,828.00 | 279,060,423.10 |
| Interest payable | 107,952.72 | 554,684.17 |
| Total | 64,845,281.53 | 279,615,107.27 |
Description for categories of long-term borrowings:
None
Other description, including interest range:
□ Applicable√ N/A
46. Bonds payable
(1). Bonds payable
□ Applicable√ N/A
(2). Changes in bonds payable: (excluding other financial instruments such as preference shares,perpetual bonds and others classified as financial liabilities)
□ Applicable√ N/A
(3). Description of converting terms and period of convertible corporate bonds
□ Applicable√ N/A
(4). Description of other financial instruments classified as financial liabilitiesBasic information of other financial instruments including outstanding preferred shares and perpetualbonds at the end of the period
□ Applicable√ N/A
Changes in financial instruments including outstanding preferred shares and perpetual bonds at the endof the period
□ Applicable√ N/A
Other financial instruments classified as financial liabilities:
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
47. Leasing liabilities
□ Applicable√ N/A
48. Long-term payables
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Long-term payables | 3,262,450.00 | 3,488,100.00 |
| Special payables | ||
| Total | 3,262,450.00 | 3,488,100.00 |
Other information:
□ Applicable√ N/A
Long-term payables
(1). Long-term payables presented by nature
√ Applicable□ N/A
In RMB
| Item | Opening balance | Closing balance |
| Purchase of patent use rights by installment | 3,488,100.00 | 3,262,450.00 |
Other information:
None
Special payables
(2). Special payables presented by nature
□ Applicable√ N/A
49. Long-term employee benefits payable
□ Applicable√ N/A
(1). Long-term employee benefits payable
□ Applicable√ N/A
(2). Changes in defined benefit plan
Present value of the obligations under the defined benefit plan:
□ Applicable√ N/A
Assets under the plan:
□ Applicable√ N/A
Net liabilities (net assets) under the defined benefit plan
□ Applicable√ N/A
Description of the impact of the content of the defined benefit plan and associated risks on the futurecash flow, time, and uncertainty of the Company:
□ Applicable√ N/A
Description of major actuarial assumptions and sensitivity analysis result for the defined benefit plan
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
50. Provisions
√ Applicable□ N/A
In RMB
| Item | Opening balance | Closing balance | Reason |
| Product quality warranty | 27,072,676.49 | 27,240,470.53 | Expenses for “three guarantees” services |
| Amounts payable for goods returned | 1,558,884.12 | ||
| Total | 27,072,676.49 | 28,799,354.65 | / |
Other description, including significant assumptions and estimates relative to material provisions:
None
51. Deferred income
Description of deferred income
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Reason |
| Government grants | 17,108,361.69 | 15,736,600.00 | 16,121,704.54 | 16,723,257.15 | |
| Total | 17,108,361.69 | 15,736,600.00 | 16,121,704.54 | 16,723,257.15 | / |
Items relating to government grants:
√ Applicable□ N/A
In RMB
| Liabilities | Opening balance | Increased government grants for the current period | Amount recognized in non-operating income for the current period | Amount recognized in other income for the current period | Other changes | Closing balance | Related to assets/income |
| 8K Ultra High Definition Laser Display Technology Engineering Research Center | 2,000,000.00 | 300,812.65 | 1,699,187.35 | Related to assets | |||
| High Performance Resin and Composite Materials Preparation Technique for Additive Manufacturing | 18,125.06 | 18,125.06 | Related to income | ||||
| Key Enterprise Laboratory for Laser Display in | 4,820,417.31 | 4,820,417.31 | Related to income |
| Guangdong Province | |||||||
| Ultra-high Brightness Laser Light Source Engineering Technology Research Center | 2,142,818.87 | 2,250,000.00 | 2,708,945.61 | 1,683,873.26 | Related to income | ||
| Trichromatic Laser Display Complete Equipment Production Demonstration Line | 7,694,753.43 | 9,901,800.00 | 4,256,356.89 | 13,340,196.54 | Related to income | ||
| Key Technology of Trichromatic Laser Display Complete Equipment Industrialization | 432,247.02 | 2,210,000.00 | 2,642,247.02 | Related to income | |||
| 2019 Special Funds for the Development of Cultural Industry in Shunyi District | 1,374,800.00 | 1,374,800.00 | Related to income | ||||
| Total | 17,108,361.69 | 15,736,600.00 | 16,121,704.54 | 16,723,257.15 |
Other information:
√ Applicable□ N/A
[Note]: Government grants included in the current profit or loss are disclosed in VII.84 of Section XI indetails.
52. Other non-current liabilities
□ Applicable√ N/A
53. Share capital
√ Applicable□ N/A
In RMB
| Opening balance | Changes (+, -) | Closing balance | |||||
| Issue new share | Bonus shares | Capitalization of capital reserve | Others | Subtotal | |||
| Total shares | 451,554,411.00 | 1,202,490.00 | 1,202,490.00 | 452,756,901.00 | |||
Other information:
On October 13, 2020, the Company held the 27
thmeeting of the first Board of Directors and the
thmeeting of the first Board of Supervisors, at which the Proposal on Adjusting the Grant Price ofRestricted Shares under the 2019 Restricted Share Incentive Plan and the Proposal on GrantingReserved Restricted Shares to Grantees of Share Incentives under the 2019 Restricted Share IncentivePlan were reviewed and passed, approving to adjust the grant price of restricted shares from RMB 17.5per share to RMB 17.425 per share. On October 29, 2020, the Company held the 28
thmeeting of the firstBoard of Directors and the 15
thmeeting of the first Board of Supervisors, at which the Proposal onInvalidating Partial Granted but Not Vested 2019 Restricted Shares and the Proposal on VestingCriteria for the First Vesting Period in the Initial Grant under 2019 Restricted Share Incentive Planwere reviewed and passed. On November 11, 2020, the Company received the additional investment ofRMB 20,953,388.25 in total paid by 147 qualified grantees of share incentives, including RMB1,202,490.00 recognized as share capital and RMB 19,750,898.25 recognized as capital premium (sharepremium). BDO China Shu Lun Pan Certified Public Accountants LLP audited this capital increase andissued a Capital Verification Report (Xin Kuai Shi Bao Zi [2020] No. ZL10495).
54. Other equity instruments
(1). Basic information of other financial instruments including outstanding preferred shares andperpetual bonds at the end of the period
□ Applicable√ N/A
(2). Changes in financial instruments including outstanding preferred shares and perpetual bondsat the end of the period
□ Applicable√ N/A
Changes of other equity instruments in the current period, reasons for such change and basis for relatedaccounting treatments:
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
55. Capital reserve
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Capital premium (Share premium) | 1,200,466,394.58 | 40,736,025.50 | 1,241,202,420.08 | |
| Other capital reserve | 7,475,923.79 | 18,783,763.38 | 18,441,116.10 | 7,818,571.07 |
| Total | 1,207,942,318.37 | 59,519,788.88 | 18,441,116.10 | 1,249,020,991.15 |
Other description, including changes in the current period and reasons for changes:
1) On November 11, 2020, the Company received the additional investment of RMB 20,953,388.25in total paid for restricted shares, including RMB 1,202,490.00 recognized as share capital and RMB19,750,898.25 recognized as capital premium (share premium). In addition, because the first vestingperiod meets the vesting criteria for the initial grant under the restricted share incentive plan, RMB18,441,116.10 was transferred from capital reserve (other capital reserve) to capital premium (sharepremium).
2) On December 23, 2020, the Company acquired minority interests by paying the consideration ofRMB 27,226,384.00 for the shares, and acquired shares in the fair value of the identifiable net assets inthe amount of RMB 29,770,395.15, while the difference RMB 2,544,011.15 was recognized as capitalpremium (share premium).
3) On October 14, 2019, the Company held the 18
thmeeting of the first Board of Directors and the
thmeeting of the first Board of Supervisors, at which resolutions on matters related to the 2019
Restricted Share Incentive Plan were reviewed and passed; as the Company’s implementation of thisincentive plan was approved in the general meeting of shareholders, it was determined that 4.4 millionshares of restricted shares were granted to 169 grantees of share incentives who met the grant conditionsat a grant price of RMB 17.5 per share on the grant date of October 14, 2019. On October 13, 2020, theCompany held the 27
th meeting of the first Board of Directors and the 14
thmeeting of the first Board ofSupervisors, at which the Proposal on Adjusting the Grant Price of Restricted Shares under the 2019Restricted Share Incentive Plan and the Proposal on Granting Reserved Restricted Shares to Granteesof Share Incentives under the 2019 Restricted Share Incentive Plan were reviewed and passed,approving to adjust the grant price of restricted shares from RMB 17.5 per share to RMB 17.425 pershare. On October 14, 2020, the Company held the 27
thmeeting of the first Board of Directors and the
th
meeting of the first Board of Supervisors, at which the proposal on granted reserved restrictedshares to grantees of share incentives under the 2019 restricted share incentive plan was reviewed andpassed; as the Company’s implementation of this incentive plan was approved in the general meeting ofshareholders, it was determined that 1.1 million shares of restricted shares were granted to 38 grantees ofshare incentives who met the grant conditions at a grant price of RMB 17.425 per share on the grant dateof October 13, 2020. The total expense of equity-settled share-based payments amounted to RMB20,570,952.76, in which RMB 18,783,763.38 was recognized in the capital reserve (other capital reserve)and RMB 1,787,189.38 was charged to the amount attributable to minority interests.
56. Treasury shares
□ Applicable√ N/A
57. Other comprehensive income
√ Applicable□ N/A
In RMB
| Item | Opening balance | Amount recognized in the current period | Closing balance | |||||
| Amount incurred for current period | Less: Amount previously included in other comprehensive | Less: Amount previously included in other comprehensive | Less: Income tax expenses | Attributable to owners of the parent company after tax | Attributable to minority shareholders after tax | |||
| before tax | income and transferred to profit or loss for the period | income and transferred to retained earnings for the period | ||||||
| I. Other comprehensive income that cannot be reclassified subsequently to profit or loss | ||||||||
| II. Other comprehensive income that will be reclassified to profit or loss | 3,287,063.85 | -6,496,909.69 | -6,501,355.78 | 4,446.09 | -3,214,291.93 | |||
| Where: Exchange differences on translation of financial statements denominated in foreign currencies | 3,287,063.85 | -6,496,909.69 | -6,501,355.78 | 4,446.09 | -3,214,291.93 | |||
| Total other comprehensive income | 3,287,063.85 | -6,496,909.69 | -6,501,355.78 | 4,446.09 | -3,214,291.93 |
Other description, including adjustments on transferring effective portion of cash flow hedges to amountupon initial recognition of the hedged item:
None
58. Special reserve
□ Applicable√ N/A
59. Surplus reserve
√ Applicable□ N/A
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 21,522,683.40 | 12,441,955.44 | 33,964,638.84 | |
| Surplus reserve recovered through business combination involving entities under common control | 1,277,540.73 | 1,277,540.73 | ||
| Total | 22,800,224.13 | 12,441,955.44 | 35,242,179.57 |
Surplus reserve description, including changes in the current period and reasons for changes:
The Company made provisions for statutory surplus reserves at 10% of the net profits realized by theparent company in the period.
60. Undistributed profits
√ Applicable□ N/A
In RMB
| Item | Current period | Prior period |
| Undistributed profits at the end of prior period before adjustment | 288,975,820.29 | 112,623,054.78 |
| Total adjusted undistributed profits at the beginning of the period (Add: +; Less: -) | 1,278,734.88 | |
| Undistributed profits at the beginning of the period after adjustment | 290,254,555.17 | 112,623,054.78 |
| Add: Net profit attributable to owners of the parent company for the period | 113,847,873.06 | 186,457,276.71 |
| Less: Appropriation to statutory surplus reserve | 12,441,955.44 | 10,104,511.20 |
| Appropriation to discretionary surplus reserve | ||
| Appropriation to general risk reserve | ||
| Declaration of dividends on ordinary shares | ||
| Conversion of ordinary shares' dividends into share capital |
| Distributed dividend | 33,866,580.83 | |
| Undistributed profits at the end of the period | 357,793,891.96 | 288,975,820.29 |
On May 22, 2020, at the 2019 annual general meeting of shareholders, the Proposal on PreliminaryPlan on Profit Distribution for 2019 was reviewed and passed, approving to make profit distribution onthe basis of the total shares on the record date of interest distribution - the Company proposed todistribute to all shareholders a cash dividend of RMB 0.75 (tax inclusive) for every 10 shares. The totalcash dividend to be paid is RMB 33,866,580.83.For the total adjusted undistributed profits at the beginning of the period, refer to the description inV.44 of Section XI.Details of adjustments to undistributed profits at the beginning of the period:
1) As a result of the retrospective adjustment of the Accounting Standards for Business Enterprises andrelated new regulations, undistributed profits at the beginning of the period were affected by RMB1,278,734.88.
2. Undistributed profits at the beginning of the period were affected by RMB 0 due to changes inaccounting policies.
3. Undistributed profits at the beginning of the period were affected by RMB 0 due to the correction ofsignificant accounting errors.
4. Undistributed profits at the beginning of the period were affected by RMB 0 due to changes in thescope of consolidation resulting from business combination involving entities under common control.
5. Undistributed profits at the beginning of the period were affected by RMB 0 in total due to otheradjustments.
61. Operating income and operating costs
(1). Description of operating income and operating costs
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period | ||
| Income | Cost | Income | Cost | |
| Main business | 1,948,884,176.83 | 1,393,075,043.93 | 1,979,148,918.89 | 1,183,650,635.25 |
| Total | 1,948,884,176.83 | 1,393,075,043.93 | 1,979,148,918.89 | 1,183,650,635.25 |
(2). Description of incomes from contracts
□ Applicable√ N/A
Description of incomes from contracts:
□ Applicable√ N/A
(3). Description of performance obligations
□ Applicable√ N/A
(4). Description of allocation to remaining performance obligations
□ Applicable√ N/A
Other information:
Breakdown of revenue by category
| Item | Subtotal |
| Principal operation place | |
| Domestic | 1,683,887,300.96 |
| Overseas | 93,264,261.21 |
| Subtotal | 1,777,151,562.17 |
| By product | |
| Laser optical engine | 202,707,478.10 |
| Complete laser projector | 1,465,195,649.90 |
| Others | 109,248,434.17 |
| Subtotal | 1,777,151,562.17 |
| Revenue recognition time | |
| Goods (transferred at a time point) | 1,744,123,232.35 |
| Services (provided during a specific period of time) | 33,028,329.82 |
| Subtotal | 1,777,151,562.17 |
Note: The revenue breakdown information presented in the table above is the revenue amount excludingrents and other amounts not subject to the New Revenue Standard.
62. Taxes and levies
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| City maintenance and construction tax | 2,867,426.89 | 3,070,823.26 |
| Education surcharges | 1,245,187.55 | 1,336,864.61 |
| Local education surcharges | 830,125.05 | 879,366.01 |
| Others | 1,776,005.30 | 2,323,097.26 |
| Total | 6,718,744.79 | 7,610,151.14 |
Other information:
None
63. Selling expenses
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee benefits | 57,290,923.11 | 52,472,593.05 |
| Marketing fees | 39,666,919.06 | 36,724,064.18 |
| Service fees | 10,032,772.59 | 7,249,578.52 |
| After-sale repair expenses | 6,175,382.08 | 17,690,062.80 |
| Advertising and business promotion expenses | 4,839,376.53 | 6,865,906.71 |
| Travel expenses | 2,561,838.29 | 6,806,740.43 |
| Business entertainment expenses | 1,671,853.12 | 3,015,283.66 |
| Other expenses | 11,349,169.82 | 20,935,881.65 |
| Total | 133,588,234.60 | 151,760,111.00 |
Other information:
None
64. Administrative expenses
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee benefits | 59,421,774.51 | 70,126,183.15 |
| Rent expense | 7,449,392.71 | 15,153,597.68 |
| Travel expenses | 471,610.48 | 3,940,279.50 |
| Service fees | 31,845,756.88 | 27,332,463.20 |
| Depreciation and amortization expenses | 9,094,503.87 | 14,945,520.79 |
| Share-based payment expenses | 20,581,939.14 | 8,146,719.12 |
| Other expenses | 6,892,298.67 | 12,981,767.17 |
| Total | 135,757,276.26 | 152,626,530.61 |
Other information:
None
65. R&D expenses
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee benefits | 120,904,809.23 | 118,054,037.18 |
| Material consumption expenses | 21,280,414.59 | 30,630,477.60 |
| Rent expense | 8,983,285.74 | 9,706,785.26 |
| Service fees | 8,549,326.63 | 10,229,627.72 |
| Depreciation and amortization expenses | 13,073,784.95 | 8,883,535.17 |
| Testing expenses | 5,234,158.17 | 4,161,556.69 |
| Patent fees | 6,808,589.82 | 11,169,391.10 |
| Other expenses | 19,608,999.97 | 8,862,355.54 |
| Total | 204,443,369.10 | 201,697,766.26 |
Other information:
None
66. Financial expenses
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Interest expenses | 20,066,451.02 | 33,120,484.94 |
| Less: Interest income | -10,322,478.28 | -4,079,231.03 |
| Exchange profit or loss | -2,227,674.26 | -799,344.64 |
| Bank service charges | 1,708,675.72 | 1,249,314.15 |
| Total | 9,224,974.20 | 29,491,223.42 |
Other information:
None
67. Other income
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Government grants related to assets | 300,812.65 | 8,000,000.00 |
| Government grants related to income | 41,782,494.35 | 22,467,052.33 |
| Refund of transaction fees for withholding individual income taxes | 323,003.17 | |
| Additional deduction of input VAT | 2,848,690.73 | 3,657,561.79 |
| Total | 45,255,000.90 | 34,124,614.12 |
Other information:
Government grants recognized in other income in the current period are disclosed in VII.84 of SectionXI in details.
68. Investment income
√ Applicable□ N/A
In RMB
| Item | Amount for the current | Amount for the prior period |
| period | ||
| Long-term equity investment accounted for using the equity method | -679,282.94 | -3,927.93 |
| Investment income from disposal of held-for-trading financial assets | 18,624,853.96 | 9,552,990.98 |
| Total | 17,945,571.02 | 9,549,063.05 |
Other information:
None
69. Gains from net exposure hedges
□ Applicable√ N/A
70. Gains from changes in fair values
□ Applicable√ N/A
71. Losses of credit impairment
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Bad debt losses | -9,121,278.95 | -3,771,572.38 |
| Total | -9,121,278.95 | -3,771,572.38 |
Other information:
None
72. Impairment losses of assets
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| I. Decline in value of inventories | -10,196,985.27 | -12,623,251.67 |
| II. Impairment losses of contract assets | -1,393,709.16 | |
| Total | -11,590,694.43 | -12,623,251.67 |
Other information:
None
73. Gains from disposal of assets
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Gains from disposal of fixed assets | 281,040.26 | 41,420.84 |
| Total | 281,040.26 | 41,420.84 |
Other information:
None
74. Non-operating income
Description of non-operating income
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period | Amount included in non-recurring profit or loss for the period |
| Total gains from disposal of non-current assets | |||
| Where: Gains from disposal of fixed assets | |||
| Gains from disposal of intangible assets | |||
| Gains from debt restructuring | |||
| Gains from exchange of non-monetary assets | |||
| Donation receipts | |||
| Government grants | 1,539,340.28 | 1,539,340.28 | |
| Amounts not required for payment | 275,714.05 | 1,876,501.15 | 275,714.05 |
| Indemnity | 2,793,056.81 | 2,005,696.00 | 2,793,056.81 |
| Others | 30,323.96 | 43,869.58 | 30,323.96 |
| Total | 4,638,435.10 | 3,926,066.73 | 4,638,435.10 |
Government grants included in profit or loss for the period
√ Applicable□ N/A
In RMB
| Grant project | Amount for the current period | Amount for the prior period | Related to assets/income |
| Grant from Hong Kong government for | 139,340.28 | Related to income |
| the semiconductor R&D project of Hong Kong University of Science and Technology | |||
| Enterprise Listing Financing Incentive Program of Shenzhen Nanshan District Industry and Information Technology Bureau | 1,400,000.00 | Related to income |
Other information:
□ Applicable√ N/A
75. Non-operating expenses
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period | Amount included in non-recurring profit or loss for the period |
| Total losses from disposal of non-current assets | |||
| Where: Losses from disposal of fixed assets | |||
| Losses from disposal of intangible assets | |||
| Losses from debt restructuring | |||
| Losses from exchange of non-monetary assets | |||
| Losses from damage and retirement of non-current assets | 1,393,161.39 | 3,255,908.90 | 1,393,161.39 |
| Penalties and overdue fines | 76,700.50 | 212,581.48 | 76,700.50 |
| External donations | 593,309.76 | 715,387.87 | 593,309.76 |
| Others | 1.31 | 16,319.31 | 1.31 |
| Total | 2,063,172.96 | 4,200,197.56 | 2,063,172.96 |
Other information:
None
76. Income tax expense
(1). Statement of income tax expense
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Income tax expense in the current period | 11,910,373.50 | 64,508,782.78 |
| Deferred income tax expenses | 12,853,862.82 | -9,526,561.15 |
| Total | 24,764,236.32 | 54,982,221.63 |
(2). Reconciliation of income tax expenses to the accounting profit:
√ Applicable□ N/A
In RMB
| Item | Amount for the current period |
| Total profit | 111,421,434.89 |
| Income tax expense calculated based on statutory/applicable tax rate | 16,713,215.24 |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | 563,787.37 |
| Effect of income tax for the period before adjustment | -178,204.59 |
| Effect of non-taxable income | -659,450.33 |
| Effect of non-deductible cost, expense and loss | 3,210,951.55 |
| Effect of utilizing deductible loss not recognized for deferred tax assets for prior period | -29,537.27 |
| Effect of deductible temporary difference or deductible loss not recognized for deferred tax assets for the current period | 25,161,016.39 |
| Change in the balance of opening deferred tax assets caused by tax rate adjustment | 88,229.77 |
| Effect of additional deduction of R&D expenses | -20,105,771.81 |
| Income tax expenses | 24,764,236.32 |
Other information:
□ Applicable√ N/A
77. Other comprehensive income
√ Applicable□ N/A
Other comprehensive income net of tax is disclosed in VII.57 of Section XI in details.
78. Items in cash flow statement
(1). Other cash receipts relating to operating activities
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Government grants | 40,365,718.97 | 28,765,309.74 |
| Non-operating income | 1,127,368.51 | 3,841,224.18 |
| Interest income | 10,382,950.88 | 2,049,565.58 |
| Other monetary funds-margins | 51,523,088.26 | 37,531,542.28 |
| Receivables and payables | 6,965,206.85 | 6,375,293.17 |
| Bank deposits-frozen funds due to litigation | 30,000,000.00 | |
| Total | 140,364,333.47 | 78,562,934.95 |
Description of other cash receipts relating to operating activities:
None
(2). Other cash payments relating to operating activities
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Selling expenses paid in cash | 77,288,028.15 | 75,178,450.72 |
| Administrative and R&D expenses paid in cash | 103,583,598.35 | 101,950,001.38 |
| Financial expenses paid in cash | 1,708,675.72 | 1,249,314.15 |
| Non-operating expenses | 670,011.57 | 944,288.66 |
| Other monetary funds-margins | 49,749,747.97 | 41,702,174.11 |
| Bank deposits-frozen funds due to litigation | 30,000,000.00 | |
| Receivables and payables | 11,988,038.74 | 5,886,899.65 |
| Total | 244,988,100.50 | 256,911,128.67 |
Description of other cash payments relating to operating activities:
None
(3). Other cash receipts relating to investing activities
□ Applicable√ N/A
(4). Other cash payments relating to investing activities
□ Applicable√ N/A
(5). Other cash receipts relating to financing activities
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Shareholder borrowings | 19,320,000.00 | |
| Total | 19,320,000.00 |
Description of other cash receipts relating to financing activities:
None
(6). Other cash payments relating to financing activities
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Issue expenses | 39,396,048.75 | |
| Total | 39,396,048.75 |
Description of other cash payments relating to financing activities:
None
79. Supplementary information to the cash flow statement
(1). Supplementary information to the cash flow statement
√ Applicable□ N/A
In RMB
| Supplemental information | Amount for the current period | Amount for the prior period |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 86,657,198.57 | 224,376,422.71 |
| Add: Provision for impairment of assets | 11,590,694.43 | 12,623,251.67 |
| Losses of credit impairment | 9,121,278.95 | 3,771,572.38 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets | 99,229,686.22 | 80,539,152.68 |
| Amortization of use right assets | ||
| Amortization of intangible assets | 7,377,145.47 | 14,703,595.57 |
| Amortization of long-term prepaid expenses | 7,123,888.08 | 4,870,707.84 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains are indicated by “－”) | -281,040.26 | -41,420.84 |
| Losses on retirement of fixed assets (gains are indicated by “－”) | 1,393,161.39 | 3,255,908.90 |
| Losses on changes in fair values |
| (gains are indicated by “－”) | ||
| Financial expenses (income is indicated by “－”) | 17,838,776.76 | 33,561,732.74 |
| Investment losses (income is indicated by “－”) | -17,945,571.02 | -9,549,063.05 |
| Decrease in deferred tax assets (increase is indicated by “-”) | 12,853,862.82 | -9,530,966.11 |
| Increase in deferred tax liabilities (decrease is indicated by “-”) | ||
| Decrease in inventories (increase is indicated by “－”) | -172,605,815.49 | -101,935,742.75 |
| Decrease in receivables from operating activities (increase is indicated by “－”) | -128,184,406.23 | -73,469,932.05 |
| Increase in payables from operating activities (decrease is indicated by “－”) | 96,596,705.75 | 51,678,964.90 |
| Others | 21,624,864.98 | 8,146,719.12 |
| Net cash flow from operating activities | 52,390,430.42 | 243,000,903.71 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Conversion of debt into capital | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets acquired under finance leases | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 983,525,089.44 | 829,789,487.86 |
| Less: Opening balance of cash | 829,789,487.86 | 472,508,550.40 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 153,735,601.58 | 357,280,937.46 |
(2). Net cash paid to acquire subsidiaries for the period
√ Applicable□ N/A
In RMB
| Amount | |
| Cash or cash equivalents paid in the period for business combination occurring in the period | 15,677,996.68 |
| Where: Tianjin Bonian Film Partnership (LP) | 15,677,996.68 |
| Less: Cash and cash equivalents held by subsidiaries at the acquisition date | 63,934.36 |
| Where: Tianjin Bonian Film Partnership (LP) | 63,934.36 |
| Net cash paid for acquiring subsidiaries | 15,614,062.32 |
Other information:
None
(3). Net cash receipts from disposal of subsidiaries for the current period
□ Applicable√ N/A
(4). Composition of cash and cash equivalents
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| I. Cash | 983,525,089.44 | 829,789,487.86 |
| Where: Cash on hand | 5,858.56 | 3,348.57 |
| Bank deposits that can be paid at any time | 980,570,123.37 | 827,470,990.73 |
| Other monetary funds that can be paid at any time | 2,949,107.51 | 2,315,148.56 |
| Deposits in the central bank that can be used for payments | ||
| Deposits made with other banks | ||
| Placements with banks | ||
| II. Cash equivalents | ||
| Where: Investments in debt securities due within three months | ||
| III. Closing balance of cash and cash equivalents | 983,525,089.44 | 829,789,487.86 |
| Where: Restricted cash and cash equivalents of the parent company or subsidiaries within the Group |
Other information:
□ Applicable√ N/A
80. Notes to items in the statement of changes in owners' equity
Describe matters such as the names and the adjusted amounts of the items included in “others” in respectof adjustments to the closing balances of the prior year:
□ Applicable√ N/A
81. Assets with limited ownership or use right
√ Applicable□ N/A
In RMB
| Item | Closing balance of carrying amount | Reason |
| Other monetary funds | 14,057,949.58 | Margins |
| Bank deposits | 40,000,000.00 | Term deposits |
| Land use rights | 303,077,499.90 | Mortgage collateral |
| Total | 357,135,449.48 | / |
Other information:
None
82. Foreign currency monetary items
(1). Foreign currency monetary items
√ Applicable□ N/A
In RMB
| Item | Closing balance of foreign currency | Exchange rate | Closing balance of RMB equivalent balance |
| Cash and bank balances | - | - | 84,403,281.41 |
| Where: USD | 12,801,308.81 | 6.5249 | 83,527,259.85 |
| GBP | 365.96 | 8.8903 | 3,253.49 |
| HKD | 626,935.22 | 0.84164 | 527,653.76 |
| VND | 1,215,191,249.88 | 0.000284 | 345,114.31 |
| Accounts receivable | 7,071,872.19 | ||
| Where: USD | 1,083,828.44 | 6.5249 | 7,071,872.19 |
| Short-term borrowings | 11,410,560.27 | ||
| Where: USD | 1,748,771.67 | 6.5249 | 11,410,560.27 |
| Accounts payable | 46,949,935.01 | ||
| Where: USD | 7,195,502.61 | 6.5249 | 46,949,935.01 |
| Long-term borrowings | 2,057,124.15 | ||
| Where: USD | 315,272.90 | 6.5249 | 2,057,124.15 |
Other information:
None
(2). Description of overseas operating entities, including significant overseas operating entities, ofwhich the major operation place, functional currency and choosing basis as well as the reason forchange of functional currency should be disclosed:
√ Applicable□ N/A
| Item | Major overseas operation place | Functional currency | Basis of choice |
| Appotronics Hong Kong Limited | Hong Kong | USD | Common currency |
| Appotronics USA, Inc. | USA | USD | Common currency |
| Fabulus Technology Hong Kong Limited | Hong Kong | USD | Common currency |
| JoveAI Limited | Cayman Islands | USD | Common currency |
| JoveAI Innovation, Inc. | USA | USD | Common currency |
| FORMOVIE TECHNOLOGY INC | USA | USD | Common currency |
| JoveAI Asia Company Limited | Vietnam | VND | Local currency |
| WEMAX LLC | USA | USD | Common currency |
83. Hedge
□ Applicable√ N/A
84. Government grants
(1). Basic information of government grants
√ Applicable□ N/A
In RMB
| Category | Amount | Item presented | Amount recognized in current profit or loss |
| Government grants related to assets | Deferred income | 300,812.65 | |
| Government grants related to income and used for compensation of the Company’s relevant costs or losses in subsequent periods | 15,736,600.00 | Other income | 15,820,891.89 |
| Government grants related to income and used for compensation of the Company’s relevant costs or losses that have been incurred | 26,261,602.46 | Other income | 26,261,602.46 |
| Government grants related to income and used for compensation of the Company’s relevant costs or losses that have been incurred | 1,539,340.28 | Non-operating income | 1,539,340.28 |
| Interest subsidies | 544,300.00 | Financial expenses | 544,300.00 |
Note: The amount refers to government grants actually received in the current period.
1) Government grants related to assets
| Item | Opening deferred income | Increase | Amortization | Closing deferred income | Amortization item presented | Description |
| 8K Ultra High Definition Laser Display Technology Engineering Research Center | 2,000,000.00 | 300,812.65 | 1,699,187.35 | Other income | Project Contract of 8K Ultra High Definition Laser Display Technology Engineering Research Center (XMHT20190101023), Development and Reform Commission of Shenzhen Municipality | |
| Subtotal | 2,000,000.00 | 300,812.65 | 1,699,187.35 |
2) Government grants related to income and used for compensation of the Company’s relevantcosts or losses in subsequent periods
| Item | Opening deferred income | Increase | Carrying forward | Closing deferred income | Carrying forward item presented | Description |
| High Performance Resin and Composite Materials Preparation Technique for Additive Manufacturing | 18,125.06 | 18,125.06 | Other income | Research and Development Cooperation Contract (2016YFB1100802), Institute of Chemistry, Chinese Academy of Sciences | ||
| Key Enterprise Laboratory for Laser Display in Guangdong Province | 4,820,417.31 | 4,820,417.31 | Other income | Project Contract for Science and Technology Plan of Key Laboratory of Laser Display Enterprises in Guangdong Province (Yue Ke Gui Cai Zi [2018] No. 233), Department of Science and Technology of Guangdong Province; Notice of Shenzhen Science, Technology and Innovation Commission on the Issuance of Grants to Provincial Key Laboratory in 2018 and 2019 (Shen Ke Ji Chuang Xin [2019] No. 333), Science, Technology and Innovation Commission of Shenzhen Municipality |
| Ultra-high Brightness Laser Light Source Engineering Technology Research Center | 2,142,818.87 | 2,250,000.00 | 2,708,945.61 | 1,683,873.26 | Other income | Project Contract for Shenzhen Municipality Science and Technology Plan (Shen Ke Ji Chuang Xin [2019] No. 33), Science, Technology and Innovation Commission of Shenzhen Municipality |
| Trichromatic Laser Display Complete Equipment Production Demonstration Line | 7,694,753.43 | 9,901,800.00 | 4,256,356.89 | 13,340,196.54 | Other income | Notice on the Establishment of 2018 Annual Projects for Strategic Advanced Electronic Materials in the National Key Research and Development Programs (Guo Ke Gao Fa Ji Zi [2018] No. 41), High Technology Research and Development Center, Ministry of Science and Technology |
| Key Technology of Trichromatic Laser Display Complete Equipment Industrialization | 432,247.02 | 2,210,000.00 | 2,642,247.02 | Other income | Task Statements for Research and Development Program in Key Fields of Guangdong Province (2019B010926001), Finance Bureau of Shenzhen Municipality | |
| 2019 Special Funds for the Development of | 1,374,800.00 | 1,374,800.00 | Other income | Announcement of Shunyi Publicity Department on |
| Cultural Industry in Shunyi District | Candidate Projects for 2019 Special Funds for the Development of Cultural Industry in Shunyi District, Shunyi Publicity Department | |||||
| Subtotal | 15,108,361.69 | 15,736,600.00 | 15,820,891.89 | 15,024,069.80 |
3) Government grants related to income and used for compensation of the Company’s relevantcosts or losses that have been incurred
| Item | Amount | Item presented | Description |
| Maternity Grants from Shenzhen Social Security Bureau | 432,674.41 | Other income | Provisions of Guangdong for Maternity Insurance of Employees, Shenzhen Social Insurance Fund Administration |
| 2019 Talent Housing Rent Allowance of the Housing and Construction Bureau of Nanshan District, Shenzhen | 896,885.00 | Other income | Supplementary Announcement on 2020 Talent Housing Rent Allowance of the Housing and Construction Bureau of Nanshan District, Shenzhen Nanshan District Industry and Information Technology Bureau |
| Level 3 Grants for High-value Patent Portfolio from Shenzhen Administration for Market Regulation | 271,428.60 | Other income | 2020 Special Funds for Building the Service System of Intellectual Property Operation in Shenzhen (Batch 1) & Candidate Objects of Grants for Intellectual Property-Pledged Financing with Special Funds under Intellectual Property Authority Delegated by Guangdong Province to Cities and Counties, Shenzhen Administration for Market Regulation |
| Refund of unemployment insurance by Shenzhen Social Insurance Fund Administration | 2,710,583.94 | Other income | Announcement on the Refund of Unemployment Insurance to Participating Enterprises in Shenzhen (Batch 3), Shenzhen Social Insurance Fund Administration |
| Refund of unemployment insurance by Beijing Social Insurance Fund Administration | 104,409.09 | Other income | Announcement on the Refund of Unemployment Insurance to Participating Enterprises in Beijing |
| Grants to the Second Batch of Patent Application from | 3,689,840.00 | Other income | Notice of Shenzhen Administration for Market Regulation on Claiming the Grants to |
| Shenzhen Administration for Market Regulation in 2018 | the Second Batch of Patent Application in 2018, Shenzhen Administration for Market Regulation | ||
| 2019 Special Funds for Intellectual Property Rights of Shenzhen Administration for Market Regulation | 500,000.00 | Other income | Notice of Shenzhen Administration for Market Regulation on the Disclosure of 2019 Project List (Batch 2) Proposed to be Funded by the Intellectual Property Special Funds under the Approval System and the Assessment System, Shenzhen Administration for Market Regulation |
| Plan of Rewards and Supports for Intellectual Property Operation of Shenzhen Nanshan District Science, Technology and Innovation Bureau | 100,000.00 | Other income | Notice on 2020 Nanshan District Independent Innovation Industry Development Special Fund - Science, Technology and Innovation Sub-Fund (Batch 1) (Shen Nan Ke [2020] No. 35), Shenzhen Nanshan District Science, Technology and Innovation Bureau |
| 2019 Special Funds for Promoting High-quality Economy Development of Shenzhen Administration for Market Regulation (Batch 3) | 300,000.00 | Other income | 2019 Allocation Plan of Special Funds for Promoting High-quality Economy Development of Guangdong Administration for Market Regulation (Batch 3), Shenzhen Administration for Market Regulation |
| Patent Support Plan of Shenzhen Nanshan District Finance Bureau | 3,532,500.00 | Other income | Disclosure of the Second Batch of Entities that Nanshan District Independent Innovation Industry Development Special Fund proposes to support in 2020, Shenzhen Nanshan District Finance Bureau |
| Patent Support Plan of Shenzhen Nanshan District Finance Bureau | 2,431,500.00 | Other income | Nanshan District Independent Innovation Industry Development Special Fund - Science, Technology and Innovation Sub-Fund - Patent Support Plan Application (2020), Shenzhen Nanshan District Finance Bureau |
| Grant for Domestic Market Expansion by Enterprises from Service Bureau for Small and Medium-sized Enterprises of Shenzhen | 95,430.00 | Other income | Notice of the Service Bureau for Small and Medium-sized Enterprises of Shenzhen on Paying Grants for Domestic Market Expansion under the Innovative Development Cultivation and Support Plan by Private and Small and Medium-sized Enterprises of Shenzhen in 2020, Service Bureau for Small and Medium-sized Enterprises of Shenzhen |
| 2019 Scheme for Grants to Enterprise Research and Development of the High-technology | 2,043,000.00 | Other income | Notice of Shenzhen Science, Technology and Innovation Commission on Disclosure of the First Batch of Enterprises proposed to be funded under 2019 Enterprise Research and |
| Department, Science, Technology and Innovation Commission of Shenzhen Municipality | Development Subsidy Scheme, Science, Technology and Innovation Commission of Shenzhen Municipality | ||
| Plan of Shenzhen Nanshan District Science, Technology and Innovation Bureau on Support to National High-tech Enterprises | 100,000.00 | Other income | Disclosure of the Third Batch of Entities that Nanshan District Independent Innovation Industry Development Special Fund proposes to support in 2020, Shenzhen Nanshan District Science, Technology and Innovation Bureau |
| Special Funds for Protected Fields of Shenzhen Administration for Market Regulation | 500,000.00 | Other income | Announcement of Shenzhen Administration for Market Regulation on 2019 Candidate Entities and Projects for the Intellectual Property Special Funds for Protected Fields, Shenzhen Administration for Market Regulation |
| Plan of Shenzhen Nanshan District Science, Technology and Innovation Bureau on Rewards to National High-tech Enterprises | 50,000.00 | Other income | Notice on Application for the Rewards to National High-tech Enterprises in Nanshan District, Shenzhen 2019, Shenzhen Nanshan District Science, Technology and Innovation Bureau |
| Enterprise Listing Financing Incentive Program of Shenzhen Nanshan District Industry and Information Technology Bureau | 1,400,000.00 | Non-operating income | Disclosure of the Fourth Batch of Entities that Nanshan District Independent Innovation Industry Development Special Fund Proposes to Support in 2020, Shenzhen Nanshan District Industry and Information Technology Bureau |
| 20th Patent Award (Excellence Award) of Shenzhen Administration for Market Regulation | 500,000.00 | Other income | Announcement of Shenzhen Administration for Market Regulation on Candidate Entities for Supporting Rewards of Intellectual Property (20th China Patent Award, 2018 Shenzhen Patent Award), Shenzhen Administration for Market Regulation |
| 2018 Shenzhen Patent Award of Shenzhen Administration for Market Regulation | 200,000.00 | Other income | Announcement of Shenzhen Administration for Market Regulation on Candidate Entities for Supporting Rewards of Intellectual Property (20th China Patent Award, 2018 Shenzhen Patent Award), Shenzhen Administration for Market Regulation |
| Level 1 Grants for High-value Patent Portfolio from Shenzhen Administration for Market Regulation | 108,571.40 | Other income | Announcement of Shenzhen Administration for Market Regulation on 2020 Special Funds for Building the Service System of Intellectual Property Operation in Shenzhen (Batch 1) & Candidate Objects of Grants for Intellectual |
| Property-Pledged Financing with Special Funds under Intellectual Property Authority Delegated by Guangdong Province to Cities and Counties (Shen Shi Jian Tong Gao (2020) No. 76), Shenzhen Administration for Market Regulation | |||
| 2018 12th Settlement for the Second Batch of Overseas Trademarks by Shenzhen Administration for Market Regulation 571-2178 | 17,000.00 | Other income | Notice of Shenzhen Administration for Market Regulation on Claiming the Grants to the Second Batch of Overseas Trademarks in 2018, Shenzhen Administration for Market Regulation |
| 2018 10th Settlement for the Second Batch of Computer Software Copyright by Shenzhen Administration for Market Regulation 133-1046 | 1,800.00 | Other income | Notice of Shenzhen Administration for Market Regulation on Claiming the Grants to the Second Batch of Computer Software Copyright in 2018, Shenzhen Administration for Market Regulation |
| Plan of Supports for Science and Technology Rewards of Shenzhen Nanshan District Science, Technology and Innovation Bureau | 200,000.00 | Other income | Project Application under the Plan of Supports for Science and Technology Rewards (2020), Shenzhen Nanshan District Science, Technology and Innovation Bureau |
| Plan of Supports for Science and Technology Rewards of Shenzhen Nanshan District Science, Technology and Innovation Bureau | 600,000.00 | Other income | Notice on 2020 Nanshan District Independent Innovation Industry Development Special Fund - Science, Technology and Innovation Sub-Fund (Batch 1) (Shen Nan Ke [2020] No. 35), Shenzhen Administration for Market Regulation |
| Grants for Daily Expenditures of Post-doctor Stations in Shenzhen from Shenzhen Human Resources and Social Security Bureau | 300,000.00 | Other income | Announcement on Candidate Entities for Grants for Daily Management Expenditures of Post-doctor Stations in Shenzhen (Batch 1 for 2020), Shenzhen Human Resources and Social Security Bureau |
| SONG Jiali 2019 Central Special Funds for Foreign Trade (Supporting Foreign Trade SMEs to Expand Markets) Batch 1 | 495,163.00 | Other income | Notice of the Commerce Bureau of Shenzhen Municipality on the Disclosure of Projects on Matters for Supporting Foreign Trade SMEs to Expand Markets Funded by Central Special Funds for Foreign Trade in 2019, Commerce Bureau of Shenzhen |
| Employment Assurance Scheme of Hong Kong Government | 188,133.62 | Other income | List of Enterprises for Grants of Employment Assurance, Hong Kong Government |
| Refunds of value-added taxes | 3,416,123.77 | Other income | |
| Grants for maintaining job | 437,377.63 | Other income |
| position | |||
| 2020 Support Funds for Elite Talents of Airport Economy under the “Wutong Program” | 300,000.00 | Other income | Application Form for Qualification of Elite Talents of Shunyi Airport Economy, Organization Department of CPC Shunyi Committee, Beijing |
| 2019 Shunyi District Cultural and Creativity Fund Awards | 1,488,000.00 | Other income | Several Opinions of Shunyi District on Promoting the Development of the Cultural and Creative Industry (Shun Zhen Fa 2013] No. 13), Shunyi People's Government, Beijing Measures for Administration of Special Funds for the Development of Cultural and Creative Industries in Shunyi District (Revised) (Shun Yi Fa [2016] No. 6), Publicity Department of CPC Shunyi Committee, Beijing |
| Science and Technology Support Funds of Shunyi Science and Technology Association | 100,000.00 | Other income | Several Measures of Shunyi District on Intensifying Efforts to Fight COVID-19 and Support Enterprises to “Control COVID-19 and Stabilize Growth” (Shun Zhen Ban Fa [2020] No. 3), General Office of Shunyi People’s Government, Beijing Implementation Measures of Shunyi District on Accelerating Science and Technology Innovation and Promoting the Transformation of Science and Technology Achievements (Shun Zheng Fa [2019] No. 9), Shunyi People’s Government, Beijing |
| Patent Promotion and Protection Funds of Shunyi | 9,000.00 | Other income | Implementation Measures of Shunyi District on Patent Promotion and Protection (Shun Zheng Fa [2019] No. 10), Shunyi People’s Government, Beijing |
| Investment and Loan Award | 142,182.00 | Other income | Administration Measures of Beijing on Implementing Link of “Investment and Loan Award” in the Cultural and Creative Industry to Promote Integration between Culture and Finance (for Trial Implementation), Jing Wen Ling Ban Wen [2017] No. 3, Beijing Cultural Reform and Development Leadership Panel |
| Government refunds for donation to Hong Kong government for the semiconductor R&D project of Hong Kong University of | 139,340.28 | Non-operating income |
| Science and Technology | |||
| Subtotal | 27,800,942.74 |
4) Interest subsidies
| Item | Opening deferred income | Increase | Carrying forward | Closing deferred income | Carrying forward item presented | Description |
| Interest subsidy for short-term liquid loans of listed enterprises | 139,900.00 | 139,900.00 | Financial expenses | Disclosure of the Third Batch of Entities that Nanshan District Independent Innovation Industry Development Special Fund Proposes to Support in 2020, Office of Nanshan Leadership Panel for Special Funds | ||
| Interest subsidy for loans of micro-, small-, and medium-sized enterprises during COVID-19 | 200,000.00 | 200,000.00 | Financial expenses | Notice of Shenzhen Service Bureau for Small and Medium-sized Enterprises of Shenzhen on the Fifth Grants for Interest Subsidy for Loans of Micro-, Small-, and Medium-sized Enterprises during COVID-19 (Shen Zhong Xiao Qi Zi [2020] No. 91), Service Bureau for Small and Medium-sized Enterprises of Shenzhen | ||
| Interest subsidy for loans during COVID-19 | 204,400.00 | 204,400.00 | Financial expenses | |||
| Subtotal | 544,300.00 | 544,300.00 |
Government grants included in profit or loss for the period amounted to RMB 44,166,947.28.
(2). Refund of government grants
√ Applicable□ N/A
In RMB
| Item | Amount | Reason |
| Subsidies for high-tech qualifications | 300,000.00 | No longer qualified for the grants due to changes in business registration |
Other information:
None
85. Others
□ Applicable√ N/A
VIII. Changes in scope of consolidation
1. Business combination not involving enterprises under common control
√ Applicable□ N/A
(1). Business combinations not involving enterprises under common control in the current period
√ Applicable□ N/A
In RMB
| Name of acquiree | Time point of obtaining equity | Cost of equity acquisition | Ratio of acquired equity interests (%) | Method of obtaining equity | Acquisition date | Basis for determining the acquisition date | Incomes of the acquiree from the acquisition date to the end of the period | Net profit of the acquiree from the acquisition date to the end of the period |
| Tianjin Bonian Film Partnership (LP) | December 23, 2020 | 27,226,384.00 | 100 | Acquisition | December 23, 2020 | Share Transfer Agreement |
Other information:
None
(2). Combination costs and goodwill
√ Applicable□ N/A
In RMB
| Combination costs | Tianjin Bonian Film Partnership (LP) |
| -- Cash | 27,226,384.00 |
| -- Fair value of non-cash assets | |
| -- Fair value of debts issued or undertaken | |
| -- Fair value of equity securities issued | |
| -- Fair value of contingent consideration | |
| -- Fair value at the acquisition date of the equity interests held prior to the acquisition date | |
| --Others |
| Total combination costs | 27,226,384.00 |
| Less: Acquired shares in the fair value of the identifiable net assets | 29,770,395.15 |
| Differences between amounts of goodwill/combination costs and the acquired shares in the fair value of the identifiable net assets | -2,544,011.15 |
Description of the method for determining the fair value of combination costs, and the contingentconsiderations and changes thereof:
N/A.Other information:
During the reporting period, the Company acquired Tianjin Bonian Film Partnership (LP) throughbusiness combination not involving enterprises under common control. In essence, this transaction isacquiring the minority interests held by the subsidiary CINEAPPO Laser Cinema Technology (Beijing)Co., Ltd. The difference above is recognized in capital reserve - share premium.
(3). Identifiable assets and liabilities of the acquiree at the acquisition date
√ Applicable□ N/A
In RMB
| Tianjin Bonian Film Partnership (LP) | ||
| Fair value at the acquisition date | Carrying amount at the acquisition date | |
| Assets: | 29,854,938.69 | 8,310,934.36 |
| Cash and bank balances | 63,934.36 | 63,934.36 |
| Long-term equity investments | 29,791,004.33 | 8,247,000.00 |
| Liabilities: | 84,543.54 | 84,543.54 |
| Other payables | 84,543.54 | 84,543.54 |
| Net assets | 29,770,395.15 | 8,226,390.82 |
| Acquired net assets | 29,770,395.15 | 8,226,390.82 |
Method for determining the fair value of identifiable assets and liabilities:
Long-term equity investments are determined according to the net assets and shareholding ratio of theinvestee, and other assets and liabilities are determined according to the carrying amounts.Contingent liabilities of the acquiree that are taken in the business combination:
NoneOther information:
None
(4). Gains or losses from the equity interests held prior to the acquisition date that are remeasured at fairvalueWhether there are transactions for the purpose of implementing business combination via multipletransactions and obtaining the control during the reporting period
□ Applicable√ N/A
(5). Description about the failure in reasonably determining the combination considerations or the fairvalues of the identifiable assets and liabilities of the acquiree at the acquisition date or at the end ofthe combination period
□ Applicable√ N/A
(6). Other information
□ Applicable√ N/A
2. Business combination involving enterprises under common control
□ Applicable√ N/A
(7). Business combinations involving enterprises under common control in the current period
□ Applicable√ N/A
(8). Combination costs
□ Applicable√ N/A
(9). Carrying amounts of assets and liabilities of the combined party at the combination date
□ Applicable√ N/A
Other information:
None
3. Counter purchase
□ Applicable√ N/A
4. Disposal of subsidiaries
Single disposal of investments in subsidiaries, i.e. the loss of control
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
5. Changes in scope of consolidation for other reasons
Description of changes in the scope of consolidation for other reasons (e.g., new subsidiary establishment, subsidiary liquidation, etc.) and the relevant information:
√ Applicable□ N/A
| Company | Method of obtaining equity | Time point of obtaining equity | Capital contribution | Proportion of contribution |
| Shenzhen Appotronics Display Device Co., Ltd. | Newly established | February 13, 2020 | 3,000,000.00 | 100% |
| WEMAX LLC | Newly established | March 17 2020 | 2,050,770.00 | 100% |
| JoveAI Asia Company Limited | Newly established | April 24, 2020 | USD 100,000 | 64.29% |
6. Others
□ Applicable√ N/A
IX. Equity in other entities
1. Equity in subsidiaries
(1). Composition of enterprise group
√ Applicable□ N/A
| Subsidiaries | Principal operation place | Registration place | Business nature | Proportion of shareholding (%) | Acquisition method | |
| Direct | Indirect | |||||
| Appotronics Timewaying (Beijing) Technology Co., Ltd. | Beijing | Beijing | Sales; technology development, consulting | 90.00 | Establishment | |
| Shenzhen Appotronics Software Technology Co., Ltd. | Shenzhen | Shenzhen | Technology development and sales of computer software and hardware | 100.00 | Establishment | |
| Beijing Orient Appotronics Technology Co., Ltd. | Beijing | Beijing | Technology promotion; computer systems, application software services | 59.00 | Establishment | |
| Shenzhen Appotronics Xiaoming Technology Co., Ltd. | Shenzhen | Shenzhen | Development, consultation and transfer of laser display technology | 100.00 | Establishment | |
| Formoive (Beijing) Technology Co., Ltd. | Beijing | Beijing | Technology and software development | 55.00 | Establishment | |
| Shenzhen Appotronics Laser Display Technology Co., Ltd. | Shenzhen | Shenzhen | R&D and sales of laser display products | 100.00 | Business combination involving enterprises under common control | |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | Beijing | Beijing | Research and development, production, technical services, sales and lease of laser cinema projection equipment | 24.84 | 38.36 | Business combination involving enterprises under common control |
| Qingda Appotronics (Xiamen) Technology Co., Ltd. | Shenzhen | Xiamen | Information technology consulting services | 51.00 | Establishment | |
| Shenzhen Appotronics Laser | Shenzhen | Shenzhen | Software development for | 100.00 | Establishment | |
| Technology Co., Ltd. | semiconductor optoelectronic devices | |||||
| Shenzhen Appotronics Home Line Technology Co., Ltd. | Shenzhen | Shenzhen | Software development related to semiconductor optoelectronic products | 100.00 | Establishment | |
| Appotronics Hong Kong Limited | Hong Kong | Hong Kong | Production, research, and development of semiconductor optoelectronic products, sales and consulting, investment and video content value-added services | 100.00 | Establishment | |
| Appotronics USA, Inc. | USA | USA | R&D, manufacture and sales of semiconductor optoelectronic products | 100.00 | Business combination involving enterprises under common control | |
| Fabulus Technology Hong Kong Limited | Hong Kong | Hong Kong | R&D, manufacture and sales of screens | 100.00 | Establishment | |
| JoveAI Limited | Cayman Islands | Cayman Islands | No specific business conducted | 64.29 | Establishment | |
| JoveAI Innovation, Inc. | USA | USA | R&D of laser display software system | 64.29 | Establishment | |
| Appotronics Technology (Changzhou) Co., Ltd. | Changzhou | Changzhou | Technical research and development of projection equipment, screen and electronic computer | 100.00 | Establishment | |
| FORMOVIE TECHNOLOGY INC | USA | USA | No specific business conducted | 55.00 | Establishment | |
| JoveAI Asia Company Limited | Vietnam | Vietnam | Technical research and development of projection equipment, screen and electronic computer | 64.29 | Establishment | |
| Tianjin Bonian | Tianjin | Tianjin | No specific | 99.00 | 1.00 | Business |
| Film Partnership (LP) | business conducted | combination not involving enterprises under common control | ||||
| Shenzhen Appotronics Display Device Co., Ltd. | Shenzhen | Shenzhen | Technical development, sales, and technical services for display products; import and export business | 100.00 | Establishment | |
| WEMAX LLC | USA | USA | Sales of laser equipment | 100.00 | Establishment |
Description of the difference between the proportion of shareholding and the proportion of voting rightsin a subsidiary:
None
Basis for holding half of the voting rights or below but still controlling the investee, and holding overhalf voting rights but having no control over the investee:
None
Basis for controls over significant structured entities included in consolidation scope:
None
Basis to determine the company acts as the agent or the principal:
None
Other information:
None
(2). Significant non-wholly subsidiaries
√ Applicable□ N/A
In RMB
| Subsidiaries | Shareholding ratio by minority shareholders | Profit or loss attributable to minority shareholders for the current period | Dividends declared for distribution to minority shareholders in the current period | Closing balance of minority interests |
| Formoive (Beijing) Technology Co., Ltd. | 45.00% | -22,385,152.39 | -35,120,901.11 | |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | 36.80% | 1,009,034.92 | 139,317,448.20 |
Description of the difference between the proportion of shareholding by minority shareholders and theirproportion of voting rights in a subsidiary:
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
(3). Significant financial information of significant non-wholly subsidiaries
√ Applicable□ N/A
In RMB
| Subsidiaries | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Formoive (Beijing) Technology Co., Ltd. | 602,500,647.92 | 16,903,557.91 | 619,404,205.83 | 692,687,626.41 | 4,763,026.34 | 697,450,652.75 | 253,973,931.39 | 7,968,567.46 | 261,942,498.85 | 288,180,191.85 | 2,437,972.51 | 290,618,164.36 |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | 218,942,342.82 | 712,358,020.45 | 931,300,363.27 | 509,106,720.26 | 43,613,620.72 | 552,720,340.98 | 255,777,103.29 | 789,861,645.43 | 1,045,638,748.72 | 383,085,231.40 | 289,141,441.68 | 672,226,673.08 |
| Subsidiaries | Amount for the current period | Amount for the prior period | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Formoive (Beijing) Technology Co., Ltd. | 1,006,770,096.44 | -49,744,783.09 | -49,744,783.09 | 81,046,874.46 | 700,577,662.64 | -47,481,133.43 | -47,481,133.43 | -99,566,333.52 |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | 288,699,197.97 | 3,358,107.97 | 3,358,107.97 | 85,283,246.66 | 593,020,861.03 | 144,802,587.21 | 144,802,587.21 | 173,475,022.15 |
Other information:
None
(4). Significant limitations on use of the group assets and pay-off the group debts
□ Applicable√ N/A
(5). Financial or other support provided to structured entities included in consolidated financialstatements:
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
2. Changes of shares of owners' equity in subsidiaries but continue to remain control over transactionsof subsidiaries
√ Applicable□ N/A
(1). Description of changes in the share in the owner's equity of subsidiaries
√ Applicable□ N/A
| Subsidiaries | Date of change | Shareholding ratio prior to change | Shareholding ratio after change |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | December 23, 2020 | 55.20% | 63.20% |
(2). Impact of the transaction on minority interests and owners' interests attributable to owners of theparent company
√ Applicable□ N/A
In RMB
| Item | CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. |
| Acquisition cost/disposal consideration | 27,226,384.00 |
| -- Cash | 27,226,384.00 |
| -- Fair value of non-cash assets | |
| Total acquisition cost/disposal consideration | 27,226,384.00 |
| Less: Share in net assets of subsidiaries calculated based on the acquired/disposed shareholding ratio | 29,770,395.15 |
| Difference | -2,544,011.15 |
| Where: Adjustment to capital reserves | -2,544,011.15 |
| Adjustment to surplus reserves | |
| Adjustment to undistributed profits |
Other information
□ Applicable√ N/A
3. Equity in joint ventures or associates
√ Applicable□ N/A
(1). Important joint ventures or associates
√ Applicable□ N/A
In RMB
| Associates or joint ventures | Principal operation place | Registration place | Business nature | Proportion of shareholding (%) | Accounting treatment method for investments in joint ventures or associates | |
| Direct | Indirect | |||||
| GDC Technology | Asia and | British | R&D, | 36.00 | Accounting for | |
| Limited (BVI) | North America | Virgin Islands | production, and sales of digital cinema servers and cinema management system | under equity method |
Description of the difference between the proportion of shareholding and the proportion of voting rightsin joint ventures or associates:
None
Basis that the company owns less than 20% voting rights but may exercise major impact, or that thecompany owns 20% or over voting rights but does not has major impact:
None
(2). Major financial information of significant joint ventures
□ Applicable√ N/A
(3). Major financial information of significant associates
√ Applicable□ N/A
In RMB
| Item | Closing balance/Amount for the current period | Opening balance/Amount for the prior period |
| Company | GDC [Note 1] | |
| Current assets | 553,504,350.37 | |
| Non-current assets | 72,596,748.61 | |
| Total assets | 626,101,098.98 | |
| Current liabilities | 379,295,268.80 | |
| Non-current liabilities | 41,349,472.31 | |
| Total liabilities | 420,644,741.11 | |
| Minority interests | ||
| Interests attributable to shareholders of the parent company | 205,456,357.87 | |
| Share of net assets calculated by ownership percentage | 73,964,288.83 | |
| Adjustment | 62,044,191.37 | |
| --Goodwill | 62,560,946.33 | |
| --Unrealized profits for insider transactions | -516,754.96 | |
| --Others | ||
| Carrying amount of investment of associates | 131,338,347.84 | |
| Fair values of equity investments in associates having publicly quoted prices | ||
| Operating income | 251,049,184.00 | |
| Net profit | 6,256,577.59 |
| Net profit of discontinued operations | ||
| Other comprehensive income | 26,383,768.27 | |
| Total comprehensive income | 32,640,345.86 | |
| Dividends received from associates in the current year |
Other informationNote 1: During the reporting period, the equity investment in GDC Technology Limited (BVI) was madeon April 9, 2020. The data disclosed in the table above is the audited data of GDC Technology Limited(BVI) for 2020.
(4). Summary financial information of insignificant joint ventures and associates
√ Applicable□ N/A
In RMB
| Closing balance/Amount for the current period | Opening balance/Amount for the prior period | |
| Joint ventures: | ||
| Total carrying amount of investments | ||
| Total amounts calculated based on shareholding proportions | ||
| --Net profit | ||
| --Other comprehensive income | ||
| --Total comprehensive income | ||
| Associates: | ||
| Total carrying amount of investments | 131,406,424.64 | 139,534,371.94 |
| Total amounts calculated based on shareholding proportions | ||
| --Net profit | -1,179,972.05 | 4,011,243.08 |
| --Other comprehensive income | -5,001,459.87 | -754,946.96 |
| --Total comprehensive income | -6,181,431.92 | 3,256,296.12 |
Other informationMain information about associates:
| Associates | Principal operation place | Registration place | Business nature | Proportion of shareholding (%) | Accounting treatment method for investments in joint ventures or associates | |
| Direct | Indirect | |||||
| Cinionic Limited | Europe and USA | Hong Kong | Sales of cinema projectors | 20.00 | Accounting for under equity method | |
(5). Description of significant limitations over the ability of joint ventures or associates to transfer fundsto the Company
□ Applicable√ N/A
(6). Excessive loss of joint venture or associates
□ Applicable√ N/A
(7). Unrecognized commitment relating to investments in joint ventures
□ Applicable√ N/A
(8). Contingent liabilities relating to investments in joint ventures or associates
□ Applicable√ N/A
4. Significant joint operations
□ Applicable√ N/A
5. Interests in structured entities that are not included in consolidated financial statementsDescription of structured entities that are not included in consolidated financial statements:
□ Applicable√ N/A
6. Others
□ Applicable√ N/A
X. Risks associated with financial instruments
√ Applicable□ N/A
The Company's risk management objectives are to achieve a proper balance between risks and yield,minimize the adverse impacts of risks on the Company's operation performance, and maximize thebenefits of the shareholders and other stakeholders. Based on these risk management objectives, theCompany's basic risk management strategy is to identify and analyze its exposure to various risks,establish an appropriate minimum tolerance to risk, implement risk management, and monitor regularlyand effectively these exposures to ensure the risks are monitored at a certain level.The Company is exposed to various risks associated with financial instruments in its daily routines,primarily including credit risk, liquidity risk and market risk. The management has reviewed andapproved policies to manage these risks, summarized as below.
(I) Credit risk
Credit risk refers to the risk that a party of the financial instrument will default on its obligationsresulting in financial loss to the counterparty.
1. Management of credit risk
(1) Evaluation of credit risk
The Company assesses at each balance sheet date whether the credit risk of the underlying financialinstruments has increased significantly since initial recognition. In determining whether the credit riskhas increased significantly since initial recognition, the Company considers reasonable and supportableinformation that is available without undue cost or effort, including quantitative and qualitative analysisbased on historical data, ranking of external credit risks and forward-looking information. The Companycompares the risk of a default occurring on a financial instrument as at the balance sheet date with therisk of a default occurring on the financial instrument as at the date of initial recognition based onindividual financial instrument or a group of financial instruments with similar credit risk characteristic,to determine the change of the risk of a default occurring on a financial instrument over the expectedlife.
The Company considers the credit risk of financial instruments has increased significantly whenone or more of the following quantitative and qualitative criteria are met:
1) The quantitative criterion primarily refers to a certain percentage of increase in the probability ofdefault over the remaining life of the financial instruments as of the balance sheet date when comparingwith that at initial recognition of the financial instruments;
2) The qualitative criterion includes, inter alia, adverse material changes in business or financialconditions that are expected to cause a significant decrease in the debtor's ability to meet its debtobligations, and an actual or expected significant adverse change in the technological, market, economic,or legal environment of the debtor that results in a significant decrease in the debtor’s ability to meet itsdebt obligations.
(2) Definition of defaulted or credit-impaired assets
A financial asset is defined as defaulted when the financial instrument meets one or moreconditions stated as below, and the criterion of defining defaulted asset is consistent with that of definingcredit-impaired asset:
1) significant financial difficulty of the debtor;
2) a breach of contract terms with binding force by the debtor;
3) it is becoming probable that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financialdifficulty, has granted to the debtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of ECL
Key parameters to measure ECL include the probability of default, loss given default and theexposure at default. The Company established models of the probability of default, loss given defaultand the exposure at default on the basis of quantitative analysis on historical statistical data (such ascounterparty ranking, guarantee methods, collateral category, and repayment way) and forward-lookinginformation.
3. Details of reconciliation of the opening balance and the closing balance of provision forimpairment of financial instruments can refer to the description in VII.4, VII.5 and VII.8 of Section XI.
4. Credit risk exposure and credit risk concentration
The Company’s credit risk is primarily from cash and bank balances and receivables. In order tocontrol the risks associated with aforementioned items, the Company has taken the following measures.
(1) Cash and bank balances
The credit risk of the Company is limited because the Company has deposited bank deposits and
other monetary funds in banks with high credit ratings.
(2) Receivables
The Company regularly evaluates the creditworthiness of its customers with deals on credit, andselects to deal with approved and creditworthy customers subject to the results of the credit assessmentwith monitoring the balance of its receivables, so as to ensure that the Company is not exposed tosignificant risk of bad debt.
No collaterals are required since the Company only deals with third parties that are approved andcreditworthy. The concentrated credit risks are managed by customers. As of December 31, 2020, theCompany is exposed to certain concentration of credit risks, as the Company’s accounts receivable fromtop 5 customers have accounted for 86.37% of the total balance of accounts receivable (December 31,2019: 70.21%). The Company held no collateral or other credit ranking measures for the balance ofaccounts receivable.
The maximum exposure to the Company is the carrying amount of each financial asset in thebalance sheet.
(II) Liquidity risk
Liquidity risk refers to the risk that the Company is in shortage of funds in performing obligationsthat are settled by delivering cash or another financial asset. Liquidity risk may arise from an inability tosell a financial asset at fair value as soon as possible, a counterparty's inability to pay its contractualliabilities, the accelerated maturity of liabilities, or an inability to generate expected cash flows.
In order to control this risk, the Company balances the continuity and flexibility of financing byusing various financing measures such as notes settlement and bank loans comprehensively and adoptingboth long-term and short-term financing methods to optimize the financing structure. The Company hasreceived credit facilities from a number of commercial banks to satisfy its working capital requirementsand capital expenditures.
Financial liabilities classified by remaining maturity dates
| Item | Closing balance | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-2 years | Over 2 years | |
| Bank borrowings | 335,041,546.85 | 347,893,031.23 | 281,565,349.76 | 66,327,681.47 | |
| Notes payable | 116,822,674.67 | 116,822,674.67 | 116,822,674.67 | ||
| Accounts payable | 226,494,815.90 | 226,494,815.90 | 226,494,815.90 | ||
| Other payables | 59,848,053.83 | 59,848,053.83 | 59,848,053.83 | ||
| Long-term payables | 3,262,450.00 | 3,572,382.75 | 3,572,382.75 | ||
| Subtotal | 741,469,541.25 | 754,630,958.38 | 684,730,894.16 | 69,900,064.22 | |
(Continued to above table)
| Item | Opening balance | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| Bank borrowings | 421,349,221.34 | 444,275,984.40 | 159,065,657.15 | 285,210,327.25 | |
| Notes payable | 37,335,841.79 | 37,335,841.79 | 37,335,841.79 | ||
| Accounts | 176,624,445.46 | 176,624,445.46 | 176,624,445.46 | ||
| Item | Opening balance | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| payable | |||||
| Other payables | 14,364,076.43 | 14,364,076.43 | 14,364,076.43 | ||
| Long-term payables | 3,488,100.00 | 3,488,100.00 | 3,488,100.00 | ||
| Subtotal | 653,161,685.02 | 676,088,448.08 | 390,878,120.83 | 285,210,327.25 | |
(III) Market riskMarket risk refers to the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risk mainly includes interest rate risk and currencyrisk.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market interest rates. The Company is exposed to the risk of fair valueinterest rate due to financial instruments with a fixed interest rate and to the risk of cash value interest ratedue to financial instruments with a floating interest rate. The Company determines the proportionbetween the fixed-rate financial instruments and the floating-rate financial instruments based on marketconditions, and maintains appropriate portfolios of financial instruments through regular review andmonitoring. The cash flow interest rate risk exposed to the Company relates primarily to the Company’sfloating-rate interest-bearing bank borrowings.As at December 31, 2020, the principal of the Company’s floating-rate interest-bearing bankborrowings amounted to RMB 334,317,535.43 (December 31, 2019: RMB 420,240,038.66). On thebasis of the assumption that the interest rate has changed 50 basic points, where all other variables areheld constant, it will bring no material impacts on the Company's total profits and shareholders' equity.
2. Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in foreign exchange rates. The Company's exposure to the currency risk isprimarily associated with the Company’s monetary assets and liabilities dominated in foreign currencies.If the monetary assets and liabilities dominated in foreign currencies are imbalanced in a short time, theCompany will purchase and sell foreign currencies at the market exchange rate to keep the net riskexposure acceptable.
The closing balance of the Company’s monetary assets and liabilities dominated in foreigncurrencies is disclosed in VII.82 of Section XI in details.
XI. Disclosure of fair value
1. The closing balance of the fair value of assets and liabilities measured at fair value
√ Applicable□ N/A
In RMB
| Item | Closing balance of fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | ||||
| (I) Held-for-trading financial assets | ||||
| 1. Financial assets at fair value through profit or loss | ||||
| (1) Investment in debt instrument | ||||
| (2) Investment in equity instrument | ||||
| (3) Derivative financial assets | ||||
| (4) Structural deposits | 114,000,000.00 | 114,000,000.00 | ||
| 2. Designated as financial assets at fair value through profit or loss | ||||
| (1) Investment in debt instrument | ||||
| (2) Investment in equity instrument | ||||
| 3. Receivables financing | 11,959,000.00 | 11,959,000.00 | ||
| (II) Other debt investments | ||||
| (III) Other equity instrument investments | 11,975,419.38 | 11,975,419.38 | ||
| (IV) Investment properties | ||||
| 1. Land use right for leasing purpose | ||||
| 2. Buildings leased | ||||
| 3. Land use right held for the purpose of transfer after value appreciation | ||||
| (V) Biological assets | ||||
| 1. Consumable biological assets | ||||
| 2. Productive biological assets | ||||
| Total assets continuously measured at fair value | 137,934,419.38 | 137,934,419.38 | ||
| (VI) Held-for-trading financial liabilities | ||||
| 1. Financial liabilities at fair value through profit or loss | ||||
| Where: Held-for-trading bonds issued | ||||
| Derivative financial liabilities | ||||
| Others | ||||
| 2. Designated as financial liabilities at fair value through profit or loss | ||||
| Total liabilities continuously measured at fair value | ||||
| II. Non-continuous fair value measurement | ||||
| (I) Held-for-sale assets | ||||
| Total assets that are not continuously measured at fair value | ||||
| Total liabilities that are not continuously measured at fair value |
2. Basis for determining the market price of continuous and non-continuous level 1 fair valuemeasurement items
□ Applicable√ N/A
3. Valuation techniques and qualitative and quantitative information of key parameters adopted forcontinuous and non-continuous level 2 fair value measurement items
□ Applicable√ N/A
4. Valuation techniques and qualitative and quantitative information of key parameters adopted forcontinuous and non-continuous level 3 fair value measurement items
√ Applicable□ N/A
No public market is available for financial assets at fair value through profit or loss, receivablesfinancing, and investment in other equity instruments, hence the fair value of the foregoing are measuredat cost.
5. Reconciliation between opening and closing carrying amounts and sensitivity analysis of
unobservable parameters for continuous level 3 fair value measurement items
□ Applicable√ N/A
6. Where transfers among levels occurred in the period, transfer reasons and policies for determining
transfer time point for continuous fair value measurement items
□ Applicable√ N/A
7. Changes in valuation techniques in the period and reasons for changes
□ Applicable√ N/A
8. Fair value of financial assets and financial liabilities not measured at fair value
□ Applicable√ N/A
9. Others
□ Applicable√ N/A
XII. Related-party relationships and transactions
1. Parent of the Company
√ Applicable□ N/A
In RMB 0’000
| Parent company | Registration place | Business nature | Registered capital | Proportion of the Company's shares held by the parent company (%) | Proportion of the Company's voting right held by the parent company (%) |
| Shenzhen Appotronics Holdings Limited | Shenzhen | R&D and sales of semiconductor products | RMB 10 million | 17.62 | 17.62 |
Description of the parent company of the CompanyNoneThe ultimate controlling party of the Company is LI Yi.Other information:
None
2. Subsidiaries of the Company
Refer to the Notes for details about the subsidiaries of the Company
√ Applicable□ N/A
Refer to the description in IX.1 of Section XI for details about the subsidiaries of the Company
3. Associates and joint ventures of the Company
Information of the significant joint ventures or associates of the Company is disclosed in IX.3 of SectionXI.
□ Applicable√ N/A
Details of other joint ventures or associates having related-party transactions and balances with theCompany in the period or in prior periods:
√ Applicable□ N/A
| Associates or joint ventures | Relationship with the Company |
| Cinionic Limited | Participating company |
| GDC Technology Limited (BVI) | Participating company |
Other information
√ Applicable□ N/A
Refer to the description in IX.3 of Section XI for details about the associates of the Company
4. Other related parties of the Company
√ Applicable□ N/A
| Other related party | Relationship between other related party and the Company |
| Shenzhen Bevix Technology Co., Ltd. | Holding more than 5% of shares in the company |
| Shenzhen YLX Technology Development Co., Ltd. | Controlled by the same de facto controller |
| CFEC and its affiliates | Minority shareholders holding more than 10% shares in the subsidiary and their affiliates |
| Xiaomi Communications Technologies Co., Ltd. and its affiliates | Minority shareholders holding more than 10% shares in the subsidiary and their affiliates |
| Beijing Donview Education Technology Co., Ltd. and its affiliates | Minority shareholders holding more than 10% shares in the subsidiary and their affiliates |
Other informationNone
5. Related party transactions
(1). Sales and purchase of goods, rendering and receipt of services
Purchase of goods/receipt of services
√ Applicable□ N/A
In RMB
| Related party | Subject matter | Amount for the current period | Amount for the prior period |
| CFEC and its affiliates | Power supply, water cooling and services | 27,172,641.25 | 75,594,510.73 |
| Xiaomi Communications Technologies Co., Ltd. and its affiliates | Electronic components and services | 205,885,065.38 | 135,947,996.69 |
| Beijing Donview Education Technology Co., Ltd. and its affiliates | Service | 36,371.68 | 70,302.92 |
| GDC Technology Limited(BVI) and its affiliates | Electronic components | 8,703,704.00 | |
| Subtotal | 241,797,782.31 | 211,612,810.34 |
Sales of goods/rendering of services
√ Applicable□ N/A
In RMB
| Related party | Subject matter | Amount for the current period | Amount for the prior period |
| Shenzhen Bevix Technology Co., Ltd. | Service | 4,508.85 | |
| GDC Technology Limited(BVI) and its affiliates | Light generator engine and software | 3,740,484.98 | |
| CFEC and its affiliates | Laser cinema projector light source and lease service | 92,512,007.78 | 141,777,980.65 |
| Xiaomi Communications Technologies Co., Ltd. and its affiliates | Laser TV, smart mini projector | 650,541,969.04 | 456,486,039.21 |
| Beijing Donview Education Technology Co., Ltd. and its affiliates | Laser business education projector | 26,233,035.11 | 74,848,453.68 |
| Cinionic Limited | Laser light source | 35,706,691.15 | 125,395,135.96 |
| Subtotal | 808,738,696.91 | 798,507,609.50 |
Description of sales and purchase of goods, rendering and receipt of services
□ Applicable√ N/A
(2). Details of trust with related parties/subcontracting and trust management/ contract-issuingDetails of trust/contracting where a group entity is the trustor/main contractor:
□ Applicable√ N/A
Description of trust/subcontracting with related parties
□ Applicable√ N/A
Details of trust/contracting where a group entity is the trustor/main contractor
□ Applicable√ N/A
Description of management/contract-issuing with related parties
□ Applicable√ N/A
(3). Leases with related parties
The Company as the lessor:
□ Applicable√ N/A
The Company as the lessee:
√ Applicable□ N/A
In RMB
| Lessor | Type of leased assets | Lease fees recognized in the current period | Lease fees recognized in the prior period |
| CFEC and its affiliates | Property lease | 1,794,184.41 | 2,070,494.22 |
Description of leases with related parties
□ Applicable√ N/A
(4). Guarantees with related parties
The Company as a guarantor:
□ Applicable√ N/A
The Company as a guaranteed party:
□ Applicable√ N/A
Description of guarantees with related parties
□ Applicable√ N/A
(5). Borrowings/loans with related parties
√ Applicable□ N/A
In RMB
| Related party | Borrowing amount | Start date | Expiry date | Description |
| Borrowing | ||||
| CFEC and its affiliates | 19,320,000.00 | 2020.07.06 | 2021.7.5 | Annual interest rate of 4.00% |
(6). Assets transfer/debt restructuring with related parties
√ Applicable□ N/A
In RMB
| Related party | Subject matter | Amount for the current period | Amount for the prior period |
| Shenzhen YLX Technology Development Co., Ltd. | Transfer of fixed assets | 740,617.73 | |
(7). Compensation for key management personnel
√ Applicable□ N/A
In RMB 0’000
| Item | Amount for the current period | Amount for the prior period |
| Compensation for key management personnel | 1,463.12 | 1,673.11 |
(8). Other related party transactions
□ Applicable√ N/A
6. Amounts due from/to related parties
(1). Amounts due from related parties
√ Applicable□ N/A
In RMB
| Item | Related party | Closing balance | Opening balance | ||
| Carrying amount | Bad debt provision | Carrying amount | Bad debt provision | ||
| Accounts receivable | CFEC and its affiliates | 6,125,422.64 | 306,402.16 | 17,494,326.54 | 874,716.33 |
| Accounts receivable | Beijing Donview Education Technology Co., Ltd. and its affiliates | 3,017.00 | 150.85 | 8,829,840.85 | 442,339.31 |
| Accounts receivable | Xiaomi Communications Technologies Co., Ltd. and its affiliates | 248,915,862.75 | 12,445,793.14 | 45,679,955.49 | 2,283,997.77 |
| Accounts receivable | Cinionic Limited | 452,175.57 | 22,608.78 | 24,298,258.08 | 1,214,912.90 |
| Accounts receivable | GDC Technology Limited (BVI) and its affiliates | 2,283,483.24 | 114,174.16 | ||
| Subtotal | 257,779,961.20 | 12,889,129.09 | 96,302,380.96 | 4,815,966.31 | |
| Prepayments | CFEC and its affiliates | 3,107,696.59 | 3,350,592.41 | ||
| Prepayments | GDC Technology Limited (BVI) and its affiliates | 2,883,384.53 | |||
| Subtotal | 5,991,081.12 | 3,350,592.41 | |||
| Other receivables | CFEC and its affiliates | 296,435.00 | 14,821.75 | 290,866.00 | 14,543.30 |
| Other receivables | Xiaomi Communications Technologies Co., Ltd. and its affiliates | 100,000.00 | 5,000.00 | 100,000.00 | 5,000.00 |
| Subtotal | 396,435.00 | 19,821.75 | 390,866.00 | 19,543.30 |
(2). Amounts due to related parties
√ Applicable□ N/A
In RMB
| Item | Related party | Closing balance of carrying amount | Opening balance of carrying amount |
| Accounts payable | CFEC and its affiliates | 11,595,819.93 | |
| Subtotal | 11,595,819.93 | ||
| Advance from customers | CFEC and its affiliates | 14,032,071.28 | 15,893,424.21 |
| Subtotal | 14,032,071.28 | 15,893,424.21 | |
| Contract liabilities | CFEC and its affiliates | 1,384,955.75 | |
| Contract liabilities | GDC Technology Limited (BVI) and its affiliates | 15,108.32 | |
| Subtotal | 1,400,064.07 | ||
| Other payables | CFEC and its affiliates | 19,343,613.33 |
| Other payables | Xiaomi Communications Technologies Co., Ltd. and its affiliates | 101,668.48 | |
| Subtotal | 19,445,281.81 |
7. Related party commitments
□ Applicable√ N/A
8. Other information
□ Applicable√ N/A
XIII. Share-based payments
1. Summary of share-based payment
√ Applicable□ N/A
Unit: Share, in RMB
| Total number of the Company's equity instruments granted during the period | 1,100,000.00 |
| Total number of the Company's equity instruments executed during the period | 1,202,490.00 |
| Total number of the Company's equity instruments lapsed during the period | 2,112,970.00 |
| Range of exercise prices and remaining contractual life of the Company's share options outstanding at the end of the period | Grant date: October 14, 2019; grant price: RMB 17.425/share; remaining period: 22 months Grant date: October 13, 2020; grant price: RMB 17.425/share; remaining period: 22 months |
| Range of exercise prices and remaining contractual life of the Company's other equity instruments outstanding at the end of the period | None |
Other informationThe Company granted 1.1 million shares of restricted shares during the current period.
2. Equity-settled share-based payments
√ Applicable□ N/A
In RMB
| The method of determining the fair value of equity instruments at the grant date | Open market quotes |
| The basis of determining the number of equity instruments expected to be executed | Actual grant amount |
| Reasons for the significant difference between the estimate in the current period and that in the prior period | None |
| Amounts of equity-settled share-based payments accumulated in capital reserve | 26,259,687.17 |
| Total expenses recognized arising from equity-settled share-based payments | 20,581,939.14 |
Other informationThe difference between the the total expenses recognized by equity-settled share-based payments inthe current period and the amount of share-based payments included in owners' equity arises from theexchange rate translation difference.
3. Cash-settled share-based payments
□ Applicable√ N/A
4. Modification to and termination of share-based payments
□ Applicable√ N/A
5. Others
□ Applicable√ N/A
XIV. Commitments and contingencies
1. Significant commitments
√ Applicable□ N/A
Significant external commitments, and nature and amount thereof as of the balance sheet dateSignificant lease contracts which the Company has entered into or will perform and their financialimpacts are disclosed in the following table:
| No. | Rent address | Rent area (square meters) | Rent purpose | Rent period | Rent expense/year |
| 1 | 20/F, 21/F, 22/F, United Headquarter Building, High-Tech Zone, No. 63 Xuefu Road, Nanshan District, Shenzhen | 6,143.79 | Research and development, office administration | 2019.8.1-2021.12.31 | 5,617,179.71 |
| 2 | 23/F, United Headquarter Building, High-Tech Zone, No. 63 Xuefu Road, Nanshan District, Shenzhen | 2,047.93 | Research and development, office administration | 2020.2.1-2025.1.31 | 1,954,275.31 |
| 3 | Yaochuan Industrial Zone, Tangwei Community, Fuhai Street, Bao'an District, Shenzhen | 23,765.57 | Plant | 2018.12.1-2022.11.30 | 12,659,623.09 |
| 4 | Room101, 1/F, Building 22E, Phase III of Hong Kong Science and Technology Park | 1,138.25 | Office administration | 2019.3.20-2022.3.19 | 2,845,286.01 |
2. Contingencies
(1). Significant contingencies as of the balance sheet date
√ Applicable□ N/A
Pending litigation
1. Civil litigation and arbitration where the Company acted as the plaintiff
As of December 31, 2020, there are 27 civil litigation cases where the Company acted as a plaintiff,specifically including:
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| 19-cv-00466-RGD-LRL | Correcting the inventor of the patent | Appotronics Corporation Limited | Delta Electronics, Inc. | Patent No. 9,024,241 | Accepted but not tried | |
| (2019) Yue 03 Min Chu No. 4309 | Ownership | Appotronics Corporation Limited | Delta Electronics, Inc. | ZL201610387831.8 | Accepted but not tried |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2019) Yue 03 Min Chu No. 2942 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Electronics (Shanghai) Co., Ltd.; Defendant 2: Delta Video Display System (Wujiang) Limited; Defendant 3: Shenzhen Super Network Technology Co., Ltd. | ZL200880107739.5 | Loss compensation of RMB 8.00 million | In trial of the first instance |
| (2019) Yue 03 Min Chu No. 2945 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 8.00 million | |||
| (2019) Yue 03 Min Chu No. 2947 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2019) Yue 03 Min Chu No. 2949 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2019) Yue 03 Min Chu No. 2950 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2019) Yue 03 Min Chu No. 2943 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Electronics (Shanghai) Co., Ltd.; Defendant 2: Delta Video Display System (Wujiang) Limited; Defendant 3: Shenzhen Super Network Technology Co., Ltd. | ZL200810065225.X | Loss compensation of RMB 8.00 million | In trial of the first instance |
| (2019) Yue 03 Min Chu No. 2944 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 8.00 million | |||
| (2019) Yue 03 Min Chu No. 2946 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2019) Yue 03 Min Chu No. 2948 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2019) Yue 03 Min Chu No. 2951 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 4.00 million | |||
| (2020) Yue 73 Min Chu No. 1335 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and | ZL200880107739.5 | Loss compensation of RMB 3.00 million + litigation costs RMB 0.50 million | In trial of the first instance |
| (2020) Yue 73 Min Chu No. 1336 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 6.50 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1337 | Infringement on patent for invention | Appotronics Corporation Limited | Creative Co., Ltd. Defendant 4: Delta Electronics Business Management (Shanghai) Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 2.50 million + litigation costs RMB 0.50 million | ||
| (2020) Yue 73 Min Chu No. 1338 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 2.00 million + litigation costs RMB 0.50 million | |||
| (2020) Yue 73 Min Chu No. 1340 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 6.00 million + litigation costs RMB 0.50 million | |||
| (2020) Yue 73 Min Chu No. 1341 | Infringement on patent for invention | Appotronics Corporation Limited | Loss compensation of RMB 14.00 million + litigation costs RMB 0.50 million | |||
| (2020) Yue 73 Min Chu No. 1361 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Electronics Business Management (Shanghai) Co., Ltd. | Loss compensation of RMB 0.75 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1339 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 5: Guangzhou Jianye Network Technology Co., Ltd. | ZL200810065225.X | Loss compensation of RMB 0.75 million + litigation costs RMB 0.50 million | In trial of the first instance |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1353 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Delta Electronics Business Management (Shanghai) Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 14.00 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1355 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Digital Protection (Beijing) Electronics Technology Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 6.00 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1356 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Delta Electronics Business Management (Shanghai) Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 6.50 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1357 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Digital Protection (Beijing) Electronics Technology Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 2.50 million + litigation costs RMB 0.50 million | ||
| (2020) Yue 73 Min Chu No. 1358 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited | Loss compensation of RMB 2.00 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1359 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Delta Electronics Business Management (Shanghai) Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 3.00 million + litigation costs RMB 0.50 million |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2020) Yue 73 Min Chu No. 1360 | Infringement on patent for invention | Appotronics Corporation Limited | Defendant 1: Delta Video Display System (Wujiang) Limited Defendant 2: WANG Yuhai Defendant 3: Hunan Dehao Cultural and Creative Co., Ltd. Defendant 4: Digital Protection (Beijing) Electronics Technology Co., Ltd. Defendant 5: Guangdong Jianye Display Information Technology Co., Ltd. Defendant 6: Guangzhou Jianye Network Technology Co., Ltd. | Loss compensation of RMB 3.00 million + litigation costs RMB 0.50 million |
2. Civil litigation and arbitration where the Company acted as the defendant
As of December 31, 2020, there are 7 civil litigations where the Company was a defendant,specifically including:
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2019) Yue 73 Zhi Min Chu No. 662 | Infringement of patent rights of inventions | Delta Electronics, Inc. | Appotronics Corporation Limited; Futian SPN Projector & Video System Firm of | ZL201610387831.8 | Loss compensation of RMB 16.00 million + litigation costs RMB 145,343 | Stayed |
| (2019) Yue 73 Zhi Min Chu No. 663 | ZL201310017478.0 | Loss compensation of RMB 16.00 million + litigation costs RMB 145,343 | Trial of the first instance completed |
| Case No. | Cause of action | Plaintiff | Defendant | Patents involved | Amount involved | Progress |
| (2019) Yue 73 Zhi Min Chu No. 664 | Shenzhen | ZL20310625063.1 | Loss compensation of RMB 16.00 million + litigation costs RMB 145,343 | Trial of the first instance completed | ||
| (2019) Jing 73 Min Chu No.1275 | Formoive (Beijing) Technology Co., Ltd.; Appotronics Corporation Limited | ZL201610387831.8 | Loss compensation of RMB 15.00 million + litigation costs RMB 1.01 million | In trial of the first instance | ||
| (2019) Jing 73 Min Chu No. 1276 | ZL201410249663.7 | Loss compensation of RMB 15.00 million + litigation costs RMB 1.01 million | In trial of the first instance | |||
| (2019) Jing 73 Min Chu No. 1277 | ZL201310017478.0 | Loss compensation of RMB 15.00 million + litigation costs RMB 1.01 million | Trial of the first instance completed | |||
| (2019) Jing 73 Min Chu No. 1278 | ZL201010624724.5 | Loss compensation of RMB 15.00 million + litigation costs RMB 1.01 million | In trial of the first instance |
(2). Description shall also be provided even if the Company has no significant contingencies to be
disclosed:
□ Applicable√ N/A
3. Others
□ Applicable√ N/A
XV. Events after the balance sheet date
1. Material non-adjusting event
√ Applicable□ N/A
In RMB 0’000
| Item | Content | Effects on the financial position and operating results | Reasons for not being able to estimate such effects |
| Significant external investments | Acquisition of and investment in WeCast | The specific amount depends on the operating results of WeCast | |
| Others | Mortgage borrowings | Cause no impact on the profit or loss; increase the assets and liabilities at the same time; the borrowing amount is to be determined | |
| Others | Restricted share incentives | Increase expenses and capital reserve; the specific amount depends on factors such as the specific grant date |
(I) External investmentOn March 26, 2021, the Company held the 30
th
meeting of the first Board of Directors and the 17
th
meeting of the first Board of Supervisors, at which the Proposal on Capital Increase by Formoive in aWholly-owned Subsidiary and Acquisition of 51% Equity Interests in WeCast Technology Corp. and theRelated-party Transaction was reviewed and approved, under which the Company would subscribe to51% equity interests in WeCast Technology Corp. As of the date of approval for issue of the financialstatements, the Company has not completed the acquisition.(II) Mortgage borrowingsOn August 25, 2020, the Company held the 25
th
meeting of the first Board of Directors, at whichthe Proposal on Mortgage Loans with Land Use Rights was reviewed and passed, approving theCompany to request the fixed assets loans of RMB 700 million for 10 years from the bank syndicate ledby China Construction Bank Co., Ltd. Shenzhen Branch with the land use rights of the Company as themortgage by signing relevant loan mortgage contract. The loans are intended merely for the constructionof the head office of the Company. The Company has completed the mortgage registration and handoverformalities for the land use rights by January 20, 2021.(III) Share incentiveOn March 26, 2021, the Company held the 30
th meeting of the first Board of Directors and the 17
th
meeting of the first Board of Supervisors, at which the Proposal on the “2021 Restricted Share IncentivePlan (Draft)” and Summary Thereof was reviewed and passed, under which the Company intends togrant 18.5000 million restricted shares, including 17.1000 million shares in the initial grant and 1.4000million shares reserved. There are 224 grantees of share incentives in the initial grant at the grant pricesof RMB 17.50 per share, RMB 18.50 per share, and RMB 21.00 per share depending on circumstancesof the grantees of share incentives.
2. Profit distribution
√ Applicable□ N/A
In RMB 0’000
| Proposed distributions of profits or dividends | 2,490.16 |
| Profits or dividends declared for distribution upon discussion and approval | 2,490.16 |
The Company’s 2020 preliminary plan for profit distribution is disclosed as below: the Companyproposed to distribute to all shareholders a cash dividend of RMB 0.55 (including tax) for every 10shares on the basis of the total share capital as at the date of share registration for 2020 annual dividenddistribution, according to which the total cash dividends expected to be distributable would be RMB
24.9016 million; the Company would neither capitalize its capital reserve nor grant bonus shares. Theamount for cash dividends in the aforesaid 2020 profit distribution plan is temporarily calculated basedon the Company’s current total share capital of 452,756,901 shares, but the actual amount for cashdividends in total should be calculated subject to the basis of the total share capital as at the date of share
registration for 2020 annual dividend distribution. The Company’s 2020 preliminary plan for profitdistribution still needs to be approved by the general meeting of shareholders of the Company.
3. Sales return
□ Applicable√ N/A
4. Description of other events after the balance sheet date
□ Applicable√ N/A
XVI. Other significant events
1. Corrections of prior period errors
(1). Retrospective application
□ Applicable√ N/A
(2). Prospective application
□ Applicable√ N/A
2. Debt restructuring
□ Applicable√ N/A
3. Asset swap
(1). Exchange of non-monetary assets
□ Applicable√ N/A
(2). Other asset swap
□ Applicable√ N/A
4. Annuity plan
□ Applicable√ N/A
5. Discontinued operations
□ Applicable√ N/A
6. Segment information
(1). Determination basis and accounting policies of reporting segments
□ Applicable√ N/A
(2). Financial information of reporting segments
□ Applicable√ N/A
(3). If the Company has no reporting segments, or cannot disclose the total assets and liabilities ofreporting segments, specify the reasons.
□ Applicable√ N/A
(4). Other information
√ Applicable□ N/A
The Company has no reporting segments due to absence of diversified operations. A breakdown ofthe Company's principal operating incomes and costs categorized by businesses, products and regions isdisclosed as below:
Categorized by businesses and products:
In RMB 0’000
| Item | Amount for the current period | Amount for the prior period | ||
| Principal activity income | Principal activity cost | Principal activity income | Principal activity cost | |
| Item | Amount for the current period | Amount for the prior period | ||
| 1. Sales | 174,412.33 | 128,143.43 | 155,344.15 | 102,544.69 |
| 2. Lease service | 17,173.26 | 10,775.31 | 39,799.12 | 13,526.03 |
| 3. Other business | 3,302.83 | 388.76 | 2,771.62 | 2,294.34 |
| Subtotal | 194,888.42 | 139,307.50 | 197,914.89 | 118,365.06 |
Categorized by regions:
In RMB 0’000
| Item | Amount for the current period | Amount for the prior period | ||
| Principal activity income | Principal activity cost | Principal activity income | Principal activity cost | |
| Domestic | 185,561.99 | 135,605.70 | 178,039.72 | 111,260.78 |
| Overseas | 9,326.43 | 3,701.80 | 19,875.17 | 7,104.28 |
| Subtotal | 194,888.42 | 139,307.50 | 197,914.89 | 118,365.06 |
7. Other significant transactions and matters having an impact on the decisions of investors
□ Applicable√ N/A
8. Others
√ Applicable□ N/A
Performance commitment In the 20
th
meeting of the first Board of Directors held on December 6, 2019, the Proposal onProposed Additional Capital Contribution to the Wholly-owned Subsidiary and Foreign Investments inGDC was reviewed and passed, according to which it was agreed to make additional capital contributionof USD 18.2 million to the Company’s wholly-owned subsidiary APPOTRONICS HONG KONGLIMITED for acquisition of 36% shares of GDC Technology Limited (British Virgin Islands). On April9, 2020, the Company paid the total consideration of approximately USD 18.11 million by its own funds.During the reporting period, the Company holds 36% equity interests in GDC, namely, 93,071,822shares of GDC.According to the Share Transfer Agreement, GDC made the the following performance covenants: theaudited net profit after deduction of non-recurring profit or loss in 2020 shall be no less than USD 9.35million; if it fails to achieve the performance objective above, GDC Cayman, the original shareholder ofGDC, shall make compensation or submit a response within 15 working days from the submission dateof GDC’s annual auditor’s report within the limit of USD 5.60 million or 46,535,911 ordinary shares ofGDC.According to the 2020 auditor’s report of GDC issued by Deloitte, GDC achieved the net profit of USD
0.9268 million in 2020, and failed to achieve the performance covenant for the year 2020, hencetriggering the performance compensation provisions.By now, we have officially required GDC to make performance compensation in accordance with theprovisions. As of the disclosure date of this report, we have reached no consensus with the originalshareholder of GDC on this matter.
XVII. Notes to key items in the parent company's financial statements
1. Accounts receivable
(1). Disclosure by aging
√ Applicable□ N/A
In RMB
| Aging | Closing balance of carrying amount |
| Within 1 year | |
| Where: Subitems within 1 year | |
| Subtotal of items within 1 year | 450,871,451.43 |
| 1 to 2 years | 117,087,528.49 |
| 2 to 3 years | 1,490,775.02 |
| Total | 569,449,754.94 |
(2). Disclosure by categories of provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying amount | Bad debt provision | Book value | Carrying amount | Bad debt provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage of provision (%) | Amount | Percentage (%) | Amount | Percentage of provision (%) | |||
| Provision for bad debts made by group | 569,449,754.94 | 100.00 | 1,910,248.15 | 0.34 | 567,539,506.79 | 300,789,821.26 | 100.00 | 1,474,044.82 | 0.49 | 299,315,776.44 |
| Where: | ||||||||||
| Group of aging | 37,102,820.20 | 6.52 | 1,910,248.15 | 5.15 | 35,192,572.05 | 21,151,263.98 | 7.03 | 1,474,044.82 | 6.97 | 19,677,219.16 |
| Total | 569,449,754.94 | / | 1,910,248.15 | / | 567,539,506.79 | 300,789,821.26 | / | 1,474,044.82 | / | 299,315,776.44 |
Provision for bad debts made individually:
□ Applicable√ N/A
Provision for bad debts made by group:
√ Applicable□ N/A
Item by group: Group of aging
In RMB
| Name | Closing balance | ||
| Accounts receivable | Bad debt provision | Proportion of provision (%) | |
| Group of aging | 37,102,820.20 | 1,910,248.15 | 5.15 |
| Group of receivables from related parties in the scope of consolidation | 532,346,934.74 | ||
| Total | 569,449,754.94 | 1,910,248.15 | 0.34 |
Recognition criterion to make the bad debt provision by group and explanation:
√ Applicable□ N/A
Recognition criterion to make the bad debt provision by group and explanation can refer to V.10 ofSection XI for details.
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
(3). Provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write off or cancellation | Other changes | |||
| Provision for bad debts made by group | 1,474,044.82 | 436,203.33 | 1,910,248.15 | |||
| Total | 1,474,044.82 | 436,203.33 | 1,910,248.15 | |||
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(4). Accounts receivable actually canceled in the current period
□ Applicable√ N/A
In which significant amounts canceled are described as below:
□ Applicable√ N/A
(5). Top five closing balances of accounts receivable categorized by debtors
√ Applicable□ N/A
| Entity | Carrying amount | Proportion to the balance of accounts receivable (%) | Bad debt provision |
| Formoive (Beijing) Technology Co., Ltd. | 393,022,783.43 | 69.02 | |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | 71,721,879.64 | 12.59 | |
| Appotronics Hong Kong Limited | 47,383,360.55 | 8.32 | |
| Shenzhen Sunvalley Technology Development Co., Ltd. | 22,790,393.35 | 4.00 | 1,139,519.67 |
| Appotronics Technology (Changzhou) Co., Ltd. | 14,732,081.15 | 2.59 | |
| Subtotal | 549,650,498.12 | 96.52 | 1,139,519.67 |
(6). Accounts receivable derecognized due to transfer of financial assets
□ Applicable√ N/A
(7). Assets and liabilities arising from transfer of accounts receivables and continued involvement
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
2. Other receivables
Presented by items
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividend receivable | ||
| Other receivables | 71,654,117.57 | 67,227,575.21 |
| Total | 71,654,117.57 | 67,227,575.21 |
Other information:
□ Applicable√ N/A
Interest receivable
(1). Categories of interest receivable
□ Applicable√ N/A
(2). Significant interests overdue
□ Applicable√ N/A
(3). Provision for bad debts
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
(4). Dividend receivable
□ Applicable√ N/A
(5). Dividends receivable with significant amounts aged more than 1 year
□ Applicable√ N/A
(6). Provision for bad debts
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
Other receivables
(1). Disclosure by aging
√ Applicable□ N/A
In RMB
| Aging | Closing balance of carrying amount |
| Within 1 year | |
| Where: Subitems within 1 year | |
| Subtotal of items within 1 year | 53,288,168.30 |
| 1 to 2 years | 17,561,278.00 |
| 2 to 3 years | 519,433.80 |
| Over 3 years | 778,397.60 |
| Total | 72,147,277.70 |
(2). Categories by the nature of other receivables
√ Applicable□ N/A
In RMB
| Nature of receivables | Closing balance of carrying amount | Opening balance of carrying amount |
| Deposits/margins/petty cash | 5,911,673.21 | 6,343,792.67 |
| Withholding | 650,484.24 | |
| Receivables from related parties in the scope of consolidation | 62,284,074.96 | 60,540,712.71 |
| Compensation receivable | 3,577,279.61 | |
| Temporary receivables | 374,249.92 | 10,289.71 |
| Total | 72,147,277.70 | 67,545,279.33 |
(3). Provision for bad debts
√ Applicable□ N/A
In RMB
| Bad debt provision | Stage I | Stage II | Stage III | Total |
| 12-month ECL in the future | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2020 | 317,704.12 | 317,704.12 | ||
| Balance as at January 1, 2020 in the current period | ||||
| --transferred to Stage II | ||||
| --transferred to Stage III | -6,300.00 | 6,300.00 | ||
| --reversed to Stage II | ||||
| --reversed to Stage I | ||||
| Provision | 181,756.01 | 181,756.01 | ||
| Reversal | ||||
| Write-off | ||||
| Cancellation | 6,300.00 | |||
| Other changes | ||||
| Balance as at January 12, 2020 | 493,160.13 | 493,160.13 |
Description of significant changes in the balance of other receivables with changed provisions for lossesin the current period:
□ Applicable√ N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period:
□ Applicable√ N/A
(4). Provision for bad debts
√ Applicable□ N/A
In RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write off or cancellation | Other changes | |||
| Provision for bad debts made by group | 317,704.12 | 181,756.01 | 6,300.00 | 493,160.13 | ||
| Total | 317,704.12 | 181,756.01 | 6,300.00 | 493,160.13 | ||
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(5). Other receivable actually canceled in the current period
□ Applicable√ N/A
(6). Top five closing balances of other receivable categorized by debtors
√ Applicable□ N/A
In RMB
| Entity | Nature of other receivables | Closing balance | Aging | Proportion to the balance of other receivables (%) | Bad debt provision closing balance |
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | Receivables from related parties in the scope of consolidation | 33,220,686.40 | Within 1 year | 46.05 | |
| Formoive (Beijing) Technology Co., Ltd. | Receivables from related parties in the scope of consolidation | 14,532,924.37 | Within 1 year | 20.14 | |
| Shenzhen Appotronics Laser Display Technology Co., Ltd. | Receivables from related parties in the scope of consolidation | 14,169,500.00 | Within 3 years | 19.64 | |
| Creator Community (Guangzhou) Co., Ltd. | Compensation receivable | 3,577,279.61 | Within 1 year | 4.96 | 178,863.98 |
| Shenzhen Meisheng Industry Co., Ltd. | Deposits/margins/petty cash | 3,574,618.00 | 2-3 years | 4.95 | 178,730.89 |
| Total | / | 69,075,008.38 | / | 95.74 | 357,594.87 |
(7). Accounts receivable involving government grants
□ Applicable√ N/A
(8). Other receivable derecognized due to transfer of financial assets
□ Applicable√ N/A
(9). Assets and liabilities arising from transfer of other receivables and continued involvement
□ Applicable√ N/A
Other information:
□ Applicable√ N/A
3. Long-term equity investment
√ Applicable□ N/A
In RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for impairment | Book value | Carrying amount | Provision for impairment | Book value | |
| Investments in subsidiaries | 467,533,569.26 | 45,885,284.27 | 421,648,284.99 | 303,680,560.40 | 45,885,284.27 | 257,795,276.13 |
| Investments in associates and joint ventures | ||||||
| Total | 467,533,569.26 | 45,885,284.27 | 421,648,284.99 | 303,680,560.40 | 45,885,284.27 | 257,795,276.13 |
(10). Investments in subsidiaries
√ Applicable□ N/A
In RMB
| Investees | Opening balance | Increase | Decrease | Closing balance | Provision for impairment | Closing balance of provision for impairment |
| Appotronics Timewaying (Beijing) Technology Co., Ltd. | 27,000,000.00 | 27,000,000.00 | 27,000,000.00 | |||
| Shenzhen Appotronics Software Technology Co., Ltd. | 516,813.05 | 1,131,149.17 | 1,647,962.22 | |||
| Beijing Orient Appotronics Technology Co., Ltd. | 5,900,000.00 | 5,900,000.00 | ||||
| Formoive (Beijing) Technology Co., Ltd. | 28,203,950.93 | 1,810,685.16 | 30,014,636.09 | 6,057,491.48 | ||
| Shenzhen Appotronics Laser Display Technology Co., Ltd. | 18,966,857.26 | 18,966,857.26 | ||||
| Shenzhen Appotronics Display Device Co., Ltd. | 3,000,000.00 | 3,000,000.00 | ||||
| CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd. | 30,767,063.78 | 1,809,838.68 | 32,576,902.46 | |||
| Qingda Appotronics (Xiamen) Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | 827,792.79 | |||
| Shenzhen Appotronics Xiaoming Technology Co., Ltd. | 12,000,000.00 | 12,000,000.00 | 12,000,000.00 | |||
| Appotronics Hong Kong Limited | 173,225,875.38 | 128,442,808.14 | 301,668,683.52 | |||
| Appotronics Technology (Changzhou) Co., Ltd. | 2,000,000.00 | 2,000,000.00 |
| Tianjin Bonian Film Partnership (LP) | 26,954,120.20 | 26,954,120.20 | ||||
| WEMAX LLC | 24,349.32 | 24,349.32 | ||||
| Appotronics USA, Inc. | 60,873.29 | 60,873.29 | ||||
| JoveAI Innovation, Inc | 619,184.90 | 619,184.90 | ||||
| Total | 303,680,560.40 | 163,853,008.86 | 467,533,569.26 | 45,885,284.27 |
(11). Investments in associates and joint ventures
□ Applicable√ N/A
Other information:
None
4. Operating income and operating costs
(12). Description of operating income and operating costs
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period | ||
| Income | Cost | Income | Cost | |
| Main business | 1,064,149,969.51 | 720,452,860.84 | 1,070,365,243.34 | 728,135,468.64 |
| Total | 1,064,149,969.51 | 720,452,860.84 | 1,070,365,243.34 | 728,135,468.64 |
(13). Description of incomes from contracts
□ Applicable√ N/A
(14). Description of performance obligations
□ Applicable√ N/A
(15). Description of allocation to remaining performance obligations
□ Applicable√ N/A
Other information:
None
5. Investment income
√ Applicable□ N/A
In RMB
| Item | Amount for the current period | Amount for the prior period |
| Gains from long-term equity investment accounted for using the cost method | 46,000,000.00 | |
| Long-term equity investment accounted for using the equity method | ||
| Investment income from disposal of long-term equity investments | -64,542.33 | |
| Investment income from held-for-trading financial assets during the holding period | ||
| Dividend income from other equity instrument investments during the holding period | ||
| Interest income from debt investments during the holding period | ||
| Interest income from other debt investments during the holding period |
| Investment income from disposal of held-for-trading financial assets | 18,624,853.96 | 9,552,990.98 |
| Investment income from disposal of other equity instrument investments | ||
| Investment income from disposal of debt investments | ||
| Investment income from disposal of other debt investments | ||
| Total | 18,624,853.96 | 55,488,448.65 |
Other information:
None
6. Others
√ Applicable□ N/A
R&D expenses
| Item | Amount for the current period | Amount for the prior period |
| Employee benefits | 57,851,800.94 | 55,729,731.59 |
| Material consumption expenses | 15,548,543.88 | 17,246,073.81 |
| Depreciation and amortization fees | 10,287,002.71 | 7,573,085.07 |
| Rent expense | 7,114,015.29 | 8,730,216.56 |
| Patent fees | 6,796,002.87 | 9,382,940.04 |
| Other expenses | 7,276,270.23 | 15,132,958.18 |
| Total | 104,873,635.92 | 113,795,005.25 |
XVIII Supplementary information
1. Breakdown of non-recurring profit or loss for the current period
√ Applicable□ N/A
In RMB
| Item | Amount | Description |
| Gain or loss on disposal of non-current assets | -1,112,121.13 | |
| Tax refunds or reductions with ultra vires approval or without official approval documents | ||
| Government grants recognized in profit or loss (other than grants which are closely related to the Company's business and are either in fixed amounts or determined under quantitative methods in accordance with the national standard) | 40,750,823.51 | |
| Income earned from lending funds to non-financial institutions and recognized in profit or loss | ||
| The excess of attributable fair value of identifiable net assets over the consideration paid for the acquisition of subsidiaries, associates and joint ventures |
| Profit or loss on exchange of non-monetary assets | ||
| Profit or loss on entrusted investments or assets management | 18,624,853.96 | |
| Impairment losses on assets due to force majeure events, e.g. natural disasters | ||
| Profit or loss on debt restructuring | ||
| Entity restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc. | ||
| Profit or loss attributable to the evidently unfair portion of transaction price, being transacted price in excess of fair transaction price, of a transaction | ||
| Net profit or loss of subsidiaries from the beginning of the period up to the business combination date recognized as a result of business combination of enterprises involving enterprises under common control | 23,593,500.83 | |
| Profit or loss arising from contingencies other than those related to normal operating business | ||
| Profit or loss on changes in the fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities and investment income on disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments, other than those used in the effective hedging activities relating to normal operating business | ||
| Reversal of impairment loss on accounts receivable and contract assets tested for impairment individually | ||
| Profit or loss on entrusted loans | ||
| Profit or loss on changes in the fair value of investment properties that are subsequently measured using the fair value model | ||
| Effects on profit or loss of one-off adjustment to profit or loss for the period according to the requirements of laws and regulations in respect of tax, accounting, etc. | ||
| Custodian fees earned from entrusted operation | ||
| Other non-operating income and expenses | 2,429,083.25 | |
| Other gains or losses meeting the definition of non-recurring profit or loss | 323,003.17 | |
| Effect of income taxes | -9,068,330.19 | |
| Effect of minority interests | -1,982,929.14 | |
| Total | 73,557,884.26 |
It is required to specify the reason for defining items as non-recurring profit or loss items according toInformation Disclosure and Presentation Rules for Companies Making Public Offering of Securities No.
－Non-recurring Profit or Loss, and reasons for defining non-recurring profit or loss items illustratedin Information Disclosure and Presentation Rules for Companies Making Public Offering of SecuritiesNo. 1－Non-recurring Profit or Loss as recurring profit or loss items.
□ Applicable√ N/A
2. Return on net assets and earnings per share
√ Applicable□ N/A
| Profit for the reporting period | Weighted average return on net assets (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the Company | 5.62 | 0.25 | 0.25 |
| Net profit after deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | 1.99 | 0.09 | 0.09 |
2. Calculation process of weighted average return on net assets
| Item | No. | Current period | |
| Net profit attributable to ordinary shareholders of the Company | A | 113,847,873.06 | |
| Non-recurring profit or loss | B | 73,557,884.26 | |
| Net profits after deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | C=A-B | 40,289,988.80 | |
| Opening balance of net assets attributable to ordinary shareholders of the Company | D | 1,975,838,572.51 | |
| Net assets increased due to issue of new shares or debt-to-equity swap that are attributable to ordinary shareholders of the Company | E | 20,953,388.25 | |
| Accumulated months from the month following the addition of net assets to the end of the reporting period | F | 2 | |
| Net assets reduced by repurchases or cash dividends that are attributable to ordinary shareholders of the Company | G | 33,866,580.83 | |
| Accumulated months from the month following the reduction of net assets to the end of the reporting period | H | 6 | |
| Others | Effect of share-based payments on net assets | I1 | 18,783,763.38 |
| Accumulated months from the month following the addition or reduction of net assets to the end of the reporting period | J1 | 6 | |
| Effect of translation of financial statements denominated in foreign currencies on net assets | I2 | -6,501,355.78 | |
| Accumulated months from the month following the addition or reduction of net assets to the end of the reporting period | J2 | 6 | |
| Impact of acquisition of minority interests on net assets | I3 | 2,544,011.15 | |
| Accumulated months from the month following the addition or reduction of net assets to the end of the reporting period | J3 | 0 | |
| Months of reporting period | K | 12 | |
| Weighted average net assets | L=D+A/2+E×F/K-G×H/K±I×J/K | 2,025,462,653.80 | |
| Weighted average return on net assets | M=A/L | 5.62% | |
| Weighted average return on net assets after deduction of non-recurring profit or loss | N=C/L | 1.99% |
3. Calculation process of basic and diluted earnings per share
(1) Calculation process of basic earnings per share
| Item | No. | Current period |
| Net profit attributable to ordinary shareholders of the Company | A | 113,847,873.06 |
| Non-recurring profit or loss | B | 73,557,884.26 |
| Net profits after deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | C=A-B | 40,289,988.80 |
| Total shares at the beginning of the period | D | 451,554,411.00 |
| Shares increased due to issue of new shares or debt-to-equity swap | F | 1,202,490.00 |
| Accumulated months from the month following the addition of shares to the end of the reporting period | G | 2 |
| Months of reporting period | K | 12 |
| Weighted average number of outstanding ordinary shares | L=D+F×G/K | 451,754,826.00 |
| Basic earnings per share | M=A/L | 0.25 |
| Basic earnings per share after deduction of non-recurring profit or loss | N=C/L | 0.09 |
(2) Calculation process of diluted earnings per share
| Item | No. | Current period |
| Net profit attributable to ordinary shareholders of the Company | A | 113,847,873.06 |
| Effect of diluted potential ordinary shares on net profit | B | |
| Net profits after dilution attributable to ordinary shareholders of the Company | C=A-B | 113,847,873.06 |
| Non-recurring profit or loss | D | 73,557,884.26 |
| Net profits after dilution and deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | E=C-D | 40,289,988.80 |
| Weighted average number of outstanding ordinary shares | F | 451,754,826.00 |
| Weighted average number of ordinary shares added to warrants, share options, and convertible bonds, etc. | G | 454,025.28 |
| Weighted average number of outstanding ordinary shares after dilution | H=F+G | 452,208,851.28 |
| Diluted earnings per share | M=C/H | 0.25 |
| Diluted earnings per share after deduction of non-recurring profit or loss | N=E/H | 0.09 |
3. Differences in accounting data under Chinese Accounting Standards and Oversea Accounting
Standards
□ Applicable√ N/A
4. Others
□ Applicable√ N/A
Section XII List of Documents Available for Inspection
| List of Documents Available for Inspection | 1. 2020 Financial and Accounting Statements with seals and signatures of the principal of the Company, the person in charge of the accounting body and the chief accountant. |
| List of Documents Available for Inspection | 2. The Auditor’s Report with seals of Pan-China Certified Public Accountants (Special General Partnership) and seals and signatures of the certified public accountant. |
| List of Documents Available for Inspection | 3. All original documents and announcements of the Company publicly disclosed in the websites designated by the Company as of the reporting period. |
| List of Documents Available for Inspection | 4. The above-mentioned documents are prepared in: Office of the Board of Directors of Appotronics Corporation Limited |
Chairman: LI YiApproval for submission by the Board of Directors: April 22, 2021
Revision information
□ Applicable√ N/A