Zhejiang Dahua Technology Co., Ltd.
2021 Semi-annual Report
August, 2021
Section I Important Notes, Contents and Definitions
The Board of Directors, the Board of Supervisors, directors, supervisors and seniorexecutives of the Company hereby guarantee that the information presented in thissemi-annual report is authentic, accurate, complete and free of any false records,misleading statements or material omissions, and they will bear joint and several liability forsuch information.Fu Liquan, the Company's legal representative, Xu Qiaofen, chief accountant, and ZhuZhuling, person in charge of accounting institution (Accounting Officer) hereby declare andwarrant that the financial statements in the Semi-Annual Report are authentic, accurate,and complete.
All directors attended the meeting of the Board of Directors for deliberation of thisannual report.
During the reporting period, there was no significant change in the risks faced by theCompany. The Company has been trying to identify all kinds of risks and actively takecountermeasures to avoid and reduce the risks:
1. Covid-19 risks: In the face of the Covid-19 outbreak, the Company has takenstringent prevention and control measures to protect the health of employees at home andabroad. In addition, the Company offers technological solutions to contribute to the globaleffort against the pandemic.
2. Supply chain security risks: In terms of supply security, the Company hascomprehensively reviewed various potential supply risks through dedicated operations, andstrengthened the sustainable and safe supply of key materials by means of research anddevelopment of backup scheme and diversified supply sources to ensure the security of thesupply chain.
3. International operation risks: The Company's products and solutions cover morethan 100 countries and regions overseas. International business operation may face trade
protection risks. In addition, the resurgence of Covid-19 around the world has resulted inmore uncertainties to the overseas economic environment, which may adversely affect thedevelopment of the Company's local business. To actively prevent and respond tointernational business risks, the Company has established an overseas compliance andrisk control system, continuously strengthened its understanding of and ability to adapt tothe laws and regulations as well as the political and economic environment of the regions inwhich the Company operates, and formulated differentiated "One Country, One Strategy"national business strategies according to the political and economic changes in differentregions to minimize business risks.
4. Foreign exchange risks: The Company's export transactions are mostly settled inUnited States Dollars ("USD"), while overseas business continues to grow. Therefore,fluctuations in the foreign exchange rate may affect the profits of the Company. TheCompany attaches great importance to exchange rate risk control and adopts variousmeans to effectively control such risks: on the one hand, it manages various currencies bycategory, guides the contracting in mainstream currencies and using such currencies tohedge against the U.S. dollar while increasing the proportion of overseas localizedcontracting; for the countries contracted in non-mainstream currencies, exchange rateprotection clauses and price adjustment mechanisms will be set in advance in the contractsto reduce the risk of exchange rate fluctuations; on the other hand, the Company effectivelyuses foreign exchange hedging and a series of derivative instruments, among others, tooffset and hedge exchange rate risks without speculative purposes.
5. Business model change risks: With the development of technologies such asnetwork communications, cloud computing, big data, and AI, and the upgraded uses ofsmartphones, business models in the IOT era may have an impact on the traditionalindustry development. If an enterprise cannot grasp opportunities brought about by thebusiness model transformation in a timely manner, it may face the risk that the originalmarket structure becomes broken. The Company continues to focus on and study themajor changes in global economy, industry and technology, analyze the industrydevelopment logic, and predict the evolution of global security industry and IoT industry, the
continuous integration of video, information communication and digital technologies,diversification and uncertainty of customer demands. While consolidating theadvantageous market, The Company actively explores and pilots new businesses and newcommercial mode, and carry out business and technical layout.
6. Technology upgrading risks: The video surveillance industry is a typicaltechnology-intensive industry, featuring extremely fast changes. If the Company is unableto keep up with development trends in the industry's technology, to pay full attention tocustomers' diversified individual needs, and to be followed by sufficient R&D investments, itwill still face the risk of losing market competitiveness due to discontinuous innovation. Byincreasing R & D investment, the Company continues to strengthen research on coretechnologies in AI, video cloud, machine vision and other fields, and reserves product,technology, management and talent resources for a broader market in the future, so as toachieve sustainable and steady development of business.
7. Product safety risks: The Company attaches great importance to and continuouslystrengthens resource investment to ensure safe and reliable operations of the securitysystem so as to respond to the product security risks on the Internet. However, hackersattacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,power interruptions, telecommunications failures, terrorism, and warfare events may stilloccur from time to time, resulting in security vulnerabilities, system failures, or serviceinterruptions. The Company has founded a cyber security committee, and set up aprofessional security team to develop company-level product safety plan, ensuring productsafety in whole process from requirements to design, coding, and testing process. At thesame time, the Company actively carry out technical exchanges and cooperation withmainstream safety enterprises, safety evaluation agencies and corresponding industryassociations to provide customers with safe products and solutions.
8. Intellectual property risks: The promotion of the Company's globalization andself-owned brand strategy will likely bring about intellectual property risks and patentinfringement, which may cause fluctuation in business relations and public opinions,increasing lawsuits and rising costs. The Company attaches great importance to
technological innovation and has established protection and management mechanism forintangible assets such as innovation achievements, self-owned brands, trade secrets, andconstantly gathers advantageous IP assets; With IP compliance risk control system, theCompany continues to strengthen its ability to understand and grasp the IP laws andregulations, administrative and judicial environment of the region where the company'sbusiness is located in.The Company plans to pay no cash dividends, no bonus shares and no capitalincrease by way of capitalization of provident fund.
Contents
Section I Important Notes, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 12
Section III Management Discussion and Analysis ...... 15
Section IV Corporate Governance ...... 33
Section V Environmental and Social Responsibilities ...... 36
Section VI Significant Events ...... 37
Section VII Changes in Shares and Information about Shareholders ...... 61
Section VIII Information of Preferred Shares ...... 68
Section IX Situation on Corporate Bonds ...... 69
Section X Financial Report ...... 70
Documents Available for Reference
I. Financial statements signed and sealed by Mr. Fu Liquan, the Company's legalrepresentative, Ms. Xu Qiaofen, chief accountant, and Ms. Zhu Zhuling, the person incharge of accounting institution.II. Original copies of all the Company's documents and announcements published onmedia designated by China Securities Regulatory Commission within the reporting period.III. Documents available for review at the securities department of the Company.
Definitions
| Item | Refers To | Definitions |
| Reporting Period | Refers To | January 1, 2021 to June 30, 2021 |
| Dahua, company, the company | Refers To | Zhejiang Dahua Technology Co., Ltd. |
| Dahua System Engineering | Refers To | Zhejiang Dahua System Engineering Co., Ltd. |
| Dahua Vision Technology | Refers To | Zhejiang Dahua Vision Technology Co., Ltd. |
| Dahua Security Network | Refers To | Zhejiang Dahua Security Network Operation Service Co., Ltd. |
| Dahua Ju'an | Refers To | Zhejiang Dahua Ju'an Technology Co., Ltd. |
| Guangxi Dahua Information | Refers To | Guangxi Dahua Information Technology Co., Ltd. |
| Dahua Security | Refers To | Zhejiang Dahua Security Service Co., Ltd. |
| Guangxi Security | Refers To | Guangxi Dahua Security Service Co., Ltd. |
| Huatu Microchip | Refers To | Zhejiang Huatu Microchip Technology Co., Ltd. |
| Hangzhou Xiaohua | Refers To | Hangzhou Xiaohua Technology CO., LTD. |
| Dahua Zhilian | Refers To | Zhejiang Dahua Zhilian Co., Ltd. |
| Dahua investment management | Refers To | Zhejiang Dahua Investment Management Co., Ltd. |
| South North United | Refers To | South-North United Information Technology Co., Ltd. |
| Guangxi Zhicheng | Refers To | Guangxi Dahua Zhicheng Co., Ltd. |
| Hangzhou Huacheng | Refers To | Hangzhou Huacheng Network Technology Co., Ltd. |
| Xinjiang Information | Refers To | Xinjiang Dahua Zhixin Information Technology Co., Ltd. |
| HuaRay Technology | Refers To | Zhejiang HuaRay Technology Co., Ltd. |
| Fuyang Hua'ao | Refers To | Hangzhou Fuyang Hua'ao Technology Co., Ltd. |
| Huafei Intelligent | Refers To | Zhejiang Huafei Intelligent Technology CO., LTD. |
| Huachuang Vision | Refers To | Zhejiang Huachuang Vision Technology Co., Ltd. |
| Guizhou Huayi | Refers To | Guizhou Huayi Shixin Technology Co., Ltd. |
| Xinjiang Zhihe | Refers To | Xinjiang Dahua Zhihe Information Technology Co., Ltd. |
| China Standard Intelligent Security | Refers To | China Standard Intelligent Security Technology Co., Ltd. |
| Guangxi Huacheng | Refers To | Guangxi Huacheng Technology Co., Ltd. |
| Meitan Dahua Technology | Refers To | Guizhou Meitan Dahua Information Technology Co., Ltd. |
| Inner Mongolia Zhimeng | Refers To | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. |
| Xinjiang Zhitian | Refers To | Xinjiang Dahua Zhitian Information Technology Co., Ltd. |
| Xinjiang Xinzhi | Refers To | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. |
| Xinjiang Huayue | Refers To | Xinjiang Dahua Huayue Information Technology Co., Ltd. |
| Leapmotor Technology | Refers To | Zhejiang Leapmotor Technology Co., Ltd. |
| Leapmotor | Refers To | Leapmotor Automobile Co., Ltd. |
| Tianjin Dahua | Refers To | Tianjin Dahua Information Technology Co., Ltd. |
| Dahua Zhilong | Refers To | Hunan Dahua Zhilong Information Technology Co., Ltd. |
| Huaxiao Technology | Refers To | Zhejiang Huaxiao Technology Co., Ltd. |
| Vision Technology | Refers To | Zhejiang Fengshi Technology Co., Ltd. |
| Xi'an Dahua Zhilian, Xi'an Dahua | Refers To | Xi'an Dahua Zhilian Technology Co., Ltd. |
| Wuxi Ruipin | Refers To | Wuxi Dahua Ruipin Technology Co., Ltd. |
| Huaxuan Technology | Refers To | Zhejiang Huaxuan Technology Co., Ltd. |
| Beijing Huayue | Refers To | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. |
| Shanghai Huashang | Refers To | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. |
| Dahua Jinzhi | Refers To | Zhejiang Dahua Jinzhi Technology Co., Ltd. |
| Dahua Guangxun | Refers To | Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. |
| Huajuan Technology | Refers To | Hangzhou Huajuan Technology Co., Ltd. |
| Dahua Hong Kong | Refers To | Dahua Technology (HK) Limited |
| Zhoushan Operation | Refers To | Zhejiang Zhoushan Digital Development Operation Co., Ltd |
| Yunnan Zhili | Refers To | Yunnan Zhili Technology Co., Ltd |
| Guangxi Dahua Technology | Refers To | Guangxi Dahua Technology Co., Ltd. |
| Dahua Storage | Refers To | Zhejiang Dahua Storage Technology Co., Ltd. |
| Huaruijie | Refers To | Zhejiang Huaruijie Technology Co., Ltd. |
| Chengdu Zhilian | Refers To | Chengdu Dahua Zhilian Information Technology Co., Ltd. |
| Chengdu Zhian | Refers To | Chengdu Dahua Zhian Information Technology Service Co., Ltd. |
| Chengdu Zhishu | Refers To | Chengdu Dahua Zhishu Information Technology Service Co., Ltd. |
| Chengdu Zhichuang | Refers To | Chengdu Zhichuang Yunshu Technology Co., Ltd. |
| Chengdu Smart | Refers To | Chengdu Huishan Smart Network Technology Co., Ltd. |
| Huakong Software | Refers To | Zhejiang Huakong Software Co., Ltd. |
| Xinsheng Electronic | Refers To | Zhejiang Xinsheng Electronic Technology Co., Ltd. |
| Huacheng Software | Refers To | Hangzhou Huacheng Software Technology Co., Ltd. |
| Guizhou Dahua | Refers To | Guizhou Dahua Information Technology Co., Ltd. |
| Henan Dahua | Refers To | Henan Dahua Zhilian Information Technology Co., Ltd. |
| Waythcan | Refers To | Zhejiang Waythcan Technology Co., Ltd. |
| Zhengzhou Dahua Zhian | Refers To | Zhengzhou Dahua Zhian Information Technology Co., Ltd. |
| Dahua USA | Refers To | Dahua Technology USA Inc. |
| Dahua Europe | Refers To | Dahua Europe B.V. |
| Dahua Middle East | Refers To | Dahua Technology Middle East FZE |
| Dahua Mexico | Refers To | Dahua Technology Mexico S.A. De C. V |
| Dahua Chile | Refers To | Dahua Technology Chile SPA |
| Dahua Malaysia | Refers To | Dahua Security Malaysia SDN. Bhd. |
| Dahua Korea | Refers To | Dahua Technology Korea Company Limited |
| Dahua Indonesia | Refers To | Pt. Dahua Vision Technology Indonesia |
| Dahua Colombia | Refers To | Dahua Technology Colombia S.A. S |
| Dahua Australia | Refers To | Dahua Technology Australia Pty Ltd. |
| Dahua Singapore | Refers To | Dahua Technology Singapore PTE. Ltd. |
| Dahua South Africa | Refers To | Dahua Technology South Africa Proprietary Limited |
| Dahua Peru | Refers To | Dahua Technology Perú S.A.C |
| Dahua Russia | Refers To | Dahua Technology Rus Limited Liability Company |
| Dahua Brazil | Refers To | Dahua Technology Brasil Comércio E Servi?os Em Seguran?a Eletr?nica Ltda |
| Dahua Canada | Refers To | Dahua Technology Canada Inc. |
| Dahua Panama | Refers To | Dahua Technology Panama S.A. |
| Dahua Hungary | Refers To | Dahua Technology Hungary KFT |
| Dahua Poland | Refers To | Dahua Technology Poland SP. Z O.O. |
| Dahua Italy | Refers To | Dahua Technology Italy S.R.L. |
| Dahua Tunisia | Refers To | Dahua technology tunisia limited liability company |
| Dahua Kenya | Refers To | Dahua Technology Kenya Limited |
| Dahua UK | Refers To | Dahua Technology UK Limited |
| Dahua Germany | Refers To | Dahua Technology Gmbh |
| Dahua Serbia | Refers To | Dahua Technology Srb D.O.O. |
| Dahua India | Refers To | Dahua Technology India Private Limited |
| Dahua Turkey | Refers To | Dahua Guvenlik Teknolojileri Sanayi Ve Ticaret A.S. |
| Dahua Czech | Refers To | Dahua Technology Czech S.R.O. |
| Dahua Argentina | Refers To | Dahua Argentina S.A. |
| Dahua Spain | Refers To | Dahua Iberia, S.L. |
| Dahua Kazakhstan | Refers To | Dahua Technology Kazakhstan LLP |
| Dahua Denmark | Refers To | Dahua Technology Denmark APS. |
| Dahua France | Refers To | Dahua Technology France SAS |
| Dahua Lorex (US) Corporation | Refers To | Lorex corporation |
| Dahua Technology Holdings | Refers To | Dahua Technology Holdings Limited |
| Dahua New Zealand | Refers To | Dahua Technology New Zealand Limited |
| Dahua Netherlands | Refers To | Dahua Technology Netherlands B.V. |
| Dahua Morocco | Refers To | Dahua Technology Morocco Sarl |
| Dahua Romania | Refers To | Dahua Technology S.R.L |
| Dahua Uzbekistan | Refers To | Dahua Vision LLC |
| Dahua Lorex (Canada) Corporation | Refers To | Lorex Technology Inc. |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria Eood |
| Dahua Sri Lanka | Refers To | Dahua Technology China (PVT) Ltd |
| Dahua Pakistan | Refers To | Dahua Technology Pakistan (Private) Limited |
| Dahua Thailand | Refers To | Dahua Technology (Thailand) Co., Ltd. |
| Dahua Nigeria | Refers To | Dahua Technology Nigeria Representative Ltd |
| Dahua Israel | Refers To | Dahua Technology Israel Ltd. |
| Dahua Mexico | Refers To | Vismextech Dhm Servicios, S.A. De C.V. |
| Imou Netherlands | Refers To | Imou Network Technology Netherlands B.V. |
| Dahua Loris (UK) Corporation | Refers To | Lorex Technology UK Limited |
| Dahua Japan | Refers To | Dahua Technology Japan |
| Imou Hong Kong | Refers To | Imou Network (Hong Kong) Technology Co., Ltd |
| Dahua Qatar | Refers To | Dahua Technology QFZ LLC |
| Dahua Panama SEM Regional Headquarters | Refers To | Dahua Technology Pacific S.A. |
Section II Company Profile and Key Financial IndicatorsI. Company Profile
| Stock Abbreviation | DAHUA | Stock Code | 002236 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江大华技术股份有限公司 | ||
| Company Abbreviation in Chinese (If any) | 大华股份 | ||
| Company Name in Foreign Language (If any) | ZHEJIANG DAHUA TECHNOLOGY CO., LTD. | ||
| Legal Representative | Fu Liquan | ||
II. Contact Person and Contact Information
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Wu Jian | Zhu Leiqian |
| Contact Address | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province |
| Tel. | 0571-28939522 | 0571-28939522 |
| Fax | 0571-28051737 | 0571-28051737 |
| zqsw@dahuatech.com | zqsw@dahuatech.com |
III. Other Information
1. Company Contact Information
Whether the Company’s registered address, office address, postal code, website and e-mail address has changed duringthe reporting period
□ Applicable √ Not applicable
The Company’s registered address, office address, postal code, website and e-mail address have not changed during thereporting period, which can be found in the 2020 Annual Report.
2. Information Disclosure and Location
Whether information disclosure and location has changed during the reporting period
□ Applicable √ Not applicable
The name of the Company’s selected information disclosure newspaper, the URL of the website designated by the CSRC
where the semi-annual report is posted, and the place where the Company’s semi-annual report is available have notchanged during the reporting period, which can be found in the 2020 Annual Report.IV. Key Accounting Data and Financial IndicatorsWhether the Company needs performed retroactive adjustment or restatement of accounting data in prior years or not
□ Yes √ No
| The Current Reporting Period | The Same Period of Last Year | Increase/Decrease of the Current Reporting Period Compared with the Same Period of the Previous Year | |
| Operating income (RMB) | 13,505,005,733.89 | 9,838,328,853.62 | 37.27% |
| Net profit attributable to shareholders of the listed Company (RMB) | 1,643,175,887.55 | 1,368,974,364.44 | 20.03% |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 1,439,592,047.22 | 1,290,258,785.10 | 11.57% |
| Net cash flow generated by operational activities (RMB) | -871,108,797.99 | -106,927,963.95 | -714.67% |
| Basic Earnings per Share (RMB/Share) | 0.56 | 0.47 | 19.15% |
| Diluted Earnings per Share (RMB/Share) | 0.56 | 0.47 | 19.15% |
| Weighted Average ROE | 7.92% | 8.35% | -0.43% |
| At the End of the Current Reporting Period | At the End of the Previous Year | Increase/Decrease at the End of the Current Reporting Period Compared with the End of the Previous Year | |
| Total assets (RMB) | 39,765,934,297.15 | 36,595,034,080.75 | 8.66% |
| Net assets attributable to shareholders of the listed company (RMB) | 21,502,466,967.23 | 19,773,030,426.40 | 8.75% |
V. Differences in Accounting Data Under Domestic and Foreign AccountingStandards
(1) Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in the financialreports disclosed according to international accounting standards and Chinese accounting standards.
(2) Differences between the net profits and net assets in the financial reports disclosedaccording to the overseas accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in the financialreports disclosed according to overseas accounting standards and Chinese accounting standards.VI. Non-recurring Gains and Losses Items and Their Amounts
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Profits or losses from disposal of non-current assets (including the write-off for the accrued impairment of assets) | 32,626,494.62 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards) | 71,089,591.16 | |
| Gains or losses from investment or asset management entrusted to others | 72,949,692.60 | |
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets and trading financial liabilities, derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and other obligatory right investment, excluding the effective hedging businesses related to the regular business operation of the Company | 78,425,697.53 | |
| Non-Operating Revenue and expenses other than the above | 2,069,343.56 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | 169,645.79 | |
| Less: Impact of income tax | 42,970,480.79 | |
| Impact of minority equity (after tax) | 10,776,144.14 | |
| Total | 203,583,840.33 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gainsand losses items listed in the said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurringGains and Losses, as recurring gains and losses items.
Section III Management Discussion and AnalysisI. The Principal Business of the Company during the Reporting PeriodDuring the reporting period, there was no major change in the Company's principal business. For details, please refer tothe 2020 Annual Report.
II. Core Competitiveness AnalysisDuring the reporting period, there was no major change in the Company's core competitiveness. For details, please referto the 2020 Annual Report.III. Main Business Analysis
Is it the same as the disclosure of the Company’s main businesses during the reporting period?
□ Yes √ No
In the first half of 2021, the Covid-19 pandemic intertwined with the changes in the internationalsituation, and commodity prices around the world rose sharply under multiple factors such asdemand-side recovery, supply-side constraints, and liquidity easing. Coupled with the continuedsanctions and restrictions imposed by the United States on some Chinese technology companies, theglobal semiconductor supply chain experienced phased and structural dislocations. In the face of thecomplex market environment changes, the Company made every efforts to ensure project delivery byvarious means. On the one hand, it adhered to various R&D strategies to ensure stable productsubstitution and update; on the other hand, it maintained the stability of raw material supply byincreasing inventory and strengthening strategic cooperation with suppliers. Meanwhile, the Companykept on technological innovation, with continuous investment in core technologies, and acceleratedlayout of new directions and new products, greatly enriching the application scenarios of solutions.During the reporting period, the Company achieved operating revenue of 13.505 billion yuan, ayear-on-year increase of 37.27%, and a net profit attributable to shareholders of listed companies of
1.643 billion yuan, a year-on-year increase of 20.03%.
Main business strategies of the Company include:
1. Continuously increase investments in R&D, enhance the capacity for technological innovationsand core technologies
The Company continued to step up its investment in core technologies such as AI, cloud computingand big data, as well as software capacity building. During the reporting period, the Company investedRMB 1.406 billion in R&D, accounting for 10.41% of the operating revenue in the first half of 2021.The Company's AI continued to achieve good results in technology competitions and real-worldtests. In the first half of 2021, the Company won the first place in a number of algorithm evaluations inthe field of text recognition, such as the single character recognition and character line recognition of theICDAR ReCTS Chinese sign recognition challenge and the Cityscapes dataset-Instance-Level SemanticLabeling Task instance segmentation task. In response to the changing application scenarios of AI, theCompany keeps improving the system and continuously enriches its functions, thus enhancing thereal-world effect. Among them, the Genius AI open platform was further improved and perfected to assistits partners and customers efficiently facilitate the implementation of intelligence in the industry.The Company invested heavily in the basic software platform to build a smart IOT operating systemfor the pan-IOT industry and established the technical base of “One System and Two Platforms” for citiesand enterprises, thus rapidly improving the overall software architecture capability and software openingcapability. Meanwhile, the Company's software module development and management capabilities werecontinuously enhanced by relying on the internal software modular development and applicationmanagement platform. In the first half of 2021, the Company's software business modules continued torefine and improve, with continuous improvement in software reusability and reduction in softwaredevelopment costs. The continuous accumulation of software modularity boosted the efficiency of theCompany's basic platform and the rapid incubation of business, and contributed to the rapid responseand delivery of customer business in all regional R&D teams.Facing the wave of digital transformation of enterprises, the Company vigorously invested in thecloud business represented by “Yunrui”, and established the “digital intelligence” technology base ofenterprises in the public cloud field, including the intelligent middle platform, IOT middle platform,business middle platform and big data middle platform. On this basis, the Company established 6 majorSaaS application product lines of Yunrui, providing universal smart IOT solutions for smart education,smart community, smart chain, smart agriculture, smart logistics, and smart construction sites.Meanwhile, the Company also built opening capabilities from PaaS to SaaS and AIopen capabilities, andpartnered with ecological partners to build an open, co-constructed and win-win solution ecology,combined with the Company's software and hardware open capabilities, to fuel industrial change and
empower thousands of industries to upgrade their digital intelligence.During the reporting period, the Company has further optimized the investment structure forsoftware architecture capability, basic software platform, enterprise application software, governmentapplication software, Yunrui cloud business system and overseas software, which continuouslyenhanced the degree of its professionalism; through more comprehensive open APIs at the PaaS, DaaS,and VSaas levels, the application development support capability of partners was continuouslyenhanced; through the sinking of software technical resources to the front line, the response speed ofsoftware in close proximity was accelerated and the software delivery service capability was improved.
2. Continuously development of high-quality innovative businesses
The Company attaches great importance to the cultivation of innovative businesses, and vigorouslyinnovate and continuously expand new high growth fields by relying on its R&D accumulation in thevideo IOT industry as well as its supply chain integration capability and market ability. The maininnovative businesses of the Company are machine vision, video collaboration, smart home, smartfire-fighting, smart storage, automotive electronics, smart drone, smart security inspection, smart displaycontrol and smart control. With deep accumulation of industry development, strong technical foundation,comprehensive insight into customer needs and in-depth understanding of segmented industries, theCompany's machine vision, video collaboration and smart home businesses are developing rapidly,providing new impetus for the Company's sustained high growth and high quality development;meanwhile, other innovative businesses are further advanced in an orderly manner in accordance withthe Company's established strategic plan. During the reporting period, the Company achieved an overallrevenue of RMB 1.197 billion in innovative business, an increase of 94.25% percent year-on-year,building up strength for the Company's future high-speed growth.
3. Continuously optimize the construction of marketing network and enhance the synergy betweentechnology and business
The Company continues to optimize the construction of its marketing network, sinking its domesticbusiness to the county and township level; regarding its overseas business, it continues to deepen itscountry-centric business sinking to improve customer coverage and response speed. Meanwhile, theCompany further strengthens the regional technical marketing system, enhances the synergy betweentechnology and business, and comprehensively improves the technical marketing capability.
During the reporting period, the Company continued to expand its enterprise business and
accelerate towards the digital transformation. For large corporate clients, the Company implemented atiered and graded service strategy, with one strategy for each client, digging deeper into customers'needs in production and management and providing systematic solutions and services. At present, theCompany has released dozens of solutions for the large enterprise market based on its digitalintelligence base, providing comprehensive services for digital upgrading of enterprises. For small andmedium-sized corporate clients, the Company continued to sink its business and simultaneously joinedhands with partners to promote the common construction and sharing of customers, focusing on theecological construction of value customers to achieve comprehensive market coverage.
The Company attaches great importance to the construction of integration cooperation ecosystem,implements hierarchical and graded management for integration eco-partners, and gives full play to theirrole as amplifier through good services. During the reporting period, the Company stepped up itsinvestment in the downward coverage of this business direction, with the number of eco-partnersincreasing rapidly, fueling a more robust business structure.
4. Maintain supply chain stability and strengthen global delivery and service capabilities
Faced with the complex and ever-changing supply environment, the Company has strengthened itsability to continuously and safely supply key materials and ensure supply chain security by developingbackup solutions, optimizing the supply chain partner system, actively stocking up and diversifyingsupply sources. Meanwhile, the Company continues to expand the scale of delivery system cooperationecology, strengthen training and certification while expanding the coverage of regional partners toimprove the delivery service capability of partners, further strengthening the Company's systematicdelivery and service capability for the global market.
5. Improve organizational capacity and operational efficiency, and continuously promote high-qualitydevelopment
The Company continues to promote fine management, fully implement high-performancemanagement and continuously reinforce its pursuit for high quality and steady growth.
The Company builds an elite organization and strengthens its platform capability; strengthens theinvestment in finance and IT to enhance the digital management of the Company; deepens the talentmechanism and continues to stimulate the vitality of talents through a diversified businessincentive-oriented mechanism.
Year-on-year changes in key financial data
Unit: RMB
| The Current Reporting Period | The Same Period of Last Year | Year-on-year increase or decrease | Reasons for changes | |
| Operating income | 13,505,005,733.89 | 9,838,328,853.62 | 37.27% | This is mainly because that the Company focuses on the smart IOT industry, increasing the development of enterprise business and channel expansion to cover lower-tier cities, overlaid with the global economic recovery after the epidemic |
| Operating Cost | 7,910,714,928.97 | 5,099,250,150.57 | 55.13% | Increases with the growth of operating revenue |
| Sales Expenses | 2,059,001,711.42 | 1,805,227,134.27 | 14.06% | No Significant Change |
| Administration expenses | 393,272,171.06 | 355,781,491.22 | 10.54% | No Significant Change |
| Financial Expenses | 77,676,041.15 | -24,567,529.26 | 416.17% | Mainly due to the increase in foreign exchange losses |
| Income tax expense | -38,451,185.77 | 169,559,416.73 | -122.68% | This is mainly due to the inconsistency in the recognition period of income tax settlement and tax difference caused by the inconsistency of the Company’s key software enterprises during the evaluation period (the last year was evaluated in the third quarter) |
| R&D investment | 1,406,249,326.81 | 1,314,612,940.95 | 6.97% | No Significant Change |
| Net cash flow generated by operating activities | -871,108,797.99 | -106,927,963.95 | -714.67% | Mainly due to the increase in stocking in this period |
| Net amount of cash flow generated by investment activities | -975,034,182.68 | -1,247,540,391.99 | 21.84% | No Significant Change |
| Net cash flow generated by financing activities | 1,073,002,256.78 | 1,401,333,857.62 | -23.43% | No Significant Change |
| Net additions to balance of equivalents | -808,743,871.72 | 46,435,465.25 | -1,841.65% | Mainly due to the increase in stocking in this period |
Significant changes in the composition of the Company’s profit or sources of profit during the reporting period
□ Applicable √ Not applicable
No significant changes in the composition of the Company’s profit or sources of profit during the reporting period.Operating revenue structure
Unit: RMB
| The Current Reporting Period | The Same Period of Last Year | Year-on-year increase or decrease | |||
| Amount | Proportion in Operating Revenue | Amount | Proportion in Operating Revenue | ||
| Total Revenue | 13,505,005,733.89 | 100% | 9,838,328,853.62 | 100% | 37.27% |
| By Industry | |||||
| Video IoT industry | 13,505,005,733.89 | 100.00% | 9,838,328,853.62 | 100.00% | 37.27% |
| By Product | |||||
| Smart IoT products and solutions | 11,574,586,946.32 | 85.71% | 8,654,135,036.80 | 87.97% | 33.75% |
| Of which: software business | 551,302,402.99 | 4.08% | 332,891,072.72 | 3.38% | 65.61% |
| Innovation business (Note) | 1,197,068,199.15 | 8.86% | 616,238,387.82 | 6.26% | 94.25% |
| Others | 733,350,588.42 | 5.43% | 567,955,429.00 | 5.77% | 29.12% |
| By Region | |||||
| Domestic | 7,777,087,103.47 | 57.59% | 5,789,716,423.38 | 58.85% | 34.33% |
| Overseas | 5,727,918,630.42 | 42.41% | 4,048,612,430.24 | 41.15% | 41.48% |
Domestic business segment
| The Current Reporting Period | The Same Period of Last Year | Year-on-year increase or decrease | |||
| Amount | Proportion in Domestic Operating Revenue | Amount | Proportion in Domestic Operating Revenue | ||
| To G | 2,181,268,061.15 | 28.05% | 1,968,901,971.97 | 34.01% | 10.79% |
| To B | 3,596,476,335.61 | 46.24% | 2,442,778,493.48 | 42.19% | 47.23% |
| Others | 1,999,342,706.71 | 25.71% | 1,378,035,957.93 | 23.80% | 45.09% |
| Total | 7,777,087,103.47 | 100.00% | 5,789,716,423.38 | 100.00% | 34.33% |
Note: Innovative businesses of the Company mainly includes machine vision, video collaboration, smart home, smartfire-fighting, smart storage, automotive electronics, smart drone, smart security inspection, smart display control, smartcontrol and other corresponding businesses. The same below.Industry, product, or region accounting for more than 10% of the Company’s operating revenue or profit
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating Cost | Gross margin | Increase or decrease of operating income compared with the same period of last year | Increase and decrease of operating cost over the same period of last year | Increase or decrease of gross profit compared with the same period of last year | |
| By Industry | ||||||
| Video IoT industry | 13,505,005,733.89 | 7,910,714,928.97 | 41.42% | 37.27% | 55.13% | -6.75% |
| By Product | ||||||
| Smart IoT products and solutions | 11,574,586,946.32 | 6,477,078,712.53 | 44.04% | 33.75% | 54.40% | -7.49% |
| Of which: software business | 551,302,402.99 | 163,767,869.40 | 70.29% | 65.61% | 53.49% | 2.34% |
| By Region | ||||||
| Domestic | 7,777,087,103.47 | 4,685,553,053.26 | 39.75% | 34.33% | 39.70% | -2.32% |
| Overseas | 5,727,918,630.42 | 3,225,161,875.71 | 43.69% | 41.48% | 84.81% | -13.20% |
| Domestic business segment | ||||||
| To G | 2,181,268,061.15 | 1,190,084,301.76 | 45.44% | 10.79% | 15.62% | -2.28% |
| To B | 3,596,476,335.61 | 2,067,000,177.07 | 42.53% | 47.23% | 59.15% | -4.30% |
| Others | 1,999,342,706.71 | 1,428,468,574.43 | 28.55% | 45.09% | 39.23% | 3.00% |
When the statistical caliber of the Company’s main business data is adjusted in the reporting period, the Company’s mainbusiness data in the most recent period should be subject to the one after the statistical caliber adjusted at the end of thereporting period.
□ Applicable √ Not applicable
Reasons for over 30% changes in related data on year-on-year basis
√ Applicable □ Not applicable
During the reporting period, the Company's operating revenue increased by 37.27% compared with the same period oflast year, mainly due to the Company's focus on the smart IOT industry, increasing the development of enterprisebusiness and channel expansion to cover lower-tier cities, overlaid with the global economic recovery after the epidemic.The operating costs increased by 55.13% compared with the same period of last year, mainly due to the increase ofrevenue during the reporting period, and the product structure changes such as infrared thermal imaging.
IV. Non-main Business Analysis
□ Applicable √ Not applicable
V. Analysis of Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
| At the End of the Current Reporting Period | At the End of the Previous Year | Proportion Increase and decrease | Statement on Significant Changes | |||
| Amount | Proportion To Total Assets | Amount | Proportion To Total Assets | |||
| Cash and Bank Balances | 6,690,863,029.69 | 16.83% | 7,471,652,634.66 | 20.42% | -3.59% | No major changes |
| Accounts receivable | 12,779,041,456.90 | 32.14% | 12,857,519,110.16 | 35.13% | -2.99% | No major changes |
| Contract Assets | 111,283,472.17 | 0.28% | 84,825,834.82 | 0.23% | 0.05% | No major changes |
| Inventory | 7,312,285,468.20 | 18.39% | 4,928,019,838.00 | 13.47% | 4.92% | Mainly due to the increase in stocking |
| Investment Property | 320,218,828.49 | 0.81% | 336,008,869.13 | 0.92% | -0.11% | No major changes |
| Long-term Equity Investment | 820,449,863.74 | 2.06% | 455,977,616.16 | 1.25% | 0.81% | Mainly due to the confirmation of other changes in equity of Leapmotor |
| Fixed Assets | 1,979,508,213.29 | 4.98% | 1,515,594,629.97 | 4.14% | 0.84% | Mainly due to the completion of Phase II, Dahua Intelligent (IoT) Industrial Park Construction Project and its conversion to fixed assets |
| Projects under Construction | 1,250,289,385.41 | 3.14% | 1,164,130,453.03 | 3.18% | -0.04% | Mainly due to increasing investments in construction projects |
| Right-of-use Assets | 205,470,210.43 | 0.52% | 0.52% | Impact of the implementation of new lease standards in 2021 | ||
| Short-term loan | 1,104,598,520.22 | 2.78% | 250,177,083.34 | 0.68% | 2.10% | Mainly due to the increase in demand for short-term capital turnover |
| Contract liabilities | 895,221,177.02 | 2.25% | 671,120,385.08 | 1.83% | 0.42% | Mainly due to the increase in advance payment of the current contract |
| Long-term loan | 1,903,000,000.00 | 4.79% | 878,000,000.00 | 2.40% | 2.39% | Mainly due to the increase in long-term bank loans |
| Lease Liabilities | 107,606,799.04 | 0.27% | 0.27% | Impact of the implementation of new lease standards in 2021 |
2. Major overseas assets
□ Applicable √ Not applicable
3. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item | At the beginning of the reporting period | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Impairment loss of the reporting period | Purchase amount of the reporting period | Sales amount of the reporting period | Other variations | At the end of the reporting period |
| Financial Assets | ||||||||
| 1. Trading financial assets (excluding derivative financial assets) | ||||||||
| 2. Derivative financial assets | 1,005,680.45 | 7,123,015.25 | 16,283.27 | 8,144,978.97 | ||||
| 3. Investment in other creditors' rights | ||||||||
| 4. Investment in other equity | ||||||||
| instruments | ||||||||
| 5. Others | 1,470,000.00 | 1,470,000.00 | ||||||
| Financial assets subtotal | 2,475,680.45 | 7,123,015.25 | 16,283.27 | 9,614,978.97 | ||||
| Investment Property | ||||||||
| Productive Biological Assets | ||||||||
| Other Non-current Financial Assets | 360,087,786.34 | 117,273,994.45 | 500,000,000.00 | -39,438,199.19 | 937,923,581.60 | |||
| Receivables Financing | 1,207,879,654.58 | -306,686,795.99 | 901,192,858.59 | |||||
| Total | 1,570,443,121.37 | 124,397,009.70 | 500,000,000.00 | -346,108,711.91 | 1,848,731,419.16 | |||
| Financial liabilities | 450,380.67 | 516.85 | 450,897.52 |
Are there any significant changes in the measurement attributes of the company's main assets during the reportingperiod?
□ Yes √ No
4. Restrictions on asset rights as of the end of the reporting period
As of June 30, 2021, restricted assets of the Company are as follows:
| Item | Ending balance (RMB) | Cause of restrictions |
| Cash and Bank Balances | 105,139,382.31 | Guarantee security deposit |
| Notes receivable and accounts receivable financing | 807,838,701.82 | Pledge applied to issue bank acceptance bills; Bank acceptance bill endorsed but not derecognized |
| Long-term Receivables | 178,385,721.02 | Pledge for bank loans |
| Non-current Assets Due within 1 Year | 31,073,678.03 | Pledge for bank loans |
| Total | 1,122,437,483.18 |
VI. Investment analysis
1. Overview
√ Applicable □ Not applicable
| Investment In the Reporting Period (RMB) | Investment Over the Corresponding Period of Last Year | Rate Of Change |
| 63,998,186.36 | 447,786,608.55 | -85.71% |
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investments underway during the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Investment Mode | The Investment in The Fixed Assets or Not | Involved industry in investment projects | Amount Invested in The Current Reporting Period | Cumulative Actual Investment as of the End of Reporting Period | Capital Source | Progress of Project | Anticipated Income | Cumulative Income as of the End of The Reporting Period | Reasons For Unreached Planned Progress and Anticipated Revenue | Disclosing Date (If Any) | Disclosing Index (If Any) |
| The Phase II Construction Project of the Smart Manufacturing Base in Hangzhou | Self-construction | Yes | Video IoT industry | 215,741,729.84 | 818,079,406.91 | Self-raised funds | 52.67% | Not applicable. | March 27, 2021 | Juchao Information Website http://cninfo.com.cn/ | ||
| Construction Project of Xi'an R & D Center | Self-construction | Yes | Video IoT industry | 106,501,691.69 | 314,900,316.55 | Self-raised funds | 26.92% | Not applicable. | March 27, 2021 | Juchao Information Website http://cninfo.com.cn/ | ||
| Project of Smart IoT Solution R & D and Industrialization | Self-construction | Yes | Video IoT industry | 221,236,190.49 | 771,334,141.65 | Self-raised funds | 47.50% | Not applicable. | March 27, 2021 | Juchao Information Website http://cninfo.com.cn/ |
| New Project of Southwest R&D Center of Dahua | Self-construction | Yes | Video IoT industry | 41,284.40 | 41,284.40 | Self-raised funds | 0.00% | Not applicable. | March 27, 2021 | Juchao Information Website http://cninfo.com.cn/ | ||
| Total | -- | -- | -- | 543,520,896.42 | 1,904,355,149.51 | -- | -- | -- | -- | -- |
4. Financial assets investment
(1). Securities investment
□ Applicable √ Not applicable
No such case as securities investment during the reporting period.
(2). Derivatives investment
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Name of derivatives investment operator | Relation with related party | Whether it is a related transaction | Types of derivatives investments | Initial amount of derivatives investment | Starting date | Termination date | Initial investment amount | Amount purchased during the reporting period | Amount sold during the reporting period | Amount of provision for impairment accrued (if any) | Investment amount at the end of the period | Proportion of investment amount in the company’s net assets at end of the reporting period | Actual profit and loss during the reporting period |
| China Construction Bank | No relations | No | Structured deposits | 50,000.00 | January 26, 2021 | June 30, 2021 | 50,000.00 | 50,000.00 | 849.32 | ||||
| Bank | No relations | No | Foreign exchange contract | November 27, 2020 | May 18, 2022 | 40,904.41 | 656,822.84 | 625,354.94 | 30,751.21 | 1.43% | 1,357.07 | ||
| Total | 50,000.00 | -- | -- | 40,904.41 | 706,822.84 | 675,354.94 | 30,751.21 | 1.43% | 2,206.39 | ||||
| Sources of funds for derivatives investment | Equity Fund | ||||||||||||
| Litigation involved (if applicable) | N/A | ||||||||||||
| Disclosure date of board of directors' announcement on the approval of derivatives investment (if any) | March 24, 2021 | ||||||||||||
| Disclosure date of shareholder meeting’s announcement on the approval of derivatives investment (if any) | April 24, 2021 | ||||||||||||
| Risk analysis and description of control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | For details of risk analysis and control measures, please refer to the "Announcement on the Use of Own Funds to Purchase Bank Wealth Management Products" (Announcement No. 2021-031) and "Announcement on Carrying out Foreign Exchange Hedging Transactions" (Announcement no. 2021-027), which were disclosed on March 24, 2021. |
| Changes in market prices or product fair value of invested derivatives during the reporting period, and the analysis of the fair value of derivatives should disclose the specific methods used and the setting of related assumptions and parameters. | For the structured deposits signed between the Company and bank during the reporting period, the gains and losses of fair value shall be determined according to the association between interest rate and the foreign exchange options. For the foreign forward contracts signed between the Company and bank, the transactional financial assets or transactional financial liabilities shall be determined in accordance with the difference between the forward foreign exchange settlement contract quotation and the forward foreign exchange price. |
| Explanation of whether the Company’s derivatives accounting policies and specific accounting principles have changed significantly during the reporting period compared with the previous reporting period | N/A |
| Independent directors' special opinions on the Company's derivatives investment and risk control | For details, please refer to the "Independent Opinions of Independent Directors on Related Matters" disclosed by the Company on March 24, 2021. |
VII. Major Assets and Equity Sales
1. Major assets sales
□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company
2. Major equity sales
□ Applicable √ Not applicable
VIII. Analysis of Major Holding and Equity Participation Companies
√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
Unit: RMB
| Company Name | Company Type | Main businesses | Registered Capital | Total Assets | Net Assets | Operating income | Operating Profit | Net Profit |
| Zhejiang Dahua System Engineering Co., Ltd. | Subsidiary Company | The development, production, installation and sales of electronic and communicati | 500,000,000.00 | 4,434,143,774.95 | 1,328,435,651.49 | 536,915,726.21 | -32,877,996.20 | -12,859,072.55 |
| on products; the design, construction and installation of computer system integration and automated control engineering | ||||||||
| Zhejiang Dahua Vision Technology Co., Ltd. | Subsidiary Company | The development, sales, and technical services related to computer software, as well as the design, development, production and sales of security equipment, electronic products and communications products | 646,810,000.00 | 23,342,782,226.15 | 1,340,836,969.69 | 11,894,804,803.64 | 245,463,199.70 | 181,793,126.65 |
| Zhejiang Dahua Zhilian Co., Ltd. | Subsidiary Company | Production and sales of electronic products and auxiliary equipment; technological development, technical consultation and services, achievement transference | 1,110,000,000.00 | 4,259,134,733.79 | 635,314,901.76 | 1,659,289,918.82 | -195,287,805.19 | -137,775,208.75 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
of computersoftware,electronicproducts,communications products,and digitalsecurityproducts;self-ownedhouse lease;cateringservice;import andexport ofgoods.
Company Name
| Company Name | Method of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Hangzhou Huajuan Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Zhejiang Waythcan Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Imou Network (Hong Kong) Technology Co., Ltd | Established with investment | No significant impact on overall production, operation and performance |
| Dahua Technology QFZ LLC | Established with investment | No significant impact on overall production, operation and performance |
| DAHUA TECHNOLOGY PACIFIC S.A. | Established with investment | No significant impact on overall production, operation and performance |
No significant holding companies and joint stock companies information should be disclosed during the reporting period.
IX. The structured entity controlled by the Company
□ Applicable √ Not applicable
X. Risks and CountermeasuresDuring the reporting period, there was no significant change in the risks faced by the Company. The
Company has been trying to identify all kinds of risks and actively take countermeasures to avoid andreduce the risks:
1. Covid-19 risks: In the face of the Covid-19 outbreak, the Company has taken stringent preventionand control measures to protect the health of employees at home and abroad. In addition, the Companyoffers technological solutions to contribute to the global effort against the pandemic.
2. Supply chain security risks: In terms of supply security, the Company has comprehensivelyreviewed various potential supply risks through dedicated operations, and strengthened the sustainableand safe supply of key materials by means of research and development of backup scheme anddiversified supply sources to ensure the security of the supply chain.
3. International operation risks: The Company's products and solutions cover more than 100countries and regions overseas. International business operation may face trade protection risks. Inaddition, the resurgence of Covid-19 around the world has resulted in more uncertainties to the overseaseconomic environment, which may adversely affect the development of the Company's local business.To actively prevent and respond to international business risks, the Company has established anoverseas compliance and risk control system, continuously strengthened its understanding of and abilityto adapt to the laws and regulations as well as the political and economic environment of the regions inwhich the Company operates, and formulated differentiated "One Country, One Strategy" nationalbusiness strategies according to the political and economic changes in different regions to minimizebusiness risks.
4. Foreign exchange risks: The Company's export transactions are mostly settled in United StatesDollars ("USD"), while overseas business continues to grow. Therefore, fluctuations in the foreignexchange rate may affect the profits of the Company. The Company attaches great importance toexchange rate risk control and adopts various means to effectively control such risks: on the one hand, itmanages various currencies by category, guides the contracting in mainstream currencies and usingsuch currencies to hedge against the U.S. dollar while increasing the proportion of overseas localizedcontracting; for the countries contracted in non-mainstream currencies, exchange rate protectionclauses and price adjustment mechanisms will be set in advance in the contracts to reduce the risk ofexchange rate fluctuations; on the other hand, the Company effectively uses foreign exchange hedgingand a series of derivative instruments, among others, to offset and hedge exchange rate risks without
speculative purposes.
5. Business model change risks: With the development of technologies such as networkcommunications, cloud computing, big data, and AI, and the upgraded uses of smartphones, businessmodels in the IOT era may have an impact on the traditional industry development. If an enterprisecannot grasp opportunities brought about by the business model transformation in a timely manner, itmay face the risk that the original market structure becomes broken. The Company continues to focuson and study the major changes in global economy, industry and technology, analyze the industrydevelopment logic, and predict the evolution of global security industry and IoT industry, the continuousintegration of video, information communication and digital technologies, diversification and uncertaintyof customer demands. While consolidating the advantageous market, The Company actively exploresand pilots new businesses and new commercial mode, and carry out business and technical layout.
6. Technology upgrading risks: The video surveillance industry is a typical technology-intensiveindustry, featuring extremely fast changes. If the Company is unable to keep up with development trendsin the industry's technology, to pay full attention to customers' diversified individual needs, and to befollowed by sufficient R&D investments, it will still face the risk of losing market competitiveness due todiscontinuous innovation. By increasing R & D investment, the Company continues to strengthenresearch on core technologies in AI, video cloud, machine vision and other fields, and reserves product,technology, management and talent resources for a broader market in the future, so as to achievesustainable and steady development of business.
7. Product safety risks: The Company attaches great importance to and continuously strengthensresource investment to ensure safe and reliable operations of the security system so as to respond tothe product security risks on the Internet. However, hackers attacks, computer viruses, physical securityvulnerabilities, natural disasters, accidents, power interruptions, telecommunications failures, terrorism,and warfare events may still occur from time to time, resulting in security vulnerabilities, system failures,or service interruptions. The Company has founded a cyber security committee, and set up aprofessional security team to develop company-level product safety plan, ensuring product safety inwhole process from requirements to design, coding, and testing process. At the same time, theCompany actively carry out technical exchanges and cooperation with mainstream safety enterprises,safety evaluation agencies and corresponding industry associations to provide customers with safeproducts and solutions.
8. Intellectual property risks: The promotion of the Company's globalization and self-owned brandstrategy will likely bring about intellectual property risks and patent infringement, which may causefluctuation in business relations and public opinions, increasing lawsuits and rising costs. The Companyattaches great importance to technological innovation and has established protection and managementmechanism for intangible assets such as innovation achievements, self-owned brands, trade secrets,and constantly gathers advantageous IP assets; With IP compliance risk control system, the Companycontinues to strengthen its ability to understand and grasp the IP laws and regulations, administrativeand judicial environment of the region where the company's business is located in.
Section IV Corporate GovernanceI. Relevant Situation of the Annual General Meeting of Shareholders and theExtraordinary General Meeting of Shareholders Held in the Reporting Period
1. The shareholders' meetings for this reporting period
| Conference Session | Conference Type | Percentage of Investors Involved | Date of Conference | Date of Disclosure | Conference Resolution |
| First Extraordinary General Meeting of Shareholders in 2021 | Extraordinary General Meeting | 51.52% | January 22, 2021 | January 23, 2021 | No proposal was voted down at the General Meeting. The Announcement of Resolutions of the First Extraordinary General Meeting of 2021 (2021-006) is published on Juchao Information Website (http://www.cninfo.com.cn) |
| 2020 Annual General Meeting of Shareholders | Annual General Meeting | 46.66% | April 23, 2021 | April 24, 2021 | No proposal was voted down at the General Meeting. The Announcement of Resolutions of the 2020 Annual General Meeting (2021-064) is published on Juchao Information Website (http://www.cninfo.com.cn) |
| Second Extraordinary General Meeting of Shareholders in 2021 | Extraordinary General Meeting | 44.65% | June 11, 2021 | June 15, 2021 | No proposal was voted down at the General Meeting. The Announcement of Resolutions of the Second Extraordinary General Meeting of 2021 (2021-076) is published on Juchao Information Website (http://www.cninfo.com.cn) |
2. Convening of the interim shareholders' general meetings upon request of the preferredstockholders whose voting rights are restored
□ Applicable √ Not applicable
II. Changes of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Title | Type | Date | Causes |
| Ying Yong | Senior Vice President | Dismissal | March 24, 2021 | Voluntarily resigned from the post of Senior Vice President but remained in the Company |
| Wu Yunlong | Vice President | Dismissal | March 24, 2021 | Voluntarily resigned from the post of Vice President but remained in the Company |
| Chen Yuqing | Vice President | Dismissal | March 24, 2021 | Voluntarily resigned from the post of Vice President but remained in the Company |
III. Profit Distribution and Capital Reserve Converted to Share Capital in theReporting Period
□ Applicable √ Not applicable
The Company plans to pay no cash dividends, no bonus shares and no capital increase by way of capitalization ofprovident fund for the half-yearIV. Implementation of the Company’s Equity Incentive Plan, Employee StockOwnership Plan or Other Employee Incentive Measures
√ Applicable □ Not applicable
1. On April 1, 2021, the "Proposal of Restricted Share Incentive Plan for the Second Unlock Periodof the First Grant and Reserving the Achievement for the First Unlock of Year 2018" was reviewed andapproved at the Thirteenth Meeting of the Seventh Board of Directors and the Ninth Meeting of theSeventh Board of Supervisors of the Company. The Board of Directors agreed to unlock 29,431,520restricted stocks held by 2,889 incentive objects who met the unlocking conditions. The matter wascompleted on April 15, 2021.
2. On April 23, 2021, the "Proposal on Buy-back and Cancellation of Some Granted but notUnlocked Restricted Stocks" was deliberated and approved at the Company's General Meeting ofShareholders in 2020, which agreed to buy back and cancel 1,028,860 authorized but not unlockedrestricted stocks held by 65 incentive objects who are no longer eligible for hte qualification (of which,882,360 shares were first granted at the buy-back price of 8.17 yuan per share; reserved grant of
146,500 shares at a buy-back price of 8.75 yuan per share). The aforesaid buy-back and cancellationmatter is still in process.
3. On June 25, 2021, the "Proposal on the Unlocking Conditions for the Restricted Stock IncentivePlan on the First Unlocking Period in 2020" was deliberated and approved at the Seventeenth Meeting ofthe Seventh Board of Directors and the Eleventh Meeting of the Seventh Board of Supervisors of theCompany. At which the Board of Directors agreed to unlock 6,695,740 restricted stocks held by 10incentive objects who meet the unlocking conditions. The matter was completed on July 9, 2021.
Section V Environmental and Social Responsibilities
I. Major Environmental IssuesWhether the listed company and its subsidiaries belong to the key pollutant discharging units announced by theenvironmental protection department
□ Yes √ No
II. Social ResponsibilitiesThe Company has not carried out targeted poverty alleviation and rural revitalization work during the reporting period.
Section VI Significant EventsI. Commitments made by the Company’s controlling shareholders, shareholders,related parties, purchasers and purchasing companies have been fulfilled during thereporting period and those that have not been fulfilled by the end of the reportingperiod
□ Applicable √ Not applicable
There are no commitments, made by the Company’s controlling shareholders, shareholders, related parties, purchasersand purchasing companies, that have been fulfilled during the reporting period and that have not been fulfilled by the endof the reporting period.
II. Non-operational capital occupation over listed companies by controllingshareholders and their related parties
□ Applicable √ Not applicable
During the reporting period, there is no non-operational capital occupation over listed companies by controllingshareholders and their related parties.III. Illegal external guarantees
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.IV. Appointment and dismissal of accounting firmsWhether the semi-annual report has been audited
□ Yes √ No
The Company’s semi-annual report has not been audited.V. Explanations made by the Board of Directors and the Board of Supervisors on the“Non-Standard Audit Report” from the accounting firm during the reporting period
□ Applicable √ Not applicable
VI. Statement by the Board of Directors on the “Non-Standard Audit Report” of theprevious year
□ Applicable √ Not applicable
VII. Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.VIII. Litigation Matters
Significant lawsuits and arbitrations
□ Applicable √ Not applicable
There is no major lawsuit or arbitration during this reporting period.Other litigation matters
√ Applicable □ Not applicable
| Basic information on litigation (arbitration) | Amount involved (yuan) | Whether an estimated liability is formed | Litigation (arbitration) progress | Outcome and impact of litigation (arbitration) hearings | Enforcement of litigation (arbitration) judgments | Date of Disclosure | Disclosure Index |
| Other litigation not meeting the disclosure standards for material litigation | 14,574.53 | 177.57 | On trial | Not applicable. | Not applicable. | - | N/A |
IX. Penalties and Rectification
□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.X. Integrity of the Company, Its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
XI. Significant Related-party Transactions
1. Related transactions relevant to daily operations
□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.
2. Related transactions in acquisition or sale of assets or equities
□ Applicable √ Not applicable
No such case as related-party transactions arising from the acquisition or sale of assets or equity.
3. Significant related-party transactions arising from joint investments on external parties
√ Applicable □ Not applicable
For details, see "6. Other Significant Related-party Transactions" in this Section.
4. Related-party creditor's rights and debts
□ Applicable √ Not applicable
No such case as related credits and debts during the reporting period.
5. Transactions with related financial companies and financial companies controlled by theCompany
□ Applicable √ Not applicable
No deposit, loan, credit or other financial business between the Company and the related financial company, or betweenthe financial company controlled by the Company and the related parties.
6. Other major related transactions
√ Applicable □ Not applicable
1. On January 8, 2021, the Eighth Meeting of the Seventh Board of Directors of the Companydeliberated and approved the "Proposal on Joint Capital Increase and Related Party Transactions", andagreed that the Company and related parties Zhang Xingming, He Chao, Ningbo Huaqi InvestmentManagement Partnership (Limited Partnership), Hangzhou Kangpi Enterprise Management Partnership(Limited Partnership) and non-related party Yao Weizhong to sign the "Agreement on Equity Transferand Capital Increase of Zhejiang Healnoc Technology Co., Ltd.". The Company and related partiesZhang Xingming, He Chao, Ningbo Huaqi Investment Management Partnership (Limited Partnership),Hangzhou Kangpi Enterprise Management Partnership (Limited Partnership) and non-related party YaoWeizhong contributed RMB 50 million in total to Zhejiang Healnoc Technology Co., Ltd. (referred to as"Healnoc") as capital increase. Among them, the Company invested RMB 20 million of its own funds,holding 20% of Healnoc equity, and Healnoc became a shareholding company. The change of industrialand commercial registrations for the above matter was completed in February 2021.
2. On January 22, 2021, the First Extraordinary Meeting of Shareholders in 2021 deliberated andapproved the “Proposal on Giving up Shareholding Companies' Equity Increase Rights and RelatedParty Transactions”. A total of 14 investors, including Zhu Jiangming, Gao Dong, Chen Jinxia, andNingbo Huaqi Investment Management Partnership (Limited Partnership), made a B-1 round of capital
increase in Leapmotor Technology. The related transaction amount involved in companies giving up theright to increase capital in the same proportion was RMB 458.459 million. The change of industrial andcommercial registrations for the above matter was completed in January 2021.
3. On January 27, 2021，the Ninth Meeting of the Seventh Board of Directors of the Companydeliberated and approved the “Proposal on Giving up Shareholding Companies' Equity Increase Rightsand Related Party Transactions”. A total of 10investors, including Zhejiang Mituo Investment Co., Ltd.,Gao Dong, Huzhou Heninghai Investment Partnership (Limited Partnership), intended to make a B-2round of capital increase in Leapmotor. The amount of related party transactions involved in thecompanies' giving up the right to increase capital in the same proportion was RMB 0.16683546 billion.The change of industrial and commercial registrations for the above matter was completed in January2021.
4. On April 22, 2021, the "Proposal on Giving Up the Right to Increase Capital and Pre-emptiveRights of a Subsidiary in the Same Proportion and Related Transaction" was deliberated and approvedat the Fourteenth Meeting of the Seventh Session of the Board of Directors of the Company, in which atotal of 5 investors, including CICC Huarui Technology Employee Shareholding No. 1 Single AssetManagement Plan, intended to increase capital to Zhejiang Huarui Technology Co., Ltd., with a totalcapital increase of RMB 9,545,783. Based on the shareholding structure after the above capitalincrease, Ningbo Huayu Investment Management Partnership (Limited Partnership), shareholder ofHuarui Technology, intended to transfer its 44.10% shareholding of Huarui Technology to a total of24investors including CICC Huarui Technology Employee Shareholding No. 1Single Asset ManagementPlan, at a total price of RMB 244,309,237. The Company waived the preferential subscription right andthe preemptive right to purchase the above-mentioned equity interests. The change of industrial andcommercial registrations for the above matter was completed in April 2021.
5. On June 7, 2021, the "Proposal on Capital Increase and Related Transaction of HoldingSubsidiary" was deliberated and approved at the Sixteenth Meeting of the Seventh Board of Directors ofthe Company, which agreed that the Company and the related legal person Zhejiang Huashi InvestmentManagement Co., Ltd. jointly increased the capital of the holding subsidiary Zhejiang HuaxiaoTechnology Co., Ltd. in the same proportion. The company increased its capital by RMB10.2 millionwith its own funds, and after the completion of the capital increase, the registered capital of HuaxiaoTechnology increased from RMB 50 million to RMB 70 million. The change of industrial and commercial
registrations for the above matter was completed in June 2021.
6. On June 29, 2021, the "Proposal on Joint Investment and Establishment of Industrial Fund andRelated Transaction with Related Parties" was deliberated and approved at the Eighteenth Meeting ofthe Seventh Session of the Board of Directors of the Company, which agreed to establish ZhoushanHuayan Chuangxi Equity Investment Partnership (Limited Partnership) with a total of 19 investors,including Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd. The form of theIndustrial Fund is a limited partnership with a total fund scale of RMB 150.1 million; Huayan Capital, asthe fund manager, contributes RMB 100,000 in currency, holding 0.07% of the shares, and DahuaShares contributes RMB 50 million in currency, holding 33.32% of the shares. The matter is still inprogress.Website for disclosing the interim report on significant related-party transactions
| Announcement name | Disclosure date | Website for the disclosure |
| Announcement on Joint Investment and Related Transactions with Related Parties | January 9, 2021 | http://www.cninfo.com.cn |
| Announcement On Giving Up the Shareholding Company's Right to Increase Capital with The Same Percentage and Related-party Transactions | January 9, 2021 | http://www.cninfo.com.cn |
| Announcement On Giving Up the Shareholding Company's Right to Increase Capital with The Same Percentage and Related-party Transactions | January 28, 2021 | http://www.cninfo.com.cn |
| Announcement On Giving Up the Subsidiaries' Right to Increase Capital with The Same Percentage, Right of Preemption, And Related-party Transactions | April 23, 2021 | http://www.cninfo.com.cn |
| Announcement On Increasing Capital in Holding Subsidiaries and Related-party Transactions | June 08, 2021 | http://www.cninfo.com.cn |
| Announcement on Joint Investment on the Establishment of Industrial Fund and Related Transactions with Related Parties | June 30, 2021 | http://www.cninfo.com.cn |
XII. Significant Contracts and Performance
1. Matters on trusteeship, contracting, and leasehold
(1) Matters on trusteeship
□ Applicable √ Not applicable
No such case as custody during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No such case as contracting during the reporting period.
(3) Leasing
√ Applicable □ Not applicable
Explanations on leasesDuring the reporting period, some of the Company's own real estate properties were used for rental, and the leased realestate property was used for office, warehouse and production workshops. There was no other major real estate leasing.Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reportingperiod
□ Applicable √ Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during thereporting period.
2. Significant guarantees
√ Applicable □ Not applicable
Unit: ten thousand RMB
| External guarantees from the Company and its subsidiaries (excluding guarantees to the subsidiaries) | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees approved during the reporting period (A1) | Total amount of guarantees actually occurred during the reporting period (A2) | |||||||
| Total amount of guarantees approved by the end of the reporting period (A3) | Total balance of guarantees at the end of the reporting period (A4) | |||||||
| Company's guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or |
| disclosure of the guarantee cap | not | |||||||
| Zhejiang Dahua Vision Technology Co., Ltd. | May 6, 2021 | 698,685.74 | 2018.03.27 | 50,000.00 | Joint liability guarantee | 2018.03.20-2021.03.19 | Yes | Yes |
| February 25, 2020 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes | |||
| 10/13/2017 | 22,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| 2018.09.21 | 25,840.40 (40 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| 2019.06.26 | 18,000.00 | Joint liability guarantee | 2019.06.26-2022.06.25 | No | Yes | |||
| 2019.07.22 | 44,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| 2019.09.29 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| February 17, 2020 | 25,000.00 | Joint liability guarantee | Two years after the maturity of the debts in | No | Yes |
| the master contract | |||||
| April 7, 2020 | 53,000.00 | Joint liability guarantee | April 7, 2020 - March 31, 2024 | No | Yes |
| April 13, 2020 | 24,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| August 3, 2020 | 50,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| August 12, 2020 | 60,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| August 18, 2020 | 33,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| 9/1/2020 | 30,000.00 | Joint liability guarantee | Five years upon expiration of debt period of master contract | No | Yes |
| September 27, 2020 | 40,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| February 4, 2021 | 100,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| February 23, 2021 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| February 25, 2021 | 10,000.00 | Joint liability guarantee | February 25, 2021 - September 26, 2021 | No | Yes | |||
| May 12, 2021 | 8,000.00 | Joint liability guarantee | May 12, 2021 - December 31, 2022 | No | Yes | |||
| May 29, 2021 | 20,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes | |||
| Zhejiang Dahua Zhilian Co., Ltd. | March 24, 2021 | 320,000.00 | April 9, 2020 | 10,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | Yes |
| May 1, 2020 | 38,760.60 (60 million U.S. dollars) | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | Yes |
| September 29, 2020 | 16,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| 10/12/2018 | 30,000.00 | Joint liability guarantee | 2018.10.12-2021.10.12 | No | Yes |
| 2019.08.30 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| September 24, 2020 | 30,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| September 25, 2020 | 16,500.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| September 27, 2020 | 7,500.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| April 29, 2021 | 10,000.00 | Joint liability guarantee | One years upon expiration of debt period | No | Yes |
| of master contract | ||||||||
| April 29, 2021 | 38,760.60 (60 million U.S. dollars) | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| April 29, 2021 | 35,530.55 (55 million U.S. dollars) | Joint liability guarantee | April 30, 2021 - May 14, 2022 | No | Yes | |||
| May 29, 2021 | 16,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes | |||
| Zhejiang Dahua System Engineering Co., Ltd. | March 24, 2021 | 50,000.00 | February 25, 2020 | 4,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| 2019.08.30 | 1,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| November 7, 2019 | 6,000.00 | Joint liability guarantee | Two years after the | No | Yes |
| maturity of the debts in the master contract | ||||||||
| August 3, 2020 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| May 29, 2021 | 4,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes | |||
| Dahua Technology (HK) Limited | March 24, 2021 | 130,000.00 | 2019.11.25 | 4,522.07 (7 million U.S. dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| April 20, 2021 | 768.62 (1 million euros) | Joint liability guarantee | April 25, 2021 - April 25, 2022 | No | Yes | |||
| DAHUA TECHNOLOGY MEXICO S.A. DE C. V | March 24, 2021 | 10,000.00 | October 27, 2020 | 4,199.07 (6.5 million U.S. dollars) | Joint liability guarantee | October 27, 2020 - October 20, 2021 | No | Yes |
| 9/1/2020 | 646.01 (1 million U.S. dollars) | Joint liability guarantee | September 1, 2020 - August 31, | No | Yes |
| 2021 | ||||||||
| Hangzhou Huacheng Network Technology Co., Ltd. | March 24, 2021 | 65,000.00 | August 3, 2020 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| 2019.08.30 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 25, 2020 | 5,500.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 27, 2020 | 5,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| February 4, 2021 | 2,000.00 | Joint liability guarantee | Six months upon expiration of the debt performance period of master contract | No | Yes | |||
| February 23, 2021 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| Dahua Technology UK Limited | March 24, 2021 | 2,000.00 | August 12, 2020 | 1,037.16 (GBP 1.16 million) | Joint liability guarantee | August 12, 2020 - Signing | No | Yes |
| termination notice | ||||||||
| Zhejiang HuaRay Technology Co., Ltd. | March 24, 2021 | 35,000.00 | February 23, 2021 | 5,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| Zhejiang Dahua Storage Technology Co., Ltd. | May 6, 2021 | 2,314.26 | April 29, 2021 | 1,292.02 (2 million U.S. dollars) | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| May 29, 2021 | 1,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes | |||
| Zhejiang Huachuang Vision Technology Co., Ltd. | March 24, 2021 | 25,000.00 | May 11, 2021 | 5,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| Zhejiang Fengshi Technology Co., Ltd. | March 24, 2021 | 2,000.00 | May 29, 2021 | 2,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the | No | Yes |
| maturity date of each note discounted by China Merchants Bank during the credit period | ||||||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | March 24, 2021 | 1,000.00 | May 29, 2021 | 1,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes |
| Zhejiang Huafei Intelligent Technology CO., LTD. | March 24, 2021 | 1,000.00 | May 29, 2021 | 1,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes |
| Zhejiang Huaxiao Technology Co., Ltd. | March 24, 2021 | 2,000.00 | May 29, 2021 | 1,000.00 | Joint liability guarantee | Additional three years | No | Yes |
| from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | ||||||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | March 24, 2021 | 1,000.00 | May 29, 2021 | 1,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No | Yes |
| Xi'an Dahua Zhilian Technology Co., Ltd. | March 24, 2021 | 30,000.00 | May 29, 2021 | 5,000.00 | Joint liability guarantee | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during | No | Yes |
| the credit period | |||||
| Guangxi Dahua Information Technology Co., Ltd. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | March 24, 2021 | 30,000.00 | No such case during the reporting period | ||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Hangzhou Xiaohua Technology CO., LTD. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Zhejiang Dahua Security Service Co., Ltd. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Guangxi Dahua Technology Co., Ltd. | March 24, 2021 | 5,000.00 | No such case during the reporting period | ||
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | March 24, 2021 | 20,000.00 | No such case during the reporting period | ||
| Zhejiang Waythcan Technology Co., Ltd. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Zhejiang Huaxuan Technology Co., Ltd. | March 24, 2021 | 1,000.00 | No such case during the reporting period | ||
| Dahua Technology Japan | March 24, 2021 | 100.00 | No such case during the reporting period | ||
| DAHUA EUROPE B.V. | March 24, 2021 | 15,000.00 | No such case during the reporting period | ||
| Dahua Technology USA Inc. | March 24, 2021 | 5,000.00 | No such case during the reporting period | ||
| Dahua Technology Singapore Pte.Ltd. | March 24, 2021 | 200.00 | No such case during the reporting period | ||
| Dahua Technology Poland sp.zo.o. | March 24, 2021 | 2,000.00 | No such case during the reporting period | ||
| Dahua Technology Hungary Kft | March 24, 2021 | 2,000.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY INDIA PRIVATE LIMITED | March 24, 2021 | 4,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY BRASIL COMERCIO SERV EM SEGURANCA ELETRONICA LTDA | March 24, 2021 | 2,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MIDDLE EAST FZE | March 24, 2021 | 1,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PER? S.A.C | March 24, 2021 | 4,000.00 | No such case during the reporting period |
| Dahua Technology Rus Limited Liability Company | March 24, 2021 | 3,000.00 | No such case during the reporting period |
| Dahua Technology Australia Pty Ltd. | March 24, 2021 | 500.00 | No such case during the reporting period |
| Dahua Technology South Africa Proprietary Limited | March 24, 2021 | 500.00 | No such case during the reporting period |
| Dahua Technology Canada Inc. | March 24, 2021 | 1,000.00 | No such case during the reporting period |
| DAHUA GUVENLIK TEKNOLOJILERI SANAYI VE TICARET ANONIM SIRKETI | March 24, 2021 | 1,000.00 | No such case during the reporting period |
| Dahua Technology SRB d.o.o. | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology Bulgaria EOOD | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Iberia, S.L. | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Security Malaysia SDN. BHD. | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology Kazakhstan LLP | March 24, 2021 | 100.00 | No such case during the reporting period |
| PT. Dahua Vision Technology Indonesia | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology Korea Company Limited | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology S.R.L. | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology France SAS | March 24, 2021 | 700.00 | No such case during the reporting period |
| Dahua vision LLC | March 24, 2021 | 500.00 | No such case during the reporting period |
| Dahua Technology New Zealand Limited | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology GmbH | March 24, 2021 | 300.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY COLOMBIA S.A.S. | March 24, 2021 | 2,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PANAMA S.A. | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua Technology Chile SpA | March 24, 2021 | 100.00 | No such case during the reporting period |
| Dahua technology tunisia limited liability company | March 24, 2021 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY KENYA LIMITED | March 24, 2021 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CHINA(PVT) LTD | March 24, 2021 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PAKISTAN (PRIVATE) LIMITED | March 24, 2021 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MOROCCO SARL | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| DAHUA ARGENTINA S.A. | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Czech s.r.o. | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Denmark ApS | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Netherlands B.V. | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| DAHUA TECHNOLOGY (THAILAND) CO., LTD | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| DAHUA TECHNOLOGY ITALY S.R.L. | March 24, 2021 | 100.00 | No such case during the reporting period | |||||
| LOREX TECHNOLOGY INC | March 24, 2021 | 2,000.00 | No such case during the reporting period | |||||
| LOREX CORPORATION | March 24, 2021 | 2,000.00 | No such case during the reporting period | |||||
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 1,487,000.00 | Total amount of guarantees to subsidiaries actually occurred during the reporting period (B2) | 308,351.79 | |||||
| Total amount of guarantees to subsidiaries approved by the end of the reporting period (B3) | 1,487,000.00 | Total balance of guarantees actually paid to subsidiaries at the end of the reporting period (B4) | 885,096.50 | |||||
| Subsidiaries' guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees to subsidiaries approved during the reporting period (C1) | Total amount of guarantees to subsidiaries actually occurred during the reporting period (C2) | |||||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | Total of actual guarantee balance for subsidiaries at the end of the reporting period (C4) | |||||||
| Total amount of company guarantees (namely sum of the previous three major items) | ||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 1,487,000.00 | Total amount of guarantees actually occurred during the reporting period (A2+B2+C2) | 308,351.79 | |||||
| Total amount of guarantees approved by the end of the reporting period (A3+B3+C3) | 1,487,000.00 | Total balance of guarantees actually paid at the end of the reporting period (A4+B4+C4) | 885,096.50 | |||||
| Total amount of actual guarantees (A4+B4+C4) as a percentage of the Company's net assets | 41.16% | |||||||
| Including: | ||||||||
| Balance of guarantees to the shareholders, actual controllers and their related parties (D) | ||||||||
| Balance of debt guarantees directly or indirectly offered to guaranteed objects with asset-liability ratio exceeding 70% (E) | 862,096.50 | |||||||
| Amount of the guarantees with the total volume exceeding 50% of the net assets (F) | ||||||||
| Total amount of the above three guarantees (D+E+F) | 862,096.50 | |||||||
| Notes on unexpired guarantees with guarantee responsibilities occurred or possible joint liabilities within the reporting period (if any) | ||||||||
| Notes on providing external guarantees in violation of specified procedures (if any) | ||||||||
3. Entrusted financing
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Specific type | Funding source | Entrusted amount | Unexpired balance | Overdue outstanding amount | Impairment amount accrued for overdue financial management |
| Bank financial products | Equity Fund | 50,000.00 | - | - | - |
| Financial products of securities companies | Equity Fund | 50,000.00 | 50,000.00 | - | - |
| Total | 100,000.00 | 50,000.00 | - | - | |
Specific matters on high-risk entrusted capital management with a large amount for a single item, or with low security,poor liquidity and no capital preservation guarantee.
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Name of trustee organization (or name of trustee) | Trustee organization (or trustee) type | Product type | Amount | Capital Source | Starting date | Termination date | Investment direction | Payment determination method | Reference for annualized rate of return | Expected earnings (if any) | Actual profit and loss during the reporting period | Actual recovery of profits and losses during the reporting period | Amount of provision for impairment accrued in the current year (if any) | Whether it passed the legal procedures | Whether there will be entrusted financial plan in the future | Item overview and related query index (if any) |
| China Construction Bank | Bank | Structured deposits | 50,000.00 | Equity Fund | January 26, 2021 | June 30, 2021 | Financial derivatives | By contract | 4.00% | 849.32 | Recovered at expiration | Yes | Yes | |||
| Guosen Securities co., Ltd. | Securities company | Asset Management Plan | 50,000.00 | Equity Fund | February 10, 2021 | February 9, 2031 | Private equity fund products, fixed income assets, equity assets, public equity hybrid funds | Payment of principal and income at maturity | 6,445.65 | Unexpired | Yes | No | ||||
| Total | 100,000.00 | -- | - | -- | -- | -- | -- | 7,294.97 | -- | -- | -- | -- | ||||
Cases of entrusted financing expected to be unable to recover the principal or cases that may result in impairment
□ Applicable √ Not applicable
4. Major contracts in daily operations
□ Applicable √ Not applicable
5. Other significant contracts
□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.XIII. Explanations on Other Significant Matters
√ Applicable □ Not applicable
On March 26, 2021, the "Proposal on the Company's Non-public Offering of Shares for 2021" andother related proposals were deliberated and approved at the Twelfth Meeting of the Seventh Session ofthe Board of Directors and the Eighth Meeting of the Seventh Board of Supervisors of the Company. TheCompany planned to issue 312,151,600 non-public shares, and the total amount of funds raised did notexceed RMB 5.6 billion (including RMB 5.6 billion). The target companies of this non-public issuance isChina Mobile Capital Holdings Co., Ltd., which is the wholly-owned subsidiary of China MobileCommunications Group Co., Ltd. The matters related to this non-public offering of shares have beendeliberated and approved at the Company's 2020 Annual General Meeting.The Company disclosed "Announcement on Application for Non-public Offering of Shares Acceptedby the China Securities Regulatory Commission" and "Announcement on Receipt of <Notice of FirstFeedback on Review of Administrative License Items by the China Securities Regulatory Commission>"(Announcement No. 2021-073, 2021-078) on June 3, 2021 and June 17, 2021 respectively.On July 5,2021, the Nineteenth Meeting of the Seventh Board of Directors and the Twelfth Meetingof the Seventh Board of Supervisors of the Company deliberated and approved the "Proposal onAdjustment of the Non-public Offering of Shares for 2021" and other proposals related to the Offering.After the adjustment, the Company planned to issue not more than 288,624,700 non-public shares andraise total funds of not more than RMB 5,100 million (including RMB 5,100 million). The target of thisnon-public issue was China Mobile Capital Holdings Limited, a wholly-owned subsidiary of China MobileCommunications Group Corporation, and on the same day, the “Report on the Response to Feedbackon the Non-public Offering Stock Application Document of Zhejiang Dahua Technology Co., Ltd.” was
disclosed.The proposal of the non-public offering of shares is subject to the approval of the China SecuritiesRegulatory Commission before implementation, and the above relevant announcement documents havebeen disclosed on the Securities Times and Juchao Information Network (http://www.cninfo.com.cn), thedesignated information disclosure media of the Company.XIV. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
Section VII Changes in Shares and Information about
ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increase or decrease in the change (+, -) | After the change | |||||||
| Number | Percentage | Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | Number | Percentage | |
| I. Shares with limited sales condition | 1,137,297,716 | 37.97% | -94,627,408 | -94,627,408 | 1,042,670,308 | 34.81% | |||
| 1. Other domestic shares | 1,137,278,516 | 37.97% | -94,617,808 | -94,617,808 | 1,042,660,708 | 34.81% | |||
| Shares held by domestic natural persons | 1,137,278,516 | 37.97% | -94,617,808 | -94,617,808 | 1,042,660,708 | 34.81% | |||
| 2. Foreign shareholding | 19,200 | 0.00% | -9,600 | -9,600 | 9,600 | 0.00% | |||
| Shares held by foreign natural persons | 19,200 | 0.00% | -9,600 | -9,600 | 9,600 | 0.00% | |||
| II. Shares without restrictions | 1,858,281,874 | 62.03% | 94,627,408 | 94,627,408 | 1,952,909,282 | 65.19% | |||
| 1. RMB ordinary shares | 1,858,281,874 | 62.03% | 94,627,408 | 94,627,408 | 1,952,909,282 | 65.19% | |||
| III. Total | 2,995,579,590 | 100.00% | 0 | 0 | 2,995,579,590 | 100.00% | |||
Reasons for changes in shares
√ Applicable □ Not applicable
1. In April, 2021, the conditions for the first granting of the second unlock period and reserved granting of the firstunlock period in 2018 Restricted Stock Incentive Plan were satisfied.
2. In June, 2021, the conditions for the first unlock period in 2020 Restricted Stock Incentive Plan were satisfied.Approval for changes in shares
√ Applicable □ Not applicable
1. On April 1, 2021, the "Proposal of Restricted Share Incentive Plan for the Second Unlock Period of the First Grantand Reserving the Achievement for the First Unlock of Year 2018" was reviewed and approved at the Thirteenth Meetingof the Seventh Board of Directors and the Ninth Meeting of the Seventh Board of Supervisors of the Company. The Boardof Directors agreed to unlock 29,431,520 restricted stocks held by 2,889 incentive objects who met the unlockingconditions.
2. On June 25, 2021, the "Proposal on the Unlocking Conditions for the Restricted Stock Incentive Plan on the FirstUnlocking Period in 2020" was deliberated and approved at the Seventeenth Meeting of the Seventh Board of Directorsand the Eleventh Meeting of the Seventh Board of Supervisors of the Company. The Board of Directors agreed to unlock6,695,740 restricted stocks held by 10 incentive objects who meet the unlocking conditions.Transfer for changes in shares
√ Applicable □ Not applicable
1. According to the Thirteenth Meeting of the Seventh Board of Directors of the Company, the Company completedthe unlocking of the second unlocking period granted for the first time and of the reserved grant of the first unlockingperiod as stated in 2018 Restricted Share Incentive Plan, with the unlocking date, also known as the date of listing andcirculation, is April 15, 2021.
2. According to the Seventeenth Meeting of the Seventh Board of Directors of the Company, the Company completedthe unlocking of the first unlocking period of 2020 Restricted Share Incentive Plan, with the unlocking date, also known asthe date of listing and circulation, is July 9, 2021.The progress on share repurchases
□ Applicable √ Not applicable
The progress on reduction of re-purchase shares by means of centralized competitive bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable tocommon shareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted stocks
√ Applicable □ Not applicable
Unit: share
| Name of Shareholder | Number of restricted shares at the beginning of the period | Number of unlocked shares with limited sales condition in current period | Number of increased restricted shares in the current period at the beginning of the period | Number of restricted shares at the end of the period at the beginning of the period | Reasons for limited sales | Date of unlocking |
| Fu Liquan | 811,561,410 | 43,659,675 | 0 | 767,901,735 | According to the | According to the |
| relevant provisions of executives shares management | relevant provisions of executives shares management | |||||
| Zhu Jiangming | 139,846,117 | 19,413,000 | 0 | 120,433,117 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management |
| Chen Ailing | 53,447,110 | 0 | 0 | 53,447,110 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management |
| Wu Jun | 51,938,164 | 0 | 0 | 51,938,164 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Zhang Xingming | 3,622,540 | 590,370 | 0 | 3,032,170 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Ying Yong | 2,271,937 | 0 | 417,313 | 2,689,250 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Zhao Yuning | 2,515,000 | 333,000 | 0 | 2,182,000 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Wu Jian | 2,167,001 | 255,000 | 0 | 1,912,001 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Chen Yuqing | 1,376,963 | 0 | 458,988 | 1,835,951 | Per relevant | Per relevant |
| management regulations of equity incentives and senior managers' shares | management regulations of equity incentives and senior managers' shares | |||||
| Jiang Xiaolai | 2,004,400 | 222,200 | 0 | 1,782,200 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Other senior executives and incentive targets | 66,547,074 | 31,030,464 | 0 | 35,516,610 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Total | 1,137,297,716 | 95,503,709 | 876,301 | 1,042,670,308 | -- | -- |
II. Issuance and listing of securities
□ Applicable √ Not applicable
III. Total Number of Shareholders and Their Shareholdings
Unit: share
| Total Number of Common Shareholders at The End of The Reporting Period | 153,835 | Total Number of Preferred Shareholders (If Any) (Refer to Note 8) Whose Voting Rights have been Recovered at the End of the Reporting Period | 0 | |||||||
| Shareholding list of common shareholders with over 5% shares or top ten shareholders | ||||||||||
| Name of Shareholder | Nature Of Shareholder | Shareholding Percentage | Number of common shares held at the end of the reporting period | Changes in the reporting period | Number of common shares held with limited sales conditions | Number of common shares held without limited sales condition | Pledges, markings or freezings | |||
| State Of Shares | Number | |||||||||
| Fu Liquan | Domestic Natural Person | 34.18% | 1,023,868,980 | 0 | 767,901,735 | 255,967,245 | Pledge | 151,287,942 | ||
| Zhu Jiangming | Domestic | 5.36% | 160,577,490 | 0 | 120,433,11 | 40,144,373 | Pledge | 10,600,000 | ||
| Natural Person | 7 | |||||||
| Hong Kong Securities Clearing Co. Ltd. | Overseas Legal Person | 3.91% | 117,056,918 | 16,521,433 | 0 | 117,056,918 | ||
| Shanghai Perseverance Asset Management (Limited Partnership) - Gaoyi Linshan No.1 Yuanwang Fund | Others | 3.34% | 100,000,000 | -38,000,000 | 0 | 100,000,000 | ||
| Chen Ailing | Domestic Natural Person | 2.38% | 71,262,813 | 0 | 53,447,110 | 17,815,703 | Pledge | 21,100,000 |
| Wu Jun | Domestic Natural Person | 2.31% | 69,250,886 | 0 | 51,938,164 | 17,312,722 | ||
| China Galaxy Securities Co., Ltd. | State-owned Legal Person | 1.50% | 44,930,751 | -9,706,649 | 0 | 44,930,751 | ||
| China Securities Finance Co., Ltd. | Domestic Non-state-owned Legal Person | 1.32% | 39,611,241 | 0 | 0 | 39,611,241 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned Legal Person | 1.05% | 31,448,750 | 0 | 0 | 31,448,750 | ||
| Shanghai Greenwoods Asset Management Co., Ltd. - Greenwoods Global Fund | Others | 0.95% | 28,361,893 | -2,255,500 | 0 | 28,361,893 | ||
| Description of the association relationship or concerted action of above-mentioned | Mr. Fu Liquan And Ms. Chen Ailing Are Husband and Wife. The Company Is Unaware of Whether Other Shareholders Have Associated Relationship or Are Persons Acting in Concert. | |||||||
| shareholders | |||
| Explanation of the above shareholders involved in proxy/trustee voting rights and abstention from voting rights | N/A | ||
| Shareholding list of top ten common shareholders without limited sales condition | |||
| Name of Shareholder | Number of common shares held without limited sales condition at the end of the reporting period | Type of shares | |
| Type of shares | Number | ||
| Fu Liquan | 255,967,245 | RMB common stock | 255,967,245 |
| Hong Kong Securities Clearing Co. Ltd. | 117,056,918 | RMB common stock | 117,056,918 |
| Shanghai Perseverance Asset Management (Limited Partnership) - Gaoyi Linshan No.1 Yuanwang Fund | 100,000,000 | RMB common stock | 100,000,000 |
| China Galaxy Securities Co., Ltd. | 44,930,751 | RMB common stock | 44,930,751 |
| Zhu Jiangming | 40,144,373 | RMB common stock | 40,144,373 |
| China Securities Finance Co., Ltd. | 39,611,241 | RMB common stock | 39,611,241 |
| Central Huijin Asset Management Co., Ltd. | 31,448,750 | RMB common stock | 31,448,750 |
| Shanghai Greenwoods Asset Management Co., Ltd. - Greenwoods Global Fund | 28,361,893 | RMB common stock | 28,361,893 |
| National Social Security Fund一一一 portfolio | 23,599,431 | RMB common stock | 23,599,431 |
| Agricultural Bank of China Co., Ltd. - Shanghai Investment Morgan Emerging Power Hybrid Securities Investment Fund | 18,384,960 | RMB common stock | 18,384,960 |
| Explanation on associated relationship or persons acting in concert among top ten common shareholders without limited shares, and between top ten common shareholders without limited shares and top ten common shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband and Wife. The Company Is Unaware of Whether Other Shareholders Have Associated Relationship or Are Persons Acting in Concert. | ||
Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree onany repurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed onrepurchase in the reporting period.IV. Shareholding Changes of Directors, Supervisors and Senior Executives
□ Applicable √ Not applicable
There were no changes in the shareholding of directors, supervisors and senior executives of the Company during thereporting period. For details, please refer to the 2020 Annual Report.V. Change of the Controlling Shareholders and Actual ControllerChange of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the CompanyChange of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting period
Section VIII Information of Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares in the reporting period.
Section IX Situation on Corporate Bonds
□ Applicable √ Not applicable
Section X Financial ReportI. Audit ReportsHas the semi-annual report been audited?
□ Yes √ No
The Company’s semi-annual financial report has not been audited.II. Financial StatementsUnits of financial reports in the notes: yuan
1. Consolidated Balance Sheet
Prepared by: Zhejiang Dahua Technology Co., Ltd.
June 30, 2021
Unit: RMB
| Item | June 30, 2021 | December 31, 2020 |
| Current Assets: | ||
| Cash and Bank Balances | 6,690,863,029.69 | 7,471,652,634.66 |
| Deposit Reservation for Balance | ||
| Loans to Banks and Other Financial Institutions | ||
| Trading Financial Assets | 9,614,978.97 | 2,475,680.45 |
| Derivative Financial Assets | ||
| Notes receivable | 265,137,658.91 | 232,857,354.55 |
| Accounts receivable | 12,779,041,456.90 | 12,857,519,110.16 |
| Receivables Financing | 901,192,858.59 | 1,207,879,654.58 |
| Prepayments | 182,899,790.83 | 162,250,648.05 |
| Premium Receivable | ||
| Reinsurance Accounts Receivable | ||
| Reinsurance Contract Reserves Receivable | ||
| Other Receivables | 922,620,846.22 | 970,427,893.48 |
| Including: interest receivable |
| Dividends Receivable | ||
| Buying Back the Sale of Financial Assets | ||
| Inventory | 7,312,285,468.20 | 4,928,019,838.00 |
| Contract Assets | 111,283,472.17 | 84,825,834.82 |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 622,854,205.58 | 635,956,549.07 |
| Other Current Assets | 720,101,094.63 | 558,434,219.93 |
| Subtotal of Current Assets | 30,517,894,860.69 | 29,112,299,417.75 |
| Non-current Assets: | ||
| Granting of loans and advances | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 2,069,432,687.70 | 2,250,315,769.50 |
| Long-term Equity Investment | 820,449,863.74 | 455,977,616.16 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 937,923,581.60 | 360,087,786.34 |
| Investment Property | 320,218,828.49 | 336,008,869.13 |
| Fixed Assets | 1,979,508,213.29 | 1,515,594,629.97 |
| Projects under Construction | 1,250,289,385.41 | 1,164,130,453.03 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 205,470,210.43 | |
| Intangible Assets | 587,307,545.91 | 406,777,323.39 |
| Development Expenditure | ||
| Goodwill | 42,685,490.30 | 42,685,490.30 |
| Long-term Deferred Expenses | 34,259,213.84 | 32,280,430.67 |
| Deferred Income Tax Assets | 923,271,010.59 | 832,453,676.69 |
| Other Non-current Assets | 77,223,405.16 | 86,422,617.82 |
| Subtotal of Non-current Assets | 9,248,039,436.46 | 7,482,734,663.00 |
| Total Assets | 39,765,934,297.15 | 36,595,034,080.75 |
| Current Liabilities: | ||
| Short-term loan | 1,104,598,520.22 | 250,177,083.34 |
| Borrowings from the Central Bank | ||
| Borrowings from Banks and Other Financial Institutions | ||
| Transactional financial liabilities | 450,897.52 | |
| Derivative Financial Liabilities | ||
| Notes Payable | 3,610,134,581.74 | 3,258,552,758.17 |
| Accounts Payable | 6,781,697,701.64 | 6,444,787,705.28 |
| Received Prepayments | ||
| Contract liabilities | 895,221,177.02 | 671,120,385.08 |
| Financial Assets Sold for Repurchase | ||
| Deposit Taking and Interbank Deposit | ||
| Receiving from Vicariously Traded Securities | ||
| Receiving from Vicariously Sold Securities | ||
| Payroll payable | 931,580,109.46 | 1,805,464,535.31 |
| Tax Payable | 353,698,201.33 | 900,144,863.67 |
| Other Payables | 717,772,801.38 | 970,552,877.22 |
| Including: interest payable | ||
| Dividends Payable | 17,855,221.21 | 12,982,399.27 |
| Service Charge and Commission Payable | ||
| Reinsurance Accounts Payable | ||
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 258,830,507.33 | 151,891,709.34 |
| Other Current Liabilities | 261,106,901.25 | 209,401,914.77 |
| Subtotal of Current Liabilities | 14,915,091,398.89 | 14,662,093,832.18 |
| Non-current Liabilities: | ||
| Insurance Contract Reserves | ||
| Long-term loan | 1,903,000,000.00 | 878,000,000.00 |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | 107,606,799.04 | |
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 261,028,749.21 | 282,427,517.82 |
| Deferred Income | 107,015,834.93 | 110,469,806.29 |
| Deferred Income Tax Liabilities | 74,325,425.30 | 67,272,768.46 |
| Other Non-current Liabilities | 358,620,950.30 | 391,128,045.90 |
| Subtotal of Non-current Liabilities | 2,811,597,758.78 | 1,729,298,138.47 |
| Total Liabilities | 17,726,689,157.67 | 16,391,391,970.65 |
| Shareholders' Equity: | ||
| Share Capital | 2,994,550,730.00 | 2,995,579,590.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 2,592,929,671.76 | 1,989,655,334.05 |
| Less: Treasury Share | 325,372,156.35 | 581,968,930.89 |
| Other Comprehensive Incomes | 90,890,444.47 | 61,157,523.13 |
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 |
| General Risk Reserves | ||
| Undistributed Profits | 14,595,777,271.43 | 13,754,915,904.19 |
| Total Shareholders' Equity Attributable to the Parent Company | 21,502,466,967.23 | 19,773,030,426.40 |
| Minority Shareholders' Equity | 536,778,172.25 | 430,611,683.70 |
| Total Shareholders' Equity | 22,039,245,139.48 | 20,203,642,110.10 |
| Total Liabilities and Shareholders' Equity | 39,765,934,297.15 | 36,595,034,080.75 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accounting institution: Zhu Zhuling
2. Balance Sheet of the Parent Company
Unit: RMB
| Item | June 30, 2021 | December 31, 2020 |
| Current Assets: | ||
| Cash and Bank Balances | 2,025,259,800.74 | 3,130,479,311.55 |
| Trading Financial Assets | ||
| Derivative Financial Assets | ||
| Notes receivable | 87,323,059.42 | 74,284,006.99 |
| Accounts receivable | 4,896,685,881.86 | 2,740,152,239.35 |
| Receivables Financing | 824,238,249.20 | 169,109,529.24 |
| Prepayments | 35,872,413.73 | 48,203,550.97 |
| Other Receivables | 12,569,808,120.45 | 13,796,603,550.30 |
| Including: interest receivable | ||
| Dividends Receivable | ||
| Inventory | 174,404,826.80 | 171,756,222.72 |
| Contract Assets | 8,015,054.45 | 8,338,657.15 |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 59,447,481.09 | 61,828,724.54 |
| Other Current Assets | 13,503,095.37 | 12,592.38 |
| Subtotal of Current Assets | 20,694,557,983.11 | 20,200,768,385.19 |
| Non-current Assets: | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 84,172,743.65 | 100,221,713.49 |
| Long-term Equity Investment | 4,080,499,755.47 | 3,660,410,557.29 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 911,867,081.60 | 355,853,684.59 |
| Investment Property | 166,276,925.08 | 173,003,549.71 |
| Fixed Assets | 582,009,977.21 | 550,991,444.04 |
| Projects under Construction | 592,328,669.32 | 438,014,907.22 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 86,093,925.51 |
| Intangible Assets | 149,118,648.79 | 156,335,152.97 |
| Development Expenditure | ||
| Goodwill | ||
| Long-term Deferred Expenses | 17,074,922.32 | 21,149,342.55 |
| Deferred Income Tax Assets | 117,342,881.29 | 135,371,242.86 |
| Other Non-current Assets | 5,058,584.78 | 35,774,247.16 |
| Subtotal of Non-current Assets | 6,791,844,115.02 | 5,627,125,841.88 |
| Total Assets | 27,486,402,098.13 | 25,827,894,227.07 |
| Current Liabilities: | ||
| Short-term loan | 250,023,003.47 | 250,177,083.34 |
| Transactional financial liabilities | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 271,118,597.42 | 303,660,579.62 |
| Accounts Payable | 614,175,514.19 | 752,373,890.95 |
| Received Prepayments | ||
| Contract liabilities | 50,494,831.34 | 85,275,423.36 |
| Payroll payable | 582,075,190.23 | 1,127,500,408.14 |
| Tax Payable | 237,773,945.08 | 627,351,201.46 |
| Other Payables | 760,021,878.84 | 1,002,654,121.27 |
| Including: interest payable | ||
| Dividends Payable | 17,855,221.21 | 12,982,399.27 |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 184,129,502.07 | 150,643,750.02 |
| Other Current Liabilities | 43,129,441.92 | 26,870,130.42 |
| Subtotal of Current Liabilities | 2,992,941,904.56 | 4,326,506,588.58 |
| Non-current Liabilities: | ||
| Long-term loan | 1,800,000,000.00 | 750,000,000.00 |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | 42,559,262.89 | |
| Long-term Payables | ||
| Long-term payroll payable |
| Expected Liabilities | 3,515,158.54 | 8,333,634.18 |
| Deferred Income | ||
| Deferred Income Tax Liabilities | 43,117,540.51 | 29,407,289.24 |
| Other Non-current Liabilities | 6,823,336.37 | 10,599,934.34 |
| Subtotal of Non-current Liabilities | 1,896,015,298.31 | 798,340,857.76 |
| Total Liabilities | 4,888,957,202.87 | 5,124,847,446.34 |
| Shareholders' Equity: | ||
| Share Capital | 2,994,550,730.00 | 2,995,579,590.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 2,589,617,306.53 | 1,976,156,775.91 |
| Less: Treasury Share | 325,372,156.35 | 581,968,930.89 |
| Other Comprehensive Incomes | 537,733.09 | 522,554.00 |
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 |
| Undistributed Profits | 15,784,420,276.07 | 14,759,065,785.79 |
| Total Shareholders' Equity | 22,597,444,895.26 | 20,703,046,780.73 |
| Total Liabilities and Shareholders' Equity | 27,486,402,098.13 | 25,827,894,227.07 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2021 Semi-Annual | 2020 Semi-Annual |
| I. Total Operating Revenue | 13,505,005,733.89 | 9,838,328,853.62 |
| Including: Operating Revenue | 13,505,005,733.89 | 9,838,328,853.62 |
| Interest Income | ||
| Earned Premiums | ||
| Service Charge and Commission Income | ||
| II. Total Operating Cost | 11,947,184,367.94 | 8,605,447,370.85 |
| Including: Operating Cost | 7,910,714,928.97 | 5,099,250,150.57 |
| Interest Expenditures | ||
| Service Charge and Commission Expenses |
| Surrender Value | ||
| Net Claims Paid | ||
| The Net Amount Withdrawn for Insurance Liability Reserves | ||
| Policyholder Dividend Expense | ||
| Reinsurance Cost | ||
| Taxes and Surcharges | 100,270,188.53 | 55,143,183.10 |
| Sales Expenses | 2,059,001,711.42 | 1,805,227,134.27 |
| Administration expenses | 393,272,171.06 | 355,781,491.22 |
| Research and development expense | 1,406,249,326.81 | 1,314,612,940.95 |
| Financial Expenses | 77,676,041.15 | -24,567,529.26 |
| Including: interest expenses | 44,547,319.17 | 36,633,828.03 |
| Interest Income | 114,759,041.30 | 82,236,920.48 |
| Add: Other income | 426,519,272.06 | 458,546,321.24 |
| Investment Income (Mark "-" for Loss) | -127,515,259.00 | -32,178,746.19 |
| Including: Investment Income from Affiliates and Joint Ventures | -155,395,120.84 | -44,335,467.10 |
| Profits from recognition Termination of Financial Assets at Amortized Cost | ||
| Exchange Gains (Mark "-" for Losses) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 123,946,629.03 | 17,009,143.17 |
| Credit Impairment Losses (Mark "-" for Loss) | -368,461,594.95 | -87,762,680.91 |
| Asset Impairment Losses (Mark "-" for Loss) | -9,923,448.05 | -42,303,107.35 |
| Asset Disposal Income (Mark "-" for Loss) | 33,002,441.01 | 10,307.31 |
| III. Operating Profit (Mark "-" for Loss) | 1,635,389,406.05 | 1,546,202,720.04 |
| Add: Non-operating Revenues | 6,539,902.55 | 6,124,434.50 |
| Less: Non-operating Expenses | 4,968,968.32 | 12,034,840.16 |
| IV. Total Profit (Mark "-" for Total Loss) | 1,636,960,340.28 | 1,540,292,314.38 |
| Less: Income Tax Expense | -38,451,185.77 | 169,559,416.73 |
| V. Net Profit (Mark "-" for Net Loss) | 1,675,411,526.05 | 1,370,732,897.65 |
| (I) Classified by operation continuity | ||
| 1. Net Profit as a Going Concern (Mark "-" for Net Loss) | 1,675,411,526.05 | 1,370,732,897.65 |
| 2. Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| (II) Classified by the attribution of ownership | ||
| 1. Net Profit Attributable to the Parent Company's Owner | 1,643,175,887.55 | 1,368,974,364.44 |
| 2. Minority Shareholders' Profit and Loss | 32,235,638.50 | 1,758,533.21 |
| VI. Net Amount of Other Comprehensive Incomes after Tax | 29,802,949.19 | 1,838,733.32 |
| Net Amount of Other Comprehensive Incomes after Tax Attributable to the Parent Company's Owner | 29,732,921.34 | 1,838,745.43 |
| (I) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income | 29,732,921.34 | 1,838,745.43 |
| that will be reclassified as P/L | ||
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference | 31,016,888.78 | 1,838,745.43 |
| 7. Others | -1,283,967.44 | |
| Net Amount of Other Comprehensive Incomes After Tax Attributable to Minority Shareholders | 70,027.85 | -12.11 |
| VII. Total Comprehensive Income | 1,705,214,475.24 | 1,372,571,630.97 |
| Total Comprehensive Income Attributable to the Parent Company's Owner | 1,672,908,808.89 | 1,370,813,109.87 |
| Total Comprehensive Income Attributable to Minority Shareholders | 32,305,666.35 | 1,758,521.10 |
| VIII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 0.56 | 0.47 |
| (II) Diluted Earnings per Share | 0.56 | 0.47 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accountinginstitution: Zhu Zhuling
4. Income Statement of the Parent Company
Unit: RMB
| Item | 2021 Semi-Annual | 2020 Semi-Annual |
| I. Operating Revenue | 4,167,159,930.09 | 3,624,985,329.95 |
| Less: Operating Cost | 526,172,609.28 | 464,299,570.21 |
| Taxes and Surcharges | 53,634,639.42 | 37,785,882.54 |
| Sales Expenses | 823,745,443.38 | 763,855,586.98 |
| Administration expenses | 211,532,912.39 | 209,844,615.20 |
| Research and development expense | 1,068,320,197.31 | 1,047,270,644.13 |
| Financial Expenses | -19,195,740.24 | 5,634,218.96 |
| Including: interest expenses | 32,381,777.40 | 32,511,309.24 |
| Interest Income | 54,366,366.58 | 29,029,575.89 |
| Add: Other income | 357,721,494.76 | 384,657,520.57 |
| Investment Income (Mark "-" for Loss) | -156,962,757.83 | -37,634,661.64 |
| Including: Investment Income from Affiliates and Joint Ventures | -171,271,964.55 | -45,152,368.00 |
| Profits from Derecognition of Financial Assets at Amortized Cost (Mark "-" for Loss) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 95,451,596.20 | 16,604,759.61 |
| Credit Impairment Losses (Mark "-" for Loss) | -15,404,331.60 | -5,673,952.18 |
| Asset Impairment Losses (Mark "-" for Loss) | -634,899.32 | -4,696,447.86 |
| Asset Disposal Income (Mark "-" for Loss) | 33,259,190.66 | 10,000.01 |
| II. Operating Profit (Mark "-" for Loss) | 1,816,380,161.42 | 1,449,562,030.44 |
| Add: Non-operating Revenues | 4,455,730.54 | 2,972,951.40 |
| Less: Non-operating Expenses | 581,042.68 | 6,055,686.02 |
| III. Total Profit (Mark "-" for Total Loss) | 1,820,254,849.28 | 1,446,479,295.82 |
| Less: Income Tax Expense | -7,414,161.31 | 105,871,539.11 |
| IV. Net Profit (Mark "-" for Net Loss) | 1,827,669,010.59 | 1,340,607,756.71 |
| (I) Net Profit as a Going Concern (Mark "-" for Net Loss) | 1,827,669,010.59 | 1,340,607,756.71 |
| (II) Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| V. Net Amount of Other Comprehensive Incomes After Tax | 15,179.09 | |
| (I) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified as P/L | 15,179.09 | |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference |
| 7. Others | 15,179.09 | |
| VI. Total Comprehensive Income | 1,827,684,189.68 | 1,340,607,756.71 |
| VII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 0.62 | 0.46 |
| (II) Diluted Earnings per Share | 0.62 | 0.46 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2021 Semi-Annual | 2020 Semi-Annual |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 15,020,513,603.09 | 12,453,860,700.45 |
| Net Increase in Customer's Bank Deposits and Interbank Deposits | ||
| Net Increase in Borrowings from the Central Bank | ||
| Net Increase in Borrowings from Other Financial Institutions | ||
| Cash Arising from Receiving Premiums for the Original Insurance Contract | ||
| Net Amount Arising from Reinsurance Business | ||
| Net Increase in Deposits and Investments from Policyholders | ||
| Cash Arising from Interests, Service Charges and Commissions | ||
| Net Increase in Borrowings from Banks and Other Financial Institutions | ||
| Net Increase in Repurchase Business Funds | ||
| Net Amount of Cash Received from the Vicariously Traded Securities |
| Tax Refund | 1,098,611,055.94 | 1,193,492,111.32 |
| Other Received Cashes Related to Operational Activities | 149,033,785.99 | 139,593,191.08 |
| Subtotal of cash inflow from operational activities | 16,268,158,445.02 | 13,786,946,002.85 |
| Cash Paid for Merchandise and Services | 10,963,754,585.76 | 8,806,532,224.04 |
| Net Increase in Loans and Advances to Customers | ||
| Net Increase in Deposits with Central Bank and Other Financial Institutions | ||
| Cash Paid for Original Insurance Contract Claims | ||
| Net increase of funds lent | ||
| Cash Paid for Interests, Service Charges and Commissions | ||
| Cash Paid for Policy Dividends | ||
| Cash Paid to and for Employees | 3,831,211,412.30 | 3,126,225,617.57 |
| Cash Paid for Taxes and Surcharges | 1,263,501,986.02 | 1,114,316,698.90 |
| Other Paid Cashes Related to Operational Activities | 1,080,799,258.93 | 846,799,426.29 |
| Subtotal of cash outflow from operational activities | 17,139,267,243.01 | 13,893,873,966.80 |
| Net cash flow generated by operating activities | -871,108,797.99 | -106,927,963.95 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 803,318,288.20 | 212,000,000.00 |
| Cash Arising from Investment Incomes | 12,730,576.24 | 7,031,342.00 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 47,268,105.91 | 851,832.61 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business |
| Units | ||
| Other Received Cashes Related to Investment Activities | 56,003,510.94 | 135,010,923.00 |
| Subtotal of cash inflow from investment activities | 919,320,481.29 | 354,894,097.61 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 579,246,808.15 | 250,327,215.67 |
| Cash Paid for Investments | 1,302,000,000.00 | 1,272,547,000.00 |
| Net Increase in Pledge Loans | ||
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | 13,107,855.82 | 79,560,273.93 |
| Subtotal of cash outflows from investment activities | 1,894,354,663.97 | 1,602,434,489.60 |
| Net amount of cash flow generated by investment activities | -975,034,182.68 | -1,247,540,391.99 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 52,905,784.31 | 59,440,000.00 |
| Including: Cash Arising from Subsidiaries Absorbing Investments by Minority Shareholders | 52,905,784.31 | 59,440,000.00 |
| Cash Arising from Borrowings | 2,728,079,926.55 | 3,324,530,906.01 |
| Other Received Cashes Related to Financing Activities | 867,776,937.16 | |
| Subtotal of cash inflow from financing activities | 2,780,985,710.86 | 4,251,747,843.17 |
| Cash Paid for Debts Repayment | 829,079,926.55 | 1,663,711,726.38 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 829,253,962.62 | 418,919,503.17 |
| Including: Dividends and Profits Paid to Minority Shareholders by |
| Subsidiaries | ||
| Other Paid Cashes Related to Financing Activities | 49,649,564.91 | 767,782,756.00 |
| Subtotal of cash outflow from financing activities | 1,707,983,454.08 | 2,850,413,985.55 |
| Net cash flow generated by financing activities | 1,073,002,256.78 | 1,401,333,857.62 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -35,603,147.83 | -430,036.43 |
| V. Net Increase in Cash and Cash Equivalents | -808,743,871.72 | 46,435,465.25 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 7,358,452,769.53 | 2,734,185,976.41 |
| VI. Cash and Cash Equivalents at the End of the Period | 6,549,708,897.81 | 2,780,621,441.66 |
6. Cash Flow Statement of the Parent Company
Unit: RMB
| Item | 2021 Semi-Annual | 2020 Semi-Annual |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 1,594,534,564.89 | 7,212,656,097.72 |
| Tax Refund | 313,656,061.60 | 395,396,831.40 |
| Other Received Cashes Related to Operational Activities | 93,670,216.79 | 68,383,248.19 |
| Subtotal of cash inflow from operational activities | 2,001,860,843.28 | 7,676,436,177.31 |
| Cash Paid for Merchandise and Services | 623,359,985.97 | 507,090,103.14 |
| Cash Paid to and for Employees | 2,116,190,187.65 | 1,905,848,316.86 |
| Cash Paid for Taxes and Surcharges | 818,858,618.53 | 670,752,521.48 |
| Other Paid Cashes Related to | 557,213,500.36 | 452,566,064.54 |
| Operational Activities | ||
| Subtotal of cash outflow from operational activities | 4,115,622,292.51 | 3,536,257,006.02 |
| Net cash flow generated by operating activities | -2,113,761,449.23 | 4,140,179,171.29 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 803,318,288.20 | 199,900,000.00 |
| Cash Arising from Investment Incomes | 3,629,417.41 | 7,031,342.00 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 58,522,097.94 | 7,862,105.25 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 63,493,496.46 | |
| Subtotal of cash inflow from investment activities | 865,469,803.55 | 278,286,943.71 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 178,160,791.03 | 137,011,698.40 |
| Cash Paid for Investments | 1,348,140,000.00 | 1,309,807,000.00 |
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | ||
| Subtotal of cash outflows from investment activities | 1,526,300,791.03 | 1,446,818,698.40 |
| Net amount of cash flow generated by investment activities | -660,830,987.48 | -1,168,531,754.69 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments |
| Cash Arising from Borrowings | 1,679,079,926.55 | 1,889,800,000.00 |
| Other Received Cashes Related to Financing Activities | 2,243,043,904.46 | 1,487,145,393.24 |
| Subtotal of cash inflow from financing activities | 3,922,123,831.01 | 3,376,945,393.24 |
| Cash Paid for Debts Repayment | 629,079,926.55 | 599,800,000.00 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 822,052,988.68 | 410,133,298.68 |
| Other Paid Cashes Related to Financing Activities | 814,356,149.58 | 5,735,303,661.46 |
| Subtotal of cash outflow from financing activities | 2,265,489,064.81 | 6,745,236,960.14 |
| Net cash flow generated by financing activities | 1,656,634,766.20 | -3,368,291,566.90 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -55,649.44 | -73,606.83 |
| V. Net Increase in Cash and Cash Equivalents | -1,118,013,319.95 | -396,717,757.13 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 3,090,496,504.00 | 860,741,299.14 |
| VI. Cash and Cash Equivalents at the End of the Period | 1,972,483,184.05 | 464,023,542.01 |
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
Unit: RMB
| Item | 2021 Semi-Annual | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,995,579,590.00 | 1,989,655,334.05 | 581,968,930.89 | 61,157,523.13 | 1,553,691,005.92 | 13,754,915,904.19 | 19,773,030,426.40 | 430,611,683.70 | 20,203,642,110.10 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,995,579,590.00 | 1,989,655,334.05 | 581,968,930.89 | 61,157,523.13 | 1,553,691,005.92 | 13,754,915,904.19 | 19,773,030,426.40 | 430,611,683.70 | 20,203,642,110.10 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -1,028,860.00 | 603,274,337.71 | -256,596,774.54 | 29,732,921.34 | 840,861,367.24 | 1,729,436,540.83 | 106,166,488.55 | 1,835,603,029.38 | |||||||
| (I) Total Comprehensive Income | 29,732,921.34 | 1,643,175,887.55 | 1,672,908,808.89 | 32,305,666.35 | 1,705,214,475.24 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -1,028,860.00 | 87,107,863.62 | -256,596,774.54 | 342,675,778.16 | 69,441,533.51 | 412,117,311.67 | |||||||||
| 1． Common stock invested by the owner | -1,028,860.00 | -7,461,896.20 | -256,596,774.54 | 248,106,018.34 | 51,074,269.52 | 299,180,287.86 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 94,569,759.82 | 94,569,759.82 | 18,367,263.99 | 112,937,023.81 | |||||||||||
| 4． Others | |||||||||||||||
| (III) Profit | -802,314,5 | -802,314,5 | -802,314, |
| Distribution | 20.31 | 20.31 | 520.31 | ||||||||||||
| 1． Appropriation of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -802,314,520.31 | -802,314,520.31 | -802,314,520.31 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special |
| Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 516,166,474.09 | 516,166,474.09 | 4,419,288.69 | 520,585,762.78 | |||||||||||
| IV. Balance at the End of This Period | 2,994,550,730.00 | 2,592,929,671.76 | 325,372,156.35 | 90,890,444.47 | 1,553,691,005.92 | 14,595,777,271.43 | 21,502,466,967.23 | 536,778,172.25 | 22,039,245,139.48 |
Amount of Previous Period
Unit: RMB
| Item | 2020 Semi-Annual | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 3,003,713,230.00 | 1,882,855,119.53 | 1,057,584,258.31 | 12,308,276.23 | 1,553,691,005.92 | 10,248,023,654.54 | 15,643,007,027.91 | 333,160,683.75 | 15,976,167,711.66 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 3,003,713,230.00 | 1,882,855,119.53 | 1,057,584,258.31 | 12,308,276.23 | 1,553,691,005.92 | 10,248,023,654.54 | 15,643,007,027.91 | 333,160,683.75 | 15,976,167,711.66 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -2,247,700.00 | -48,671,349.18 | -428,452,683.70 | 1,838,745.43 | 971,781,988.66 | 1,351,154,368.61 | 60,254,389.76 | 1,411,408,758.37 | |||||||
| (I) Total Comprehensive | 1,838,745.43 | 1,368,974,364.44 | 1,370,813,109.87 | 1,758,521.10 | 1,372,571,630.97 | ||||||||||
| Income | |||||||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -2,247,700.00 | -49,972,123.11 | -428,452,683.70 | 376,232,860.59 | 59,440,000.00 | 435,672,860.59 | |||||||||
| 1． Common stock invested by the owner | -2,247,700.00 | -119,640,368.28 | -428,452,683.70 | 306,564,615.42 | 59,440,000.00 | 366,004,615.42 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 69,668,245.17 | 69,668,245.17 | 69,668,245.17 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | -397,192,375.78 | -397,192,375.78 | -397,192,375.78 | ||||||||||||
| 1． Appropriation of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -397,192,375.78 | -397,192,375.78 | -397,192,375.78 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) |
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 1,300,773.93 | 1,300,773.93 | -944,131.34 | 356,642.59 | |||||||||||
| IV. Balance at the End of This Period | 3,001,465,530.00 | 1,834,183,770.35 | 629,131,574.61 | 14,147,021.66 | 1,553,691,005.92 | 11,219,805,643.20 | 16,994,161,396.52 | 393,415,073.51 | 17,387,576,470.03 |
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
| Item | 2021 Semi-Annual | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the | 2,995,579,590.00 | 1,976,156,775.91 | 581,968,930.8 | 522,554.00 | 1,553,691,005.9 | 14,759,065,7 | 20,703,046,780.73 | |||||
| End of Last Year | 9 | 2 | 85.79 | |||||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,995,579,590.00 | 1,976,156,775.91 | 581,968,930.89 | 522,554.00 | 1,553,691,005.92 | 14,759,065,785.79 | 20,703,046,780.73 | |||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -1,028,860.00 | 613,460,530.62 | -256,596,774.54 | 15,179.09 | 1,025,354,490.28 | 1,894,398,114.53 | ||||||
| (I) Total Comprehensive Income | 15,179.09 | 1,827,669,010.59 | 1,827,684,189.68 | |||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -1,028,860.00 | 94,706,282.63 | -256,596,774.54 | 350,274,197.17 | ||||||||
| 1． Common stock invested by the owner | -1,028,860.00 | -7,461,896.20 | -256,596,774.54 | 248,106,018.34 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 102,168,178.83 | 102,168,178.83 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | -802,314,520.31 | -802,314,520.31 | ||||||||||
| 1． Appropriation of Surplus |
| Reserves | ||||||||||||
| 2． Distribution to Owners (or Shareholders) | -802,314,520.31 | -802,314,520.31 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period |
| (VI) Others | 518,754,247.99 | 518,754,247.99 | ||||||||||
| IV. Balance at the End of This Period | 2,994,550,730.00 | 2,589,617,306.53 | 325,372,156.35 | 537,733.09 | 1,553,691,005.92 | 15,784,420,276.07 | 22,597,444,895.26 |
Amount of Previous Period
Unit: RMB
| Item | 2020 Semi-Annual | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 | ||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -2,247,700.00 | -49,250,688.72 | -428,452,683.70 | 943,415,380.93 | 1,320,369,675.91 | |||||||
| (I) Total Comprehensive Income | 1,340,607,756.71 | 1,340,607,756.71 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -2,247,700.00 | -49,250,688.72 | -428,452,683.70 | 376,954,294.98 | ||||||||
| 1． Common stock invested by the owner | -2,247,700.00 | -119,640,368.28 | -428,452,683.70 | 306,564,615.42 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 70,389,679.56 | 70,389,679.56 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | -397,192,375.78 | -397,192,375.78 | ||||||||||
| 1． Appropriation of Surplus Reserves | ||||||||||||
| 2． Distribution to Owners (or Shareholders) | -397,192,375.78 | -397,192,375.78 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings |
| of the Comprehensive Income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the End of This Period | 3,001,465,530.00 | 1,818,239,212.32 | 629,131,574.61 | 1,553,691,005.92 | 11,340,904,217.51 | 17,085,168,391.14 |
III. Basic Information about the CompanyZhejiang Dahua Technology Co., Ltd. (hereinafter referred to as “Company” or “the Company”) was incorporated underthe official approval document No. 18 [2002] issued by Zhejiang Provincial People's Government Work Leading Group forEnterprise Listing in June 2002, a stock company limited established on the basis of overall change of the formerHangzhou Dahua Information Technology Co., Ltd., co-founded by 5 natural persons, Fu Liquan, Chen Ailing, ZhuJiangming, Liu Yunzhen and Chen Jianfeng.On April 22, 2008, the Company issued RMB 16.8 million shares of common stock to the general public for the first timeunder the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China Securities RegulatoryCommission (“CSRC”). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registered capital of RMB
66.8million and the change registration filed with Administration for Industry and Commerce was completed on May 23,2008. The Company’s unified social credit code is 91330000727215176K. The Company falls within the video IOTindustry.As of June 30, 2021, the Company has issued a total of 2,995,579,590shares, with a registered capital of RMB2,995,579,590.00. The registered address is No.1187, Bin’an Road, Binjiang District, Hangzhou, and the headquartersaddress is No.1199, Bin’an Road, Binjiang District, Hangzhou. The Company's main operation activities include thedevelopment, services & sales of computer software, the design, development, production, installation & sales ofelectronic products and communication products, the development, system integration & sales of network products, thedesign & installation of electronic engineering products, information technology consulting service, import & exportbusinesses. (Refer to the “Importer and Exporter Qualification” for the details of the scope). (For items subject to approvalaccording to law, business activities can only be carried out after approval by relevant departments)The actual controllers of the Company are Fu Liquan and Chen Ailing.This financial statement has been approved by Board of Directors on August 27, 2021.For details of the scope of the consolidated financial statement for the current period, refer to Notes IX “Equity in OtherEntities”, and for details of the changes in the scope of the consolidated financial statement for the current period, pleaserefer to Notes VIII “Changes in the Scope of Consolidation”.
IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Company prepares the financial statement, on a going concern basis, based on actual transactions and matters, inaccordance with Accounting Standards for Business Enterprises - Basic Standards issued by the Ministry of Finance andall specific accounting standards, application guidelines of accounting standards for business enterprises, explanations onthe accounting standards for business enterprises and other related regulations (hereinafter referred to as “AccountingStandards for Business Enterprises” collectively, and the disclosure provisions in the Preparation Rules for InformationDisclosures by Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reports issued byCSRC.
2. Going concern
The Company has the capability to continue operation for at least 12 months from the end of the current reporting period,without any significant event affecting the continuing operation.
V. Significant Accounting Polices and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
The following disclosures cover the specific accounting policies and accounting estimates formulated by the Companyaccording to the characteristics of its production and operation.
1. Statement on compliance with Accounting Standards for Business EnterprisesThis financial statement is in compliance with the requirements on the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance and presents truly and completely the financial position of the consolidatedcompanies and the parent company as at June 30, 2021 and the operating results and cash flows of the consolidation andthe parent company for the first half of 2021.
2. Accounting period
The accounting period of the Company is from January 1 to December 31 of each calendar year.
3. Operating cycle
The Company's operating cycle is 12 months.
4. Functional currency
For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited, thereporting currency is Renminbi ("RMB"). The remaining overseas operating entities determine the appropriate currency tobe their functional currency based on the currency of the primary economic environment in which they operate.
5. The accounting treatment of business combinations involving enterprises under commoncontrol and business combinations not involving enterprises under common controlBusiness combination under common control: The assets and liabilities acquired by the merging party in businesscombination shall be measured at the book value of the assets, liabilities of the merged party (including goodwill incurredin the acquisition of the merged party by ultimate controlling party) in the consolidated financial statements of the ultimatecontrolling party on the date of combination. The difference between the book value of the net assets obtained and thebook value of the consideration paid for the combination (or total nominal value of the issued shares) is adjusted to capitalpremium in capital reserve. Adjustments shall be made to retained earnings in the event that the share premiums in thecapital reserves are not sufficient for write-down.Business combinations involving entities not under common control: The assets paid and liabilities incurred or committedas a consideration of business combination by the merging party were measured at fair value on the date of acquisitionand the difference between the fair value and its book value shall be charged to the profit or loss for the period. Where thecost of combination is higher than the fair value of the identifiable net assets acquired from the merging party in businesscombination, such difference shall be recognized as goodwill; where the cost of combination is less than the fair value ofthe identifiable net assets acquired from the merging party in business combination, such difference shall be charged tothe profit or loss for the period.The fees which are directly related to the business combination shall be recognized as the profit or loss in the period whenthe costs are incurred; the transaction expenses of issuing equity securities or debt securities for business merger shall beinitially capitalized for equity securities or debt securities.
6. Preparation method of consolidated financial statements
(1) Scope of Consolidation
The scope of consolidation of the consolidated financial statements is based on controlling interests and includes theCompany and all the subsidiaries. Control means that the Company has the power over the investee, enjoys variablereturns by participating in the relevant activities of the investee, and has the ability to use the power over the investee toinfluence its return amount.
(2) Procedures of consolidation
The Company treats the whole enterprise group as a single accounting entity and prepares consolidated financialstatements in accordance with unified accounting policies to reflect the overall financial status, operating results and cashflow of the enterprise group. The impact of internal transactions between the Company and its subsidiaries and among thesubsidiaries shall be offset. If internal transactions indicate impairment losses of related assets, the losses shall berecognized in full. If the accounting policies and accounting periods adopted by subsidiaries are inconsistent with those ofthe company, necessary adjustments shall be made according to the accounting policies and accounting periods of thecompany when preparing the consolidated financial statements.The owner's equity, the net profit or loss and the comprehensive income attributable to minority shareholders of asubsidiary of the current period are presented separately under the owners' equity in the consolidated balance sheet, thenet profit and the total comprehensive income in the consolidated income statement respectively. Where lossesattributable to the minority shareholders of a subsidiary of the current period exceed the minority shareholders' interestentitled in the shareholders' equity of the subsidiary at the beginning of the period, the excess is allocated against theminority shareholders’ interest.
① Acquisition of subsidiaries or business
During the reporting period, if there are new subsidiaries or businesses due to business consolidation under commoncontrol, the operating results and cash flows from the beginning of the current period to the end of the reporting period of
the consolidated subsidiaries or businesses will be included in the consolidated financial statements, and at the same time,the opening amount of the consolidated financial statements and related items in the comparison statements will beadjusted, which will be regarded as the consolidated reporting entity that has existed since the ultimate controlling partystarted to control.If the investee under common control can be controlled due to additional investment and other reasons, the equityinvestment held before gaining the control of the consolidated party is recognized as relevant profit and loss, othercomprehensive income and changes in other net assets at the later of the date of acquisition of the original equity and thedate when the consolidating and consolidated parties are under common control, and shall be written down to the openingbalance retained earnings or the current profit and loss in the comparative reporting period.During the reporting period, if subsidiaries or businesses are added due to the consolidation of enterprises not undercommon control, the fair values of identifiable assets, liabilities and contingent liabilities determined on the purchase dateshall be included in the consolidated financial statements from the acquisition date.In connection with imposing control over the investee not under common control due to additional investment and otherreasons, the equity of acquiree held before the acquisition date shall be remeasured at the fair value of such equity on theacquisition date and the difference between fair value and book value shall be recognized as investment income in thecurrent period. Other comprehensive income that can be reclassified into the profit and loss in the future and otherchanges in the owner's equity under the equity method, which are related to the equity of the purchased party held beforethe acquisition date, are converted into the current investment income of the acquisition date.
② Disposal of subsidiaries or business
a. General treatmentWhen losing control of the investee due to partial disposal of the equity investment, or any other reasons, the remainingequity investment shall be remeasured at fair value at the date the control right is lost. The sum of consideration receivedfrom disposal of equity investment and the fair value of the remaining equity investment, net of the difference between thesum of the Company's previous share of the subsidiary's net assets recorded from the acquisition date or combinationdate and the sum of goodwill, is recognized in investment income in the period in which control is lost. Othercomprehensive income related to the original subsidiary's equity investment and can be reclassified into profit and loss inthe future as well as other changes in the owner's equity accounted using the equity method, shall be converted intocurrent investment income when the control right is lost.b. Disposal of subsidiary achieved by stagesWhen disposal of equity interests of subsidiaries via multiple transaction until the control is lost, generally transactions instages are treatment as a package deal if the transaction terms, conditions, and economic impact of disposal of thesubsidiary's equity interests comply with one or more of the following:
i. These transactions are achieved at the same time or the mutual effects on each other are considered;ii. A complete set of commercial results can be achieved with reference to the series of transactions as a whole;iii. Achieving a transaction depends on at least achieving of one of the other transaction;iv. One transaction recognized separately is not economical, but it is economical when considered together with othertransactions.If these transactions belong to a package of transactions, such transactions shall be treated as the transactions in whichthe subsidiaries concerned will be disposed and the control is lost. However, the differences between price on eachdisposal and disposal of investment on the subsidiary's net assets shall be recognized in other comprehensive income inthe consolidated financial statements, and included in the current profit and loss when the control right is lost.If such transactions do not belong to a package transaction, accounting treatment for partial disposal of equityinvestments of subsidiary without losing control shall be applied before the control right is lost. When the control right islost, general accounting treatment for disposal of a subsidiary shall be used.
③ Acquisition of minority interest of subsidiaries
The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respect to anydifference between the long-term equity investment arising from the acquisition of minority interest and the net assetsattributing to the parent company continuously calculated on the basis of the newly increased share proportion as of theacquisition date or date of consolidation, adjust the retained earnings if the share premium in the capital reserve isinsufficient for write-down.
④ Partial disposal of equity Investment in subsidiaries without losing control
The difference between disposal consideration and the share of net assets continuously calculated by the subsidiary fromthe acquisition date or the consolidation date corresponding to the disposal of long-term equity investment shall beadjusted to share premium in the capital reserve in the consolidated balance sheet. Adjustments shall be made to retainedearnings in the event that the share premiums in the capital reserves are not sufficient for write-down.
7. Classification of Joint Venture Arrangement and Accounting Treatment Method of JointOperationA joint arrangement includes a joint operation and a joint venture.Joint operation refers to a joint arrangement in which the parties to the joint venture possess the assets related to thearrangement and assume the liabilities related to the arrangement.The Company recognizes the following items related to the share of interests in the joint operation:
(1) The assets held separately by the Company and the assets held jointly according to the Company's share;
(2) The liabilities borne separately by the Company and liabilities jointly borne according to the Company's share;
(3) The income generated from the sale of the Company's share of joint operating output;
(4) The income generated from the sale of output in the joint operation according to the Company's share;
(5) The expenses incurred separately, and recognize the expenses incurred in the joint operation according to theCompany's share;The Company’s investments in joint ventures are accounted by the equity method. For details, please refer to the financialreport under this section - (V) Significant Accounting Polices and Accounting Estimates - 19. Long-term Equity Investment.
8. Criteria for Recognition of Cash and Cash Equivalents
Cash refers to the Company's cash on hand and deposits that are available for payment at any time. Cash equivalentsrefer to the investments held by the Company which are short-term, highly liquid, easy to be converted into knownamounts of cash and have little risk of value change.
9. Foreign currency transactions and translation of foreign currency statements
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when the transactionsoccurred.Balance sheet date foreign currency monetary items shall be translated using the spot exchange rate at the balance sheetdate. The resulting exchange differences are recognized in profit or loss for the current period, except for thosedifferences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency foracquisitions, construction or production of the qualified assets, which should be capitalized as cost of the assets.
(2) Translation of foreign currency financial statements
All assets and liabilities items in balance sheet are translated based on spot exchange rate on the balance sheet date; the
owner’s equity items other than “undistributed profit” are translated at a spot exchange rate when incurred. Revenue andexpense items in the income statement are translated at a spot exchange rate at the transaction occurrence date.For disposal of overseas operation, the translation difference as stated in the foreign currency financial statementsrelating to overseas operation, is accounted for in the profit and loss account in the current period from owners' equityitems.
10. Financial Instruments
A financial asset, financial liability or equity instrument shall be recognized when the Company becomes a party to thefinancial instrument contract.
(1) Classification of the financial instruments
According to the Company's business model for management of the financial assets and the contractual cash flowfeatures of the financial assets, the financial assets, when initially recognized, are classified as: financial assets atamortized cost, financial assets at fair value through other comprehensive income (debt instruments) and financial assetsat fair value through profit or loss.The financial assets that meet the following conditions and are not required to be measured at fair value and whosechanges are incorporated to the current profit and loss shall be classified by the Company as financial assets measured atamortized cost:
- The business model aims at collecting contractual cash flow;- The contractual cash flow is only the payment of principal and interest based on the outstanding principal amount.The financial assets that meet the following conditions and are not required to be measured at fair value and whosechanges are included in the current profit and loss shall be classified by the Company as financial assets (debtinstruments) measured at fair value and whose changes are included in other comprehensive income:
- The business model aims at collecting contract cash flow and selling the financial assets;- The contractual cash flow is only the payment of principal and interest based on the outstanding principal amount.For non-trading investments in equity instruments, the Company may irrevocably designate, at the time of initialrecognition, them as financial assets at fair value through other comprehensive income (equity instruments). Thedesignation is made on a single investment basis, and the relevant investment meets the definition of equity instrumentfrom the issuer's perspective.Except for the above-mentioned financial assets measured at amortized cost and at fair value and whose changes areincluded in other comprehensive income, the Company classifies all other financial assets as financial assets measured atfair value and whose changes are included in the current profit and loss. At the time of initial recognition, the Companymay irrevocably designate financial assets that should have been classified as amortized cost or measured at fair valueand whose changes are included in other comprehensive income as financial assets measured at fair value and whosechanges are included in the current profit and loss, provided that the accounting mismatches can be eliminated orsignificantly reduced.The financial liabilities, when initially recognized, are classified as: financial liabilities at fair value through profit or loss andfinancial liabilities at amortized cost.Financial liabilities which meet one of the following conditions will be, when initially measured, designated as financialliabilities at fair value through profit or loss:
1) Such designation may be able to eliminate or significantly reduce the accounting mismatch.
2) The portfolio of financial liabilities or the portfolio of financial assets and financial liabilities shall be subject tomanagement and performance evaluation on the basis of fair value according to the enterprise risk management orinvestment strategy contained in the formal documentations, and a report shall be made to the key management
personnel within the enterprise on this basis.
3) Such financial liabilities shall contain embedded derivative instruments to be split separately.Subject to the conditions above, the Company has no such designated financial liabilities.
(2) The basis for recognition of and the method for measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term receivablesand creditors investment, which shall be initially measured at fair value, and the relevant transaction expenses should beinitially capitalized; The accounts receivable that do not contain material financing compositions and those for which theCompany decides to not take into account the financing compositions of no more than one year shall be initially measuredat the contract transaction price.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.At the time of recovery or disposal, the difference between the price obtained and the book value shall be included in thecurrent profit or loss.
② Financial assets measured at fair value and its changes are included in other comprehensive income (debtinstruments)Financial assets measured at fair value and its changes are included in other comprehensive income (debt instruments)include receivables financing and investments in other creditor's rights. They are initially measured at fair value, and therelevant transaction expenses should be initially capitalized. These financial assets are subsequently measured at fairvalue, and the change in fair value, other than the interest, the impairment loss or profit and the profit or loss on foreignexchange, shall be included in other comprehensive income.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the profit or loss for the period.
③ Financial assets measured at fair value and those change are included in other comprehensive income (equityinstruments)Financial assets at fair value through other comprehensive income (equity instruments) include investment in other equityinstruments. They are initially measured at fair value, and the transaction expenses shall be initially capitalized. Thesefinancial assets are subsequently measured at fair value, and the change in fair value shall be included in othercomprehensive income. The dividends obtained shall be included in the profit or loss for the period.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the carry-forward retained earnings.
④ Financial assets measured at fair value and those change are included in profit or loss in the current periodFinancial assets at fair value through profit or loss include trading financial assets, derivative financial assets and othernon-current financial assets. They are initially measured at fair value, and the transaction expenses related to them areincluded in the profit or loss for the period. These financial assets are subsequently measured at fair value, and thechange in fair value shall be included in the profit or loss for the period.
⑤ Financial liabilities measured in fair Value with changes recorded into current profit and lossFinancial liabilities at fair value through profit or loss include trading financial liabilities and derivative financial liabilities.They are initially measured at fair value, and the transaction expenses related to them are included in the profit or loss forthe period. These financial liabilities are subsequently measured at fair value, and the change in fair value shall beincluded in the profit or loss for the period.Upon derecognition, the difference between their book value and the consideration paid is included in the profit or loss forthe period.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term loans, notes payable, accounts payable, other payables, long-term
loans, bonds payable, and long-term payables. They are initially measured at fair value, and the transaction expensesshall be initially capitalized.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.Upon derecognition the difference between the consideration paid and the book value of these financial liabilities isincluded in the current profit or loss.
(3) Derecognition of financial assets and transfer of financial assets
When one of the following conditions is met, the Company will derecognize the financial assets:
- The contractual right to receive cash flows from financial assets has been terminated;- The financial assets have been transferred, and almost all risks and rewards in the ownership of financial assets havebeen transferred to the transferee;- The financial assets have been transferred, and the Company has not retained control over financial assets although ithas neither transferred nor retained almost all risks and rewards in the ownership of financial assets.When a financial asset is transferred, the financial asset shall not be derecognized if almost all risks and rewards on theownership of the financial asset are retained.The substance-over-form principle shall be adopted while making judgment on whether the transfer of financial assetssatisfies the above conditions for termination of recognition.The transfer of financial assets can be classified into entire transfer and partial transfer. If the transfer of an entire financialasset satisfies the conditions for termination of recognition, the difference between the two amounts below shall berecorded into profit or loss for the period:
① The book value of the financial asset transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the change in fair valuepreviously recorded into the owners' equities (in cases where the transferred financial assets are financial assets (debtinstruments) measured at fair value and whose changes are included in other comprehensive income)If the partial transfer of financial assets satisfies the conditions for termination of recognition, the overall book value of thetransferred financial asset shall be apportioned according to their respective relative fair value between the recognitionterminated part and the remaining part, and the difference between the two amounts below shall be recorded into profit orloss for the current period:
① The book value of the recognition terminated portion;
② The sum of consideration of the recognition terminated portion and the corresponding portion of accumulated changein fair value previously recorded into owners' equity (in cases where the transferred financial assets are financial assetsmeasured at fair value and whose changes are included in other comprehensive income (debt instruments)).Financial assets will still be recognized if they fail to satisfy the conditions for termination of recognition, with theconsideration received recognized as a financial liability.
(4) Derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the recognition of the whole orrelevant portion of the liability is terminated; an agreement is entered between the Company and a creditor to replace theoriginal financial liabilities with new financial liabilities with substantially different terms, terminate the recognition of theoriginal financial liabilities as well as recognize the new financial liabilities.If all or part of the contract terms of the original financial liabilities are substantially amended, the recognition of the originalfinancial liabilities will be terminated in full or in part, and the financial liabilities whose terms have been amended shall berecognized as a new financial liability.When recognition of financial liabilities is terminated in full or in part, the difference between the book value of the financialliabilities terminated and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit or loss for the current period.
Where the Company repurchases part of its financial liabilities, the book value of such financial liabilities will be allocatedaccording to the relative fair value between the continued recognized part and terminated part on the repurchase date.The difference between the book value of the financial liabilities terminated and the consideration paid (includingtransferred non-cash assets or new financial liability) is recognized in profit or loss for the current period.
(5) Method for determining the fair values of financial assets and liabilities
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the activemarket. The fair value of a financial instrument that is not traded in an active market is determined by using a valuationtechnique. The Company uses the valuation technique when it is applicable under current conditions and there areenough available data and other information to support and the technique should maximize the use of relevant observable.It chooses the inputs which are consistent with the asset or liability's characteristics considered by market participants inthe transaction of the relevant asset or liability and makes the maximum use of relevant observable inputs. Unobservableinputs are used under the circumstance that the relevant observable inputs cannot be obtained or not feasible.
(6) Test method and accounting treatment for impairment of financial assets
The Company estimates the expected credit loss on the financial assets at amortized cost and the financial assets at fairvalue and whose changes are included other comprehensive income (debt instruments), either alone or in combination.In consideration of reasonable and well-founded information about past events, current situation and forecast of futureeconomic situation, the Company calculates the probability weighted amount of the present value of the differencebetween the cash flow receivable and the cash flow expected to be received under the Contract with the risk of default asweight factors, and confirms the expected credit loss.If the credit risk of this financial instrument has been significantly increased upon initial recognition, the Company shallmeasure its loss provision in accordance with the amount equivalent to the expected credit loss of the financial instrumentthroughout the duration. If the credit risk of this financial instrument is not significantly increased upon initial recognition,the Company shall measure the loss provision of this financial instrument by the amount of its expected credit loss in the12 months to come. The increased or reversed amount of the loss provision resulting therefrom is included in the currentprofit or loss as the impairment loss or profit.By comparing the default risk of financial instruments on the balance sheet date with the default risk on the initialrecognition date, the Company may determine the relative change of default risk during the expected duration of financialinstruments to assess whether the credit risk of financial instruments has increased significantly since the initialrecognition. If the financial instrument becomes overdue for more than 30 days, the Company will consider that the creditrisk of this financial instrument has been significantly increased, unless there are concrete evidences indicating that thecredit risk of this financial instrument has not been significantly increased upon initial recognition.If the financial instrument carries low credit risk at the balance sheet date, the Company believes that the credit risk of thisfinancial instrument is not significantly increased upon initial recognition.If there are objective evidences showing that a certain financial asset has been subject to credit impairment, the Companywill accrue impairment provision for this financial asset on the individual asset basis.For accounts receivable and contract assets arising from transactions regulated by Accounting Standards for BusinessEnterprises No. 14 - Revenue (2017), the Company always measures its loss provision at an amount equivalent to theexpected credit loss throughout the duration, regardless of whether it contains significant financing components.The Company will always measure the loss provision for lease receivables by the amount of the expected credit lossthroughout the duration.Where the Company no longer reasonably expects the contractual cash flow of financial assets to be fully or partiallyrecovered, the book balance of the financial assets shall be directly written down.
11. Notes Receivable
Refer to the financial report under this section - (V) Significant Accounting Polices and Accounting Estimates - 10.Financial Instruments.
12. Accounts Receivable
Refer to the financial report under this section - (V) Significant Accounting Polices and Accounting Estimates - 10.Financial Instruments.
13. Account Receivable Financing
Refer to the financial report under this section - (V) Significant Accounting Polices and Accounting Estimates - 10.Financial Instruments.
14. Other Accounts Receivable
Determination method and accounting treatment for the expected credit loss of other receivablesRefer to the financial report under this section - (V) Significant Accounting Polices and Accounting Estimates - 10.Financial Instruments.
15. Inventories
(1) Category of inventory
Inventories are classified as raw materials, turnover materials, commodity stocks, products in progress and materialscommissioned for processing.Inventories are initially measured at cost, which includes purchasing costs, processing costs and other expenses incurredto bring inventories to their present location and condition.
(2) Pricing method for issuing inventories
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value of different types of inventories
On the balance sheet date, inventories shall be measured at the lower of cost and net realizable value. Where the cost ofinventories is higher than its net realizable value, provision for inventory depreciation shall be made. The net realizablevalue refers to the estimated selling price of inventory in daily activities minus the estimated cost of completion, theestimated selling expenses and related taxes and fees.Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale rawmaterials, during the normal course of production and operation, shall be determined by their estimated sales less therelated selling expenses and taxes; the net realizable value of material inventories, which need to be processed, duringthe normal course of production and operation, shall be determined by the amount after deducting the estimated cost ofcompletion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the netrealizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground ofthe contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the netrealizable value of the exceeding part shall be calculated on the ground of general selling price.After the provision for inventory depreciation has been made, if the factors affecting the previous write-down of theinventory value have disappeared, resulting in the net realizable value of inventory being higher than its book value, it
shall be reversed within the original provision for inventory depreciation, and the reversed amount shall be included in thecurrent profit and loss.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
16. Contract Assets
(1) Methods and standards for recognition of contract assets
The Company lists contract assets or contract liabilities in the balance sheet based on the relationship betweenperformance obligations and customer payments. The Company’s right to receive consideration for the goods transferredor services provided to customers (and such right depends on factors other than the passage of time) is listed as acontract asset. Contract assets and contract liabilities under the same contract are presented on a net basis. TheCompany's right to receive consideration from customers unconditionally (depending only on the passage of time) is listedseparately as account receivable.
(2) Determination method and accounting treatment for the expected credit loss of contract assetsFor the determination method and accounting treatment of the expected credit loss of contract assets, please refer to thefinancial report under this section - (V) Significant Accounting Polices and Accounting Estimates - 10. FinancialInstruments.
17. Contract Costs
Contract costs include the cost of fulfilling a contract and the cost for obtaining the contract.The costs incurred by the Company for contract performance, which do not fall within the scope of relevant standardssuch as inventories, fixed assets or intangible assets, shall be recognized as an asset as the costs for contractperformance when the following conditions are met:
?Such costs are directly related to a current contract or a contract expected to be obtained.?Such costs increase the resources of the Company for fulfilling its obligations in the future.?Such costs are expected to be recovered.Where the incremental cost incurred by the Company for obtaining the contract is expected to be recovered, it shall berecognized as an asset as the costs for obtaining the contract.Assets related to contract costs are amortized on the same basis as income from goods or services related to the assets.However, if the amortization period of the costs for obtaining the contract does not exceed one year, the Company willinclude it in the current profit and loss when incurred.Where the book value of an asset related to the contract costs is higher than the difference between the following twoitems, the Company shall make provision for impairment of the excess and recognize it as an asset impairment loss:
(1) The remaining consideration expected to be obtained due to the transfer of goods or services related to such asset;
(2) The estimated cost to be incurred for the transfer of the relevant goods or services.
If the factors of impairment in the previous period change subsequently, making the aforesaid difference higher than thebook value of the said asset, the Company shall reverse the impairment reserve originally accrued and include it in thecurrent profit and loss, but the book value of the asset after reversal does not exceed that on the reversal date assumingthat no impairment reserve is accrued.
18. Holding Assets for Sale
If the book value is recovered mainly through sale (including exchange of non-monetary assets with commercialsubstance) instead of continuous use of a non-current asset or disposal group, it shall be classified as held for sale.A non-current asset or disposed group is classified by the Company as holding for sale if it meets the following criteria atthe same time:
(1) Immediate sale could be made under the current circumstances in accordance with the practice of selling such assetsor disposal groups in similar transactions;
(2) Selling is extremely likely to occur, i.e., the Company has made a resolution on a selling plan and obtained confirmedpurchase commitments, and the selling is predicted to be completed within 1 year. If required by relevant provisions thatselling shall only be made after approved by the relevant competent authority or supervision department of the Company,such approval should have been obtained.Where the book value of non-current assets (excluding financial assets, deferred income tax assets and assets formed bystaff remuneration) or disposal groups classified as held for sale is higher than the net amount after fair value lessdisposal expenses, the book value is written down to the net amount after fair value less disposal expenses, and thewritten down amount shall be recognized as an asset impairment loss and included in the current profit and loss, whileprovision for impairment of assets held for sale is made.
19. Long-term Equity Investment
(1) Criteria for judgment of joint control or significant influence
Joint control is the contractually agreed sharing of control of an arrangement, and exists only when requiring theunanimous consent of the parties sharing control before making decisions about the relevant activities of the arrangement.The Company together with the other joint venture parties can jointly control over the investee and are entitled to the rightof the net assets of the investee, as the investee is joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where theCompany can exercise significant influence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business consolidation
For the long-term equity investment in subsidiaries formed by business consolidation under common control: the initialinvestment cost of long-term equity investments is the share with reference to the book value of the shareholders' equityof the consolidated party in the consolidated financial statements of the ultimate controlling party on the consolidation date.For the difference between the initial investment cost of long-term equity investment and the book value of paymentconsideration, the equity premium in capital reserve shall be adjusted. When the equity premium in capital reserve isinsufficient to offset, the retained earnings shall be adjusted. If the investee under common control can be controlled dueto additional investment and other reasons, the equity premium shall be adjusted based on the difference between theinitial investment cost of the long-term equity investment recognized according to the above principles and the sum of thebook value of the long-term equity investment prior to the consolidation plus the book value of the newly paidconsideration for the shares obtained on the consolidation date. If the equity premium is insufficient to offset, the retainedearnings shall be offset.For the long-term equity investment in subsidiaries formed by business consolidation under common control, the cost ofthe consolidation ascertained on the acquisition date shall be taken as the initial investment cost of the long-term equityinvestments. In connection with imposing control over the investee not under common control due to additional investmentand other reasons, the initial investment cost shall be the sum of the book value of the equity investment originally held
and the newly increased initial investment cost.
② Long-term equity investments acquired by other means other than business combinationThe initial cost of a long-term equity investment obtained by cash payment shall be the purchase costs actually paid.The initial cost of investment of a long-term equity investment obtained by means of issuance of equity securities shall bethe fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit and loss
① Long-term equity investment calculated by cost method
Long-term equity investment in subsidiaries of the Company is calculated by cost method, provided that the investmentmeets the criteria for held-for-sale. except for the actual consideration paid for the acquisition of investment or thedeclared but not yet distributed cash dividends or profits which are included in the consideration, investment gains arerecognized as the Company' shares of the cash dividends or profits declared by the investee.
② Long-term equity investment calculated by equity method
Long-term equity investments of associates and jointly controlled entities are calculated using equity method. Where theinitial investment cost of a long-term equity investment exceeds the investor's interest in the fair value of the investee'sidentifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initialinvestment cost is less than the investor's interest in the fair value of the investee's identifiable net assets at theacquisition date, the difference shall be included to the current profit and loss, and at the same time, the cost of long-termequity investment is adjusted.The Company shall recognize the investment income and other comprehensive income respectively based on the sharesof net profit and loss and other comprehensive income realized by the investee which it shall be entitled or shared, and atthe same time makes adjustment to the book value of long-term equity investments. The book value of long-term equityinvestment shall be reduced by attributable share of the profit or cash dividends for distribution declared by the investee.In relation to other changes of the owner's equity except for the investee’s net profit and loss, other comprehensiveincome and profit distributions (“other changes in the owner’s equity”), the book value of long-term equity investmentsshall be adjusted and included in the owner's equity.When determining the investee’s net profit and loss, other comprehensive income and share of changes in the owner'sequity, fair value of each identifiable assets of the investee at the time when the investment is obtained shall be used asbasis, and the investee’s net profit and other comprehensive income shall be recognized after adjustment according to theaccounting policies and accounting period of the Company.The unrealized profit and loss resulting from transactions between the Company and its affiliates or joint ventures shall beeliminated in portion to the investor's equity interest of investee, based on which investment income or loss shall berecognized, provided that the assets invested or sold constitute a business. Any losses resulting from transactions, whichare attributable to impairment of assets, shall be fully recognized.The Company shall be obligated to bear additional losses incurred by net loss of joint ventures or affiliates. In addition, thebook value of long-term equity investment and other long-term interests that substantially constitute the net investment inthe joint ventures or affiliates shall be written down to zero. When the joint ventures or affiliates realize the net profit in thefuture, the Company shall resume the recognition of the income share after the income share makes up for theunrecognized loss share.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the book value and the consideration actuallyreceived shall be included in the current profit or loss.If the long-term equity investment calculated by equity method is partially disposed of, and the remaining equity is stillcalculated by equity method, other comprehensive income recognized by the original equity method shall be carriedforward based on the corresponding proportion on the same basis as the investee directly disposes of relevant assets or
liabilities, and other changes in the owner's equity shall be transferred into the current profit and loss on a pro rata basis.Where the joint control of or significant impacts on the investee is lost due to the disposal of equity investment, othercomprehensive income recognized by the original equity investment due to the adoption of the equity method shall becalculated in the same way as the investee's direct disposal of related assets or liabilities at the termination of the equitymethod, and all other changes in the owner's equity shall be transferred to the current profit and loss at the termination ofthe equity method.If the control right of the investee is lost due to the disposal of some equity investments and other reasons, and if theremaining equity can exert joint control or significant influence on the investee when individual financial statements areprepared, it shall be calculated based on the equity method instead, and the remaining equity shall be regarded as beingcalculated and adjusted by the equity method immediately upon acquisition. Other comprehensive income recognizedbefore obtaining the control right of the investee shall be carried forward proportionally on the same basis as the directdisposal of related assets or liabilities by the investee, and other changes in the owner's equity confirmed by the equitymethod shall be transferred into the current profit and loss in proportion. If the remaining equity cannot exercise jointcontrol or exert significant impacts on the investee, it is recognized as a financial asset, and the difference between its fairvalue and book value on the date of loss of control is included in the current profit and loss, and all other comprehensiveincome and other changes in the owner's equity recognized before obtaining the control right of the investee are carriedforward.If the equity investment of a subsidiary is disposed of step by step through multiple transactions until the control right islost, which belongs to a package transaction, accounting treatment shall be performed for each transaction as atransaction that disposes of the equity investment of a subsidiary and loses the control right. The difference between thedisposal price before the loss of control right and the book value of the long-term equity investment corresponding to thedisposed equity is first recognized as other comprehensive income in individual financial statements, and then included inthe current profit and loss of the loss of control right when the control right is lost. If it is not a “package deal”, accountingtreatment shall be made for each transaction separately.
20. Investment Real Estate
Investment property refers to the real estate held to generate rental income or capital appreciation, or both, includingleased land use rights, land use rights held for transfer after appreciation, and leased buildings (including buildings thatare leased after completion of self-construction or development activities and buildings in construction or developmentthat are used for rental in the future).The Company adopts the cost mode to measure the existing investment property. Subsequent expenditures related toinvestment real estate shall be included in the cost of investment real estate when the relevant economic benefits arelikely to flow in and its cost can be measured reliably. Otherwise, it shall be included in the current profit and loss whenincurred. Investment property measured at cost - buildings held for leasing shall adopt the same depreciation policy forfixed assets of the company, land use rights held for leasing shall adopt the same amortization policy for the intangibleassets.
21. Fixed Assets
(1) Conditions for recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others,or for administrative purposes; and have a service life of more than one accounting year. Fixed asset is recognized when itmeets the following conditions: ① It is probable that the economic benefits associated with the fixed asset will flow to the
enterprise; ② Its cost can be reliably measured. Fixed assets shall be measured at cost (and considering the impact ofexpected abandonment cost factors). Subsequent expenditures related to fixed assets shall be included in the cost offixed assets when the related economic benefits are likely to flow in and the cost can be measured reliably. The bookvalue of the replaced part shall be terminated. All other subsequent expenditures shall be included in the current profit andloss when incurred.
(2) Methods for depreciation
| Category | Depreciation method | Useful lives of depreciation | Residual Ratio | Annual depreciation rate |
| Housing and building | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 5-10 | 5% | 19.00%-9.50% |
| Means of transport | Straight-line method | 4-8 | 5% | 23.75%-11.88% |
| Electronic and other equipment | Straight-line method | 3-5 | 5% | 31.67%-19.00% |
Fixed assets are depreciated by categories using the straight-line method, and the annual depreciation rates aredetermined by categories based upon their estimated useful lives and their estimated residual values. Where the parts ofa fixed asset have different useful lives or cause economic benefits for the enterprise in different ways, differentdepreciation rates or depreciation methods shall apply, and each part is depreciated separately.
(3) Disposal of fixed assets
When a fixed asset is disposed of, or no economic benefit is expected to be generated through the use or disposal, therecognition of the fixed asset shall be terminated. The disposal income from the sale, transfer, scrapping or damage offixed assets after deducting their book value and relevant taxes is included in the current profit and loss.
22. Projects under Construction
Projects under construction are measured at the actual costs incurred. Actual costs include construction cost, installationcost, borrowing costs eligible for capitalization, and other expenditures necessary to bring the project under constructionto its intended usable condition. When projects under construction reach the intended usable condition, they shall beturned into fixed assets and shall be depreciated from the next month.
23. Borrowing Costs
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or production ofassets qualified for capitalization, the costs will be capitalized and included in the costs of the related assets. Otherborrowing costs shall be recognized as expense in the period in which they are incurred and included in profit or loss forthe current period.Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) that necessarily take asubstantial period of time for acquisition, construction or production to get ready for their intended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation of capitalization ofborrowing costs, excluding the period in which capitalization of borrowing costs is temporarily suspended.Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures on assets (including cash paid, transferred non-currency assets or expenditure for holding debt liabilityfor the acquisition, construction or production of assets qualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intended usable or salablecondition have commenced.Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset under acquisition andconstruction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended if the abnormal interruption occurs in the acquisition, construction orproduction process of the assets eligible for capitalization, and such interruption lasts for 3 consecutive months or above.If the interruption is a necessary step for making the eligible asset under acquisition and construction or production readyfor the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred duringsuch period shall be recognized as profits and losses of the current period. When the acquisition and construction orproduction of the asset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
Specific borrowings for the acquisition, construction or production of assets qualified for capitalization, borrowing costs ofthe specific borrowings actually incurred in the current period minus the interest income earned on the unused borrowingloans as a deposit in the bank or as investment income earned from temporary investment will be used to determine theamount of borrowing costs for capitalization.General borrowings for the acquisition, construction or production of assets qualified for capitalization, theto-be-capitalized amount of interests on the general borrowing shall be calculated and determined by multiplying theweighted average asset disbursement of the part of the accumulative asset disbursements minus the specificallyborrowed loans by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated anddetermined according to the weighted average interest rate of the general borrowing.During the capitalization period, the exchange difference of the principal and interest of the special foreign currency loanshall be capitalized and included in the cost of the assets eligible for capitalization. The exchange difference of principaland interest of foreign currency borrowings except for special foreign currency borrowings shall be included in the currentprofit and loss.
24. Intangible Assets
(1) Valuation method, service life, impairment test
(1) Valuation method of intangible assets
① Intangible assets are initially measured at cost upon acquisition
The costs of an externally purchased intangible asset include the purchase price, relevant taxes and expenses paid,and other expenditures directly attributable to putting the asset into condition for its intended use.
② Subsequent measurement
The service life of intangible assets shall be analyzed and judged upon acquisition.
As for intangible assets with a finite service life, they are amortized using the straight-line method over the term inwhich economic benefits are brought to the firm; If the term in which economic benefits are brought to the firm by an
intangible asset cannot be estimated, the intangible asset shall be taken as an intangible asset with indefinite service life,and shall not be amortized.
(2) Estimated useful lives for the intangible assets with limited-service life
| Item | Estimated useful lives | Basis |
| Land use rights | 40 or 50 years | Land use certificate |
| Non-patented technology | 5-10 years | Expected benefited period |
| Softwares | 2-5 years | Expected benefited period |
| Trademark rights | 6 years | Expected benefited period |
| Software copyright | 10 years | Expected benefited period |
For an intangible asset with a finite service life, review on its service life and amortization method is performed at theend of each end.
Upon review, service life and amortization method for the intangible assets are the same with the previous estimateat the end of this period.
(3) The basis for judgment of intangible assets with uncertain service life and the procedure for reviewingtheir service life
As at the balance sheet date, the Company has no intangible assets with uncertain service life.
(4) Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided into expenses in the
research phase and expenses in the development phase.
Research phase: Scheduled innovative investigations and research activities to obtain and understand scientific or
technological knowledge.
Development phase: Apply the research outcomes or other knowledge to a plan or design prior to a commercial
production or use in order to produce new or essentially-improved materials, devices, products, etc.
(5) Specific condition for capitalizing expenditure during the development phase
Expenditures in the research phase are recorded into the current profit and loss when incurred. Expenditure at thedevelopment phase shall be recognized as intangible assets if it meeting the following conditions at the same time;expenditure in the development phase shall be included in the current profit and loss if it fails to meet the followingconditions:
①It is technically feasible to complete such intangible asset so that it will be available for use or for sale;
②There is intention to complete the intangible asset for use or sale;
③The intangible asset can produce economic benefits, including there is evidence that the products produced usingthe intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, thereis evidence that there exists usage for the intangible asset;
④There is sufficient support in terms of technology, financial resources and other resources in order to complete the
development of the intangible asset, and there is capability to use or sell the intangible asset;
⑤The expenses attributable to the development stage of the intangible asset can be measured reliably.
If it is impossible to distinguish the expenditure at the research phase from the expenditure at the development
phase, all the R&D expenditure incurred shall be booked into the current profit and loss.
25. Impairment of Long-term Assets
Long-term assets, such as long-term equity investment, investment properties, fixed assets, construction in progress,intangible assets, oil and gas assets and other long-term assets that measured at cost are tested for impairment if there isany indication that an asset may be impaired at the balance sheet date. If the result of the impairment test indicates thatthe recoverable amount of the asset is less than its book value, a provision for impairment and an impairment loss arerecognized for the amount by which the asset's book value exceeds its recoverable amount. The recoverable amount isthe higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derivedfrom the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is notpossible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to whichthe asset belongs to is determined. A group of assets is the smallest group of assets that is able to generate cash inflowsindependently.For the goodwill arising from business consolidation and intangible assets with uncertain service life, and intangible assetsthat have not reached the usable condition, impairment test shall be conducted at the end of every year, regardless ofwhether there are signs of impairment or not.When the Company carry out impairment test to goodwill, the Company shall, as of the purchasing day, allocate on areasonable basis the book value of the goodwill formed by merger of enterprises to the relevant asset groups, or if there isa difficulty in allocation, to allocate it to the sets of asset groups. Related asset groups or asset group combinations are theasset groups or asset group combinations that can benefit from the synergistic effect of the business consolidation.For the purpose of impairment test on the relevant asset groups or the sets of asset groups containing goodwill, if anyevidence shows that the impairment of asset groups or sets of asset groups related to goodwill is possible, an impairmenttest will be made first on the asset groups or sets of asset groups not containing goodwill, thus calculating the recoverableamount and comparing it with the relevant book value so as to recognize the corresponding impairment loss. Then, animpairment test shall be conducted for the asset group or combination of asset groups containing goodwill, and the bookvalue is compared with the recoverable amount. If the recoverable amount is lower than the book value, the amount ofimpairment loss shall first be offset against the book value of goodwill allocated to the asset group or combination of assetgroups. Next, based on the proportion of the book value of the assets except for goodwill in the asset group or portfolio ofthe asset group, the book value of other assets shall be deducted proportionally. Once the above asset impairment loss isrecognized, it will not be reversed in the subsequent accounting periods.
26. Long-term Deferred Expenses
Long-term deferred expenses are the expenses that have occurred but should be amortized in the current period andsubsequent periods with amortization period longer than 1 year, mainly including improvement expenditure of fixed assetsleased. Long-term deferred expenses shall be evenly amortized by installments over the expected benefit period.
27. Contract Liabilities
The Company lists contract assets or contract liabilities in the balance sheet based on the relationship betweenperformance obligations and customer payments. The Company lists the obligation to transfer commodities or offerservices to customers for the consideration received or receivable from customers as contract liabilities. Contract assetsand contract liabilities under the same contract are presented on a net basis.
28. Employee Compensation
(1) Accountant Treatment of Short-term Remuneration
During the accounting period when the staff provides service, the Company will recognize the short-term remunerationactually incurred as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.The Company will pay social insurance and housing funds, and will make provision of trade union funds and staffeducation costs in accordance with the requirements. During the accounting period when the staff provides service, theCompany will determine the relevant amount of employee benefits in accordance with the required provision basis andprovision ratios.The welfare expense of staff incurred in the Company shall be included in the current profits and losses at the actualamounts incurred, in which non-monetary welfare expense shall be measured at fair value.
(2) Accountant Treatment of Retirement Benefit Plan
①Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with the relevant provisionsof the local government for the staff. During the accounting period when the staff provides service, the Company willcalculate the amount payable in accordance with the local stipulated basis and proportions which will be recognized asliabilities, and the liabilities would be charged into current profits and loss or costs of assets. Additionally, the Companyhas also joined in the enterprise annuity plan/supplementary pension insurance fund approved by the related nationaldepartment. The Company conducts payment/payment of annuity plan to local social insurance institutions according tocertain proportion of employees' wages and corresponding expenditures are included in current profits and losses orrelevant asset costs.
②Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determined by projected unitcredit method would be vested to the service period of the staff and charged into current profits and loss or costs ofassets.
(3) Accountant Treatment of Termination Benefits
For the dismissal welfare provided to employees, the employee compensation liabilities arising from the dismissal welfareshall be determined at the earliest of the following two, and included in the current profits and losses: When theCompany cannot unilaterally withdraw the dismissal welfare provided due to the termination of labor relations plan orlayoff proposal; When the Company determines the costs or expenses associated with the restructuring involving thepayment of dismissal welfare.
29. Estimated Liabilities
The Company shall recognize the obligations related to contingencies as estimated liabilities, when all of the followingconditions are met:
(1) The obligations are current obligations undertaken by the Company.
(2) The performance of such obligation may cause the outflow of economic benefits from the Company.
(3) The amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenditure required to settle the related present
obligation.Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken into account as awhole in reaching the best estimate. Where the effect of the time value of money is material, the best estimate shall bedetermined by discounting the related future cash outflow.The expenses required have a successive range, in which the possibilities of occurrence of all results are the same, andthe best estimate shall be determined according to the middle value within the range. In other cases, the best estimateshall be determined by the following conditions:
?Where the contingency involves a single item, the amount most likely to occur.?Where the contingency involves multiple items, is shall be determined in accordance with various possible outcomes andrelated probability.Where some or all of the expenditure required to settle an estimated liability is expected to be reimbursed by a third party,the reimbursement is separately recognized as an asset when it is virtually certain that the reimbursement will be received.The amount recognized for the reimbursement is limited to the book value of the estimated liability.On the balance sheet date, the Company reviewed the book value of the estimated liability. If there is conclusive evidenceindicating that the book value cannot reflect the current best estimate, the book value should be adjusted according to thecurrent best estimate.
30. Share-based Payment
The Company's share-based payment refers to a transaction in which an enterprise determines the liabilities on the basisof equity instruments granting or bearing for the acquisition of service from its employees or other parties. The Company'sshare-based payment is equity-settled.Equity-settled share-based payment and equity instrument:
As to an equity-settled share-based payment in return for services of employees, calculation will be based on the fairvalue of the equity instrument granted to the employees. Share-based payment vested immediately after grant shall beincluded in the relevant cost or expense at the fair value of equity instrument on the date of grant, and the capital reservewill be increased accordingly. For share-based payment vested when the services in the waiting period are offered or thespecified performance requirements are satisfied after the date of grant, the service obtained in the current period isincluded in the relevant cost or expense on each balance sheet date during the waiting period based on the best estimateof the number of vesting equity instruments and the fair value on the date of grant, and the capital reserve will beincreased accordingly.If the terms of the equity-settled share-based payment are amended, the Company shall recognize the services receivedat least based on the situation before the amendment was made. In addition, any amendment resulting in the increase ofthe fair value of the equity instrument granted or changes that are beneficial to the staff on the amendment date, will berecognized as an increase in the service received.If the equity instrument granted is cancelled during the waiting period, it will be accounted for as accelerated exercise andthe amount recognizable in the remaining waiting period should be immediately included in the current profits and losses.The capital reserve should also be recognized. However, if new equity instruments are vested and they are verified at thevesting date of new equity instrument as alternatives vested to canceled equity instruments, the treatment on the newequity instrument is in conformity with the modified treatment on disposal of equity instrument.
31. Revenue
Accounting policies for revenue recognition and measurement
The Company shall recognize the revenue when it has performed its obligations hereunder (i.e., when the customerobtains control over relevant goods or services). Acquiring the right of control over relevant commodities or servicesmeans leading use of such commodities or services and obtaining almost all economic benefits from such commodities orservices.If the contract contains two or more performance obligations, the Company shall apportion the transaction price to eachindividual performance obligation on the contract commencement date according to the relative proportion of theindividual selling price of the commodities or services promised by each individual performance obligation. The Companymeasures the revenue according to the transaction price apportioned to each individual performance obligation.The transaction price refers to the amount of consideration that the Company is expected to be entitled to collect due tothe transfer of commodities or services to customers, excluding the payments collected on behalf of third parties and thepayments expected to be returned to customers. The Company determines the transaction price according to the contractterms and in combination with old practices. When the transaction price is determined, factors such as variableconsideration, major financing components in the contract, non-cash consideration, consideration payable to a customershall be taken into account. The Company determines the transaction price, including variable consideration, according tothe amount by which the accumulative recognized revenue is much more unlikely to be significantly reversed whenrelevant uncertainties are eliminated. If there are major financing components in the contract, the Company shalldetermine the transaction price according to the amount payable in cash when the customer acquires the right of controlover the commodities or services, and amortize the difference between the transaction price and the contractconsideration by effective interest method during the contract period.When one of the following conditions is met, it shall be deemed to perform obligation within a certain period of time,otherwise it belongs to the performance of obligation at a certain point of time:
? The customer acquires and consumes the economic benefits arising from the Company's performance while performingthe contract.? The customer can control the commodities in production during the Company's performance.? The commodities produced by the Company during the performance are irreplaceable, and the company has the right tocollect payment for the accumulated performance to date during the whole contract period.For the performance obligations performed within a certain period of time, the Company shall recognize the revenueaccording to the performance progress within that period of time, except that the performance progress cannot bereasonably recognized. In consideration of the nature of commodities or services, the Company determines theperformance progress by output method or input method. If the performance progress cannot be reasonably recognizedand the costs incurred are expected to be compensated, the Company will recognize the revenue according to the amountof costs incurred until the performance progress can be reasonably recognized.For the performance obligations performed at a certain point of time, the Company will recognize the revenue when thecustomer acquires the right of control over relevant commodities or services. While determining whether the customer hasacquired the right of control over the commodities, the Company shall take the followings into consideration:
? The Company has the current right to collect payment for the commodity or service, that is, the customer is obligated topay for the commodity or service.? The Company has transferred the legal ownership of the commodity to the customer, that is, the customer already hasthe legal ownership of the commodity.? The Company has transferred the physical commodity to the customer, that is, the customer has possessed the physicalcommodity.? The Company has transferred the major risks and rewards of the commodity ownership to the customer, that is, thecustomer has acquired the major risks and rewards of the commodity ownership.? The customer has accepted the commodity or service.
The difference in accounting policies for revenue recognition caused by same business in different business modelsN/A
32. Government Subsidies
(1) Type
Government grants are monetary assets and non-monetary assets acquired by the Company from the government free ofcharge. Government grants are classified into government grants related to assets and government grants related torevenue.Government grants related to assets refer to government grants acquired by the Company for the purpose of purchasingor constructing or otherwise forming long-term assets. Government grants related to revenue refer to the governmentgrants other than those related to assets.
(2) Confirmation of Time Point
Government grants related to assets will be measured at the actual amount of money received at the time of receipt. Theassets (bank deposits) and deferred income shall be period by period included in the profits and losses of the currentperiod in a reasonable and systematic manner from the time the assets are available for use (those related to theCompany's daily activities shall be included in other income; those unrelated to the Company's daily activities shall berecognized as non-operating income). When the relevant assets are disposed of (sold, transferred, scrapped, etc.) at orbefore the end of their service life, the balance of the deferred income that has not yet been apportioned will betransferred to the current-period income from the disposal of the assets on an one-time manner, and will not be deferred.For government grants related to revenue, they will be recognized as profit and loss of the current period according to theamount receivable for government grants obtained under fixed quota standards, otherwise, they will be recognized asprofit and loss of the current period when it is actually received.
(3) Accounting Treatment
Government grants related to assets shall write off the book value of relevant assets or be recognized as deferred income.When recognized as deferred income, the government grant related to assets will be period by period credited to theprofits and losses of the current period in a reasonable and systematic manner within the service life of relevant assets(those related to the Company's daily activities shall be recognized as other income; those unrelated to the Company'sdaily activities shall be recognized as non-operating income).The revenue-related government grants shall be recognized as deferred income if they are used to compensate relevantexpenses or losses in subsequent periods, and they shall be included in profit and loss of the current period (those relatedto Company's routine activities shall be included in other income; those unrelated to the Company's routine activities shallbe included in non-operating income) or used to offset relevant expenses or losses during the recognition of relatedexpenses or losses; the grants used to compensate related expenses or losses incurred shall be included in profit andloss of the current period (those related to Company's routine activities shall be included in other income; those unrelatedto the Company's routine activities shall be included in non-operating income) or used to offset relevant expenses orlosses.The Company performs accounting treatment of policy-oriented concessional loan discount interest in the following cases:
①Where the finance allocates the discount interest funds to the lending bank, and the lending bank provides loans to theCompany at the policy preferential interest rate, the actually received loan amount shall be taken as the entry value of theloan, and the relevant borrowing costs shall be calculated according to the loan principal and the policy preferentialinterest rate.
②If the finance directly allocates the discount interest funds to the Company, the Company will offset the relevantborrowing costs against the corresponding discount interest.
33. Deferred Income Tax Assets/Deferred Income Tax Liabilities
Income tax includes the current income tax and the deferred income tax. The Company includes the current income taxand the deferred income tax into the current profits and losses, except for the income tax arising from businesscombination and transactions or events directly included in the owner's equity (including other comprehensive income).The deferred income tax assets and deferred income tax liabilities shall be calculated and recognized according to thedifference between the tax base of assets and liabilities and their book value.Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be availableagainst which deductible temporary differences can be utilized. For deductible losses and tax credits that can be reversedin the future period, deferred tax assets shall be recognized to the extent that it is probable that taxable profit will beavailable in the future to offset the deductible losses and tax credits.Save as the exceptions, deferred income tax liabilities shall be recognized for the taxable temporary difference.The followings are special circumstances in which deferred income tax assets or deferred income tax liabilities are notrecognized:
? Initial recognition of goodwill.? Transactions or events not involving business combination or not having influence on accounting profits and taxableincome upon occurrence of business combination (or deductible losses).For the taxable temporary difference related to investment of subsidiaries, affiliates, and joint ventures, the deferredincome tax liabilities shall be recognized unless the reversal time of the temporary difference can be controlled and it isunlikely to be reversed in the foreseeable future. For the deductible temporary difference related to investment ofsubsidiaries, affiliates, and joint ventures, the deferred income tax assets shall be recognized if the temporary difference islikely to be reversed in the foreseeable future and it is likely to obtain the taxable income to offset the deductible temporarydifference.On the balance sheet date, the deferred income tax assets or deferred income tax liabilities are calculated at theapplicable tax rate during the expected recovery of the assets or settlement of the liabilities according to the tax law.On the balance sheet date, the book value of deferred income tax assets shall be reviewed. If no sufficient taxable incomeis likely to be obtained to offset the benefits of deferred income tax assets in the future, the book value of deferred incometax assets shall be written down. The amount written down shall be reversed when it is likely to obtain sufficient taxableincome.After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets and repay debtat the same time, the net amount after offsetting its current income tax assets and current income tax liabilities shall berecorded.On the balance sheet date, the deferred income tax assets and deferred income tax liabilities shall be presented by netamount after offset if the following conditions are met at the same time:
? The taxpayer has the legal right to settle current income tax assets and current income tax liabilities on a net basis.? The deferred income tax assets and the deferred income tax liabilities are related to income tax to be paid by the sametaxpayer to the same tax collection and management authority or related to different taxpayers, but the relevant taxpayeris intended to apply net settlement of current income tax assets and liabilities or, at the same time, obtain assets, repaydebt whenever every deferred income tax asset and liability with importance would be reversed in the future.
34. Lease
Lease refers to the contract whereby a lessor transfers the right to use assets to a lessee in return for consideration withina period of time.On the commencement date of a contract, the Company shall assess whether the contract is a lease or includes a lease.
Where a party to a contract transfers the right to control the use of one or more identified assets for a certain period of timein return for consideration, the contract is a lease or includes a lease.Where a contract concurrently contains multiple separate leases, the lessee and lessor shall split the contract andconduct accounting treatment respectively for all separate leases.
(1) The Lessee
①Right-of-use Assets
The Company recognizes the right-of-use assets for the lease other than short-term lease and low-value asset lease onthe lease inception date. The right-of-use assets are initially measured at cost, which includes: initial measurementamount of lease liabilities; lease payment paid on or before the commencement of the lease term (if there are leaseincentives, the relevant amount of lease incentives enjoyed shall be deducted); initial direct costs incurred by the lessee;the estimated cost to be incurred by the lessee for dismantling and removing the leased asset, restoring the site where theleased asset is located or restoring the leased asset to the state agreed in the lease terms.The Company depreciates the right-of-use assets according to the straight-line method. If it can be reasonably recognizedthat the title of the leased asset is acquired at the expiration of the lease term, the Company shall accrue depreciationwithin the remaining service life of the leased asset. If it cannot be reasonably recognized that the title of the leased assetis acquired at the expiration of the lease term, the
leased assets shall be depreciated within the shorter of the lease term and the remaining service life of the leased asset.
②Lease Liabilities
On the lease inception date, the Company recognizes the lease liabilities for the lease other than short-term lease andlow-value asset lease. Lease liabilities shall be initially measured at the present value of the unpaid lease payment. Leasepayment includes: Where there are lease incentives in the fixed payment and substantial fixed payment, the amountrelated to the lease incentives shall be deducted; the variable lease payment that depends on the index or ratio shall bedetermined on the basis of the index or ratio on the lease inception date at the initial measurement; the exercise price ofthe purchase option, provided that the Company reasonably determines that the option will be exercised; the funds to bepaid for the termination of the lease option, provided that the lease period reflects that the Company will terminate thelease option; the funds expected to be paid on the basis of the guaranteed residual value provided by the Company. Theinterest rate implicit in lease is applied as the discount rate. If the interest rate implicit in lease cannot be determined, theCompany's incremental borrowing rate shall be applied as the discount rate.The Company shall calculate the interest expense of the lease liability during each period of the lease term at a fixedperiodic interest rate and include it into the current profits and losses or relevant asset costs. The variable lease paymentwhich is not included in the measurement of lease liabilities shall be included into the current profits and losses or relevantasset costs when actually incurred.After the lease inception date, the Company remeasures the lease liability according to the present value of the changedlease payment in the following circumstances: Changes in the evaluation results of the call option, renewal option or leasetermination option, or inconsistency between actual exercise of the renewal option or lease termination option and theoriginal evaluation results; changes in the payable amount estimated according to guaranteed residual value; changes inthe index or ratio applied to determine the amount of lease payments. When remeasuring the lease liability, the Companyshall accordingly adjust the book value of right-of-use assets. If the book value of the right-of-use assets has beenreduced to zero, but the lease liability still needs to be further reduced, the remaining amount shall be included into thecurrent profits and losses.
③ Short-term Leases and Low-value Asset Leases
The Company does not recognize the right-of-use assets and lease liabilities for the short-term leases and low-valueasset leases, and include the relevant lease payments into the current profits and losses or relevant asset costs according
to the straight-line method during each period of the lease term. Short-term leases refer to, on the lease inception date,the leases with a lease term of no more than 12 months and excluding the call option. Low-value asset leases refer toleases with low value when a single leased asset is brand-new. If the Company sublets or is expected to sublet the leasedassets, the original lease shall not be recognized as the low-value asset lease.
④Lease Change
If there is a change in lease and all of the following conditions are met, the Company shall take the changed lease as anindividual lease for accounting treatment: Such lease change expands the lease scope by increasing the right of use ofone or more lease assets; the increased consideration and the separate price for the expanded lease range shall beequivalent to the amount adjusted by the contract.If the changed lease does not be accounted as an individual lease, on the effective date of such changed lease, theCompany shall reapportion the changed contract consideration, redetermine the lease term, and remeasures the leaseliabilities according to the changed lease payment and revised discount rate.
(2) The Lessor
On the lease inception date, the Company shall classify a lease as a finance lease or an operating lease. Finance leaserefers to the lease by which almost all the risks and rewards related to the ownership of the leased asset are essentiallytransferred, regardless of whether the ownership is finally transferred or not. Operating lease refers to the lease other thana finance lease.As the lessor for sublease, the Company shall classify the sublease based on the right-of-use assets generated fromoriginal lease. If the original lease is a short-term lease and the Company does not recognize the right-of-use assets andlease liabilities for it, the Company shall classify the sublease as an operating lease.
① Accounting Treatment of Operating Lease
The lease expense received by the Company for the assets leased out shall be amortized in a straight-line basis over thelease term without deducting the rent-free periods, and recognized as leasing income. The initial direct fee related to theleasing transactions paid by the Company shall be included into current expenses; in case of large amount, it shall becapitalized and included into current profits and losses evenly on the same basis as the leasing income is recognized overthe lease term.When the Company bears the lease related expenses which should be undertaken by the lessee, the Company shalldeduct this part of expense from the rent income, and amortize the net amount over the lease term.
②Accounting Treatment of Finance Lease
On the commencement date of the lessee, the difference between the recorded amount of the leased asset and theminimum lease receivables shall be accounted for as unrecognized finance income and recognized as rental income ineach period in which the rent will be received in the future. Initial direct costs shall be included in the initial accounting ofthe lease payment receivables and deduct by the revenue recognized over the lease term.
35. Other Significant Accounting Policies and Accounting Estimates
(1) Termination of Operation
Termination of business is a separately distinguishable constituent part that satisfies one of the following conditions andthat has been disposed of or classified by the Company as held for sale:
①This constituent part represents an independent primary business or a separate principal operating area;
②This constituent part is part of an associated plan to dispose of for an independent primary business or a separateprincipal operating area;
③This constituent part is a subsidiary acquired for resale.
(2) Repurchase of the Company's Shares
The Company's shares repurchased by the Company for reducing the registered capital or rewarding employees shall betreated as the treasury shares based on the actual amount paid, and shall be checked and registered at the same time. Ifthe repurchased shares are canceled, the difference between the actual amount paid for the repurchase and the total parvalue of shares calculated by the par value of the canceled shares and the number of canceled shares will write off thecapital reserve. If the capital reserve is insufficient, the retained income will be written off; if the repurchased shares areawarded to the employees of the Company, it shall be categorized as equity-settled share-based payment. When theCompany receives the payment made by employees who exercise their rights to purchase such shares, the amount shallbe used to write off the cost of treasury shares delivered to employees and the capital reserve in the waiting period andmeanwhile, the capital reserve (stock premium) shall be adjusted according to the difference.
36. Changes in Significant Accounting Policies and Accounting Estimates
(1) Changes in Significant Accounting Policies
√ Applicable □ Not applicable
| Content and Reasons for Change in Accounting Policies | Procedure for Approval | Notes |
| Accounting Standards for Enterprises No.21 – Lease (CaiKuai [2018] No.35) (hereinafter referred to as "new lease criteria") issued by the Ministry of Finance on December 7, 2018 specify that the new lease criteria should be implemented by the enterprises concurrently listed at home and abroad and those who adopt International Financial Reporting Standards (IFRS) or Accounting Standards for Enterprises for preparing financial statement since January 1, 2019 and by other enterprises implementing Accounting Standards for Enterprises since January 1, 2021. | Proposal on Change in Accounting Policies has been approved at the eleventh meeting of the seventh session of the Board of Directors of the Company on March 23, 2021. | According to the new lease criteria, the right-of-use assets and lease liabilities for all leased assets shall be recognized according to the minimum present lease value of the rent payable in the future (except for short-term leases and low-value asset leases with simplified treatment), and the depreciation expense and the unrecognized financing expense are also recognized separately since January 1, 2021. Since January 1, 2021, the Company discloses the financial statement according to the new lease criteria, and only adjusts the amount of related items in the financial statement at the beginning of the year when the new lease criteria is first implemented, without retroactive adjustment of information in the comparable periods. The changes in accounting policies have no significant impact on the financial position, operating results and cash flow of the Company. |
From January 1, 2021, the Company implements Accounting Standards for Enterprises No.21 – Lease (Revised)(hereinafter referred to as "new lease criteria") issued by the Ministry of Finance in 2018. The new lease criteria has the
following effects on the items in the financial statement as of January 1, 2021:
①Content of and Reasons for Change in Accounting Policies
For the operating lease contracts existed before first implementation of the new lease criteria, the Companydistinguishes different connection methods according to the remaining lease term:
Where the remaining lease term is longer than 1 year, the Company recognizes the lease liabilities according to theremaining lease payment and incremental borrowing rate on January 1, 2021, and initially recognizes the right-of-useassets according to the amount equivalent to the lease liabilities plus the prepaid rent transferred from other assets.Where the remaining lease term is less than 1 year, the Company does not recognize the right-of-use assets and thelease liabilities by simplified method, without significant impact on the financial statement.
For the operating lease contracts with low-value assets existed before first implementation of the new lease criteria,the Company does not recognize the right-of-use assets and the lease liabilities by simplified method, without significantimpact on the financial statement.
② Affected Item and Amount
| Item | Impact on Balance on January 1, 2021 | |
| Consolidated Balance Sheet | Balance Sheet of the Parent Company | |
| Prepayments | -9,255,773.15 | -7,480,693.68 |
| Other Receivables | -1,452,172.37 | -141,861.28 |
| Other Current Assets | 102,047.54 | |
| Right-of-use Assets | 155,673,708.67 | 82,586,983.09 |
| Non-current Liabilities Due within 1 Year | 58,971,448.27 | 29,457,938.99 |
| Lease Liabilities | 86,096,362.42 | 45,506,489.14 |
(2) Changes in significant accounting estimates
□ Applicable √ Not applicable
(3) The first implementation of new lease criteria from 2021 to adjust the relevant items of thefinancial statements implemented at the beginning of the year for the first timeWhether the accounts of the balance sheet at the beginning of the year shall be adjusted
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
| Item | December 31, 2020 | January 1, 2021 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 7,471,652,634.66 | 7,471,652,634.66 | |
| Deposit Reservation |
| for Balance | |||
| Loans to Banks and Other Financial Institutions | |||
| Trading Financial Assets | 2,475,680.45 | 2,475,680.45 | |
| Derivative Financial Assets | |||
| Notes receivable | 232,857,354.55 | 232,857,354.55 | |
| Accounts receivable | 12,857,519,110.16 | 12,857,519,110.16 | |
| Receivables Financing | 1,207,879,654.58 | 1,207,879,654.58 | |
| Prepayments | 162,250,648.05 | 152,994,874.90 | -9,255,773.15 |
| Premium Receivable | |||
| Reinsurance Accounts Receivable | |||
| Reinsurance Contract Reserves Receivable | |||
| Other Receivables | 970,427,893.48 | 968,975,721.11 | -1,452,172.37 |
| Including: interest receivable | |||
| Dividends Receivable | |||
| Buying Back the Sale of Financial Assets | |||
| Inventory | 4,928,019,838.00 | 4,928,019,838.00 | |
| Contract Assets | 84,825,834.82 | 84,825,834.82 | |
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 635,956,549.07 | 635,956,549.07 | |
| Other Current Assets | 558,434,219.93 | 558,536,267.47 | 102,047.54 |
| Subtotal of Current Assets | 29,112,299,417.75 | 29,101,693,519.77 | -10,605,897.98 |
| Non-current Assets: | |||
| Granting of loans and advances | |||
| Investment in Creditor's Rights |
| Investment in Other Creditor's Rights | |||
| Long-term Receivables | 2,250,315,769.50 | 2,250,315,769.50 | |
| Long-term Equity Investment | 455,977,616.16 | 455,977,616.16 | |
| Investment in Other Equity Instruments | |||
| Other Non-current Financial Assets | 360,087,786.34 | 360,087,786.34 | |
| Investment Property | 336,008,869.13 | 336,008,869.13 | |
| Fixed Assets | 1,515,594,629.97 | 1,515,594,629.97 | |
| Projects under Construction | 1,164,130,453.03 | 1,164,130,453.03 | |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | 155,673,708.67 | 155,673,708.67 | |
| Intangible Assets | 406,777,323.39 | 406,777,323.39 | |
| Development Expenditure | |||
| Goodwill | 42,685,490.30 | 42,685,490.30 | |
| Long-term Deferred Expenses | 32,280,430.67 | 32,280,430.67 | |
| Deferred Income Tax Assets | 832,453,676.69 | 832,453,676.69 | |
| Other Non-current Assets | 86,422,617.82 | 86,422,617.82 | |
| Subtotal of Non-current Assets | 7,482,734,663.00 | 7,638,408,371.67 | 155,673,708.67 |
| Total Assets | 36,595,034,080.75 | 36,740,101,891.44 | 145,067,810.69 |
| Current Liabilities: | |||
| Short-term loan | 250,177,083.34 | 250,177,083.34 | |
| Borrowings from the Central Bank | |||
| Borrowings from Banks and Other Financial Institutions |
| Transactional financial liabilities | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 3,258,552,758.17 | 3,258,552,758.17 | |
| Accounts Payable | 6,444,787,705.28 | 6,444,787,705.28 | |
| Received Prepayments | |||
| Contract liabilities | 671,120,385.08 | 671,120,385.08 | |
| Financial Assets Sold for Repurchase | |||
| Deposit Taking and Interbank Deposit | |||
| Receiving from Vicariously Traded Securities | |||
| Receiving from Vicariously Sold Securities | |||
| Payroll payable | 1,805,464,535.31 | 1,805,464,535.31 | |
| Tax Payable | 900,144,863.67 | 900,144,863.67 | |
| Other Payables | 970,552,877.22 | 970,552,877.22 | |
| Including: interest payable | |||
| Dividends Payable | 12,982,399.27 | 12,982,399.27 | |
| Service Charge and Commission Payable | |||
| Reinsurance Accounts Payable | |||
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | 151,891,709.34 | 210,863,157.61 | 58,971,448.27 |
| Other Current Liabilities | 209,401,914.77 | 209,401,914.77 | |
| Subtotal of Current Liabilities | 14,662,093,832.18 | 14,721,065,280.45 | 58,971,448.27 |
| Non-current Liabilities: |
| Insurance Contract Reserves | |||
| Long-term loan | 878,000,000.00 | 878,000,000.00 | |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | 86,096,362.42 | 86,096,362.42 | |
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 282,427,517.82 | 282,427,517.82 | |
| Deferred Income | 110,469,806.29 | 110,469,806.29 | |
| Deferred Income Tax Liabilities | 67,272,768.46 | 67,272,768.46 | |
| Other Non-current Liabilities | 391,128,045.90 | 391,128,045.90 | |
| Subtotal of Non-current Liabilities | 1,729,298,138.47 | 1,815,394,500.89 | 86,096,362.42 |
| Total Liabilities | 16,391,391,970.65 | 16,536,459,781.34 | 145,067,810.69 |
| Shareholders' Equity: | |||
| Share Capital | 2,995,579,590.00 | 2,995,579,590.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,989,655,334.05 | 1,989,655,334.05 | |
| Less: Treasury Share | 581,968,930.89 | 581,968,930.89 | |
| Other Comprehensive Incomes | 61,157,523.13 | 61,157,523.13 | |
| Special Reserves | |||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 | |
| General Risk Reserves |
| Undistributed Profits | 13,754,915,904.19 | 13,754,915,904.19 | |
| Total Shareholders' Equity Attributable to the Parent Company | 19,773,030,426.40 | 19,773,030,426.40 | |
| Minority Shareholders' Equity | 430,611,683.70 | 430,611,683.70 | |
| Total Shareholders' Equity | 20,203,642,110.10 | 20,203,642,110.10 | |
| Total Liabilities and Shareholders' Equity | 36,595,034,080.75 | 36,740,101,891.44 | 145,067,810.69 |
Balance Sheet of the Parent Company
Unit: RMB
| Item | December 31, 2020 | January 1, 2021 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 3,130,479,311.55 | 3,130,479,311.55 | |
| Trading Financial Assets | |||
| Derivative Financial Assets | |||
| Notes receivable | 74,284,006.99 | 74,284,006.99 | |
| Accounts receivable | 2,740,152,239.35 | 2,740,152,239.35 | |
| Receivables Financing | 169,109,529.24 | 169,109,529.24 | |
| Prepayments | 48,203,550.97 | 40,722,857.29 | -7,480,693.68 |
| Other Receivables | 13,796,603,550.30 | 13,796,461,689.02 | -141,861.28 |
| Including: interest receivable | |||
| Dividends Receivable | |||
| Inventory | 171,756,222.72 | 171,756,222.72 | |
| Contract Assets | 8,338,657.15 | 8,338,657.15 | |
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 61,828,724.54 | 61,828,724.54 | |
| Other Current Assets | 12,592.38 | 12,592.38 | |
| Subtotal of Current Assets | 20,200,768,385.19 | 20,193,145,830.23 | -7,622,554.96 |
| Non-current Assets: | |||
| Investment in Creditor's Rights | |||
| Investment in Other Creditor's Rights | |||
| Long-term Receivables | 100,221,713.49 | 100,221,713.49 | |
| Long-term Equity Investment | 3,660,410,557.29 | 3,660,410,557.29 | |
| Investment in Other Equity Instruments | |||
| Other Non-current Financial Assets | 355,853,684.59 | 355,853,684.59 | |
| Investment Property | 173,003,549.71 | 173,003,549.71 | |
| Fixed Assets | 550,991,444.04 | 550,991,444.04 | |
| Projects under Construction | 438,014,907.22 | 438,014,907.22 | |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | 82,586,983.09 | 82,586,983.09 | |
| Intangible Assets | 156,335,152.97 | 156,335,152.97 | |
| Development Expenditure | |||
| Goodwill | |||
| Long-term Deferred Expenses | 21,149,342.55 | 21,149,342.55 | |
| Deferred Income Tax Assets | 135,371,242.86 | 135,371,242.86 | |
| Other Non-current Assets | 35,774,247.16 | 35,774,247.16 | |
| Subtotal of Non-current Assets | 5,627,125,841.88 | 5,709,712,824.97 | 82,586,983.09 |
| Total Assets | 25,827,894,227.07 | 25,902,858,655.20 | 74,964,428.13 |
| Current Liabilities: | |||
| Short-term loan | 250,177,083.34 | 250,177,083.34 | |
| Transactional financial |
| liabilities | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 303,660,579.62 | 303,660,579.62 | |
| Accounts Payable | 752,373,890.95 | 752,373,890.95 | |
| Received Prepayments | |||
| Contract liabilities | 85,275,423.36 | 85,275,423.36 | |
| Payroll payable | 1,127,500,408.14 | 1,127,500,408.14 | |
| Tax Payable | 627,351,201.46 | 627,351,201.46 | |
| Other Payables | 1,002,654,121.27 | 1,002,654,121.27 | |
| Including: interest payable | |||
| Dividends Payable | 12,982,399.27 | 12,982,399.27 | |
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | 150,643,750.02 | 180,101,689.01 | 29,457,938.99 |
| Other Current Liabilities | 26,870,130.42 | 26,870,130.42 | |
| Subtotal of Current Liabilities | 4,326,506,588.58 | 4,355,964,527.57 | 29,457,938.99 |
| Non-current Liabilities: | |||
| Long-term loan | 750,000,000.00 | 750,000,000.00 | |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | 45,506,489.14 | 45,506,489.14 | |
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 8,333,634.18 | 8,333,634.18 | |
| Deferred Income | |||
| Deferred Income Tax | 29,407,289.24 | 29,407,289.24 |
| Liabilities | |||
| Other Non-current Liabilities | 10,599,934.34 | 10,599,934.34 | |
| Subtotal of Non-current Liabilities | 798,340,857.76 | 843,847,346.90 | 45,506,489.14 |
| Total Liabilities | 5,124,847,446.34 | 5,199,811,874.47 | 74,964,428.13 |
| Shareholders' Equity: | |||
| Share Capital | 2,995,579,590.00 | 2,995,579,590.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,976,156,775.91 | 1,976,156,775.91 | |
| Less: Treasury Share | 581,968,930.89 | 581,968,930.89 | |
| Other Comprehensive Incomes | 522,554.00 | 522,554.00 | |
| Special Reserves | |||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 | |
| Undistributed Profits | 14,759,065,785.79 | 14,759,065,785.79 | |
| Total Shareholders' Equity | 20,703,046,780.73 | 20,703,046,780.73 | |
| Total Liabilities and Shareholders' Equity | 25,827,894,227.07 | 25,902,858,655.20 | 74,964,428.13 |
(4) Explanation of data comparison for early stage of retroactive adjustment due to firstimplementation of the new lease criteria from 2021
□ Applicable √ Not applicable
Ⅵ. Taxes
1. Major Categories of Taxes and Tax Rates
| Tax Type | Taxation Basis | Tax Rate |
| VAT | According to the provisions of the tax law, the sales tax shall be calculated on the basis of the income by selling goods and taxable services. After deducting the input tax that is allowed to be deducted from the sales tax in the current period, the | 13%, 9%, 6%, simple collection rate of 5%, and simple collection rate of 3%, 0%, tax-free |
| difference shall be the value added tax | ||
| Urban Maintenance and Construction Tax | Actually paid turnover tax | 7%、5% |
| Enterprise Income Tax | Calculated based on the taxable income | 12.5%、15%、16.5%、20%、25% |
| Education Surcharges | Actually paid turnover tax | 3% |
| Local Education Surcharges | Actually paid turnover tax | 2% |
If there are multiple taxpayers with different enterprise income tax rates, specify the situation
| Name of taxpayer | Income tax rate |
| Zhejiang Dahua Technology Co., Ltd. | 15% |
| Zhejiang Dahua System Engineering Co., Ltd. | 15% |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 15% |
| Zhejiang Huachuang Vision Technology Co., Ltd. | 15% |
| Zhejiang HuaRay Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhihe Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhitian Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Huayue Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | 15% |
| Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | 15% |
| Guangxi Dahua Zhicheng Co., Ltd. | 15% |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 15% |
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 20% |
| Zhejiang Huaxiao Technology Co., Ltd. | 20% |
| Zhejiang Huaxuan Technology Co., Ltd. | 20% |
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 20% |
| Guangxi Dahua Technology Co., Ltd. | 20% |
| Beijing Huayue Shangcheng Information Technology Service Co., Ltd. | 20% |
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 20% |
| Zhejiang Dahua Storage Technology Co., Ltd. | 20% |
| Zhejiang Huakong Software Co., Ltd. | 20% |
| Yunnan Zhili Technology Co., Ltd | 20% |
| Guizhou Dahua Information Technology Co., Ltd. | 20% |
| Henan Dahua Zhilian Information Technology Co., Ltd. | 20% |
| Dahua Technology (HK) Limited | 16.50% |
| Chengdu Dahua Zhilian Information Technology Co., Ltd. | 20% |
| Hangzhou Xiaohua Technology CO., LTD. | 20% |
| Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | 20% |
| Chengdu Zhichuang Yunshu Technology Co., Ltd. | 20% |
| Chengdu Huishan Smart Network Technology Co., Ltd. | 20% |
| Guizhou Huayi Shixin Technology Co., Ltd. | 20% |
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | 20% |
| Tianjin Dahua Information Technology Co., Ltd. | 20% |
| Other Domestic Companies | 25% |
| Other Overseas Companies | Applicable to local tax rate |
2. Preferential Tax Rate
(1) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2020" (Guo KeHuo Zi [2020] No. 251) issued by the Office of National Leading Group for Identification and Management of High-techEnterprises on December 29, 2020, the Company was identified as a high-tech enterprise, which is valid for 3 years. Thecorporate income tax for this year was reduced at a rate of 15%.
(2) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2019" (Guo KeHuo Zi [2020] No.32) issued by the Office of National Leading Group for Identification and Management of High-techEnterprises on January 20, 2020, our subsidiary Zhejiang Dahua System Engineering Co., Ltd. was identified as ahigh-tech enterprise, valid for 3 years. The corporate income tax of this year was reduced at the tax rate of 15%.
(3) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2020" (Guo KeHuo Zi [2020] No. 251) issued by the Office of National Leading Group for Identification and Management of High-techEnterprises on December 29, 2020, our subsidiary Zhejiang Dahua Security Network Operations Services Co., Ltd. wasidentified as a high-tech enterprise, which is valid for 3 years. The corporate income tax of this year was reduced at the taxrate of 15%.
(4) According to the “Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018” issued bythe Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018, thesubsidiary - Zhejiang Huachuang Vision Technology Co. Ltd. was certified as a high-tech enterprise, which is valid for3years. As of the approval date of this report, it is still in the stage of re-examination and declaration of high-techenterprise qualification in 2021. According to the Announcement of the State Taxation Administration on IssuesConcerning the Implementation of Preferential Policies for Income Tax of High-tech Enterprises, the enterprise income taxof high-tech enterprises can be paid in advance temporarily at the tax rate of 15% within the year when the qualificationexpires and before it is re-recognized, so the enterprise income tax of this year is calculated and paid at a reduced tax rateof 15%.
(5) According to the “Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018” issued bythe Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018, thesubsidiary - Zhejiang HuaRay Technology Co., Ltd. was certified as a high-tech enterprise, which is valid for 3 years. As of
the approval date of this report, it is still in the stage of re-examination and declaration of high-tech enterprise qualificationin 2021. According to the Announcement of the State Taxation Administration on Issues Concerning the Implementation ofPreferential Policies for Income Tax of High-tech Enterprises, the enterprise income tax of high-tech enterprises can bepaid in advance temporarily at the tax rate of 15% within the year when the qualification expires and before it isre-recognized, so the enterprise income tax of this year is calculated and paid at a reduced tax rate of 15%.
(6) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2020" (Guo KeHuo Zi [2020] No.251) issued by the Office of National Leading Group for Identification and Management of High-techEnterprises on December 29, 2020, our subsidiary Zhejiang Huafei Intelligence Technology Co., Ltd. was identified as ahigh-tech enterprise, which is valid for 3 years. The corporate income tax for this year was reduced at the tax rate of 15%.
(7) According to the Notice on the Implementation of Inclusive Tax Reduction and Exemption Policies for Small andMicro-Enterprises (Cai Shui [2019] No.13), the following subsidiaries should pay the corporate income tax at the tax rateof 20% of their taxable income: Zhejiang Dahua Ju'an Technology Co., Ltd., Zhejiang Huaxiao Technology Co., Ltd.,Zhejiang Huaxuan Technology Co., Ltd., Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd., Guangxi DahuaTechnology Co. Ltd., Beijing Huayue Shangcheng Information Technology Service Co., Ltd., Shanghai HuashangChengyue Information Technology Service Co., Ltd., Zhejiang Dahua Storage Technology Co., Ltd., Zhejiang HuakongSoftware Co., Ltd., Yunnan Zhili Technology Co., Ltd., Guizhou Dahua Information Technology Co., Ltd., Henan DahuaZhilian Information Technology Co., Ltd., Chengdu Dahua Zhilian Information Technology Co., Ltd., Hangzhou XiaohuaTechnology Co., Ltd., Chengdu Dahua Zhishu Information Technology Service Co., Ltd., Chengdu Zhichuang YunshuTechnology Co., Ltd., Chengdu Huishan Smart Network Technology Co., Ltd., Guizhou Huayi Shixin Technology Co., Ltd.,Zhejiang Zhoushan Digital Development Operation Co., Ltd., and Tianjin Dahua Information Technology Co., Ltd.
(8) According to the document (CaiShui [2011] No.58) jointly issued by the Ministry of Finance, the State Administration ofTaxation, and the General Administration of Customs, and the announcement (CaiShui [2020] No.23) issued by theMinistry of Finance, the following subsidiaries can enjoy preferential tax policies related to the Development of the WestRegions Program from 2011 to 2030: Xinjiang Dahua Zhixin Information Technology Co., Ltd., Xinjiang Dahua ZhiheInformation Technology Co., Ltd., Xinjiang Dahua Zhitian Information Technology Co., Ltd., Xinjiang Dahua HuayueInformation Technology Co., Ltd., Xinjiang Dahua Xinzhi Information Technology Co., Ltd., Inner Mongolia DahuaZhimeng Information Technology Co., Ltd., and Guangxi Dahua Zhicheng Co., Ltd. The corporate income tax of this yearwas reduced to a rate of 15%.Ⅶ. Notes to the Items in the Consolidated Financial Statement
1. Cash and bank balances
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Cash on Hand | 23,851.15 | 24,145.51 |
| Bank Balance | 6,444,134,464.33 | 7,336,459,974.17 |
| Other Cash and Bank Balances | 246,704,714.21 | 135,168,514.98 |
| Total | 6,690,863,029.69 | 7,471,652,634.66 |
| Including: Total Amount Deposited in Overseas Banks | 1,693,137,203.87 | 1,625,638,746.76 |
| The total amount restricted for use due to | 105,139,382.31 | 101,126,967.62 |
The amount restricted for use due to mortgage, pledge or freeze:
mortgage, pledge or freezeItem
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Bid / Performance bond | 105,139,382.31 | 101,126,967.62 |
| Total | 105,139,382.31 | 101,126,967.62 |
2. Trading Financial Assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Financial assets at fair value through profit or loss in this period | 9,614,978.97 | 2,475,680.45 |
| Including: | ||
| Derivative Financial Assets | 8,144,978.97 | 1,005,680.45 |
| Financial products | 1,470,000.00 | 1,470,000.00 |
| Total | 9,614,978.97 | 2,475,680.45 |
3. Notes Receivable
(1) Disclosure of Notes Receivable
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Bank Acceptance Notes | 67,400,083.22 | 57,617,340.08 |
| Commercial acceptance bill | 197,737,575.69 | 175,240,014.47 |
| Total | 265,137,658.91 | 232,857,354.55 |
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Including: | ||||||||||
| Notes Receivable with the Bad Debt Provision Accrued Based on Combinations | 290,756,778.94 | 100.00% | 25,619,120.03 | 8.81% | 265,137,658.91 | 248,409,731.28 | 100.00% | 15,552,376.73 | 6.26% | 232,857,354.55 |
| Including: | ||||||||||
| Bank Acceptance Notes | 68,775,595.12 | 23.65% | 1,375,511.90 | 2.00% | 67,400,083.22 | 58,793,204.17 | 23.67% | 1,175,864.09 | 2.00% | 57,617,340.08 |
| Commercial acceptance bill | 221,981,183.82 | 76.35% | 24,243,608.13 | 10.92% | 197,737,575.69 | 189,616,527.11 | 76.33% | 14,376,512.64 | 7.58% | 175,240,014.47 |
| Total | 290,756,778.94 | 100.00% | 25,619,120.03 | 265,137,658.91 | 248,409,731.28 | 100.00% | 15,552,376.73 | 232,857,354.55 |
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Bank Acceptance Notes | 68,775,595.12 | 1,375,511.90 | 2.00% |
| Commercial acceptance bill | 221,981,183.82 | 24,243,608.13 | 10.92% |
| Total | 290,756,778.94 | 25,619,120.03 | -- |
If the provision for bad debts of notes receivable is accrued according to the general model of expected credit losses,please refer to the disclosure method of other receivables for disclosure of the information relating to the bad debtsprovisions:
□ Applicable √ Not applicable
(2) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bank Acceptance Notes | 1,175,864.09 | 199,647.81 | 1,375,511.90 | |||
| Commercial acceptance bill | 14,376,512.64 | 9,867,095.49 | 24,243,608.13 | |||
| Total | 15,552,376.73 | 10,066,743.30 | 25,619,120.03 | |||
Significant amount of recovered or reversed bad debt provision in this period:
□ Applicable √ Not applicable
(3) Notes receivable pledged by the company at the end of the periodNo notes receivable that the company has pledged at the end of the period
(4) Notes receivable endorsed or discounted by the company at the end of the period and thathave not yet expired on the balance sheet date
Unit: RMB
| Item | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 32,558,357.84 | |
| Total | 32,558,357.84 |
4. Accounts Receivable
(1) Categorical disclosure of accounts receivable
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on single item | 555,237,732.63 | 3.69% | 555,237,732.63 | 100.00% | 669,736,293.01 | 4.53% | 313,697,573.83 | 46.84% | 356,038,719.18 | |
| Including: | ||||||||||
| Accounts receivable with insignificant single amount but accrued for separate provision of bad debt | 555,237,732.63 | 3.69% | 555,237,732.63 | 100.00% | 669,736,293.01 | 4.53% | 313,697,573.83 | 46.84% | 356,038,719.18 | |
| Accounts receivables with the bad debt provision accrued based on combinations | 14,482,272,449.11 | 96.31% | 1,703,230,992.21 | 11.76% | 12,779,041,456.90 | 14,106,509,538.15 | 95.47% | 1,605,029,147.17 | 11.38% | 12,501,480,390.98 |
| Including: | ||||||||||
| Portfolio 2: Aging Analysis Portfolio | 14,482,272,449.11 | 96.31% | 1,703,230,992.21 | 11.76% | 12,779,041,456.90 | 14,106,509,538.15 | 95.47% | 1,605,029,147.17 | 11.38% | 12,501,480,390.98 |
| Total | 15,037,510,181.74 | 100.00% | 2,258,468,724.84 | 12,779,041,456.90 | 14,776,245,831.16 | 100.00% | 1,918,726,721.00 | 12,857,519,110.16 | ||
Bad debt provision based on single item
Unit: RMB
| Name | Balance at the End of the Period |
| Book balance | Bad debt provision | Accrued proportion | Reason for making bad debt provision | |
| Customer 1 | 225,140,645.36 | 225,140,645.36 | 100.00% | No recovery is expected |
| Customer 2 | 260,153,530.00 | 260,153,530.00 | 100.00% | No recovery is expected |
| Customer 3 | 18,790,253.00 | 18,790,253.00 | 100.00% | No recovery is expected |
| Customer 4 | 51,153,304.27 | 51,153,304.27 | 100.00% | No recovery is expected |
| Total | 555,237,732.63 | 555,237,732.63 | -- | -- |
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year (including 1 year) | 11,166,163,761.03 | 558,317,864.04 | 5.00% |
| 1 to 2 years | 1,433,638,437.00 | 143,363,843.70 | 10.00% |
| 2 to 3 years | 879,732,640.04 | 263,919,792.01 | 30.00% |
| 3 to 4 years | 456,095,367.69 | 228,047,683.84 | 50.00% |
| 4 to 5 years | 185,302,173.62 | 148,241,738.89 | 80.00% |
| 5 years or above | 361,340,069.73 | 361,340,069.73 | 100.00% |
| Total | 14,482,272,449.11 | 1,703,230,992.21 | -- |
Please refer to the disclosing methods of other receivables for the information disclosure of bad debts provisions, if thebad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 11,166,163,761.03 |
| 1 to 2 years | 1,433,638,437.00 |
| 2 to 3 years | 1,383,817,068.40 |
| 3 years or above | 1,053,890,915.31 |
| 3 to 4 years | 456,095,367.69 |
| 4 to 5 years | 236,455,477.89 |
| 5 years or above | 361,340,069.73 |
| Total | 15,037,510,181.74 |
(2) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bad debt provision | 1,918,726,721.00 | 353,620,673.67 | 12,563,422.37 | -1,315,247.46 | 2,258,468,724.84 | |
| Total | 1,918,726,721.00 | 353,620,673.67 | 12,563,422.37 | -1,315,247.46 | 2,258,468,724.84 | |
(3) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Accounts receivable actually written off | 12,563,422.37 |
(4) Accounts receivable of the top five closing balances collected by debtorsThe accounts receivables of the top five closing balance collected by the arrears is summed up to 1,384,695,461.81 yuan,accounting for 9.21% of the total closing balance of the accounts receivables, the closing balance of bad debt provisionsaccrued is summed up to 688,274,933.44 yuan.
(5) Accounts receivable derecognized due to the transfer of financial assets
1) According to the accounts receivable acquisition agreement without recourse signed between the subsidiary DahuaHong Kong and JPMorgan Chase Bank in the current period, the Company transferred accounts receivable of USD5,784,951.68 to JPMorgan Chase Bank, equivalent to RMB 37,371,366.35 and the recognition of accounts receivableafter the transfer.
2) According to the accounts receivable acquisition agreement without recourse signed between the subsidiary DahuaHong Kong and JPMorgan Chase Bank in the current period, the Company transferred accounts receivable of USD2,035,418.14 to JPMorgan Chase Bank, equivalent to RMB 13,149,004.73, and terminated the recognition of accountsreceivable after the transfer.
5. Receivables Financing
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Bank Acceptance Notes | 882,840,084.73 | 1,191,810,834.58 |
| Supply chain finance | 18,352,773.86 | 16,068,820.00 |
| Total | 901,192,858.59 | 1,207,879,654.58 |
The increase and decrease of accounts receivable financing in the current period and the changes in the fair value.
□ Applicable √ Not applicable
Please refer to the disclosing methods of other receivables for the information disclosure of depreciation provisions, if thedepreciation provisions of accounts receivable financing are made according to the general model of expected creditlosses:
□ Applicable √ Not applicable
6. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
| Aging | Balance at the End of the Period | Balance at the Start of the Period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 161,401,258.38 | 88.25% | 139,389,298.38 | 91.11% |
| 1 to 2 years | 15,263,798.22 | 8.34% | 11,346,933.87 | 7.42% |
| 2 to 3 years | 4,025,492.64 | 2.20% | 575,066.34 | 0.37% |
| 3 years or above | 2,209,241.59 | 1.21% | 1,683,576.31 | 1.10% |
| Total | 182,899,790.83 | -- | 152,994,874.90 | -- |
(2) Advance payment of the top five closing balances by prepayment parties
The total amount of the top five advance payments of closing balance collected according to the concentration ratio ofadvance payment objects is RMB 55,124,551.62, accounting for 30.14% of the total closing balance of the advancepayments.
7. Other Receivables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Other Receivables | 922,620,846.22 | 968,975,721.11 |
| Total | 922,620,846.22 | 968,975,721.11 |
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening book balance |
| Deposits | 193,243,653.12 | 149,004,407.45 |
| Prepaid or advance expense | 135,590,425.70 | 106,409,461.12 |
| Equity Transfer Fund | 588,000,000.00 | 588,000,000.00 |
| Export refunds | 100,115,398.53 | |
| Employee home loan | 100,477,712.99 | 114,008,578.27 |
| Others | 5,828,784.85 | 6,018,587.80 |
| Total | 1,023,140,576.66 | 1,063,556,433.17 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, 2021 | 72,640,383.80 | 21,183,679.76 | 756,648.50 | 94,580,712.06 |
| Balance in the Current Period on January 1, 2021 | —— | —— | —— | —— |
| --Transfer to phase two | -4,310,189.22 | 4,310,189.22 | ||
| --Transfer to phase three | -10,409.96 | -79,068.62 | 89,478.58 | |
| Provisions of this period | 2,026,627.51 | 4,025,319.14 | 6,051,946.65 | |
| Reversal of the current period | 77,476.64 | 25,028.10 | 102,504.74 | |
| Other variations | -10,423.53 | -10,423.53 | ||
| Balance on June 30, 2021 | 70,335,988.60 | 29,362,642.86 | 821,098.98 | 100,519,730.44 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 845,320,220.80 |
| 1 to 2 years | 84,848,763.38 |
| 2 to 3 years | 32,656,049.04 |
| 3 years or above | 60,315,543.44 |
| 3 to 4 years | 30,471,131.28 |
| 4 to 5 years | 25,539,747.20 |
| 5 years or above | 4,304,664.96 |
| Total | 1,023,140,576.66 |
3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Portfolio 2: Aging Analysis Portfolio | 94,580,712.06 | 6,051,946.65 | 102,504.74 | -10,423.53 | 100,519,730.44 | |
| Total | 94,580,712.06 | 6,051,946.65 | 102,504.74 | -10,423.53 | 100,519,730.44 | |
4） Accounts receivable actually written off in this periodThere's no actual written-off accounts receivable in this period.
5) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Equity Transfer Fund | 196,000,000.00 | Within 1 year | 19.16% | 9,800,000.00 |
| Company 2 | Equity Transfer Fund | 107,800,000.00 | Within 1 year | 10.54% | 5,390,000.00 |
| Company 3 | Equity Transfer Fund | 66,150,000.00 | Within 1 year | 6.47% | 3,307,500.00 |
| Company 4 | Equity Transfer Fund | 64,680,000.00 | Within 1 year | 6.32% | 3,234,000.00 |
| Company 5 | Equity Transfer | 62,720,000.00 | Within 1 year | 6.13% | 3,136,000.00 |
| Fund | |||||
| Total | -- | 497,350,000.00 | -- | 48.62% | 24,867,500.00 |
6) Accounts receivable not related to government subsidies
There are no other accounts receivable related to government subsidies.
7) Other accounts receivable derecognised due to transfer of financial assets
There are no other accounts receivable derecognized due to the transfer of financial assets.
8) Assets and liabilities generated due to other transferred receivables that the Company stillkeeps recourse or retains part of corresponding rights or interests
There are no assets and liabilities generated due to other transferred receivables that the Company still keeps recourse orretains part of corresponding rights or interests.
8. Inventory
(1) Categories of inventories
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for Impairment of Inventories or Provision for Impairment of Performance Cost | Book value | Book balance | Provision for Impairment of Inventories or Provision for Impairment of Performance Cost | Book value | |
| Raw materials | 2,950,939,755.21 | 29,768,503.82 | 2,921,171,251.39 | 1,775,145,593.83 | 26,591,186.48 | 1,748,554,407.35 |
| Work-in-progress | 1,479,391,068.29 | 21,306,985.49 | 1,458,084,082.80 | 1,230,145,494.18 | 33,254,762.89 | 1,196,890,731.29 |
| Finished goods | 2,679,971,318.04 | 80,993,196.17 | 2,598,978,121.87 | 1,904,284,563.26 | 87,368,092.93 | 1,816,916,470.33 |
| Outsourced work-in-progress | 334,052,012.14 | 334,052,012.14 | 165,658,229.03 | 165,658,229.03 | ||
| Total | 7,444,354,153.68 | 132,068,685.48 | 7,312,285,468.20 | 5,075,233,880.30 | 147,214,042.30 | 4,928,019,838.00 |
(2) Provision for stock depreciation and for contract performance cost impairment
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Accrued | Others | Reversals or | Others | |||
| write-offs | ||||||
| Raw materials | 26,591,186.48 | 7,048,661.98 | 3,871,344.64 | 29,768,503.82 | ||
| Work-in-progress | 33,254,762.89 | 2,044,463.95 | 13,992,241.35 | 21,306,985.49 | ||
| Finished goods | 87,368,092.93 | 9,662,433.94 | 15,928,978.76 | 108,351.94 | 80,993,196.17 | |
| Total | 147,214,042.30 | 18,755,559.87 | 33,792,564.75 | 108,351.94 | 132,068,685.48 |
9. Contract assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Completed but unsettled assets arising from construction contracts | 158,780.49 | 3,175.61 | 155,604.88 | 1,017,240.04 | 28,227.92 | 989,012.12 |
| Operation and maintenance services | 59,167,778.43 | 932,903.74 | 58,234,874.69 | 33,574,009.14 | 599,464.04 | 32,974,545.10 |
| Quality deposit | 62,327,099.97 | 9,434,107.37 | 52,892,992.60 | 58,308,795.21 | 7,446,517.61 | 50,862,277.60 |
| Total | 121,653,658.89 | 10,370,186.72 | 111,283,472.17 | 92,900,044.39 | 8,074,209.57 | 84,825,834.82 |
If the bad debt provisions of accounts receivable are accrued according to the general model of expected credit losses,please refer to the disclosing methods of other receivables for disclosure of the information relating to bad debtsprovisions:
□ Applicable √ Not applicable
Provisions for impairment of contract assets of this period
Unit: RMB
| Item | Provisions of this period | Reversal of the current period | Offset / Write-off in the current period | Causes |
| Completed but unsettled assets arising from construction contracts | 25,052.31 | |||
| Operation and maintenance services | 333,439.70 | |||
| Quality deposit | 1,987,589.76 | |||
| Total | 2,321,029.46 | 25,052.31 | -- |
10. Non-current assets due within one year
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term accounts receivables due within 1 year | 622,854,205.58 | 635,956,549.07 |
| Total | 622,854,205.58 | 635,956,549.07 |
Other notes:
The amount of long-term receivables due within one year pledged by the Company at the end of the period is RMB31,073,678.03 . For details, please refer to “Ⅶ. Consolidated Financial Statements Project Notes /63, Assets withRestricted Ownership or Right of Use”.
11. Other current assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Not deducted input tax | 647,355,012.36 | 447,082,394.96 |
| Prepaid enterprise income tax | 66,520,940.04 | 91,891,780.90 |
| Receivable return cost | 6,225,142.23 | 19,562,091.61 |
| Total | 720,101,094.63 | 558,536,267.47 |
12. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | Range of discount rate | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
| Installment Payment for Selling Products | 2,069,432,687.70 | 2,069,432,687.70 | 2,250,315,769.50 | 2,250,315,769.50 | |||
| Including: Unrealized Financing Income | 331,270,718.55 | 331,270,718.55 | 375,421,302.27 | 375,421,302.27 | 3.69%-10.93% | ||
| Total | 2,069,432,687.70 | 2,069,432,687.70 | 2,250,315,769.50 | 2,250,315,769.50 | -- | ||
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
(2) Assets/liabilities generated due to transferred long-term receivables that the Company stillkeeps recourse or retains part of corresponding rights or interests
There are no assets/liabilities generated due to transferred long-term receivables that the Company still keeps recourse orretains part of corresponding rights or interests.Other notesThe amount of long-term receivables pledged by the Company at the end of the period is RMB 178,385,721.02 . Fordetails, please refer to “Ⅶ. Consolidated Financial Statements Project Notes /63, Assets with Restricted Ownership orRight of Use”.
13. Long-term equity investments
Unit: RMB
| The invested entity | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (book value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | ||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Intelbras S.A. | 376,829,395.58 | 15,500,136.45 | 8,909,387.47 | -1,835,013.29 | 381,585,131.27 | ||||||
| Ruicity Digital Technology Co., Ltd. | 57,944,111.48 | -3,588,203.81 | 54,355,907.67 | ||||||||
| China Standard Intelligent Security Technology Co., Ltd. | 9,665,399.07 | -1,209,353.29 | 8,456,045.78 | ||||||||
| Zhejiang Zhian Internet of Things Engineering Co., Ltd. | 4,403,222.69 | 1,442,574.58 | 5,845,797.27 | ||||||||
| Zhejiang Leapmotor | -164,798,905.92 | 518,754,247.99 | 353,955,342.07 | ||||||||
| Technology Co., Ltd. | |||||||||||
| Digital Dongyang Technology Operation Co., Ltd. | 2,400,000.00 | -134,417.30 | 2,265,582.70 | ||||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,148,962.20 | -425,465.81 | 723,496.39 | ||||||||
| Ningbo Dahua Anbang Security Services Co., Ltd. | 1,136,743.24 | -78,167.35 | 1,058,575.89 | ||||||||
| Wenzhou Dahua Security Services Co., Ltd. | 845,387.15 | 155,744.92 | 1,001,132.07 | ||||||||
| Zhoushan Dahua Technology Co., Ltd. | 736,351.40 | 10,372.11 | 746,723.51 | ||||||||
| Shaoxing Dahua Security Services Co., Ltd. | 524,006.45 | -7,521.21 | 516,485.24 | ||||||||
| Taizhou Dahua Security Services Co., Ltd. | 327,520.78 | 53,487.51 | 381,008.29 | ||||||||
| Lishui Dahua Intelligent Technology Co., Ltd. | 16,516.12 | 9,569.99 | 26,086.11 |
| Guangdong Dahua Zhishi Technology Co., Ltd. | 142,478.81 | -142,478.81 | |||||||||
| Zhejiang Huanuokang Technology Co., Ltd. | 12,000,000.00 | -2,467,450.52 | 9,532,549.48 | ||||||||
| Subtotal | 455,977,616.16 | 12,000,000.00 | -155,395,120.84 | 518,754,247.99 | 8,909,387.47 | -1,977,492.10 | 820,449,863.74 | ||||
| Total | 455,977,616.16 | 12,000,000.00 | -155,395,120.84 | 518,754,247.99 | 8,909,387.47 | -1,977,492.10 | 820,449,863.74 |
14. Other non-current financial assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Equity instrument investment | 373,467,039.68 | 360,087,786.34 |
| Investment in financial product | 564,456,541.92 | |
| Total | 937,923,581.60 | 360,087,786.34 |
15. Investment properties
(1) Investment properties measured by cost method
√ Applicable □ Not applicable
Unit: RMB
| Item | Buildings and constructions | Land use rights | Projects under Construction | Total |
| Ⅰ. Original book value | ||||
| 1. Balance at the Start of the Period | 387,536,763.70 | 9,893,017.27 | 397,429,780.97 | |
| 2. Increased in the Current Period | 1,849,820.55 | 23,027.59 | 1,872,848.14 | |
| (1) Outsourcing | ||||
| (2) Transfer of fixed assets\intangible assets | 1,849,820.55 | 23,027.59 | 1,872,848.14 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | 8,045,870.07 | 1,076,293.88 | 9,122,163.95 |
| (1) Disposal | ||||
| (2) Transfer of fixed assets / intangible assets | 8,045,870.07 | 1,076,293.88 | 9,122,163.95 | |
| (3) Other transfer-out | ||||
| 4. Balance at the End of the Period | 381,340,714.18 | 8,839,750.98 | 390,180,465.16 | |
| Ⅱ. Accumulated Depreciation and Amortization | ||||
| 1. Balance at the Start of the Period | 59,861,557.64 | 1,559,354.20 | 61,420,911.84 | |
| 2. Increased in the Current Period | 9,875,894.88 | 132,316.15 | 10,008,211.03 | |
| (1) Accrual or Amortization | 9,504,345.73 | 130,934.49 | 9,635,280.22 | |
| (2) Transfer of fixed assets\intangible assets | 371,549.15 | 1,381.66 | 372,930.81 | |
| 3. Decreased in the Current Period | 1,398,299.19 | 69,187.01 | 1,467,486.20 | |
| (1) Disposal | ||||
| (2) Transfer of fixed assets / intangible assets | 1,398,299.19 | 69,187.01 | 1,467,486.20 | |
| (3) Other transfer-out | ||||
| 4. Balance at the End of the Period | 68,339,153.33 | 1,622,483.34 | 69,961,636.67 | |
| Ⅲ. Provision for Impairment | ||||
| 1. Balance at the Start of the Period | ||||
| 2. Increased in the Current Period | ||||
| (1) Accrual | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal |
| (2) Other Transfer-out | ||||
| 4. Balance at the End of the Period | ||||
| Ⅳ. Book value | ||||
| 1. Closing Balance on Book Value | 313,001,560.85 | 7,217,267.64 | 320,218,828.49 | |
| 2. Opening Balance on Book Value | 327,675,206.06 | 8,333,663.07 | 336,008,869.13 |
(2) Investment properties measured at fair value
□ Applicable √ Not applicable
16. Fixed assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed Assets | 1,979,508,213.29 | 1,515,594,629.97 |
| Total | 1,979,508,213.29 | 1,515,594,629.97 |
(1) Fixed assets
Unit: RMB
| Item | Housing and building | Machinery and equipment | Means of transport | Electronic and other equipment | Total |
| Ⅰ. Original book value: | |||||
| 1. Balance at the Start of the Period | 1,210,289,116.15 | 295,906,750.90 | 49,627,842.50 | 994,587,982.50 | 2,550,411,692.05 |
| 2. Increased in the Current Period | 442,655,979.29 | 9,514,093.55 | 725,472.83 | 161,349,090.92 | 614,244,636.59 |
| (1) Purchase | 9,514,093.55 | 725,472.83 | 161,349,090.92 | 171,588,657.30 | |
| (2) Transferred From Construction in Progress | 434,610,109.22 | 434,610,109.22 | |||
| (3) Acquisition | |||||
| (4) Investment property transfer | 8,045,870.07 | 8,045,870.07 | |||
| 3. Decreased in | 19,671,457.32 | 652,389.49 | 233,298.55 | 14,004,758.53 | 34,561,903.89 |
| the Current Period | |||||
| (1) Disposal or Scrapping | 17,821,636.77 | 652,389.49 | 233,298.55 | 14,004,758.53 | 32,712,083.34 |
| (2) Transfer to investment properties | 1,849,820.55 | 1,849,820.55 | |||
| 4. Currency Translation Difference | -134,503.60 | -82,657.22 | -111,408.52 | -631,567.77 | -960,137.11 |
| 5. Balance at the End of the Period | 1,633,139,134.52 | 304,685,797.74 | 50,008,608.26 | 1,141,300,747.12 | 3,129,134,287.64 |
| II. Accumulated depreciation | |||||
| 1. Balance at the Start of the Period | 274,599,746.80 | 97,659,790.39 | 29,106,542.75 | 633,450,982.14 | 1,034,817,062.08 |
| 2. Increased in the Current Period | 35,596,043.47 | 13,380,323.54 | 3,153,805.14 | 86,050,236.24 | 138,180,408.39 |
| (1) Accrual | 34,197,744.28 | 13,380,323.54 | 3,153,805.14 | 86,050,236.24 | 136,782,109.20 |
| (2) Investment property transfer | 1,398,299.19 | 1,398,299.19 | |||
| 3. Decreased in the Current Period | 11,305,895.07 | 261,337.65 | 233,298.55 | 11,079,910.10 | 22,880,441.37 |
| (1) Disposal or Scrapping | 10,934,345.92 | 261,337.65 | 233,298.55 | 11,079,910.10 | 22,508,892.22 |
| (2) Transfer to investment properties | 371,549.15 | 371,549.15 | |||
| 4. Currency Translation Difference | -22,193.10 | -72,232.48 | -66,092.09 | -330,437.08 | -490,954.75 |
| 5. Balance at the End of the Period | 298,867,702.10 | 110,706,543.80 | 31,960,957.25 | 708,090,871.20 | 1,149,626,074.35 |
| Ⅲ. Provision for Impairment | |||||
| 1. Balance at the Start of the Period | |||||
| 2. Increased in the Current Period | |||||
| (1) Accrual |
| 3. Decreased in the Current Period | |||||
| (1) Disposal or Scrapping | |||||
| 4. Balance at the End of the Period | |||||
| Ⅳ. Book value | |||||
| 1. Closing Balance on Book Value | 1,334,271,432.42 | 193,979,253.94 | 18,047,651.01 | 433,209,875.92 | 1,979,508,213.29 |
| 2. Opening Balance on Book Value | 935,689,369.35 | 198,246,960.51 | 20,521,299.75 | 361,137,000.36 | 1,515,594,629.97 |
17. Construction in progress
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Projects under Construction | 1,250,289,385.41 | 1,164,130,453.03 |
| Total | 1,250,289,385.41 | 1,164,130,453.03 |
(1) Details of construction in progress
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Phase I, Urban Intelligent Information Industry Construction Project | 33,180,772.50 | 33,180,772.50 | 33,127,985.19 | 33,127,985.19 | ||
| The Phase II Construction Project of the Smart | 193,642,526.09 | 193,642,526.09 | 449,783,408.47 | 449,783,408.47 | ||
| Manufacturing Base in Hangzhou | ||||||
| Construction Project of Xi'an R & D Center | 280,270,686.55 | 280,270,686.55 | 173,768,994.86 | 173,768,994.86 | ||
| The construction project of the marketing center in Xi'an | 120,072,023.53 | 120,072,023.53 | 66,257,152.93 | 66,257,152.93 | ||
| Project of Smart IoT Solution R & D and Industrialization | 579,711,423.57 | 579,711,423.57 | 428,273,059.98 | 428,273,059.98 | ||
| Others | 43,411,953.17 | 43,411,953.17 | 12,919,851.60 | 12,919,851.60 | ||
| Total | 1,250,289,385.41 | 1,250,289,385.41 | 1,164,130,453.03 | 1,164,130,453.03 |
(2) Changes in significant construction in progress
Unit: RMB
| Item Name | Budget | Balance at the Start of the Period | Increased in the current period | Transfer amounts in this period | Other amounts decreased in current period | Balance at the End of the Period | Project accumulative investment as a percentage of the budget | Project Progress | Accumulated capitalized interest amount | Including: capitalized interest amount in the current period | Capitalization rate of the interest in the current period | Capital Source |
| Project of Smart IoT Solution R & D and Industrialization | RMB 0.912 billion | 428,273,059.98 | 151,438,363.59 | 579,711,423.57 | 63.57% | 63.57% | Equity Fund | |||||
| The Phase II Construction Project of the Smart Manufacturing Base in Hangzhou | RMB 0.827 billion | 449,783,408.47 | 178,454,833.99 | 434,595,716.37 | 193,642,526.09 | 75.96% | 75.96% | Equity Fund | ||||
| Construction Project of | RMB 0.734 billion | 173,768,994.86 | 106,501,691.69 | 280,270,686.55 | 38.20% | 38.20% | Equity Fund |
| Xi'an R & D Center | ||||||||||||
| The construction project of the marketing center in Xi'an | RMB 0.3 billion | 66,257,152.93 | 53,814,870.60 | 120,072,023.53 | 40.02% | 40.02% | Equity Fund | |||||
| Phase I, Urban Intelligent Information Industry Construction Project | RMB 39.33 million | 33,127,985.19 | 52,787.31 | 33,180,772.50 | 84.36% | 84.36% | Equity Fund | |||||
| Total | 1,151,210,601.43 | 490,262,547.18 | 434,595,716.37 | 1,206,877,432.24 | -- | -- | -- |
18. Right-of-use assets
Unit: RMB
| Item | Buildings and constructions | Total |
| Ⅰ. Original book value: | ||
| 1. Balance at the Start of the Period | 155,673,708.67 | 155,673,708.67 |
| 2. Increased in the Current Period | 94,766,699.23 | 94,766,699.23 |
| 3. Decreased in the Current Period | 2,056,658.96 | 2,056,658.96 |
| 4. Currency Translation Difference | -1,174,034.78 | -1,174,034.78 |
| 5. Balance at the End of the Period | 247,209,714.16 | 247,209,714.16 |
| II. Accumulated depreciation | ||
| 1. Balance at the Start of the Period | ||
| 2. Increased in the Current Period | 42,053,689.80 | 42,053,689.80 |
| (1) Accrual | 42,053,689.80 | 42,053,689.80 |
| 3. Decreased in the Current Period | 316,293.86 | 316,293.86 |
| (1) Disposal | 316,293.86 | 316,293.86 |
| 4. Currency Translation Difference | 2,107.79 | 2,107.79 |
| 5. Balance at the End of the Period | 41,739,503.73 | 41,739,503.73 |
| Ⅲ. Provision for Impairment | ||
| 1. Balance at the Start of the Period |
| 2. Increased in the Current Period | ||
| (1) Accrual | ||
| 3. Decreased in the Current Period | ||
| (1) Disposal | ||
| 4. Balance at the End of the Period | ||
| Ⅳ. Book value | ||
| 1. Closing Balance on Book Value | 205,470,210.43 | 205,470,210.43 |
| 2. Opening Balance on Book Value | 155,673,708.67 | 155,673,708.67 |
19. Intangible assets
(1) Details of intangible assets
Unit: RMB
| Item | Land use rights | Patent right | Non-patented technology | Softwares | Trademark rights | Software copyright | Total |
| Ⅰ. Original book value | |||||||
| 1. Balance at the Start of the Period | 373,911,184.43 | 72,512,508.78 | 142,373,035.57 | 2,085,200.00 | 4,000,000.00 | 594,881,928.78 | |
| 2. Increased in the Current Period | 197,040,823.17 | 307,999.92 | 5,913,671.27 | 203,262,494.36 | |||
| (1) Purchase | 195,964,529.29 | 307,999.92 | 2,404,183.62 | 198,676,712.83 | |||
| (2) Internal research and development | |||||||
| (3) Acquisition | |||||||
| (4) Transfer of construction in progress | 3,509,487.65 | 3,509,487.65 | |||||
| (5) Investment | 1,076,293.88 | 1,076,293.88 |
| property transfer | |||||||
| 3. Decreased in the Current Period | 23,027.59 | 60,234.36 | 83,261.95 | ||||
| (1) Disposal | 60,234.36 | 60,234.36 | |||||
| (2) Transfer to investment properties | 23,027.59 | 23,027.59 | |||||
| (3) Disposal of subsidiaries | |||||||
| 4. Currency Translation Difference | -16,940.00 | -277,131.29 | -16,262.40 | -310,333.69 | |||
| 5. Balance at the End of the Period | 570,912,040.01 | 72,820,508.70 | 147,949,341.19 | 2,068,937.60 | 4,000,000.00 | 797,750,827.50 | |
| Ⅱ. Accumulated amortization | |||||||
| 1. Balance at the Start of the Period | 29,762,345.53 | 47,600,274.66 | 104,656,785.20 | 2,085,200.00 | 4,000,000.00 | 188,104,605.39 | |
| 2. Increased in the Current Period | 5,541,559.71 | 3,399,560.57 | 13,634,881.81 | 22,576,002.09 | |||
| (1) Accrual | 5,472,372.70 | 3,399,560.57 | 13,634,881.81 | 22,506,815.08 | |||
| (2) Investment property transfer | 69,187.01 | 69,187.01 | |||||
| 3. Decreased in | 1,381.66 | 60,234.36 | 61,616.02 |
| the Current Period | |||||||
| (1) Disposal | 60,234.36 | 60,234.36 | |||||
| (2) Transfer to investment properties | 1,381.66 | 1,381.66 | |||||
| 4. Currency Translation Difference | -159,447.47 | -16,262.40 | -175,709.87 | ||||
| 5. Balance at the End of the Period | 35,302,523.58 | 50,999,835.23 | 118,071,985.18 | 2,068,937.60 | 4,000,000.00 | 210,443,281.59 | |
| Ⅲ. Provision for Impairment | |||||||
| 1. Balance at the Start of the Period | |||||||
| 2. Increased in the Current Period | |||||||
| (1) Accrual | |||||||
| 3. Decreased in the Current Period | |||||||
| (1) Disposal | |||||||
| 4. Balance at the End of |
| the Period | |||||||
| Ⅳ. Book value | |||||||
| 1. Closing Balance on Book Value | 535,609,516.43 | 21,820,673.47 | 29,877,356.01 | 587,307,545.91 | |||
| 2. Opening Balance on Book Value | 344,148,838.90 | 24,912,234.12 | 37,716,250.37 | 406,777,323.39 |
(2) Land Use Rights with Certificates of Title Not Granted
Unit: RMB
| Item | Book value | Reasons for certificates of title not granted |
| Chengdu Project Land | 163,641,982.09 | In the process of obtaining the real estate certificates |
| Zhengzhou Project Land | 30,396,000.00 | In the process of obtaining the real estate certificates |
20. Goodwill
(1) Original book value of goodwill
Unit: RMB
| The invested entity or matters which formed goodwill | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Generated from business combination | Disposal | |||||
| Dahua Technology Italy S.R.L. | 6,615,294.18 | 6,615,294.18 | ||||
| Lorex Technology Inc. | 36,070,196.12 | 36,070,196.12 | ||||
| Total | 42,685,490.30 | 42,685,490.30 | ||||
(2) Provision of impairment in goodwill
Information about the asset group or asset group combination where the goodwill is located
| The invested entity or matters which formed goodwill | Amount of goodwill | Information about the asset group or asset group combination where it is located |
| Dahua Technology Italy S.R.L. | 6,615,294.18 | The asset group relating to the goodwill generated for the acquisition of Dahua Technology Italy S.R.L., namely, the long-term asset group, including fixed assets and intangible assets, formed for Dahua Technology Italy S.R.L. on June 30, 2021. |
| Lorex Technology Inc. | 36,070,196.12 | The asset group relating to the goodwill generated for the acquisition of Lorex Technology Inc., namely, the long-term asset group, including fixed assets and intangible assets, formed for Lorex Technology Inc. on June 30, 2021. |
Explain the goodwill impairment test process, key parameters (e.g., growth rate at forecast period, growth rate at steadyperiod, profit rate, discount rate, forecast period, etc. when the present value of future cash flow is estimated) and theconfirmation method of goodwill impairment loss:
The recoverable amount is determined according to the present value of the expected future cash flow of the relevantasset group. Its future cash flows shall be determined according to the five-year financial budget from 2021 to 2025approved by the management, and the discount rate of 15% to 18% is applied. Cash flows over 5 years are calculated onthe basis of zero growth rate. The growth rate is determined based on the growth forecast of the relevant industry anddoes not exceed the long-term average growth rate of the industry. Future cash flow estimates are based onmanagement’s estimated sales amount, cost of sales, and operating expenses during the forecast period based on pastperformance and expectations of market development.Result of goodwill impairment testThe company has evaluated the recoverable amount of goodwill and there is no evidence that the recoverable amount ofgoodwill of relevant asset groups is lower than its book value, and there is no indication of impairment.
21. Long-term deferred expenses
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Prepaid Expenses in This Period | Other Amounts Decreased | Balance at the End of the Period |
| Housing rent | 491,299.17 | 491,299.17 | |||
| Improvement expenditure of fixed assets leased by operating lease | 31,789,131.50 | 14,665,459.69 | 12,144,539.27 | 50,838.08 | 34,259,213.84 |
| Total | 32,280,430.67 | 14,665,459.69 | 12,635,838.44 | 50,838.08 | 34,259,213.84 |
22. Deferred income tax assets / Deferred income tax liabilities
(1) Deferred income tax assets not written off
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Deductible temporary difference | Deferred Income Tax Assets | Deductible temporary difference | Deferred Income Tax Assets | |
| Provision for Impairment of Assets | 2,242,651,712.06 | 460,259,512.44 | 1,909,935,626.30 | 398,764,404.73 |
| Unrealized Profit from Internal Transactions | 775,645,396.25 | 151,162,598.99 | 614,859,671.43 | 133,692,510.71 |
| Deductible Losses | 651,246,145.50 | 115,683,114.86 | 520,264,565.80 | 81,682,494.52 |
| Equity incentive expense | 419,645,927.83 | 66,189,161.13 | 587,174,173.32 | 91,434,898.97 |
| Expected Liabilities | 235,702,333.03 | 35,873,648.95 | 249,218,594.89 | 37,770,815.89 |
| Payroll payable | 267,407,865.84 | 44,823,664.36 | 248,689,069.67 | 41,294,136.66 |
| Costs from Tax Increase Due to Absence of Invoice | 198,411,132.06 | 42,493,581.51 | 215,743,240.70 | 46,777,204.87 |
| Changes in fair value gains and losses | 433,943.84 | 108,485.96 | ||
| Others | 39,821,318.15 | 6,677,242.39 | 4,545,104.94 | 1,037,210.34 |
| Total | 4,830,965,774.56 | 923,271,010.59 | 4,350,430,047.05 | 832,453,676.69 |
(2) Deferred income tax liabilities not written off
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||
| Taxable temporary difference | Deferred Income Tax Liabilities | Taxable temporary difference | Deferred Income Tax Liabilities | |
| The gross profit of sales by installments | 189,429,234.07 | 31,760,088.22 | 235,151,871.90 | 27,236,997.72 |
| Changes in fair value of financial instruments | 280,472,003.17 | 42,565,337.08 | 180,909,531.20 | 40,035,770.74 |
| Total | 469,901,237.24 | 74,325,425.30 | 416,061,403.10 | 67,272,768.46 |
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Offset
Unit: RMB
| Item | Amount of Deferred Income Tax Assets Offset against Liabilities at the End of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the End of the Period | Amount of Deferred Income Tax Assets Offset against Liabilities at the Start of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the Start of the Period |
| Deferred Income Tax Assets | 923,271,010.59 | 832,453,676.69 | ||
| Deferred Income Tax Liabilities | 74,325,425.30 | 67,272,768.46 |
(4) Deferred income tax assets or liabilities listed by net amount after offset
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Deductible temporary difference | 327,646,206.06 | 335,677,986.45 |
| Deductible Losses | 778,887,491.06 | 666,511,990.20 |
| Total | 1,106,533,697.12 | 1,002,189,976.65 |
(5) Details of unrecognized deferred income tax assets
Unit: RMB
| Year | Amount at the end of the period | Opening balance | Notes |
| 2021 | 18,283,602.90 | 20,311,684.07 | |
| 2022 | 13,558,094.01 | 21,549,664.58 | |
| 2023 | 57,185,450.24 | 59,777,478.08 | |
| 2024 | 202,915,989.17 | 212,857,740.29 | |
| 2025 | 309,141,006.00 | 352,015,423.18 | |
| 2026 | 177,803,348.74 | ||
| Total | 778,887,491.06 | 666,511,990.20 | -- |
23. Other non-current assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Prepayments for purchase of engineering equipments | 77,223,405.16 | 77,223,405.16 | 10,822,617.82 | 10,822,617.82 | ||
| Advance payment for land | 75,600,000.00 | 75,600,000.00 | ||||
| Total | 77,223,405.16 | 77,223,405.16 | 86,422,617.82 | 86,422,617.82 |
24. Short-term loans
(1) Categories of short-term loan
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Fiduciary loans | 1,099,000,000.00 | 250,000,000.00 |
| Interest payable for short-term loan | 5,598,520.22 | 177,083.34 |
| Total | 1,104,598,520.22 | 250,177,083.34 |
25. Trading financial liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Transactional financial liabilities | 450,897.52 | |
| Including: Derivative financial liabilities | 450,897.52 | |
| Total | 450,897.52 |
26. Notes payable
Unit: RMB
| Types | Balance at the End of the Period | Balance at the Start of the Period |
| Commercial acceptance bill | 2,252,402,114.75 | 2,322,699,486.30 |
| Bank acceptance bill | 1,357,732,466.99 | 935,853,271.87 |
| Total | 3,610,134,581.74 | 3,258,552,758.17 |
27. Accounts payable
(1) Details of accounts payable
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Payment for purchase of materials | 6,374,629,384.82 | 6,186,065,780.61 |
| Payment for engineering equipments | 407,068,316.82 | 258,721,924.67 |
| Total | 6,781,697,701.64 | 6,444,787,705.28 |
（2）Important accounts payable aged over 1 year
There is no important account payable aged more than one year.28 Contract liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Advance payment for product sales | 335,633,797.01 | 186,958,669.05 |
| Pre-payments from construction projects | 467,174,817.43 | 458,335,908.05 |
| Points sales | 25,892,534.51 | 25,825,807.98 |
| Advance payment for service | 66,520,028.07 | |
| Total | 895,221,177.02 | 671,120,385.08 |
29. Payroll payable
(1) Details of payroll payable
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Ⅰ. Short-term remuneration | 1,798,899,948.47 | 2,830,486,976.04 | 3,705,444,706.05 | 923,942,218.46 |
| Ⅱ. Dimission benefits - defined contribution scheme | 6,564,586.84 | 119,869,776.30 | 118,796,472.14 | 7,637,891.00 |
| Ⅲ. Dismissal welfare | 6,970,234.11 | 6,970,234.11 | ||
| Total | 1,805,464,535.31 | 2,957,326,986.45 | 3,831,211,412.30 | 931,580,109.46 |
(2) List of short-term remuneration
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| 1. Wages or salaries, bonuses, allowances and subsidies | 1,525,308,786.25 | 2,500,239,591.61 | 3,426,690,763.77 | 598,857,614.09 |
| 2. Staff welfare | 35,435,575.79 | 35,435,575.79 | ||
| 3. Social insurance contributions | 5,721,208.70 | 80,391,201.93 | 80,524,182.03 | 5,588,228.60 |
| Including: medical insurance | 3,945,349.33 | 77,861,462.02 | 77,704,565.02 | 4,102,246.33 |
| Work injury insurance premium | 347,114.77 | 2,202,111.45 | 2,324,389.45 | 224,836.77 |
| Maternity insurance premium | 1,428,744.60 | 327,628.46 | 495,227.56 | 1,261,145.50 |
| 4. Housing funds | 54,890.86 | 149,779,209.02 | 149,784,512.44 | 49,587.44 |
| 5. Labor union and education funds | 267,815,062.66 | 64,641,397.69 | 13,009,672.02 | 319,446,788.33 |
| Total | 1,798,899,948.47 | 2,830,486,976.04 | 3,705,444,706.05 | 923,942,218.46 |
(3) Defined contribution scheme (Note)
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| 1. Basic pension insurance | 6,005,826.98 | 115,259,086.81 | 114,136,642.38 | 7,128,271.41 |
| 2. Unemployment insurance | 558,759.86 | 4,610,689.49 | 4,659,829.76 | 509,619.59 |
| Total | 6,564,586.84 | 119,869,776.30 | 118,796,472.14 | 7,637,891.00 |
30. Taxes payable
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| VAT | 124,732,187.49 | 324,985,170.91 |
| Enterprise Income Tax | 168,714,378.96 | 528,220,256.03 |
| Individual income tax | 26,091,883.24 | 12,804,973.65 |
| Urban Maintenance and Construction Tax | 7,538,722.18 | 13,569,797.71 |
| Education surcharges (including local education surcharges) | 6,868,471.30 | 13,930,579.23 |
| Sales tax | 12,976,148.44 | 3,587,770.62 |
| Others | 6,776,409.72 | 3,046,315.52 |
| Total | 353,698,201.33 | 900,144,863.67 |
31. Other payables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Dividends Payable | 17,855,221.21 | 12,982,399.27 |
| Other Payables | 699,917,580.17 | 957,570,477.95 |
| Total | 717,772,801.38 | 970,552,877.22 |
(1) Dividends payable
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Equity Incentive Restricted Stock Dividend | 17,855,221.21 | 12,982,399.27 |
| Total | 17,855,221.21 | 12,982,399.27 |
(2) Other payables
1) Other payables listed by nature of funds
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Deposits | 105,489,820.71 | 74,208,249.14 |
| Temporarily borrowed and advance payments | 213,592,183.29 | 275,423,794.55 |
| Equity Transfer Fund | 29,325,000.00 | |
| Restricted share repurchase obligations | 325,372,156.35 | 581,968,930.89 |
| Others | 26,138,419.82 | 25,969,503.37 |
| Total | 699,917,580.17 | 957,570,477.95 |
2) Other important payables aged over 1 year
There are no other important payables aged over 1 year.
32. Non-current liabilities due within one year
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term debt due within one year | 175,000,000.00 | 150,000,000.00 |
| Lease liabilities due within one year | 81,973,170.49 | 58,971,448.27 |
| Interest payable due within 1 year | 1,857,336.84 | 1,891,709.34 |
| Total | 258,830,507.33 | 210,863,157.61 |
33. Other current liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 64,956,557.08 | 70,570,174.49 |
| Contract liabilities pending write-off tax | 85,235,954.42 | 79,678,501.51 |
| Non-derecognized notes | 110,914,389.75 | 59,153,238.77 |
| Total | 261,106,901.25 | 209,401,914.77 |
34. Long-term loans
(1) Categories of long-term loans
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Pledged loans | 103,000,000.00 | 128,000,000.00 |
| Fiduciary loans | 1,800,000,000.00 | 750,000,000.00 |
| Total | 1,903,000,000.00 | 878,000,000.00 |
35. Lease liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Lease Liabilities | 107,606,799.04 | 86,096,362.42 |
| Total | 107,606,799.04 | 86,096,362.42 |
36. Estimated liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | Causes |
| Pending litigation | 1,775,746.00 | Pending litigation |
| Others | 423,933.76 | Loss-making contract | |
| Expected after-sales maintenance cost | 252,138,141.48 | 258,303,127.48 | After-sales maintenance cost |
| Expected return amount after the period | 7,114,861.73 | 23,700,456.58 | Expected sales return |
| Total | 261,028,749.21 | 282,427,517.82 | -- |
37. Deferred income
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | Causes |
| Government subsidies | 110,469,806.29 | 3,453,971.36 | 107,015,834.93 | Received government subsidies related to assets | |
| Total | 110,469,806.29 | 3,453,971.36 | 107,015,834.93 | -- |
Projects related to government subsidies:
Unit: RMB
| Liabilities | Balance at the Start of the Period | The amount of new subsidies in this period | Amount recorded as non-operating revenue in this period | The Amount Recorded as Other Income in This Period | The Amount Written off Costs in This Period | Other variations | Balance at the End of the Period | Related to assets/related to income |
| Special award for industrial park projects | 52,348,286.44 | 1,929,499.23 | 50,418,787.21 | Related to assets | ||||
| Phase I investment financial incentive fund for security video surveillance product production | 53,505,000.00 | 53,505,000.00 | Related to assets |
| base project | ||||||||
| Funding for manufacturing enterprise technological transformation projects | 4,616,519.85 | 1,524,472.13 | 3,092,047.72 | Related to assets | ||||
| Total | 110,469,806.29 | 3,453,971.36 | 107,015,834.93 |
Other notes:
1. According to the Economic Development Zone Management Committee, Hangzhou Fuyang District Financial BureauFJG【2017】No. 35 and FCQ【2017】No. 506documents, the company received 31.66 million yuan of special subsidy fromFuyang Dahua Intelligent (IOT) Industrial Park in 2015 and 2017 respectively, a total of 63.32 million yuan, as thegovernment subsidy related to assets, which is recognized as deferred income, and shall be recognized as other incomein installments according to the estimated service life (20 years).
2. According to Fuyang Economic Development Zone Management Committee, Hangzhou Fuyang District FinancialBureau FJG【2019】No. 18, 【2020】No. 39and FCQ【2019】No. 286 documents, the company received investmentfinancial reward fund of 27.455 million yuan and 26.05 million yuan in 2019 and 2020 respectively for security videosurveillance product production base project phase one, as the government subsidy related to assets, which is recognizedas deferred income. As of June 30, 2020, this part of assets has not been completed and has not been amortized.
3. According to Hangzhou Fuyang District Bureau of Economy and Information Technology, Hangzhou Fuyang DistrictBureau of Finance FJXC【2019】No. 49 and FCQ【2019】No. 804 documents, the company received project fund of 9.1977million yuan for the first batch of technical renovation project of municipal manufacturing enterprises in 2019, as thegovernment subsidy related to assets, which is recognized as deferred income, and shall be recognized as other incomein installments according to the estimated service life (15-111 months).
38. Other non-current liabilities
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 248,620,950.30 | 281,128,045.90 |
| Other loans | 110,000,000.00 | 110,000,000.00 |
| Total | 358,620,950.30 | 391,128,045.90 |
Other notes:
The company has reached a cooperation intention with CDB Development Fund to increase the capital of Dahua ZhilianCo., Ltd., a subsidiary of the company. It is agreed that CDB Development Fund will not assign directors, supervisors and
other senior managers to Dahua Zhilian; The company shall pay the investment income with an annualized yield of 1.2%to CDB Development Fund through dividends and call premium and other means, and the company shall redeem theequity of CDB Development Fund to Dahua Zhilian from 2022 to 2024, and recognize it as other non-current liabilities.
39. Share capital
Unit: RMB
| Balance at the Start of the Period | Increased or decreased amount in this period (+/-) | Balance at the End of the Period | |||||
| Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | |||
| Total shares | 2,995,579,590.00 | -1,028,860.00 | -1,028,860.00 | 2,994,550,730.00 | |||
Other notes:
According to the company's thirteenth meeting of the seventh board of directors held in April 2021 and the revised articlesof association of the company, which have passed by the company at 2020 annual general meeting of shareholders, thecompany repurchased and canceled 1,028,860 restricted shares granted but not unlocked held by the resigned equityincentive objects, reduced the registered capital by RMB 1,028,860.00 , with the company's registered capital reduced to2,994,550,730.00 yuan. The above capital reduction matters are being handled.
40. Capital reserve
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Capital premium (capital share premium) | 1,345,746,389.28 | 182,546,901.94 | 21,612,609.65 | 1,506,680,681.57 |
| Other capital reserves | 643,908,944.77 | 624,886,947.36 | 182,546,901.94 | 1,086,248,990.19 |
| Total | 1,989,655,334.05 | 807,433,849.30 | 204,159,511.59 | 2,592,929,671.76 |
Other notes, including increases or decreases in this period and their reasons:
1. The amount of employee services exchanged by the company for equity payment in the current period is RMB84,708,381.89, of which minority shareholders enjoy amount of RMB 6,804,324.44. The employee service amount offsetdue to the repurchase and cancellation of restricted shares held by equity incentive objects that have been granted but notyet unlocked is RMB 3,864,873.97, and other capital reserves are increased by RMB 74,039,183.48. If the amountdeductible before tax exceeds the cost related to share-based payment recognized in the accounting standards, theincome tax impact amount is RMB 32,093,515.89, increasing other capital reserves.
2.The company repurchased and canceled 1,028,860 granted but unlocked restricted shares held by equity incentiveobjects in the current period, reduced the share capital by 1,028,860.00 yuan, and reduced the capital reserve (sharecapital premium) by 7,461,896.20 yuan.
3.In the equity settled share-based payment, the minority shareholders possess a portion of 11,562,939.55 yuan, reducingthe capital reserve (capital stock premium) by 11,562,939.55 yuan.
4.Since the performance conditions in 2020 have met the unlocking conditions for the second unlocking period for the firsttime and the unlocking conditions for the first unlocking period reserved for the first time set in the incentive plan, exceptfor the incentive objects who have resigned, the restricted shares held by the incentive objects for the second unlockingperiod and the restricted shares held by the incentive objects reserved for the first unlocking period are unlocked. Amongother capital reserves, the recognized related expenses of restricted shares unlocked in the current period are134,025,460.59 yuan, the income tax impact amount of the amount that can be deducted before tax exceeding the costrelated to share based payment recognized in the accounting standards is 48,521,441.35 yuan, a total of 182,546,901.94yuan which is transferred to the capital reserve (share capital premium).
5. Due to the failure to increase the capital of subsidiaries in the same proportion, the shareholding ratio of subsidiariesdecreased, and the capital reserve (capital stock premium) decreased by 2,587,773.90 yuan.
6. The impact of other changes in other owners’ equity of Zhejiang Leapmotor Technology Co., Ltd. that the companyshould enjoy under the equity method in the current period increased other capital reserves by RMB 518,754,247.99.
41. Treasury share
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Restricted shares | 581,968,930.89 | 256,596,774.54 | 325,372,156.35 | |
| Total | 581,968,930.89 | 256,596,774.54 | 325,372,156.35 |
Other notes, including increases or decreases in this period and their reasons:
1. Due to the resignation of some employees, the Company repurchased this part of restricted shares in the current period,with a total of 1,028,860 restricted shares repurchased, a corresponding reduction in the share capital of 1,028,860.00yuan, and a corresponding reduction in the amount of treasury shares of 8,490,756.20 yuan.
2. Since the second phase of grant for the first time and the first phase of the reserved grant of the restricted stockincentive plan in 2018 met the unlocking conditions, a total of 29,431,520 restricted shares were unlocked, and thetreasury shares and related liabilities were reduced by 243,233,196.40 yuan.
3. The cash dividends distributed to restricted stock holders reduced treasury shares and related liabilities, the restrictedstock unlocked the actual distribution of some escrow cash dividends and the recovery of cash dividends distributed torelevant resigned personnel due to employee resignation, resulting in a total reduction of treasury shares and relatedliabilities of 4,872,821.94 yuan.
42. Other comprehensive income
Unit: RMB
| Item | Balance at the Start of the Period | This Period's Amount of Occurrence | Balance at the End of the Period | |||||
| Before tax balance in this period | Less: recorded into other comprehensive incomes in previous period and transferred | Less: Recorded into other comprehensive incomes in previous period and transferred | Less: Income Tax Expense | Attributable to the Company after tax | Attributable to the minority shareholders after tax | |||
| to P/L in current period | to retained income in current period | |||||||
| II. Other comprehensive income that will be reclassified into P/L | 61,157,523.13 | 29,802,949.19 | 29,732,921.34 | 70,027.85 | 90,890,444.47 | |||
| Currency conversion difference | 54,715,972.03 | 30,978,213.12 | 31,016,888.78 | -38,675.66 | 85,732,860.81 | |||
| Others | 6,441,551.10 | -1,175,263.93 | -1,283,967.44 | 108,703.51 | 5,157,583.66 | |||
| Other comprehensive incomes in total | 61,157,523.13 | 29,802,949.19 | 29,732,921.34 | 70,027.85 | 90,890,444.47 |
43. Surplus reserve
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Statutory surplus reserve | 1,553,691,005.92 | 1,553,691,005.92 | ||
| Total | 1,553,691,005.92 | 1,553,691,005.92 |
44. Undistributed profits
Unit: RMB
| Item | Current Period | Previous Period |
| Undistributed Profit before Adjustment at the End of Previous Period | 13,754,915,904.19 | 10,248,023,654.54 |
| Undistributed Profit after Adjustment at the Start of the Period | 13,754,915,904.19 | 10,248,023,654.54 |
| Add: net profit attributable to parent company's owner in current period | 1,643,175,887.55 | 1,368,974,364.44 |
| Less: s Common Stock Dividends Payable | 802,815,330.12 | 397,654,658.45 |
| Add: Common stock dividends corresponding to repurchase and cancellation of restricted stocks | 500,809.81 | 462,282.67 |
| Undistributed Profit at the End of the Period | 14,595,777,271.43 | 11,219,805,643.20 |
45. Operating income and operating costs
(1) Operating income and operating costs
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | ||
| Income | Cost | Income | Cost | |
| Main Business | 13,306,440,228.58 | 7,773,003,019.77 | 9,602,675,069.68 | 4,920,046,273.00 |
| Other businesses | 198,565,505.31 | 137,711,909.20 | 235,653,783.94 | 179,203,877.57 |
| Total | 13,505,005,733.89 | 7,910,714,928.97 | 9,838,328,853.62 | 5,099,250,150.57 |
(2) Information about operating income and operating costs (by product)
| Item | This Period's Amount of Occurrence | |
| Income | Cost | |
| Smart IoT products and solutions | 11,574,586,946.32 | 6,477,078,712.53 |
| Of which: software business | 551,302,402.99 | 163,767,869.40 |
| Innovative business | 1,197,068,199.15 | 805,660,868.12 |
| Others | 733,350,588.42 | 627,975,348.32 |
| Total | 13,505,005,733.89 | 7,910,714,928.97 |
(3) Information about operating income and operating costs (by district)
| Item | This Period's Amount of Occurrence | |
| Income | Cost | |
| Domestic | 7,777,087,103.47 | 4,685,553,053.26 |
| Overseas | 5,727,918,630.42 | 3,225,161,875.71 |
| Total | 13,505,005,733.89 | 7,910,714,928.97 |
Information about performance of obligations:
The Company shall timely fulfill its performance obligations in accordance with the contract, and recognize the relevantrevenue when the customer obtains the control right of related commodities, which is mainly divided into fulfilling itsperformance obligations at a certain point of time and performing the performance obligations within a certain period oftime.The Company shall recognize the revenue from the sales of goods when the control over the goods is transferred, namely,when the goods are transported to the designated place of the other party, or delivered to the carrier designated by theother party, or when they are delivered to the other party for acceptance.If the Company identifies part of the business as performance obligations fulfilled within a certain period of time accordingto the nature of the business, the Company shall recognize the revenue according to the performance progress within that
period of time, except that the performance progress cannot be reasonably recognized. If the Company cannotreasonably recognize the performance progress using the output method or the input method, but the costs incurred areexpected to be compensated, the revenue shall be recognized according to the amount of costs incurred until theperformance progress can be reasonably recognized.
46. Taxes and surcharges
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Urban Maintenance and Construction Tax | 44,660,286.58 | 23,318,746.92 |
| Education Surcharges | 31,900,534.13 | 16,649,481.08 |
| House property tax | 2,351,433.37 | 2,429,673.54 |
| Land usage tax | 656,297.10 | 939,532.57 |
| Vehicle and vessel use tax | 23,707.54 | 34,922.82 |
| Stamp duty | 5,084,326.28 | 4,827,847.03 |
| Others | 15,593,603.53 | 6,942,979.14 |
| Total | 100,270,188.53 | 55,143,183.10 |
47. Selling expenses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 1,044,869,188.90 | 883,747,948.12 |
| After-sales service expense | 151,149,337.68 | 188,026,183.46 |
| Transportation and vehicle expenses | 228,486,216.43 | 162,242,677.25 |
| Marketing expense | 158,441,695.91 | 125,951,940.36 |
| Taxation and insurance expense | 114,258,333.64 | 117,797,928.06 |
| Administrative expenses | 77,325,742.64 | 106,886,558.37 |
| Business entertainment | 92,867,175.49 | 68,957,545.58 |
| Traveling expense | 85,796,783.51 | 62,166,335.57 |
| Communication expense | 7,644,337.28 | 26,252,604.63 |
| Knowledge resource fee | 25,449,407.98 | 21,141,479.54 |
| Depreciation cost and asset amortization | 55,213,618.90 | 15,640,480.09 |
| Others | 17,499,873.06 | 26,415,453.24 |
| Total | 2,059,001,711.42 | 1,805,227,134.27 |
48. Administration expenses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 272,130,616.85 | 258,180,429.50 |
| Depreciation cost and asset amortization | 41,179,216.36 | 36,171,195.90 |
| Administrative expenses | 32,286,309.59 | 26,698,756.21 |
| Knowledge resource fee | 20,467,417.96 | 17,269,047.77 |
| Consumables and service fees | 4,673,608.79 | 8,690,430.41 |
| Business entertainment | 3,377,855.85 | 3,527,325.45 |
| Transportation and vehicle expenses | 3,149,317.93 | 2,405,347.17 |
| Traveling expense | 3,425,734.01 | 1,599,133.76 |
| Others | 12,582,093.72 | 1,239,825.05 |
| Total | 393,272,171.06 | 355,781,491.22 |
49. R&D expenses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 1,238,777,601.85 | 1,142,032,536.26 |
| Research consumables and service fees | 84,653,952.01 | 105,243,650.19 |
| Depreciation cost and asset amortization | 40,480,759.70 | 27,160,042.95 |
| Traveling expense | 22,875,356.11 | 17,825,255.20 |
| Administrative expenses | 13,009,916.31 | 13,410,737.82 |
| Communication expense | 4,368,448.13 | 6,041,044.08 |
| Others | 2,083,292.70 | 2,899,674.45 |
| Total | 1,406,249,326.81 | 1,314,612,940.95 |
50. Financial expenses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest expense | 44,547,319.17 | 36,633,828.03 |
| Less: interest income | 114,759,041.30 | 82,236,920.48 |
| P/L on foreign exchange | 131,529,465.80 | 5,140,375.51 |
| Others | 16,358,297.48 | 15,895,187.68 |
| Total | 77,676,041.15 | -24,567,529.26 |
51. Other incomes
Unit: RMB
| Sources of other incomes | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Value-added tax refund | 355,601,489.70 | 373,851,655.76 |
| Special subsidies | 70,558,018.03 | 84,531,537.83 |
| VAT additional deduction | 359,764.33 | 163,127.65 |
| Total | 426,519,272.06 | 458,546,321.24 |
52. Investment incomes
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-term equity investment income measured by equity method | -155,395,120.84 | -44,335,467.10 |
| Investment income from disposal of long-term equity investment | 281,454.95 | 6,255,168.49 |
| Investment Income from Disposal Trading Financial Assets | 22,063,805.80 | -1,616,153.94 |
| Investment income from possession of other non-current financial assets | 5,364,955.30 | 7,307,215.11 |
| Investment income from treasury bond reverse repurchase | 169,645.79 | 210,491.25 |
| Total | -127,515,259.00 | -32,178,746.19 |
53. Income from changes in fair value
Unit: RMB
| Source of the income from changes in fair value | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Trading Financial Assets | 7,123,015.25 | 2,431,780.82 |
| Including: gains from changes at fair value of derivative financial instruments | 7,123,015.25 | 2,431,780.82 |
| Transactional financial liabilities | -450,380.67 |
| Other Non-current Financial Assets | 117,273,994.45 | 14,577,362.35 |
| Total | 123,946,629.03 | 17,009,143.17 |
54. Credit impairment losses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Bad debt losses of other receivables | -5,949,441.91 | -4,374,932.26 |
| Bad debt losses of accounts receivable | -353,620,673.67 | -80,445,242.05 |
| Bad debt losses from receivable financing | 1,175,263.93 | |
| Bad debt losses on notes receivable | -10,066,743.30 | |
| Contract assets impairment losses | -2,942,506.60 | |
| Total | -368,461,594.95 | -87,762,680.91 |
55. Impairment losses of assets
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| II. Losses of inventory falling price and losses of contract performance cost impairment | -7,627,470.90 | -42,303,107.35 |
| Ⅻ. Contract assets impairment losses | -2,295,977.15 | |
| Total | -9,923,448.05 | -42,303,107.35 |
56. Asset disposal income
Unit: RMB
| Sources of the asset disposal income | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Income from disposal of fixed assets | 33,113,440.14 | 10,307.31 |
| Income from disposal of right-of-use assets | -110,999.13 |
57. Non-operating income
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount recorded into non-recurring profit and loss in current period |
| Government subsidies | 171,808.80 | 877,665.31 | 171,808.80 |
| Gains and losses of non-current asset retirement | 679,706.38 | 398,527.61 | 679,706.38 |
| Others | 5,688,387.37 | 4,848,241.58 | 5,688,387.37 |
| Total | 6,539,902.55 | 6,124,434.50 | 6,539,902.55 |
Government subsidies recorded into current period P/L:
Unit: RMB
| Subsidy items | Distributing Entity | Distributing Reason | Types of Nature | Subsidies Influence Profit and Loss in the Current Year or not | Special Subsidy or not | This period's amount of occurrence | Previous period's amount of occurrence | Related to assets/related to income |
| Wuzhou City allocates special funds to actively support and cultivate eligible enterprises | Development and Reform Bureau of Changzhou District, Wuzhou City | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 50,000.00 | Related to income | |
| 2019 Top Ten Merit Enterprise (Excellent Entrepreneur) Award in Fuyang District, Hangzhou | Economic and Information Bureau of Fuyang District, Hangzhou | Reward | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and | Yes | No | 300,000.00 | Related to income |
| regulations) | ||||||||
| Subsidies for overseas employees to stay in office during the epidemic | Governments of other countries overseas | Subsidy | Subsidies received by undertaking the functions of the state to ensure the supply or price control of certain public utilities or socially necessary products | Yes | No | 111,808.80 | 511,665.31 | Related to income |
| Subsidy for the elimination of old vehicles in Hangzhou | Hangzhou Finance Bureau | Subsidy | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 16,000.00 | Related to income | |
| 2020 China (Xiaoguwei) "Internet + Transportation" Innovation and Entrepreneurship Competition | Guangdong Traffic E-payment Association | Reward | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 60,000.00 | Related to income |
58. Non-operating expenses
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount recorded into non-recurring profit and loss in current period |
| Donations | 115,939.69 | 9,139,267.32 | 115,939.69 |
| Gains and losses of non-current asset retirement | 1,337,107.72 | 819,686.61 | 1,337,107.72 |
| Including: Losses on disposal of fixed assets | 1,337,107.72 | 819,686.61 | 1,337,107.72 |
| Water conservancy fund | 12,816.79 | 7,139.14 | |
| Others | 3,503,104.12 | 2,068,747.09 | 3,503,104.12 |
| Total | 4,968,968.32 | 12,034,840.16 | 4,956,151.53 |
59. Income tax expenses
(1) Income tax expenses table
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Current income tax expense | 10,662,968.22 | 140,980,035.67 |
| Deferred income tax expense | -49,114,153.99 | 28,579,381.06 |
| Total | -38,451,185.77 | 169,559,416.73 |
(2) Reconciliation of accounting profits and income tax expenses
Unit: RMB
| Item | This Period's Amount of Occurrence |
| Total Profit | 1,636,960,340.28 |
| Income tax expense calculated at statutory/applicable tax rate | 245,544,051.04 |
| Impact by applying different tax rates to subsidiaries | -12,634,599.61 |
| Impact of income tax before adjustment in this period | -195,277,436.51 |
| Impact of the non-deductible costs, expenses and losses | 37,271,664.04 |
| Impact of additional deduction of the research and development expenses | -174,804,839.08 |
| Others | 61,449,974.35 |
| Income tax expense | -38,451,185.77 |
60. Other comprehensive income
See the notes to this section for details.
61. Items of cash flow statement
(1) Other cash receipts relating to operating activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest Income | 31,424,004.92 | 17,443,454.89 |
| Government subsidies | 62,592,472.14 | 78,834,593.67 |
| Tender and performance guarantee deposit | 25,458,692.40 | 28,166,941.19 |
| Others | 29,558,616.53 | 15,148,201.33 |
| Total | 149,033,785.99 | 139,593,191.08 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Administrative expenses | 148,852,318.30 | 140,230,672.86 |
| Communication expense | 19,886,351.20 | 15,732,684.76 |
| Business entertainment | 101,210,043.24 | 71,195,825.63 |
| Traveling expense | 118,402,918.50 | 82,296,281.44 |
| Marketing expense | 118,471,634.44 | 77,354,370.79 |
| Transportation and vehicle expenses | 204,194,430.33 | 163,643,754.38 |
| Knowledge resource fee | 43,764,104.24 | 34,596,983.79 |
| Research and development consumption and external inspection fee | 14,958,712.93 | 20,323,161.02 |
| Taxation and insurance expense | 8,896,959.13 | 24,354,809.36 |
| Tender and performance guarantee deposit | 58,034,090.23 | 13,108,747.03 |
| Incomings and outgoings and | 81,594,660.65 | 34,877,860.45 |
| advanced payments | ||
| Consumables and service fees | 149,595,572.15 | 152,728,533.48 |
| Others | 12,937,463.59 | 16,355,741.30 |
| Total | 1,080,799,258.93 | 846,799,426.29 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Cash arising from investment in financial derivatives | 26,678,510.94 | 71,517,426.54 |
| Advance payment for equity transfer | 29,325,000.00 | 60,000,000.00 |
| Receipts of loans from non-financial institutions | 3,493,496.46 | |
| Total | 56,003,510.94 | 135,010,923.00 |
(4) Other cash payments related to investing activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Cash paid for investment in financial derivatives | 13,107,855.82 | 72,348,580.48 |
| Net cash from disposal of subsidiaries | 7,211,693.45 | |
| Total | 13,107,855.82 | 79,560,273.93 |
(5) Other cash receipts related to financing activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Withdrawn documentary credit deposit | 767,782,756.00 | |
| Equity incentive subscription | 99,994,181.16 | |
| Total | 867,776,937.16 |
(6) Other cash payments related to financing activities
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Paid documentary credit deposit | 767,782,756.00 |
| Cash paid for the repayment of lease liabilities | 49,649,564.91 | |
| Total | 49,649,564.91 | 767,782,756.00 |
62. Supplementary information about the cash flow statement
(1) Supplementary information about the Cash Flow Statement
Unit: RMB
| Supplementary information | Amount of this period | Amount of Previous Period |
| 1． Reconciliation of net profit to cash flows from operational activities: | -- | -- |
| Net Profit | 1,675,411,526.05 | 1,370,732,897.65 |
| Add: provision for impairment of assets | 378,385,043.00 | 130,065,788.26 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 146,286,454.93 | 131,141,539.18 |
| Depreciation of Right-of-use Assets | 42,053,689.80 | |
| Amortization of Intangible Assets | 22,637,749.57 | 24,767,627.82 |
| Amortization of long-term prepaid expenses | 12,635,838.44 | 12,452,944.39 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (mark "-" for incomes) | -33,002,441.01 | -10,307.31 |
| Losses on scrapping of fixed assets (mark "-" for incomes) | 657,401.34 | 421,159.00 |
| Losses on fair value changes (mark "-" for incomes) | -123,946,629.03 | -17,009,143.17 |
| Financial expenses (mark "-" for incomes) | 52,271,024.16 | 15,327,107.25 |
| Losses on investment (mark "-" for incomes) | 127,515,259.00 | 32,178,746.19 |
| Decrease on deferred income tax assets (mark "-" for increases) | -108,136,559.40 | 1,505,192.29 |
| Increase on deferred income tax liabilities (mark "-" for decreases) | 7,052,656.84 | 1,938,115.51 |
| Decrease on inventories (mark "-" for increases) | -2,369,120,273.38 | -675,761,590.32 |
| Decrease on operational receivables (mark "-" for increases) | -230,579,623.21 | 1,756,139,392.57 |
| Increase on operational payables (mark "-" for decreases) | -552,073,423.01 | -2,965,863,025.21 |
| Others | 80,843,507.92 | 75,045,591.95 |
| Net cash flow generated by operating activities | -871,108,797.99 | -106,927,963.95 |
| 2． Major investing and financing activities not involving cash | -- | -- |
| receipts and payment: | ||
| Conversion of Debt into Capital | ||
| Convertible Bonds Due within 1 Year | ||
| Fixed Assets under Finance Lease | ||
| 3． Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 6,549,708,897.81 | 2,780,621,441.66 |
| Less: Balance at the Start of the Period of cash | 7,358,452,769.53 | 2,734,185,976.41 |
| Add: closing balance of cash equivalents | ||
| Less: Balance at the Start of the Period of cash equivalents | ||
| Net additions to balance of equivalents | -808,743,871.72 | 46,435,465.25 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Ⅰ. Cash | 6,549,708,897.81 | 7,358,452,769.53 |
| Including: cash on hand | 23,851.15 | 24,145.51 |
| Bank deposit for payment at any time | 6,408,119,714.76 | 7,324,387,076.66 |
| Other monetary capital for payment at any time | 141,565,331.90 | 34,041,547.36 |
| Ⅱ. Cash equivalents | ||
| Ⅲ. Closing balance of cash and cash equivalents | 6,549,708,897.81 | 7,358,452,769.53 |
| Including: restricted cash and cash equivalents used by the parent company or subsidiaries within the group |
63. Assets with restricted ownership rights or rights of use
Unit: RMB
| Item | Book value at the end of the period | Cause of restrictions |
| Cash and Bank Balances | 105,139,382.31 | Guarantee security deposit |
| Notes receivable and accounts receivable financing | 807,838,701.82 | Pledge applied to issue bank acceptance bills; Bank acceptance bill endorsed but not derecognized |
| Long-term Receivables | 178,385,721.02 | Pledge for bank loans |
| Non-current Assets Due within 1 Year | 31,073,678.03 | Pledge for bank loans |
| Total | 1,122,437,483.18 | -- |
64. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Item | Closing balance in foreign currencies | Exchange rate for conversion | Closing Balance Converted into RMB |
| Cash and Bank Balances | -- | -- | |
| Including: USD | 276,531,466.74 | 6.4601 | 1,786,420,928.29 |
| EUR | 30,332,705.33 | 7.6862 | 233,143,239.71 |
| HKD | 31,490,079.12 | 0.8321 | 26,202,210.93 |
| INR | 440,078,738.69 | 0.0869 | 38,263,158.10 |
| ZAR | 82,346,607.70 | 0.4501 | 37,061,347.36 |
| AED | 20,192,437.43 | 1.7587 | 35,511,833.94 |
| Total amount of other currencies | 165,594,154.00 | ||
| Accounts receivable | -- | -- | |
| Including: USD | 414,254,529.88 | 6.4601 | 2,676,125,688.48 |
| EUR | 48,305,751.95 | 7.6862 | 371,287,670.64 |
| HKD | |||
| INR | 3,582,881,535.50 | 0.0869 | 311,517,804.88 |
| PLN | 62,270,833.80 | 1.7009 | 105,917,083.92 |
| Russian ruble | 724,940,450.19 | 0.0892 | 64,686,396.91 |
| Total amount of other currencies | 284,084,517.16 | ||
| Long-term loan | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Accounts Payable | |||
| Including: USD | 238,225,290.88 | 6.4601 | 1,538,959,201.61 |
| INR | 1,227,728,425.79 | 0.0869 | 106,746,276.82 |
| MXN | 20,510,565.96 | 0.3260 | 6,685,975.15 |
| EUR | 729,698.63 | 7.6862 | 5,608,609.61 |
| Australian dollar | 524,672.91 | 4.8528 | 2,546,132.70 |
| BRL | 792,477.35 | 1.3033 | 1,032,827.81 |
| Total amount of other currencies | 3,560,629.10 |
(2) Notes on overseas business entities, including that for the important overseas businessentities, the overseas main premises, functional currency and selection basis shall be disclosed.If there are changes on its functional currency, the causes for the changes shall be disclosed aswell.
√ Applicable □ Not applicable
Since the Company's overseas business entity, Dahua Technology (HK) Limited, does not have autonomy over itsbusiness activities, which are the extension of the Company's business activities. For the part constituting the Company'sbusiness activities, RMB shall be used as its functional currency.
65. Government subsidies
(1) Basic information about government subsidies
Unit: RMB
| Types | Amount | Items reported | Amount taken to current P&L |
| VAT refund | 355,601,489.70 | Other Incomes | 355,601,489.70 |
| District-level funding for the creation of an international software city | 10,000,000.00 | Other Incomes | 10,000,000.00 |
| Provincial Science and Technology Development Special Fund Subsidy | 8,340,000.00 | Other Incomes | 8,340,000.00 |
| Tax refund | 6,023,635.39 | Other Incomes | 6,023,635.39 |
| Subsidy for the central pilot project of modern supply chain system construction in the circulation field in Hangzhou | 6,012,500.00 | Other Incomes | 6,012,500.00 |
| District supporting funds for the first batch of technological projects | 6,000,000.00 | Other Incomes | 6,000,000.00 |
| Funding for provincial key industrial Internet platform projects | 5,000,000.00 | Other Incomes | 5,000,000.00 |
| Patent subsidies | 4,835,720.00 | Other Incomes | 4,835,720.00 |
| Special subsidies for development of the integrated circuit industry in Hangzhou | 4,089,100.00 | Other Incomes | 4,089,100.00 |
| Other special subsidies | 3,745,573.60 | Other Incomes | 3,745,573.60 |
| Funding for industrial chain pilot projects for emergency in Zhejiang province | 3,000,000.00 | Other Incomes | 3,000,000.00 |
| Funding for Hangzhou 5G Industry Project | 2,884,000.00 | Other Incomes | 2,884,000.00 |
| Fund for Hangzhou Intelligent Manufacturing Demonstration and Manufacturing Digital Transformation Project | 1,500,000.00 | Other Incomes | 1,500,000.00 |
| Return from social security | 1,464,864.34 | Other Incomes | 1,464,864.34 |
| Subsidies for job stability | 1,438,653.34 | Other Incomes | 1,438,653.34 |
| Fund for intellectual property award | 1,042,000.00 | Other Incomes | 1,042,000.00 |
| Subsidy funds for industrial technology basic public service platform projects | 885,000.00 | Other Incomes | 885,000.00 |
| Subsidies for high-tech enterprise | 800,000.00 | Other Incomes | 800,000.00 |
| Government subsidies during the epidemic | 43,000.00 | Other Incomes | 43,000.00 |
| VAT additional deduction | 359,764.33 | Other Incomes | 359,764.33 |
| Subsidies for overseas employees to stay in office during the epidemic | 111,808.80 | Non-operating Revenue | 111,808.80 |
| 2020 China (Xiaoguwei) "Internet + Transportation" Innovation and Entrepreneurship Competition | 60,000.00 | Non-operating Revenue | 60,000.00 |
| Phase I investment financial incentive fund for security video surveillance product production base project | 53,505,000.00 | Deferred Income | |
| Fuyang Dahua Intelligent (IOT) Industrial Park | 63,320,000.00 | Deferred income / Other income | 1,929,499.23 |
| Hangzhou City's funding for technological transformation of manufacturing enterprises | 9,197,700.00 | Deferred income / Other income | 1,524,472.13 |
(2) Repayment of government subsidies
√ Applicable □ Not applicable
| Item | Amount | Causes |
| Preferential loan discount funds for provincial epidemic prevention and control key guarantee enterprises | 102,326.40 | Due to the prepayment of the epidemic loan, the excess subsidy of the financial discount was refunded |
VIII. Changes in the Scope of Consolidation
1. Consolidation not under the common control
(1) Profits or losses arising from re-measurement of the equity held before acquisition date in fairvalue
Is there any transaction that leads to business consolidation achieved through multiple transactions in various stages withcontrol acquired within the reporting period?
□ Yes √ No
2. Disposal of subsidiaries
Is there any situation where disposal of investment in subsidiaries in a single transaction causes loss of control?
□ Yes √ No
Is there any situation where disposal of investment in subsidiaries is achieved through multiple transactions in variousstages, causing loss of control in this period?
□ Yes √ No
3. Changes in the scope of combination for other reasons
Explanations on the changes in the scope of consolidation caused by other reasons (for example, newly establishedsubsidiaries, subsidiaries clearing, etc.) and relevant information:
(1) The company invested and established two domestic subsidiaries, Zhejiang Huashi Zhijian Technology Limited andZhengzhou Dahua Zhian Information Technology Limited, as well as three overseas subsidies, Huacheng Network (HongKong) Technology Limited, Dahua Technology QFZ LLC, and DAHUA TECHNOLOGY PACIFIC S.A., the abovesubsidiaries have been included in the scope of consolidation since the date of establishment.
(2) Hangzhou Huajun Technology Limited, a subsidiary of the company, was canceled in the current period and will not beincluded in the scope of consolidation from the date of cancellation.IX. Equity in Other Entities
1. Equity in Subsidiaries
(1) Composition of the enterprise group
| Name of Subsidiaries | Main Place of Business | Registered Address | Business Nature | Shareholding Percentage | Acquisition Method | |
| Direct | Indirect | |||||
| Dahua System Engineering | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100% | Establishment | |
| Dahua Vision Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100% | Establishment | |
| Dahua Security Network | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Dahua Ju'an | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Guangxi Dahua Information | Youjiang District, Baise | Youjiang District, Baise | Electronics and information | 100% | Establishment | |
| Dahua Security | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Service | 100% | Establishment | |
| Guangxi Security | Qingxiu District, Nanning | Qingxiu District, Nanning | Service | 100% | Establishment | |
| Hangzhou Xiaohua | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45% (Note 1) | Establishment | |
| Dahua Zhilian | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 90.09% (Note 2) | Establishment | |
| Dahua investment management | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Investment & investment management | 75% | Establishment | |
| Guangxi Zhicheng | Youjiang District, Baise | Youjiang District, Baise | Electronics and information | 65% | Establishment | |
| Hangzhou Huacheng | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Xinjiang Information | Shihezi, Xinjiang | Shihezi, Xinjiang | Electronics and information | 92% | Establishment | |
| HuaRay Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Sci-tech popularization and application services industry | 45.9% (Note 3) | Establishment | |
| Fuyang Hua'ao | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Huafei Intelligent | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45.50% (Note 4) | Establishment | |
| Huachuang Vision | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Guizhou Huayi | Guanshanhu District, Guiyang | Guanshanhu District, Guiyang | Electronics and information | 45% (Note 5) | Establishment | |
| Xinjiang Zhihe | Cele County, Hotan, Xinjiang | Cele County, Hotan, Xinjiang | Electronics and information | 97% | Establishment | |
| Guangxi Huacheng | Wuzhou, Guangxi | Wuzhou, Guangxi | Electronics and information | 90% | Establishment |
| Meitan Dahua Technology | Zunyi, Guizhou | Zunyi, Guizhou | Electronics and information | 100% | Establishment | |
| Inner Mongolia Zhimeng | New District, Bai County, Chahar Right Wing Back Banner | New District, Bai County, Chahar Right Wing Back Banner | Electronics and information | 95% | Establishment | |
| Xinjiang Zhitian | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97% | Establishment | |
| Xinjiang Xinzhi | Shache County, Kashgar District, Xinjiang | Shache County, Kashgar District, Xinjiang | Electronics and information | 100% | Establishment | |
| Xinjiang Huayue | Kashgar, Xinjiang | Kashgar, Xinjiang | Electronics and information | 100% | Establishment | |
| Tianjin Dahua | Tianjin Binhai New Area | Tianjin Binhai New Area | Electronics and information | 65% | Establishment | |
| Dahua Zhilong | Shuangpai County, Yongzhou City | Shuangpai County, Yongzhou City | Electronics and information | 90% | Establishment | |
| Vision Technology | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 100% | Establishment | |
| Huaxiao Technology | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 51% | Establishment | |
| Xi'an Dahua | Xi'an City, Shaanxi Province | Xi'an City, Shaanxi Province | Electronics and information | 100% | Establishment | |
| Wuxi Ruipin | Wuxi City | Wuxi City | Electronics and information | 51% | Establishment | |
| Huaxuan Technology | Xiaoshan District, Hangzhou City, Zhejiang Province | Xiaoshan District, Hangzhou City, Zhejiang Province | Electronics and information | 100% | Establishment | |
| Beijing Huayue | Xicheng District, Beijing | Xicheng District, Beijing | Electronics and information | 100% | Establishment | |
| Shanghai Huashang | Putuo District, Shanghai | Putuo District, Shanghai | Electronics and information | 100% | Establishment |
| Dahua Jinzhi | Wucheng District, Jinhua City, Zhejiang Province | Wucheng District, Jinhua City, Zhejiang Province | Electronics and information | 100% | Establishment | |
| Dahua Guangxun | Chengdu High-tech Zone | Chengdu High-tech Zone | Electronics and information | 100% | Business combination not under common control | |
| Zhoushan Operation | Zhoushan City, Zhejiang Province | Zhoushan City, Zhejiang Province | Electronics and information | 58.8% | Establishment | |
| Yunnan Zhili | Lijiang City, Yunnan Province | Lijiang City, Yunnan Province | Electronics and information | 90% | Establishment | |
| Guangxi Dahua Technology | Liuzhou City, Guangxi Zhuang Autonomous Region | Liuzhou City, Guangxi Zhuang Autonomous Region | Electronics and information | 100% | Establishment | |
| Dahua Storage | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51% | Establishment | |
| Huaruijie | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Automobile manufacturing | 51% | Establishment | |
| Chengdu Zhilian | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100% | Establishment | |
| Chengdu Zhian | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100% | Establishment | |
| Chengdu Zhishu | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100% | Establishment | |
| Chengdu Zhichuang | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100% | Establishment | |
| Chengdu Smart | Dayi County, Chengdu | Dayi County, Chengdu | Electronics and information | 90% | Establishment | |
| Huakong Software | Wucheng District, Jinhua City | Wucheng District, Jinhua City | Electronics and information | 100% | Establishment |
| Huacheng Software | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100% | Establishment | |
| Guizhou Dahua | Nanming District, Guiyang City | Nanming District, Guiyang City | Electronics and information | 100% | Establishment | |
| Henan Dahua | Zhengzhou City, Henan Province | Zhengzhou City, Henan Province | Electronics and information | 100% | Establishment | |
| Waythcan | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45% (Note 6) | Establishment | |
| Zhengzhou Dahua Zhian | Zhengzhou City, Henan Province | Zhengzhou City, Henan Province | Electronics and information | 100% | Establishment | |
| Dahua Hong Kong | Hong Kong | Hong Kong | Electronics and information | 100% | Establishment | |
| Dahua USA | USA | USA | Electronics and information | 100% | Establishment | |
| Dahua Europe | Netherlands | Netherlands | Electronics and information | 100% | Establishment | |
| Dahua Middle East | United Arab Emirates | United Arab Emirates | Electronics and information | 100% | Establishment | |
| Dahua Mexico | Mexico | Mexico | Electronics and information | 100% | Establishment | |
| Dahua Chile | Chile | Chile | Electronics and information | 100% | Establishment | |
| Dahua Colombia | Columbia | Columbia | Electronics and information | 100% | Establishment | |
| Dahua Australia | Australia | Australia | Electronics and information | 100% | Establishment | |
| Dahua Singapore | Singapore | Singapore | Electronics and information | 100% | Establishment | |
| Dahua South Africa | South Africa | South Africa | Electronics and information | 100% | Establishment | |
| Dahua Peru | Peru | Peru | Electronics and information | 100% | Establishment | |
| Dahua Brazil | Brazil | Brazil | Electronics and information | 100% | Establishment | |
| Dahua Russia | Russia | Russia | Electronics and information | 100% | Establishment | |
| Dahua Canada | Canada | Canada | Electronics and information | 100% | Establishment |
| Dahua Panama | Panama | Panama | Electronics and information | 100% | Establishment | |
| Dahua Hungary | Hungary | Hungary | Electronics and information | 100% | Establishment | |
| Dahua Poland | Poland | Poland | Electronics and information | 100% | Establishment | |
| Dahua Tunisia | Tunisia | Tunisia | Electronics and information | 100% | Establishment | |
| Dahua Kenya | Kenya | Kenya | Electronics and information | 100% | Establishment | |
| Dahua UK | UK | UK | Electronics and information | 100% | Establishment | |
| Dahua Bulgaria | Bulgaria | Bulgaria | Electronics and information | 100% | Establishment | |
| Dahua Serbia | Serbia | Serbia | Electronics and information | 100% | Establishment | |
| Dahua Germany | Germany | Germany | Electronics and information | 100% | Establishment | |
| Dahua Malaysia | Malaysia | Malaysia | Electronics and information | 100% | Establishment | |
| Dahua Korea | South Korea | South Korea | Electronics and information | 100% | Establishment | |
| Dahua Indonesia | Indonesia | Indonesia | Electronics and information | 67% | Establishment | |
| Dahua India | India | India | Electronics and information | 100% | Establishment | |
| Dahua Turkey | Turkey | Turkey | Electronics and information | 100% | Establishment | |
| Dahua Czech | Czech Republic | Czech Republic | Electronics and information | 100% | Establishment | |
| Dahua Argentina | Argentina | Argentina | Electronics and information | 100% | Establishment | |
| Dahua Spain | Spain | Spain | Electronics and information | 100% | Establishment | |
| Dahua Kazakhstan | Kazakhstan | Kazakhstan | Electronics and information | 100% | Establishment | |
| Dahua Denmark | Denmark | Denmark | Electronics and information | 100% | Establishment |
| Dahua France | France | France | Electronics and information | 100% | Establishment | |
| Dahua Lorex (US) Corporation | USA | USA | Electronics and information | 100% | Establishment | |
| Dahua Technology Holdings | Hong Kong | Hong Kong | Electronics and information | 100% | Establishment | |
| Dahua Morocco | Morocco | Morocco | Electronics and information | 100% | Establishment | |
| Dahua Technology Italy | Italy | Italy | Electronics and information | 100% | Business combination not under common control | |
| Dahua Uzbekistan | Uzbekistan | Uzbekistan | Electronics and information | 100% | Establishment | |
| Dahua Netherlands | Netherlands | Netherlands | Electronics and information | 100% | Establishment | |
| Dahua Sri Lanka | Sri Lanka | Sri Lanka | Electronics and information | 100% | Establishment | |
| Dahua Lorex (Canada) Corporation | Canada | Canada | Electronics and information | 100% | Business combination not under common control | |
| Dahua Pakistan | Pakistan | Pakistan | Electronics and information | 100% | Establishment | |
| Dahua New Zealand | New Zealand | New Zealand | Electronics and information | 100% | Establishment | |
| Dahua Thailand | Thailand | Thailand | Electronics and information | 99.98% | Establishment | |
| Dahua Romania | Romania | Romania | Electronics and information | 100% | Establishment | |
| Dahua Nigeria | Nigeria | Nigeria | Electronics and information | 100% | Establishment | |
| Dahua Israel | Israel | Israel | Electronics and information | 100% | Establishment | |
| Dahua Mexico | Mexico | Mexico | Electronics and information | 100% | Establishment |
| Imou Netherlands | Netherlands | Netherlands | Electronics and information | 100% | Establishment | |
| Dahua Loris (UK) Corporation | UK | UK | Electronics and information | 100% | Establishment | |
| Dahua Japan | Japan | Japan | Electronics and information | 100% | Establishment | |
| Dahua Qatar | Qatar | Qatar | Electronics and information | 100% | Establishment | |
| Imou Hong Kong | Hong Kong | Hong Kong | Electronics and information | 100% | Establishment | |
| Dahua Panama SEM Regional Headquarters | Panama | Panama | Electronics and information | 100% | Establishment |
Explanations on the fact that the proportion of the shares held by a subsidiary differs from that of voting rights:
(1) The company directly holds 45% of the equity of Hangzhou Xiaohua Technology Limited, and Zhejiang HuashiInvestment Management Limited grants 12% of its voting rights to the company according to the agreement. Thecompany actually holds 57% of the voting rights of Hangzhou Xiaohua Technology Limited, which constitutes actualcontrol and include it in the scope of consolidation.
(2) According to the industrial and commercial registration data, CDB Development Fund holds the equity of the company.According to the cooperation agreement between the company and CDB Development Fund, CDB Development Fundshall not assign directors, supervisors and other senior managers to Dahua Zhilian; regarding its investment, the companyshall pay the investment income with an annualized rate of return of 1.2% to CDB Development Fund every year bymeans of dividend and repurchase premium, etc., and the company shall redeem the equity of CDB Development Fund toDahua Zhilian phase by phase from 2022 to 2024, and the company regards its investment amount as other non-currentliabilities. The company actually holds 100% voting rights and interests of Dahua Zhilian.
(3) On April 30, 2021, the registered capital of Zhejiang Huarui Technology Limited increased from RMB 50 million to RMB55,555,556. As the Company waived the right to increase capital in the same proportion and the right of preemption ofHuarui Technology, the original 51% equity of Huarui Technology held by the Company was diluted to 45.9%. After theequity dilution, the Company remained the largest shareholder of Huarui, and the remaining shareholders had a low anddiversified shareholding, and Huarui was still a subsidiary of the Company. On June 26, 2021, “Zhejiang HuaruiTechnology Limited.” was renamed as “Zhejiang Huarui Technology Co., Ltd.”
(4) The company directly holds 45.50% of the equity of Zhejiang Huafei Intelligent Technology Limited, and at the sametime, Zhejiang Huashi Investment Management Limited grants 16% of the voting rights to the company according to theagreement. The company actually holds 61.50% of the voting rights of Zhejiang Huafei Intelligent Technology Limited,which constitutes actual control and includes it in the scope of consolidation.
(5) The company directly holds 45% of the equity of Guizhou Huayi Shixin Technology Limited, and at the same time,Guizhou Yiyun Investment Limited grants 6% of the voting rights to the company according to the agreement. Thecompany actually holds 51% of the voting rights of Guizhou Huayi Shixin Technology Limited, which constitutes actualcontrol and includes it in the scope of consolidation.
(6) The company directly hold 45% equity of Zhejiang Huashi Zhijian Technology Limited, and at the same time, NingboHualing Investment Management Partnership (limited partnership) grants 40% of the voting rights held to the company inaccordance with the agreement. The company effectively holds 85% of the voting rights of Zhejiang Huashi Zhijian
Technology Limited, which constitutes actual control and includes it in the scope of consolidation.
2. The transactions that lead to changes in the shareholder's equity in the subsidiaries while stillhas working control over the subsidiary
(1) Explanation of the changes in the shareholder's equity in the subsidiariesOn April 30, 2021, the registered capital of Zhejiang Huarui Technology Limited increased from RMB 50 million to RMB55,555,556. As the Company waived the right to increase capital in the same proportion and the right of preemption ofHuarui Technology, the original 51% equity of Huarui Technology held by the Company was diluted to 45.9%. After theequity dilution, the Company remained the largest shareholder of Huarui, and the remaining shareholders had a low anddiversified shareholding. Huarui was still a subsidiary of the Company, and included in the scope of consolidation.
3. Equity in joint venture arrangements or affiliates
(1) Financial summary of non-essential joint ventures and affiliates
Unit: RMB
| Closing balance / accrual of current period | Balance at the Start of the Period / accrual of previous period | |
| Joint ventures: | -- | -- |
| The total count of the following items based on the shareholding ratios | -- | -- |
| Affiliates: | -- | -- |
| Total book value of investments | 820,449,863.74 | 455,977,616.16 |
| The total count of the following items based on the shareholding ratios | -- | -- |
| --Net profit | -155,395,120.84 | -44,335,467.10 |
| --Other comprehensive income | -1,835,013.29 | -63,899.99 |
| --Total comprehensive income | -157,230,134.13 | -44,399,367.09 |
X. Risks Relating to Financial Instruments
The company faces various financial risks in the course of operation: credit risk, liquidity risk and market risk(including exchange rate risk, interest rate risk and other price risks).The overall objective of the Company's risk management is to formulate risk management policies that can minimize riskswithout affecting the Company's competitiveness and adaptability to changes too much.
(一) Credit risk
Credit risk refers to the risk of financial loss to the company due to the failure of the counterparty to perform itscontractual obligations. The Company is mainly facing with the customer credit risk arising from sales on account. Beforesigning a new contract, the Company will assess the new customer's credit risk, including external credit rating and thecredibility letter from a bank under some circumstances (if such information is available). The Company has set a credit
limit for sales on account for each customer. Such limit shall be the maximum amount with no additional approval needed.
The Company ensures that the overall credit risk is within the controllable range through quarterly monitoring of creditratings of existing customers, and monthly review of aging analysis on accounts receivable. When monitoring customers'credit risk, the Company groups them according to their credit characteristics. The customers rated as "high risk" will beplaced in the list of restricted customers, and the company can sell on credit to such company in the future only withadditional approval, otherwise they must make relevant payment in advance.For overseas customers, the Company mainly uses wire transfer as a payment method. According to the creditevaluation of each customer, the Company gives different credit lines and credit account periods, and agrees on thepayment method and account period in the commodity procurement contract between the two parties. After the sales ofproducts, the Company has a dedicated person responsible for tracking, reconciliation, and payment reminding. Inaddition, the Company introduced export credit insurance to ensure that the return risk from overseas customers is withincontrollable range.
(Ⅱ) Liquidity risk
Liquidity risk refers to the risk of capital shortage when an enterprise performs its obligation to settle by cash or otherfinancial assets.The Company's policy is to ensure that there is sufficient cash to repay the liabilities due. The liquidity risk is under theconcentrated control of the Company's Financial Department. By monitoring the cash balance, negotiable securitiesavailable for cash at any time and rolling forecast of cash flow in the next 12 months, the financial department ensures thatthe company has sufficient funds to repay its debts under all reasonable forecasts.
The financial liabilities of the Company are listed as follows based on the undiscounted contractual cash flow:
| Item | June 30, 2021 | ||
| Within 1 year | More than 1 year | Total | |
| Short-term loan | 1,104,598,520.22 | 1,104,598,520.22 | |
| Notes Payable | 3,610,134,581.74 | 3,610,134,581.74 | |
| Accounts Payable | 6,781,697,701.64 | 6,781,697,701.64 | |
| Other Payables | 717,772,801.38 | 717,772,801.38 | |
| Non-current Liabilities Due within 1 Year | 267,905,114.96 | 267,905,114.96 | |
| Lease Liabilities | 111,686,035.50 | 111,686,035.50 | |
| Long-term loan | 1,903,000,000.00 | 1,903,000,000.00 | |
| Total | 12,482,108,719.94 | 2,014,686,035.50 | 14,496,794,755.44 |
| Item | December 31, 2020 | ||
| Within 1 year | More than 1 year | Total | |
| Short-term loan | 250,177,083.34 | 250,177,083.34 | |
| Notes Payable | 3,258,552,758.17 | 3,258,552,758.17 | |
| Accounts Payable | 6,444,787,705.28 | 6,444,787,705.28 | |
| Other Payables | 970,552,877.22 | 970,552,877.22 | |
| Non-current Liabilities Due within 1 Year | 151,891,709.34 | 151,891,709.34 |
| Long-term loan | 878,000,000.00 | 878,000,000.00 | |
| Total | 11,075,962,133.35 | 878,000,000.00 | 11,953,962,133.35 |
(Ⅲ) Market risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financial instrumentsfluctuates due to changes in market prices, including exchange rate risk, interest rate risk and other price risks.
1. Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due tochanges in market interest rates. The interest rate risk faced with by the Company is mainly from bank loans. TheCompany's assets and liabilities relating to interest rate are respectively bank deposits and short-term loans, whoseinterest rate risk is low.
2. Exchange rate risk
Exchange rate risk refers to the risk that the fair value or future cash flow of financial instruments fluctuates due tochanges in foreign exchange rates. The Company will try its best to match the revenues with the expenses in foreigncurrency, to lower the exchange rate risk. In addition, the Company may also sign forward foreign exchange contracts orcurrency swap contracts to avoid exchange rate risks.
The exchange rate risk faced with by the Company is mainly from financial assets and liabilities in USD. The amountsof assets and liabilities in foreign currencies and converted into RMB are listed as below:
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and Bank Balances | 1,786,420,928.29 | 535,775,944.04 | 2,322,196,872.33 | 2,066,290,327.08 | 722,490,474.86 | 2,788,780,801.94 |
| Accounts receivable | 2,676,125,688.48 | 1,137,493,473.51 | 3,813,619,161.99 | 2,758,289,939.69 | 1,026,362,106.74 | 3,784,652,046.43 |
| Accounts Payable | 1,538,959,201.61 | 126,180,451.19 | 1,665,139,652.80 | 1,435,207,173.38 | 78,343,376.34 | 1,513,550,549.72 |
| Total | 6,001,505,818.38 | 1,799,449,868.74 | 7,800,955,687.12 | 6,259,787,440.15 | 1,827,195,957.94 | 8,086,983,398.09 |
XI. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
| Item | Fair values at period-end | |||
| First level measurement ata fair value | Second level measurement at fair value | Third level measurement at fair value | Total | |
| I. Constant measurement at fair value | -- | -- | -- | -- |
| (Ⅰ). Trading financial assets | 9,614,978.97 | 9,614,978.97 | ||
| 1. Financial assets measured at fair value and whose changes are included in current profits and losses | 9,614,978.97 | 9,614,978.97 | ||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (3) Derivative financial assets | 8,144,978.97 | 8,144,978.97 | ||
| (4) Others | 1,470,000.00 | 1,470,000.00 | ||
| 2. Financial assets designated to be measured at fair value and whose changes are included in current profits and losses | ||||
| (1) Debt instrument investment | ||||
| (2) Equity instrument investment | ||||
| (Ⅱ) Other creditor's rights investment | ||||
| (Ⅲ) Other equity instrument investment | ||||
| (Ⅳ) Investment property | ||||
| 1. Right to use the land for lease | ||||
| 2. The buildings for lease | ||||
| 3. Land use rights held and prepared to transfer after appreciation | ||||
| (Ⅴ) Biological assets | ||||
| 1. Consumable biological assets | ||||
| 2. Productive biological assets | ||||
| (Ⅵ) Accounts receivables financing | 901,192,858.59 | 901,192,858.59 | ||
| (Ⅶ) Other non-current financial assets | 937,923,581.60 | 937,923,581.60 | ||
| Total assets constantly measured at fair value | 910,807,837.56 | 937,923,581.60 | 1,848,731,419.16 | |
| (Ⅵ) Trading financial liabilities | 450,897.52 | 450,897.52 | ||
| Including: Issued trading bonds | ||||
| Derivative Financial Liabilities | 450,897.52 | 450,897.52 | ||
| Others | ||||
| (Ⅶ) Financial liabilities designated to be measured at fair value and included in current profits or losses | ||||
| Total amount of liabilities constantly | 450,897.52 | 450,897.52 |
| measured at their fair values | ||||
| II. Non-constant measurement at fair values | -- | -- | -- | -- |
| (Ⅰ) Assets held for sale | ||||
| Total assets not continuously measured at fair value | ||||
| Total liabilities not continuously measured at fair value |
2. The valuation techniques adopted and the qualitative and quantitative information of importantparameters for continuous and non-continuous second-level fair value measurementsThe fair value of derivative financial assets shall be recognized according to the difference between the quotation offorward foreign exchange settlement and the forward foreign exchange price;Due to the short remaining term of the receivables financing, the book value is close to the fair value, and the nominalamount is used as the fair value.
3. The valuation techniques adopted and the qualitative and quantitative information of importantparameters for continuous and non-continuous third-level fair value measurementsEvaluate the value and net book assets based on the income method and asset-based method.
4. The fair value of financial assets and financial liabilities not measured at fair valueThe fair value of financial assets and financial liabilities measured by the Company at amortized cost is equivalent to thebook value.XII. Related Parties and Related-party Transactions
1. The Company's Parent Company
| Name of parent company | Registered Address | Business Nature | Registered Capital | Shareholding ratio of the parent company | Proportion of voting rights of the parent company |
| Fu Liquan | 34.18% | 34.18% | |||
| Chen Ailing | 2.38% | 2.38% |
The ultimate controllers of the Company are Mr. Fu Liquan and Ms. Chen Ailing.
2. Information about the Company's subsidiaries
For details of subsidiaries of the Company, see Note "IX. Equities in other entities".
3. Information about the Company's joint ventures and affiliates
Here is the information about joint ventures and affiliates that have related-party transactions with the Company in thecurrent period or have balance from related-party transactions with the Company in the previous period:
| Names of joint ventures and affiliates | Relationship with the Company |
| Intelbras S.A. | Affiliate |
| Guangdong Dahua Zhishi Technology Limited (Note 1) | Affiliate |
| Lishui Dahua Intelligent Technology Co., Ltd. | Affiliate |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Affiliate |
| Shaoxing Dahua Security Services Co., Ltd. | Affiliate |
| Shenzhen Congwen Security Electronics Limited (Note 2) | Affiliate, such relationship was terminated in June 2021. |
| Taizhou Dahua Security Services Co., Ltd. | Affiliate |
| Wenzhou Dahua Security Services Co., Ltd. | Affiliate |
| Zhejiang Zhian Internet of Things Technology Co., Ltd. (Note 3) | Affiliate |
| Zhejiang Leapmotor Technology Limited and its affiliates (Note 4) | Affiliate, and enterprise controlled by the Company's actual controller |
| China Standard Intelligent Security Technology Co., Ltd. | Affiliate |
| Ruicity Digital Technology Co., Ltd. and its affiliates (Note 5) | Affiliate |
| Zhoushan Dahua Technology Co., Ltd. | Affiliate |
| Digital Dongyang Technology Operation Co., Ltd. | Affiliate |
| Hangzhou Juhuanyan Information Technology Co., Ltd. | Affiliate |
Other notesNote 1: On July 6, 2021, Zhejiang Dahua Technology Co., Ltd. transferred all the shares held by Guangdong Dahua ZhishiTechnology Limited to Zhejiang Huashi Zhijian Technology Limited, a subsidiary within the scope of consolidation."Guangdong Dahua Zhishi Technology Limited" was renamed "Guangdong Zhishi Digital Technology Limited".Note 2: Shenzhen Congwen Security Electronics Limited is an affiliate company of the company. The companytransferred its equity in June2020, but within 12 months, Shenzhen Congwen Security Electronics Limited was stillrecognized as the company's associated legal person of the company, the relationship ended in June 20216.Note 3: On April 28, 2021, “Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd.” was renamed as “ZhejiangZhian Internet of Things Engineering Co., Ltd.”Note 4: On April 30, 2021, “Zhejiang Leapmotor Technology Limited” was renamed as “Zhejiang Leapmotor TechnologyCo., Ltd.” “Zhejiang Leapmotor Technology Co., Ltd. and its affiliates” include a total of five companies, namely LeapmotorAutomobile Limited, Hangzhou Leapmotor Automobile Sales Service Limited, Zhejiang Youchong New EnergyTechnology Limited, Wuhan Lingchao Automobile Sales Service Limited, and Zhejiang Leapmotor Automobile SalesService Limited, which have related transactions with the Company.Note 5: “Ruicity Digital Technology Co., Ltd. and its affiliates” include Ruicity Digital Technology Co., Ltd. and its subsidiaryRuicity (Shandong) Digital Technology Co., Ltd.
4. Information about other related parties
| Names of other related parties | Relationship between the Company and other related parties |
| Hangzhou Nuojia Technology Co., Ltd. | Enterprises controlled by spouses of senior executives of the company |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Enterprise significantly influenced by the senior manager of the Company |
| Hangzhou Xintu Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Ningbo Hualing Investment Management Partnership (Limited Partnership) | Enterprise controlled by actual controller |
| Ningxia Shendun Security Services Co., Ltd. | Subsidiary of a company with shares held by the Company |
| Zhejiang Huanuokang Technology Co., Ltd. | Company controlled by the Company's actual controller |
| Zhejiang Lancable Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Zhoushan Weixin Equity Investment Partnership (Limited Partnership) | Enterprises in which the actual controller has significant influence |
| Zhoushan Zhixin Equity Investment Partnership (Limited Partnership) | Enterprise controlled by actual controller |
| Zhejiang Huatu Microchip Technology Limited (Note 1) | Enterprises in which the actual controller has significant influence |
| Zhejiang Xinsheng Electronic Technology Limited (Note 1) | Enterprises in which the actual controller has significant influence |
| Zhoushan Dahua Security Service Limited | Subsidiary of the affiliate |
| South-North United Information Technology Co., Ltd. (Note 2) | This company shall end its affiliate relationship within the year of 2021 |
| Wangsu Technology Co., Ltd. (Note 3) | Enterprises over which the previous senior executives have significant influence |
| Zhejiang Huashi Investment Management Co., Ltd. | Enterprise controlled by actual controller |
| Zhejiang Zhihua IOT Technology Limited | Subsidiaries of affiliates |
| Hangzhou Xianmai Technology Limited | Enterprise controlled by actual controller |
| Zhejiang Nuojia Biotechnology Co., Ltd. | Enterprises over which the previous senior executives have significant influence |
| China Mobile Communications Group Co., Ltd. and its affiliates (Note 4) | Groups that have important influence on the company |
Other notesNote 1: Zhejiang Huatu Microchip Technology Limited and Zhejiang Xinsheng Electronic Technology Limited were
disposed by Dahua in July 2020, after the disposal, however, they remain enterprises in which the actual controller hassignificant influence.Note 2: South-North United Information Technology Co., Ltd. was disposed by Dahua in 2020, but within the 12 monthsafter the disposal, South-North United Information was till recognized as the company's associated legal person, and therelationship ended in April 2021.Note 3: Huang Siying, the original independent director of the company, served as a director of Wangsu TechnologyLimited and left his post in August 2020, within the 12 months of her departure, Wangsu Technology Co., Ltd was stillrecognized as the company's associated legal person.Note 4: The company signed a share subscription agreement with effective conditions with China Mobile Capital HoldingsCo., Ltd., a wholly-owned subsidiary of China Mobile Communications Group Co., Ltd., on March 26, 2021, and signedthe "Strategic Cooperation Agreement with Effective Conditions" with China Mobile Communications Group Co., Ltd. andChina Mobile Capital Holdings Co., Ltd. After the completion of this non-public offering, China Mobile Capital will holdmore than5% of the shares of the company. According to the "Shenzhen Stock Exchange Stock Listing Rules", as a resultof signing agreements or arrangements with the listed company or its affiliates, the entity directly or indirectly holding morethan 5％ of the shares of the listed company after the agreement or arrangement takes effect or within the next 12 monthsis regarded as the related party of the listed company. Therefore, the company has a related relationship with ChinaMobile Communication Group Co., Ltd. and its affiliated companies since March 26, 2021.
5. Information about related-party transactions
(1) Related-party transactions involving purchase and selling of merchandise and provision andacceptance of labor services
Merchandise purchase and acceptance of labor services
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Approved transaction limit | Over the transaction limit or not | Previous Period's Amount of Occurrence |
| Zhejiang Leapmotor Technology Co., Ltd and its affiliates | Purchase of materials | 35,679.20 | No | 1,362,577.05 | |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Material procurement, acceptance of service | 444,057.57 | No | 3,271,015.27 | |
| Hangzhou Nuojia Technology Co., Ltd. | Acceptance of services | 484,234.68 | No | 206,422.02 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Purchase of materials | 1,336,283.11 | No | 145,132.74 | |
| Zhoushan Dahua Security Service Limited | Acceptance of services | 4,088,447.17 | No | 1,020,944.24 |
| Shenzhen Conwin Security Electronics CO., Ltd. | Acceptance of services | 8,000.00 | No | ||
| Others | Material procurement, acceptance of service | 136,955,034.68 |
Sales of merchandise and provision of services
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Zhejiang Leapmotor Technology Co., Ltd and its affiliates | Sales of merchandise | 25,154,144.53 | 1,600,748.70 |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Sales of merchandise | 609,380.47 | 74,075.23 |
| Zhoushan Dahua Technology Co., Ltd. | Sales of merchandise | 80,051.32 | 12,183.18 |
| Wenzhou Dahua Security Services Co., Ltd. | Provision of services | 23,584.91 | |
| Hangzhou Xintu Technology Co., Ltd. | Sales of merchandise and provision of services | 236,264.22 | 236,913.67 |
| Shenzhen Conwin Security Electronics CO., Ltd. | Sales of merchandise | 378,258.42 | |
| Guangdong Dahua Zhishi Technology Co., Ltd. | Sales of merchandise | 12,724,922.75 | 4,684,747.26 |
| Intelbras S.A. | Sales of merchandise | 303,183,526.51 | 126,462,175.51 |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Sales of merchandise | 11,469.03 | 14,159.28 |
| Zhejiang Lancable Technology Co., Ltd. | Sales of merchandise | -56,034.48 | |
| Hangzhou Nuojia Technology Co., Ltd. | Sales of merchandise and provision of services | 45,893.80 | 104,055.89 |
| China Standard Intelligent Security Technology Co., Ltd. | Sales of merchandise | 1,327.43 | 62,220.38 |
| Zhejiang Huanuokang Technology Co., Ltd. | Sales of merchandise | 1,471,146.02 | 292,228.09 |
| Ruicity Digital Technology Co., Ltd. and its affiliates | Sales of merchandise and provision of services | 15,964,205.97 | 3,913,235.39 |
| Taizhou Dahua Security Services Co., Ltd. | Sales of merchandise | 69.03 | |
| Zhejiang Zhihua IOT Technology Limited | Sales of merchandise | 14,867.26 | |
| Zhejiang Nuojia Biotechnology Co., Ltd. | Sales of merchandise | 7,522.13 | |
| Others | Sales of merchandise and provision of services | 59,132,012.56 |
(2) Related leasing
The Company being the lessor:
Unit: RMB
| Name of the lessee | Type of the leased assets | Rental income confirmed in this period | Rental income confirmed in the previous period |
| Zhejiang Leapmotor Technology Co., Ltd. | Buildings and constructions | 495,771.41 | 344,155.74 |
| China Standard Intelligent Security Technology Co., Ltd. | Buildings and constructions | 74,697.48 | |
| South-North United Information Technology Co., Ltd. | Buildings and constructions | 414,961.09 | |
| Ruicity Digital Technology Co., Ltd. and its affiliates | Transportation equipment | 28,723.15 | |
| Others | Transportation equipment | 15,044.25 |
(3) Related guarantee
The Company being the guarantor:
Unit: RMB
| Secured parties | Guarantee Amount | Starting date | Maturity date | Guarantee fulfilled completely or not |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | October 13, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | March 20, 2018 | March 19, 2021 | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. (guarantee currency is US dollar) | 40,000,000.00 | September 21, 2018 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 180,000,000.00 | June 26, 2019 | June 25, 2022 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 440,000,000.00 | July 22, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | September 29, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision | 250,000,000.00 | February 17, 2020 | Two years after the maturity of the | No |
| Technology Co., Ltd. | debts in the master contract | |||
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | February 26, 2020 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 530,000,000.00 | April 7, 2020 | March 31, 2024 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 240,000,000.00 | April 13, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | July 31, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 600,000,000.00 | August 12, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 330,000,000.00 | August 18, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | August 15, 2020 | Five years upon expiration of debt period of master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 400,000,000.00 | September 27, 2020 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 1,000,000,000.00 | February 4, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | February 25, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | February 25, 2021 | September 26, 2021 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 80,000,000.00 | May 12, 2021 | December 31, 2022 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 300,000,000.00 | October 12, 2018 | October 12, 2021 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | April 09, 2020 | One years upon expiration of debt period of master contract | Yes |
| Zhejiang Dahua Zhilian Limited (guaranteed currency | 60,000,000.00 | May 1, 2020 | One years upon expiration of debt period of master contract | Yes |
| is USD) | ||||
| Zhejiang Dahua Zhilian Co., Ltd. | 300,000,000.00 | March 28, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 165,000,000.00 | September 25, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 75,000,000.00 | September 27, 2020 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | September 29, 2020 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | May 1, 2021 | One years upon expiration of debt period of master contract | No |
| Zhejiang Dahua Zhilian Limited (guaranteed currency is USD) | 60,000,000.00 | May 1, 2021 | April 30, 2022 | No |
| Zhejiang Dahua Zhilian Limited (guaranteed currency is USD) | 55,000,000.00 | April 30, 2021 | May 14, 2022 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 10,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 60,000,000.00 | November 7, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | February 26, 2020 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua System Engineering Co., Ltd. | 50,000,000.00 | July 31, 2020 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Dahua Technology (HK) Limited (guarantee currency is US dollar) | 7,000,000.00 | November 25, 2019 | Two years after the maturity of the debts in the master contract | No |
| Dahua Technology (Hong Kong) Limited (guaranteed currency is euro) | 1,000,000.00 | April 25, 2021 | April 25, 2022 | No |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is USD) | 6,500,000.00 | October 27, 2020 | October 20, 2021 | No |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is USD) | 1,000,000.00 | September 01, 2020 | August 31, 2021 | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 50,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 100,000,000.00 | February 26, 2020 | Three years after the maturity of the debts in the master contract | Yes |
| Hangzhou Huacheng Network Technology Co., Ltd. | 55,000,000.00 | September 25, 2020 | Two years after the maturity of the debts in the master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 50,000,000.00 | September 27, 2020 | Three years after the maturity of the debts in the master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 20,000,000.00 | February 4, 2021 | Six months upon expiration of the debt performance period of master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 100,000,000.00 | February 25, 2021 | Three years after the maturity of the debts in the master contract | No |
| Dahua Technology UK Limited (guaranteed currency is GBP) | 1,160,000.00 | August 12, 2020 | Sign the termination notice | No |
| Zhejiang HuaRay Technology Co., Ltd. | 50,000,000.00 | February 25, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. (guaranteed currency is USD) | 2,000,000.00 | May 2, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Storage Technology Co., Ltd. | 10,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each | No |
| note discounted by China Merchants Bank during the credit period | ||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | 50,000,000.00 | May 11, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Fengshi Technology Co., Ltd. | 20,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Wuxi Dahua Ruipin Technology Co., Ltd. | 10,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 10,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Zhejiang Huaxiao Technology Co., Ltd. | 10,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | 10,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 50,000,000.00 | May 29, 2021 | Additional three years from the effective date of the commitment letter to the maturity date of each note discounted by China Merchants Bank during the credit period | No |
(4) Asset transfer and debt restructuring of related parties
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Zhejiang Huanuokang Technology Co., Ltd. | Selling of fixed assets | 64,475.38 | |
| Ruicity Digital Technology Co., Ltd. and its affiliates | Selling of fixed assets | 112,127.64 | 142,819.61 |
| Zhejiang Leapmotor Technology Co., Ltd and its affiliates | Procurement of fixed assets | 1,157,719.80 | 196,477.09 |
(5) Remuneration for key management personnel
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Salary of key management personnel | 5,430,399.52 | 6,528,420.50 |
(6) Other related-party transactions
1. On January 8, 2021, the Eighth Meeting of the Seventh Board of Directors of the Company deliberated and approvedthe "Proposal on Joint Capital Increase and Related Party Transactions", and agreed that the Company and relatedparties Zhang Xingming, He Chao, Ningbo Huaqi Investment Management Partnership (Limited Partnership), HangzhouKangpi Enterprise Management Partnership (Limited Partnership) and non-related party Yao Weizhong to sign the"Agreement on Equity Transfer and Capital Increase of Zhejiang Healnoc Technology Co., Ltd.". The Company andrelated parties Zhang Xingming, He Chao, Ningbo Huaqi Investment Management Partnership (Limited Partnership),Hangzhou Kangpi Enterprise Management Partnership (Limited Partnership) and non-related party Yao Weizhongcontributed RMB 50 million in total to Zhejiang Healnoc Technology Co., Ltd. (referred to as "Healnoc") as capital increase.Among them, the Company invested RMB 20 million of its own funds, holding 20% of Healnoc equity, and Healnocbecame a shareholding company. The change of industrial and commercial registrations for the above matter wascompleted in February 2021.
2. On January 22, 2021, the First Extraordinary Meeting of Shareholders in 2021 deliberated and approved the “Proposalon Giving up Shareholding Companies' Equity Increase Rights and Related Party Transactions”. A total of 14 investors,including Zhu Jiangming, Gao Dong, Chen Jinxia, and Ningbo Huaqi Investment Management Partnership (LimitedPartnership), made a B-1 round of capital increase in Leapmotor Technology. The related transaction amount involved incompanies giving up the right to increase capital in the same proportion was RMB 458.459 million. The change ofindustrial and commercial registrations for the above matter was completed in January 2021.
3. On January 27, 2021，the Ninth Meeting of the Seventh Board of Directors of the Company deliberated and approvedthe “Proposal on Giving up Shareholding Companies' Equity Increase Rights and Related Party Transactions”. A total of10investors, including Zhejiang Mituo Investment Co., Ltd., Gao Dong, Huzhou Heninghai Investment Partnership(Limited Partnership), intended to make a B-2 round of capital increase in Leapmotor. The amount of related partytransactions involved in the companies' giving up the right to increase capital in the same proportion was RMB
0.16683546 billion. The change of industrial and commercial registrations for the above matter was completed in January2021.
4. On April 22, 2021, the "Proposal on Giving Up the Right to Increase Capital and Pre-emptive Rights of a Subsidiary inthe Same Proportion and Related Transaction" was deliberated and approved at the Fourteenth Meeting of the SeventhSession of the Board of Directors of the Company, in which a total of 5 investors, including CICC Huarui TechnologyEmployee Shareholding No. 1 Single Asset Management Plan, intended to increase capital to Zhejiang HuaruiTechnology Co., Ltd., with a total capital increase of RMB 9,545,783. Based on the shareholding structure after theabove capital increase, Ningbo Huayu Investment Management Partnership (Limited Partnership), shareholder of HuaruiTechnology, intended to transfer its 44.10% shareholding of Huarui Technology to a total of 24investors including CICCHuarui Technology Employee Shareholding No. 1Single Asset Management Plan, at a total price of RMB 244,309,237.The Company waived the preferential subscription right and the preemptive right to purchase the above-mentioned equityinterests. The change of industrial and commercial registrations for the above matter was completed in April 2021.
5. On June 7, 2021, the "Proposal on Capital Increase and Related Transaction of Holding Subsidiary" was deliberatedand approved at the Sixteenth Meeting of the Seventh Board of Directors of the Company, which agreed that theCompany and the related legal person Zhejiang Huashi Investment Management Co., Ltd. jointly increased the capital ofthe holding subsidiary Zhejiang Huaxiao Technology Co., Ltd. in the same proportion. The company increased its capitalby RMB10.2 million with its own funds, and after the completion of the capital increase, the registered capital of HuaxiaoTechnology increased from RMB 50 million to RMB 70 million. The change of industrial and commercial registrations forthe above matter was completed in June 2021.
6. On June 29, 2021, the "Proposal on Joint Investment and Establishment of Industrial Fund and Related Transactionwith Related Parties" was deliberated and approved at the Eighteenth Meeting of the Seventh Session of the Board ofDirectors of the Company, which agreed to establish Zhoushan Huayan Chuangxi Equity Investment Partnership (LimitedPartnership) with a total of 19 investors, including Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd.The form of the Industrial Fund is a limited partnership with a total fund scale of RMB 150.1 million; Huayan Capital, as thefund manager, contributes RMB 100,000 in currency, holding 0.07% of the shares, and Dahua Shares contributes RMB 50million in currency, holding 33.32% of the shares. The matter is still in progress.
6. Receivables and payables of the related parties
(1) Receivables
Unit: RMB
| Item Name | Related parties | Balance at the End of the Period | Balance at the Start of the Period | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 30,762,326.83 | 1,550,779.35 | 20,226,671.24 | 1,097,618.01 |
| Accounts receivable | Zhejiang Zhian Internet of Things Engineering Co., Ltd. | 100,000.00 | 30,000.00 | 100,000.00 | 10,000.00 |
| Accounts receivable | Guangdong Dahua Zhishi Technology Co., Ltd. | 12,670,875.40 | 633,543.77 | 9,674,896.53 | 483,744.83 |
| Accounts receivable | Ningbo Dahua Anbang Security Services Co., Ltd. | 644,510.00 | 32,225.50 | 826,971.00 | 41,348.55 |
| Accounts receivable | Hangzhou Xintu Technology Co., Ltd. | 47,473.26 | 2,373.66 | 94,500.00 | 4,725.00 |
| Accounts receivable | Hangzhou Xunwei Robotics Technology Co., Ltd. | 7,200.00 | 360.00 | 15,300.00 | 765.00 |
| Accounts receivable | Hangzhou Nuojia Technology Co., Ltd. | 2,099.00 | 104.95 | 48,305.00 | 2,415.25 |
| Accounts receivable | China Standard Intelligent Security Technology Co., Ltd. | 1,017,406.10 | 184,290.85 | 1,017,723.17 | 94,223.41 |
| Accounts receivable | Zhejiang Huanuokang Technology Co., Ltd. | 1,801,425.53 | 90,071.28 | 1,106,873.88 | 73,242.70 |
| Accounts receivable | Intelbras S.A. | 195,449,590.28 | 9,772,606.21 | 208,554,357.60 | 10,427,717.88 |
| Accounts receivable | Shaoxing Dahua Security Services Co., Ltd. | 50,000.00 | 5,000.00 | 50,000.00 | 5,000.00 |
| Accounts receivable | South-North United Information Technology Co., Ltd. | 29,508,038.92 | 6,150,422.02 | ||
| Accounts receivable | Ruicity Digital Technology Co., Ltd. and its affiliates | 22,074,231.76 | 1,103,711.59 | 12,589,716.40 | 629,485.82 |
| Accounts receivable | Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,223,000.00 | 219,041.50 | 1,223,000.00 | 92,728.30 |
| Accounts receivable | Zhoushan Dahua Technology Co., Ltd. | 78,065.00 | 3,903.25 | ||
| Accounts receivable | Others | 132,288,139.25 | 9,113,249.13 | 2,228,554.7 | 111,428.76 |
| Prepayment | Others | 20,195,635.70 | 9,430,662.05 | ||
| Prepayment | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 119,200.00 | 811,033.19 | ||
| Other Receivables | Shenzhen Conwin Security Electronics CO., Ltd. | 8,000.00 | 400.00 | ||
| Other Receivables | Ningbo Hualing Investment Management Partnership (Limited Partnership) | 107,800,000.00 | 5,390,000.00 | 107,800,000.00 | 5,390,000.00 |
| Other Receivables | Zhoushan Weixin Equity Investment Partnership (Limited Partnership) | 62,720,000.00 | 3,136,000.00 | 62,720,000.00 | 3,136,000.00 |
| Other Receivable | Zhoushan Zhixin Equity Investment Partnership (Limited Partnership) | 64,680,000.00 | 3,234,000.00 | 64,680,000.00 | 3,234,000.00 |
| s | |||||
| Other Receivables | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 5,600.00 | 280.00 | ||
| Other Receivables | Others | 1,247,969.22 | 299,940.46 | 54,751.47 | 2,737.57 |
(2) Payables
Unit: RMB
| Item Name | Related parties | Closing balance | Opening book balance |
| Accounts Payable | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 11,943,849.77 | 11,126,290.19 |
| Accounts Payable | Ningxia Shendun Security Services Co., Ltd. | 350,375.00 | 350,375.00 |
| Accounts Payable | Hangzhou Nuojia Technology Co., Ltd. | 1,863,441.59 | 2,371,466.69 |
| Accounts Payable | Zhejiang Huanuokang Technology Co., Ltd. | 1,107,343.59 | 1,018,404.74 |
| Accounts Payable | Wangsu Technology Co., Ltd. | 18,000.00 | 18,000.00 |
| Accounts Payable | Others | 56,790,867.78 | |
| Contract liabilities | Hangzhou Nuojia Technology Co., Ltd. | 353.98 | |
| Contract liabilities | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 1,195,593.81 | 982,300.88 |
| Contract liabilities | South-North United Information Technology Co., Ltd. | 6,371.68 | |
| Contract liabilities | Ruicity Digital Technology Co., Ltd. and its affiliates | 112,127.64 | |
| Contract liabilities | Hangzhou Juhuanyan Information Technology Co., Ltd. | 250,000.00 | 250,000.00 |
| Contract liabilities | Zhejiang Zhihua IOT Technology Limited | 2,830.19 | |
| Contract liabilities | Hangzhou Xintu Technology Co., Ltd. | 3,721.17 | |
| Contract | Others | 1,478,163.34 |
| liabilities | |||
| Other Payables | Zhejiang Leapmotor Technology Co., Ltd and its affiliates | 173,520.00 | 173,520.00 |
| Other Payables | Others | 720,000.00 |
XIII. Share-based payment
1. Overview of share-based payment
√ Applicable □ Not applicable
Unit: RMB
| Total amount of equity instruments granted by the Company in current period | - |
| Total amount of equity instruments exercised by the Company in current period | 29,431,520 shares of restricted stock |
| Total amount of equity instruments of the Company invalidated in current period | 1,028,860 shares of restricted stock |
| The range of the exercise prices of other outstanding equity instruments issued by Company at the end of the period and the remaining contractual term | The first-grant price of restricted stock granted under the Restricted Stock Incentive Plan in 2018 was RMB 8.17 per share, and the remaining term of the contract was 20 months; the grant price of the reserved granted restricted stock was 8.75 yuan per share, and the remaining term of the contract was 20 months. In 2020, the grant price of restricted stock granted under the Restricted Stock Incentive Plan is RMB 7.467 per share, the remaining period of the contract is 23 months. |
2. Situation of equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
| The method for determining the fair value of equity instruments on the day of granting | Determined based on the stock price at the grant date and the grant cost of the restricted stocks |
| The basis for determining the amount of exercisable equity instruments | Estimated according to equity instruments held by the employees |
| Reason for the significant difference between the estimation of current period and the previous period | N/A |
| The accumulated amount of equity-settled share-based payment counted into the capital reserve | 470,599,182.63 |
| Amount of equity-settled share-based payment confirmed in current period | 80,843,507.92 |
3. Situation of cash-settled share-based payment
□ Applicable √ Not applicable
XIV. Commitments and contingencies
1. Significant commitments
Important commitments on the balance sheet dayAs of June 30, 2021, the pledges of the company are as follows:
(1) On August 19, 2016,Xinjiang Dahua Zhixin Information Technology LLC, as a subsidiary, pledged its future accountsreceivable of RMB 351,064,980.00 incurred from the available service fee under the Franchise Agreement for theShihezi “Safe Shicheng” PPP Project and signed the Fixed Assets Loan Contract (Total Contract Amount: RMB230,000,000.00, Contract No.: 2016-01) with Shihezi Sub-Branch of the Construction Bank of China, to provide guaranteefor the Company's loan (Loan Contract No.: 2016-01) amounting to RMB 230,000,000.00 (Term of Borrowing: from August,2016 to August 2027). As of June 30, 2021, the amount of receivables pledged was RMB 209,459,399.05 (including thebalance of long-term receivables of RMB 178,385,721.02 and the balance of non-current assets of RMB 31,073,678.03due within one year). The loan balance under the guarantee contract was RMB 128,000,000.00 (including the long-termloans of RMB 103,000,000.00 and the non-current liabilities of RMB 25,000,000.00 due within one year).
(2) On June 28, 2019, Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co., Ltd. enteredinto the (33100000) ZSZCCZ (2019) No. 12373 Asset Pool Pledge Guarantee Contract (Contract Term: June 28, 2019 toJune 28, 2021). On June 29th, 2021, Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co.,Ltd. renewed the (33100000) ZSZCCZ (2021) No. 13431 Asset Pool Pledge Guarantee Contract (Contract Term: June 29,2021 to June 29, 2022), to provide guarantee for the Asset Pool Business Cooperation Agreement signed by theCompany, its subsidiary Zhejiang Dahua Vision Technology Co., Ltd., its subsidiary Zhejiang Dahua System EngineeringCo., Ltd., its subsidiary Guangxi Dahua Information Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co.,Ltd., with the maximum financing amount of the fund pledge pool not exceeding RMB 3 billion.Under this note pool business, as of June 30, 2021, Zhejiang Dahua Technology Co., Ltd. has RMB 590,293,741.29 ofundue notes receivable (including RMB 580,000,000.00 of related party bills receivable within the consolidated scope), itssubsidiary Zhejiang Dahua Vision Technology Co., Ltd. has RMB 623,227,941.27 of undue notes receivable (includingRMB 100,000,000.00 of related party bills receivable within the consolidated scope), and its subsidiary Zhejiang DahuaSystem Engineering Co., Ltd. has RMB 6,641,384.68 of undue notes receivable. Under the pledge, Zhejiang DahuaTechnology Co., Ltd. issued RMB 16,874,532.77 of bank acceptance bills, its subsidiary Zhejiang Dahua VisionTechnology Co., Ltd. issued RMB 1,148,501,714.35 of bank acceptance bills, and its subsidiary Zhejiang Dahua SystemEngineering Co., Ltd. issued RMB 811,669.15 of bank acceptance bills.
(3) On November 23, 2020, Zhejiang Dahua Zhilian Co., Ltd. and Hangzhou Branch of Zheshang Bank Co., Ltd. enteredinto the (33100000) ZSZCCZ (2020) No. 28875 Asset Pool Pledge Guarantee Contract (Contract Term: November 23,2020 to June 28, 2021). On June 29, 2021, Zhejiang Dahua Zhilian Co., Ltd. and Hangzhou Branch of Zheshang BankCo., Ltd. renewed the (33100000) ZSZCCZ (2021) No. 14619 Asset Pool Pledge and Guarantee Contract (Contract Term:
from June 29, 2021 to June 29, 2022), to provide a guarantee for the Notes Pool Business Cooperation Agreement signedby Zhejiang Dahua Zhilian Co., Ltd. and Zheshang Bank Co., Ltd. The financing amount for the fund pledge pool shall not
exceed RMB 0.5 billion.Under this note pool business, as of June 30, 2021, Zhejiang Dahua Zhilian Co., Ltd. has RMB 23,719,523.56 of unduenotes receivable for issuing acceptance bills. Under the pledge, Zhejiang Dahua Zhilian Co., Ltd. issued RMB20,124,055.34 of bank acceptance bills.
（3）Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of China Merchants Bank Co., Ltd. entered into theSpecial Credit Agreement for Notes Pool Business, which promised a special credit line of RMB 2 billion for the notes poolto be allocated to its subsidiaries: Zhejiang Dahua Vision Technology Co., Ltd., Zhejiang Dahua System Engineering Co.,Ltd., Hangzhou Huacheng Network Technology Co., Ltd., Zhejiang Fengshi Technology Co., Ltd., Zhejiang HuaRayTechnology Co., Ltd., and Zhejiang Dahua Zhilian Co., Ltd. As of June 30, 2021, Zhejiang Dahua Technology Co., Ltd. hasRMB 2,702,695.15 of undue notes receivable, its subsidiary Zhejiang Dahua Vision Technology Co., Ltd. has RMB137,255,796.12 of undue notes receivable (including RMB 10,000,000.00 of related party bills receivable within theconsolidated scope), its subsidiary Hangzhou Huacheng Network Technology Co., Ltd. has RMB 553,230.00 of unduenotes receivable, and its subsidiary Zhejiang Fengshi Technology Co., Ltd. has RMB 2,530,000.00 of undue notesreceivable pledged for issuing bank acceptance bills. Under the pledge, its subsidiary Zhejiang Dahua Vision TechnologyCo., Ltd. issued RMB 2,143,046.99 of bank acceptance bills, its subsidiary Hangzhou Huacheng Network Technology Co.,Ltd. issued RMB 89,824,929.61 of bank acceptance bills, and its subsidiary Zhejiang Fengshi Technology Co., Ltd. issuedRMB 42,626,897.54 of bank acceptance bills.
2. Contingencies
(1) Important contingent matters on the balance sheet day
No important contingent matters on the balance sheet date
(2) Even if the company has no important contingencies to disclose, it shall give explanationNo important contingent matter needs to be disclosed by the Company.XV. Events after the Balance Sheet DateEvents after the balance sheet date that do not need to be disclosed in the current period
XVI. Other Significant Events
1. Subsection information
(1) Basis for determining the reporting subsection and the accounting policyThe company determines its operating divisions based on the internal organizational structure, managementrequirements and internal reporting system, etc. The company has only one operating division, namely the R & D,production and sales of video IOT products. The accounting policy of the reporting subsection is consistent with that of theCompany.
(2) Financial information of the reporting subsection
Regional subsection
Unit: RMB
| Item | Operating income | Operating Cost |
| Domestic | 7,777,087,103.47 | 4,685,553,053.26 |
| Overseas | 5,727,918,630.42 | 3,225,161,875.71 |
| Total | 13,505,005,733.89 | 7,910,714,928.97 |
Product subsection
Unit: RMB
| Item | Operating income | Operating Cost |
| Smart IoT products and solutions | 11,574,586,946.32 | 6,477,078,712.53 |
| Of which: software business | 551,302,402.99 | 163,767,869.40 |
| Innovative business | 1,197,068,199.15 | 805,660,868.12 |
| Others | 733,350,588.42 | 627,975,348.32 |
| Total | 13,505,005,733.89 | 7,910,714,928.97 |
XVII. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Categorical disclosure of accounts receivable
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Including: | ||||||||||
| Accounts receivables with the bad debt provision accrued based on combinations | 4,989,564,802.09 | 100.00% | 92,878,920.23 | 1.86% | 4,896,685,881.86 | 2,826,617,475.98 | 100.00% | 86,465,236.63 | 3.06% | 2,740,152,239.35 |
| Including: | ||||||||||
| Portfolio 1: Related Parties Portfolio | 4,019,543,525.13 | 80.56% | 4,019,543,525.13 | 1,932,175,484.83 | 68.36% | 1,932,175,484.83 | ||||
| Portfolio 2: Aging Analysis Portfolio | 970,021,276.96 | 19.44% | 92,878,920.23 | 9.57% | 877,142,356.73 | 894,441,991.15 | 31.64% | 86,465,236.63 | 9.67% | 807,976,754.52 |
| Total | 4,989,564,802.09 | 100.00% | 92,878,920.23 | 4,896,685,881.86 | 2,826,617,475.98 | 100.00% | 86,465,236.63 | 2,740,152,239.35 |
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year | 734,787,592.39 | 36,739,379.62 | 5.00% |
| 1 to 2 years | 166,749,028.78 | 16,674,902.88 | 10.00% |
| 2 to 3 years | 31,739,273.19 | 9,521,781.96 | 30.00% |
| 3 to 4 years | 11,810,976.15 | 5,905,488.08 | 50.00% |
| 4 to 5 years | 4,485,193.79 | 3,588,155.03 | 80.00% |
| 5 years or above | 20,449,212.66 | 20,449,212.66 | 100.00% |
| Total | 970,021,276.96 | 92,878,920.23 | -- |
Please refer to the disclosing methods of other receivables for the information disclosure of bad debts provisions, if thebad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 4,686,674,470.49 |
| 1 to 2 years | 201,288,024.00 |
| 2 to 3 years | 40,762,688.26 |
| 3 years or above | 60,839,619.34 |
| 3 to 4 years | 23,643,456.86 |
| 4 to 5 years | 5,284,603.14 |
| 5 years or above | 31,911,559.34 |
| Total | 4,989,564,802.09 |
(2) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Accrued by aging analysis | 86,465,236.63 | 6,389,796.36 | 23,887.24 | 92,878,920.23 | ||
| Total | 86,465,236.63 | 6,389,796.36 | 23,887.24 | 92,878,920.23 |
(3) Accounts receivable actually written off in this period
No accounts receivable actually written off in this period
(4) Accounts receivable of the top five closing balances collected by debtorsThe accounts receivables of the top five closing balance collected by the arrears are summed up to4,130,531,853.22-yuan, accounting for 82.78% of the total closing balance of the accounts receivables, the closingbalance of bad debt provisions accrued is summed up to 8,870,616.09 yuan.
(5) Accounts receivable derecognized due to the transfer of financial assetsThere are no accounts receivable derecognized due to the transfer of financial assets in this period.
(6) Amount of assets and liabilities formed by transfer of accounts receivable and continuinginvolvementAmount of assets and liabilities formed by transfer of accounts receivable and continuing involvement in the current period
2. Other receivables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Other Receivables | 12,569,808,120.45 | 13,796,461,689.02 |
| Total | 12,569,808,120.45 | 13,796,461,689.02 |
(1) Other accounts receivable
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening book balance |
| Deposits | 41,419,009.16 | 30,677,198.60 |
| Prepaid or advance expense | 45,589,302.55 | 39,286,222.84 |
| Equity Transfer Fund | 588,000,000.00 | 588,000,000.00 |
| Employee home loan | 77,390,223.99 | 86,870,816.57 |
| Incomings and outgoings | 11,869,943,982.59 | 13,102,867,304.50 |
| Others | 3,868,628.42 | 5,061,884.88 |
| Total | 12,626,211,146.71 | 13,852,763,427.39 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, 2021 | 52,038,067.76 | 3,625,283.30 | 638,387.31 | 56,301,738.37 |
| Balance in the Current Period on January 1, 2021 | —— | —— | —— | —— |
| --Transfer to phase two | -859,905.17 | 859,905.17 | ||
| --Transfer to phase three | -7,280.00 | -51,530.00 | 58,810.00 | |
| Provisions of this period | 129,313.02 | 49,451.51 | 178,764.53 | |
| Reversal of the current period | 77,476.64 | 77,476.64 | ||
| Balance on June 30, 2021 | 51,300,195.61 | 4,356,181.83 | 746,648.82 | 56,403,026.26 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 11,739,098,893.95 |
| 1 to 2 years | 240,396,769.21 |
| 2 to 3 years | 622,803,652.18 |
| 3 years or above | 23,911,831.37 |
| 3 to 4 years | 17,175,201.68 |
| 4 to 5 years | 5,388,147.34 |
| 5 years or above | 1,348,482.35 |
| Total | 12,626,211,146.71 |
3) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Portfolio 2: Aging Analysis Portfolio | 56,301,738.37 | 178,764.53 | 77,476.64 | 56,403,026.26 | ||
| Total | 56,301,738.37 | 178,764.53 | 77,476.64 | 56,403,026.26 | ||
4）Accounts receivable actually written off in this periodThere's no actual written-off accounts receivable in this period.
5) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Incomings and outgoings | 8,138,628,511.25 | RMB 8,137,680,605.42 within 1 year, RMB 947,894.82 for 1-2 years and RMB 11.01 for 2-3 years | 64.46% | |
| Company 2 | Incomings and outgoings | 1,609,097,559.05 | Within 1 year | 12.74% | |
| Company 3 | Incomings and outgoings | 818,285,111.83 | RMB 761,614,290.09 within 1 year, 56,670,821.74 for 1-2 years | 6.48% | |
| Company 4 | Incomings and outgoings | 438,458,642.74 | RMB 25,596,991.82 within 1 year, RMB 30,056,859.69 for 1-2 years, RMB 382,804,791.23 for 2-3 years | 3.47% | |
| Company 5 | Incomings and outgoings | 320,846,120.30 | RMB 271,685,329.76 within 1 year, RMB 49,160,790.54 for 1-2 years | 2.54% | |
| Total | -- | 11,325,315,945.17 | -- | 89.69% |
3. Long-term equity investment
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Investment in subsidiaries | 3,659,666,877.16 | 3,659,666,877.16 | 3,598,917,483.61 | 3,598,917,483.61 | ||
| Investment in affiliates and joint ventures | 420,832,878.31 | 420,832,878.31 | 61,493,073.68 | 61,493,073.68 | ||
| Total | 4,080,499,755.47 | 4,080,499,755.47 | 3,660,410,557.29 | 3,660,410,557.29 |
(1) Investment in Subsidiaries
Unit: RMB
| The invested entity | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (Book value) | Closing balance of provision for decline in value | |||
| Investments increased | Investment decreased | Provision for impairment accrued | Others | ||||
| Zhejiang Dahua System Engineering Co., Ltd. | 533,280,154.61 | 5,588,203.39 | 538,868,358.00 | ||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 27,240,264.48 | -12,754.64 | 27,227,509.84 | ||||
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||||
| Guangxi Dahua Information Technology Co., Ltd. | 6,289,815.02 | 67,635.35 | 6,357,450.37 | ||||
| Dahua Technology (HK) Limited | 608,628,700.00 | 608,628,700.00 | |||||
| Zhejiang Dahua Security Service Co., Ltd. | 180,383.54 | -32,541.88 | 147,841.66 | ||||
| Zhejiang Dahua Vision Technology Co., Ltd. | 669,609,997.31 | 5,058,770.44 | 674,668,767.75 | ||||
| Guangxi Dahua Security Service Co., Ltd. | 20,002,580.76 | 20,002,580.76 | |||||
| Hangzhou Xiaohua Technology CO., LTD. | 5,813,279.51 | 84,353.48 | 5,897,632.99 | ||||
| Zhejiang Dahua Zhilian Co., Ltd. | 1,001,165,918.91 | 292,730.38 | 1,001,458,649.29 | ||||
| Zhejiang Dahua Investment Management Co., Ltd. | 62,175,000.00 | 62,175,000.00 | |||||
| Guangxi Dahua Zhicheng Co., Ltd. | 71,226,231.21 | -4,116.36 | 71,222,114.85 | ||||
| Hangzhou Huacheng Network Technology Co., Ltd. | 29,566,484.68 | 476,899.83 | 30,043,384.51 | ||||
| Zhejiang HuaRay Technology Co., Ltd. | 32,352,342.50 | 1,085,920.86 | 33,438,263.36 | ||||
| Hangzhou Fuyang Hua'ao | 5,100,000.00 | 5,100,000.00 |
| Technology Co., Ltd. | |||||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | 25,616,346.82 | 254,145.78 | 25,870,492.60 | ||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | 30,091,777.77 | 527,689.48 | 30,619,467.25 | ||||
| Zhejiang Fengshi Technology Co., Ltd. | 9,006,836.94 | 5,839.38 | 9,012,676.32 | ||||
| Dahua Technology Holdings Limited | 8,102,000.00 | 8,102,000.00 | |||||
| Zhejiang Huaxiao Technology Co., Ltd. | 28,023,346.51 | 10,341,818.49 | 38,365,165.00 | ||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | 56,197,022.50 | 36,226.90 | 56,233,249.40 | ||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | 12,875,213.66 | 5,122,001.12 | 17,997,214.78 | ||||
| Zhejiang Huaxuan Technology Co., Ltd. | 55,525,681.73 | -14,570.04 | 55,511,111.69 | ||||
| Beijing Huayue Shangcheng Information Technology Service Co., | 10,583,863.46 | 200,854.05 | 10,784,717.51 |
| Ltd. | |||||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | 60,000,000.00 | 60,000,000.00 | |||||
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 1,673,832.92 | 107,966.48 | 1,781,799.40 | ||||
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 5,530,000.00 | 5,530,000.00 | |||||
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | 17,640,000.00 | 17,640,000.00 | |||||
| Guangxi Dahua Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Yunnan Zhili Technology Co., Ltd | 4,500,000.00 | 4,500,000.00 | |||||
| Zhejiang Dahua Storage Technology Co., Ltd. | 8,295,404.08 | 17,395,619.87 | 25,691,023.95 | ||||
| Zhejiang Huaruijie Technology Co., Ltd. | 51,267,388.28 | 103,118.00 | 51,370,506.28 | ||||
| Chengdu Dahua Zhilian Information | 45,851.60 | 20,311.42 | 66,163.02 |
| Technology Co., Ltd. | |||||||
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | 100,000,000.00 | 100,000,000.00 | |||||
| Chengdu Huishan Smart Network Technology Co., Ltd. | 5,500,000.00 | 5,500,000.00 | |||||
| Zhejiang Dahua Security Inspection Technology Co., Ltd. | 13,677,159.92 | 13,677,159.92 | |||||
| Dahua Technology USA Inc. | 2,395.40 | 2,395.40 | |||||
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 2,055.08 | 2,055.08 | |||||
| Guangxi Huacheng Technology Co., Ltd. | 135,146.72 | 29,563.34 | 164,710.06 | ||||
| Hangzhou Huacheng Software Technology Co., Ltd. | 478,183.81 | 313,618.71 | 791,802.52 | ||||
| Dahua Technology Canada Inc. | 96,379.20 | 20,534.40 | 116,913.60 | ||||
| Total | 3,598,917,483.61 | 60,749,393.55 | 3,659,666,877.16 |
(2) Investment in affiliates and joint ventures
Unit: RMB
| Name of Investees | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (book value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | ||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Ruicity Digital Technology Co., Ltd. | 57,944,111.48 | -3,588,203.81 | 54,355,907.67 | ||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | -164,798,905.92 | 518,754,247.99 | 353,955,342.07 | ||||||||
| Digital Dongyang Technology Operation Co., Ltd. | 2,400,000.00 | -134,417.30 | 2,265,582.70 | ||||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,148,962.20 | -425,465.81 | 723,496.39 | ||||||||
| Guangdong Dahua Zhishi Technology Co., Ltd. | 142,478.81 | -142,478.81 | |||||||||
| Zhejiang Huanuokang Technology Co., Ltd. | 12,000,000.00 | -2,467,450.52 | 9,532,549.48 | ||||||||
| Subtotal | 61,493,073.68 | 12,000,000.00 | -171,271,964.55 | 518,754,247.99 | -142,478.81 | 420,832,878.31 | |||||
| Total | 61,493,073.68 | 12,000,000.00 | -171,271,964.55 | 518,754,247.99 | -142,478.81 | 420,832,878.31 | |||||
4. Operating income and operating costs
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | ||
| Income | Cost | Income | Cost | |
| Main Business | 4,149,060,053.90 | 513,023,110.70 | 3,604,445,938.19 | 448,774,239.46 |
| Other businesses | 18,099,876.19 | 13,149,498.58 | 20,539,391.76 | 15,525,330.75 |
| Total | 4,167,159,930.09 | 526,172,609.28 | 3,624,985,329.95 | 464,299,570.21 |
5. Investment income
Unit: RMB
| Item | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-term equity investment income measured by equity method | -171,271,964.55 | -45,152,368.00 |
| Investment income from disposal of long-term equity investment | 281,454.95 | |
| Investment Income from Disposal Trading Financial Assets | 8,493,150.68 | |
| Investment income from possession of other non-current financial assets | 5,364,955.30 | 7,307,215.11 |
| Investment income from treasury bond reverse repurchase | 169,645.79 | 210,491.25 |
| Total | -156,962,757.83 | -37,634,661.64 |
XVIII. Supplementary Information
1. Breakdown of non-recurring gains and losses for this period
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gains and losses from disposal of non-current assets | 32,626,494.62 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards) | 71,089,591.16 | |
| Gains or losses from investment or asset management entrusted to | 72,949,692.60 |
| others | ||
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets and trading financial liabilities, derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and other obligatory right investment, excluding the effective hedging businesses related to the regular business operation of the Company | 78,425,697.53 | |
| Non-Operating Revenue and expenses other than the above | 2,069,343.56 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | 169,645.79 | |
| Less: Impact of income tax | 42,970,480.79 | |
| Impact of minority equity | 10,776,144.14 | |
| Total | 203,583,840.33 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gainsand losses items listed in the said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Profit for the reporting period | Weighted Average ROE | Earnings per share | |
| Basic Earnings per Share (RMB/Share) | Diluted Earnings per Share (RMB/Share) | ||
| Net profit attributable to common shareholders of the Company | 7.92% | 0.56 | 0.56 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses | 6.94% | 0.49 | 0.49 |
3. Differences in accounting data between domestic and overseas accounting standards
(1) Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(2) Differences of net profits and net assets in the financial reports disclosed according to theoverseas accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(3) Reasons for accounting data differences under domestic and overseas accounting standards.For difference adjustment on the data already audited by an overseas audit institution, name ofthe audit institution should be noted.
□ Applicable √ Not applicable
Zhejiang Dahua Technology Co., Ltd.
Chairman: Fu LiquanAugust 28, 2021