Shenzhen Textile (Holdings) Co., Ltd.
2018 Annual Report
April 2019
I. Important Notice, Table of Contents and DefinitionsThe Board of Directors , Supervisory Committee, All Directors, Supervisors and Senior executives of theCompany hereby guarantees that there are no misstatement, misleading representation or important omissions inthis report and shall assume joint and several liability for the authenticity, accuracy and completeness of thecontents hereof.
Mr.Zhu Jun, The Company leader, Mr. Zhu Meizhu, Person in charge of accounting works, and Ms.MuLinying, the person in charge of the accounting department (the person in charge of the accounting )herebyconfirm the authenticity and completeness of the financial report enclosed in this annual report.
Other directors attending the Meeting for annual report deliberation except for the followed:
| Name of director absent | Title for absent director | Reasons for absent | Attorney |
| Zhu Jun | Chairman | Working reason | Zhu Meizhu |
Table of Contents
I.Important Notice, Table of contents and DefinitionsII. Basic Information of the Company and Financial indexIII. Outline of Company BusinessIV. Management’s Discussion and AnalysisV. Important EventsVI. Change of share capital and shareholding of Principal ShareholdersVII. Situation of the Preferred SharesVIII. Information about Directors, Supervisors and Senior ExecutivesIX. Administrative structureX. Corporate BondXI. Financial ReportXII. Documents available for inspection
Definition
| Terms to be defined | Refers to | Definition |
| Company/The Company/ Shen Textile | Refers to | Shenzhen Textile (Holdings) Co., Ltd |
| Articles of Association | Refers to | Articles of Association of Shenzhen Textile (Holdings) Co., Ltd |
| Actual controller / National Assets Regulatory Commission of Shenzhen Municipal People's Government | Refers to | National Assets Regulatory Commission of Shenzhen Municipal People's Government |
| The Controlling shareholder/ Shenzhen Investment Holding Co., Ltd. | Refers to | Shenzhen Investment Holding Co., Ltd. |
| Shenchao Technology | Refers to | Shenzhen Shenchao Technology Investment Co., Ltd. |
| SAPO Photoelectric | Refers to | Shenzhen SAPO Photoelectric Co., Ltd. |
| Jinjiang Group | Refers to | Hangzhou Jinjiang Group Co., Ltd. |
| Nitto Denko | Refers to | Nitto Denko Corporation |
| Kunshan Zhiqimei | Refers to | Kunshan Zhiqimei Material Technology Co., Ltd. |
| Line 6 | Refers to | TFT-LCD polarizer II phase Line 6 project |
| Line 7 | Refers to | Industrialization project of polaroid for super large size TV |
| “CSRC” | Refers to | China Securities Regulatory Commission |
| Company Law | Refers to | Company Law of the People’s Republic of China |
| Securities Law | Refers to | Securities Law of the People’s Republic of China |
| The Report | Refers to | 2018 Annual Report |
II. Basic Information of the Company and Financial index
Ⅰ.Company Information
| Stock abbreviation | Shen Textile A ,Shen Textile B | Stock code： | 000045、200045 |
| Stock exchange for listing | Shenzhen Stock Exchange | ||
| Name in Chinese | 深圳市纺织(集团)股份有限公司 | ||
| Chinese abbreviation (If any) | 深纺织 | ||
| English name (If any) | SHENZHEN TEXTILE （HOLDINGS） CO.,LTD | ||
| English abbreviation (If any) | STHC | ||
| Legal Representative | Zhu Jun | ||
| Registered address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | ||
| Postal code of the Registered Address | 518031 | ||
| Office Address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | ||
| Postal code of the office address | 518031 | ||
| Internet Web Site | http://www.chinasthc.com | ||
| szfzjt@chinasthc.com | |||
| Board secretary | Securities affairs Representative | |
| Name | Jiang Peng | Li Zhenyu |
| Contact address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen |
| Tel | 0755-83776043 | 0755-83776043 |
| Fax | 0755-83776139 | 0755-83776139 |
| jiangp@chinasthc.com | lizy@chinasthc.com |
| Newspapers selected by the Company for information disclosure | Securities Times, China Securities, Shanghai Securities Daily ,Securities Daily and Hongkong Commercial Daily. |
| Internet website designated by CSRC for publishing the Annual report of the Company | http://www.cninfo.com.cn |
| The place where the Annual report is prepared and placed | Secretarial office of the Board |
| Organization Code | 19217374-9 |
| Changes in principal business activities since listing (if any) | In July 2012, The business scope of the company is changed to "production, textiles processing, knitwear, clothing, upholstery fabrics, belts, trademark bands, handicrafts (without restrictions); general merchandise, the special equipment of the textile industry, textile equipment and accessories, instruments, standard parts, raw textile materials, dyes, electronic products, chemical products, mechanical and electrical equipment, light industrial products, office supplies and domestic trade (excluding the franchise, the control and the monopoly of goods) ; operation of import and export bus iness." after approval of Shenzhen Market Supervisory Authority . |
| Changes is the controlling shareholder in the past (is any) | In October 2004,In accordance with the Decision on Establishing Shenzhen Investment Holdings Co., Ltd. issued by State-owned Assets Administration Committee of Shenzhen Municipal People's Government (Shen Guo Zi Wei (2004) No. 223 Document), Shenzhen Investment Management Co., Ltd., the controlling shareholder of the Company, and Shenzhen Construction Holding Company and Shenzhen Commerce and Trade Holding Company merged into Shenzhen Investment Holdings Co., Ltd. |
| Name of the CPAs | Peking Certified Public Accountants（Special Geneaal Partnership） |
| Office address： | 11/F, Zhongtang Building , No.110, Xihimen Street , Beijing |
| Names of the Certified Public Accountants as the signatiries | Lan Tao, Liu Ru |
| 2018 | 2017 | Changed over last year | 2016 |
| （％） | ||||
| Operating income（RMB） | 1,272,356,771.34 | 1,475,545,719.72 | -13.77% | 1,198,200,216.42 |
| Net profit attributable to the shareholders of the listed company（RMB） | -22,980,624.93 | 52,776,101.46 | -143.54% | -87,270,604.54 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company（RMB） | -65,404,429.81 | 3,140,446.26 | -2,182.65% | -102,767,648.41 |
| Cash flow generated by business operation, net（RMB） | -460,494,321.15 | -28,518,702.31 | -1,514.71% | -55,264,465.84 |
| Basic earning per share(RMB/Share) | -0.0449 | 0.100 | -144.90% | -0.17 |
| Diluted gains per share(RMB/Share)(RMB/Share) | -0.0449 | 0.100 | -144.90% | -0.17 |
| Weighted average ROE(%) | -0.96% | 2.23% | -3.19% | -4.10% |
| End of 2018 | End of 2017 | Changed over last year（％） | End of 2016 | |
| Gross assets（RMB） | 4,619,203,416.79 | 4,195,746,507.56 | 10.09% | 4,119,586,266.47 |
| Net assets attributable to shareholders of the listed company（RMB） | 2,373,329,991.86 | 2,397,474,603.79 | -1.01% | 2,339,554,176.31 |
| First quarter | Second quarter | Third quarter | Fourth quarter |
| Operating income | 221,307,388.08 | 252,955,020.49 | 433,011,400.70 | 365,082,962.07 |
| Net profit attributable to the shareholders of the listed company | 5,616,717.00 | 4,030,259.15 | 2,621,782.96 | -35,249,384.04 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company | -4,641,384.38 | -6,175,930.54 | -7,620,712.88 | -46,966,402.01 |
| Net Cash flow generated by bus iness operation | -35,263,573.85 | -93,587,315.59 | -269,937,851.60 | -61,705,580.11 |
| Operating income | First quarter | Second quarter | Third quarter | 1-3 quarter in total |
| Disclosure amount | 221,307,388.08 | 316,980,662.53 | 533,270,021.4 | 1,071,558,072.01 |
| Audited Confirmed Amount | 221,307,388.08 | 252,955,020.49 | 433,011,400.7 | 907,273,809.27 |
| discrepancy | 0 | -64,025,642.04 | -100,258,620.70 | -164,284,262.74 |
| Items | Amount (2018) | Amount (2017) | Amount (2016) | Notes |
| Non-current asset disposal gain/loss(including the write-off part for which assets impairment provision is made) | -97,477.14 | -52,131.44 | -138,610.37 | |
| Govemment subsidy recognized in current gain and loss(excluding those closely related to the Company’s business and granted under the state’s policies) | 17,228,202.21 | 12,567,426.98 | 9,578,484.46 | |
| Gain/loss on entrusting others with investment or asset management | 52,271,862.25 | 49,885,730.58 | ||
| Switch back of provision for depreciation of account receivable which was singly taken depreciation test. | 332,073.93 | 634,628.72 | ||
| Net amount of non-operating income and expense except the aforesaid items | 1,143,552.02 | -1,175,757.59 | 5,493,881.12 |
| Other non-recurring Gains/loss items | 23,068,858.53 | |||
| Less :Influenced amount of income tax | 48,007.18 | 1,828,395.90 | 71,340.06 | |
| Influenced amount of minor shareholders’ equity (after tax) | 28,074,327.28 | 33,162,149.89 | ||
| Total | 42,423,804.88 | 49,635,655.20 | 15,497,043.87 | -- |
III. Business Profile
Ⅰ.Main Business the Company is Engaged in During the Report PeriodWhether the company needs to comply with the disclosure requirements of the particular industryNo
1. Main Business the CompanyThe company's main business covered such the high and new technology industry as represented by LCDpolarizer, its own property management business and the retained business of high-end textile and garmentIn the report period, no significant change happened to the main business of the Company. On one hand, theCompany focused on promotion of the polarizer operation capacity, wherein it took measures of optimizingproduction process and product structure, tightening quality control and highlighting technology research &development among others, and shifted its priority from sales to selling profits in a strategically market-orientedway; on the other hand, it completed the construction and optimization of the Line 6 Project as planned, to bespecific, in June 2018, it completed the technical transformation and test run of TFT-LCD and OLED polarizerLine 6 Project that was transferred to fixed assets and embarked on a mass production stage. With regard tooptimization and promotion of the Line 6 Project, the Company completed the comprehensive acceleration of thefirst three processes--pre-processing, extension and coating, introduced shape grinding machines in the rearsection of the production line in the first half of year and realized regular mass production in the third quarter,filling the Company's gap in the shape polarizer processing; thirdly, the Company took the initiative to boostconstruction of the jumbo TV polarizer industrialization project (Line 7) and completed the project approval,feasibility study and examination and approval work. Adopted at the General Meeting of Shareholders in August2018 through deliberation, the Line 7 Project duly embarked on its construction in September 2018 and passed theEIA in December 2018. The plant and equipment design was optimized in the Line 7 Project on the ground of asignificant technical support given by Nitto Denko in terms of production technology, plant design, and AGV pathoptimization among others; fourthly, to enhance management service and increase benefit of propertymanagement enterprises, the Company further intensified all the management service ideas of propertymanagement enterprises, took the initiative to cope with all the adverse effects of such factors as economicdownturn and market depression on property leasing and management and increased the rental income with effort;fifthly, confronted with the sluggish traditional textile industry, the Company took the initiative to overcome suchunfavorable effects as a rise in the cost of raw materials and labor and gave priority to order production throughoptimization of customer and product structure to bring the money-losing textile business into the black; sixthly,the Company tightened safety and environmental protection work, safeguarded enterprise harmony and stability,and kept giving a priority to safe and environment-friendly production to take the initiative to discharge its socialresponsibility while pursuing a green, health and sustainable development.
As a type of upstream raw materials of LCD panels and one of essential and fundamental materials in thepanel display industry, polarizers are widespread used in a variety of areas, LCD panels and OLED panels forsmart phones, tablet PCs and TV sets, instruments, apparatuses, sunglasses, and light filters of camera equipment,to name a few. At the moment, the Company has 6 mass polarizer production lines for making products that coversuch areas as TN, STN, TFT, OLED, 3D, dye films, and optical films for touch screens and are primarily used inTV, NB, navigators, Monitor, vehicle-mounted, industrial control, instruments, apparatuses, smart phones,
wearable equipment, 3D glasses, sunglasses and other products, based on which, the Company has become aqualified supplier to China Star Optoelectronics Technology (CSOT), BOE, Infovision Optoelectronics (IVO),Shenchao Optoelectronic, LGD, Tianma and other major panel enterprises through constant extension of itsmarketing channels and building of its own brand.
The Company's main products made in each polarizer production line and their application are as follows:
| Line | Place | Product breadth | Planned capacity | Main products |
| Line 1 | Pingshan | 500mm | 600,000 m2 | TN/STN/ dye film |
| Line 2 | Longhua | 500mm | 1.2 million m2 | TN/STN/CSTN |
| Line 3 | Longhua | 650mm | 1 million m2 | TN/STN/CSTN/TFT |
| Line 4 | Pingshan | 1490mm | 6 million m2 | TN/STN/CSTN/TFT |
| Line 5 | Pingshan | 650mm | 2 million m2 | TFT |
| Line 6 | Pingshan | 1490mm | 10 million m2 | TFT/OLED |
| Line 7 (Under construction) | Pingshan | 2500mm | 32 million m2 | TFT/OLED |
| Main assets | Major changes |
| Equity assets | No major changes |
| Fixed assets | Fixed assets at the end of the reporting period increased by RMB331.7430 million compared to the beginning of the period, an increase of 50.56%, mainly due to the carry-over of fixed assets in the current phase II of the TFT-LCD polarizer. Line 6. |
| Intangible assets | No major changes |
| Construction in process | Construction in process at the end of the reporting period decreased by RMB306.9489 million compared to the beginning of the period, a decrease of 95.165%, mainly due to the carry-over of fixed assets in the current phase II of the TFT-LCD polarizer. Line 6. |
| Notes receivable & Account receivable | Notes receivable & Account receivable at the end of the reporting period increased by RMB292.6303 million compared to the beginning of the period, an increase of 123.62%, Mainly due to the increase in trade volume this year. |
| Prepayment | Prepayment at the end of the reporting period increased by RMB215.2736 million compared to the beginning of the period, an increase of 1565.04%,Mainly due to the increase in prepayments for the current period. |
| Other account receivable | Other account receivable at the end of the reporting period decreased by RMB13.8079 million compared to the beginning of the period, a decrease of 48.19%，Mainly due to the decrease in interest receivable. |
| Inventories | Inventories at the end of the reporting period increased by RMB164.1375 million compared to the beginning of the period, an increase of 59.55%，Mainly due to the increase in the production of semi-finished products after the coordinated production of No. 4 and No. 6 production lines, and the increase in raw materials purchased. |
industrialization of the core production technology of LCD polarizer, the developing and industrialization of thenew products of OLED polarizer and the “domestication” research on the production materials of polarizer.Through the introduction of various types of sophisticated testing equipments to perfect the test means ofsmall-scale test and medium-scale test, further by improving the incentive system of research and developmentand building the collaborative innovation platform of “Industry-Study-Research-Utilization” and so forth means,the company comprehensively enhanced the level of research and development.
（2）Talents advantages.
The company has the management team and the senior technical team with strong technical ability, enduringcooperative spirit, rich experience and international vision on the polarizer. The company had engaged overseastechnical personnel who have great experiences on advanced polarizer production and established the technologymanagement team with its own technical team and complemented by engaging foreign technical personnel, Sincethe end of 2017,The Company has with the world-class polaroid manufacturers nitto electrical co., LTDestablished technical cooperation relations, through technical cooperation, learning advanced polaroid productionmanagement idea, through independent innovation technology experience, at the same time to improve their corecompetitiveness, gradually accumulate their own brands, the advantages of the technology, operation management,and through the distribution of perfecting examination system, and the salaries and incentives focus is shifted tocore employees such as management and research and development, giving full play to the subjective initiative ofthe talents.
（3）Market advantages.
The company has good customer groups not only in domestic market but in foreign market, compared withforeign advanced counterparts, the biggest advantage lies in the localization for supporting, close to the panelmarket, as well as the strong support of the national policy. In terms of market demand, with the mass productionof the 10.5/11-generation TFT-LCD panel production lines under construction and planned for the next few years,the production capacity of high-generation TFT-LCD panels in mainland China will increase significantly in thenext few years, the corresponding domestic polaroid film market demand has also increased, and the domesticmarket is the most important market for polaroid manufacturers, especially in the large-size polarizer market.Mainland polarizer manufacturers will usher in important industry opportunities; in terms of market development,the company takes production material control as the core, technology services as the guide, customer needs as thefocus, organically combines production and sales, establishes a rapid response mechanism, fully exploitslocalization advantages, and uses its own accumulated technology and talents, does a good job of peer-to-peerprofessional services, forms a stable supply chain and increases market share.
(4) Quality advantages.
The company always adhered to the quality policy of "Satisfying customer demands and pursuing excellentquality" and focused on product quality control. The company strictly controls product performance indicators,standardizes inspection standards for incoming materials, starts with quality improvement and consumptionreduction, and achieves simultaneous increase in output and quality; through the introduction of a modern qualitymanagement system, the products have passed ISO9001 Quality Management System and ISO14001Environmental Management System, OHSAS18000 Occupational Health and Safety Management System,QCO80000 System Certification; the product is tested by SGS and meets the environmental protection ,Thecompany had increased the automatic detecting and marking equipments in the beginning section and the endingsection, strictly controlled the product quality and improved the product utilization rate and product managementefficiency.
（5）Management advantages.
SAPO Photoelectric has accumulated rich management experiences in more than 20 years in themanufacturing of polarizer, possessing the home most advanced control technology of the production managementprocess of the polarizer and quality management technology and the stable raw material procurement channel soforth management systems. The company had carried out comprehensive benchmarking work, organized themanagement personnel to learn advanced experiences from customers and peers to force the elevation ofmanagement ability, and drew on the foreign company’s management experiences of polarizer, optimized thecompany's organizational structure, reduced the managerial hierarchy and further enhanced the company'smanagement efficiency. After the introduction of the strategic investor, Through close cooperation with JinjiangGroup, we complement each other's strengths, absorb the vitality of private enterprises, continue to implementadvanced management systems, reasonable incentive mechanisms, etc., improve the efficiency ofdecision-making, enhance the speed of market response, improve the research and development incentive system,and also realize the deep integration of the value of the company and its employees and stimulates the new vitalityof the business.
（6）Policy advantages.
Polarizer is seen as an essential part of the panel display industry and SAPO Photoelectric in its developmenthas promoted the supply capacity of national polarizers, greatly lowered the dependence of national panelenterprises on imported polarizers, and safeguarded the national panel industry, which serves as a good facilitatorto enhancing the overall competitiveness of China's panel industry chain and coordinated development of thewhole industry chain of the panel display industry cluster in Shenzhen. Recognized as a national high-techenterprise, the Company is entitled to the preferential policy for duty-free import of own productive raw materialsthat cannot be produced at home and frequently gained national, provincial and municipal policy and financialsupport in its polarizer projects. Meanwhile, the Company tightened supplier management, improved its overallpurchasing strategy, and downsized suppliers while introducing a competitive mechanism, wherein focus wasgiven to introduction of new materials at a competitive price, to further lower its production cost and improve itsproduct competitiveness.
IV. Management’s Discussion and Analysis
Ⅰ.General
In 2018, the economic environment change was intensified, and the Company was affected by unfavorablefactors such as Sino-US trade friction, large exchange rate fluctuations, intensified market competition, highproduction unit consumption, poor product structure optimization, and the overall increase in production factorsprices. The business situation of polarizer production and operation was not up to expectations.
In 2018, the Company realized the operating income of RMB 1,272.3568 million, a decrease of 13.77% overthe same period of the previous year; the total profit recorded a loss of RMB 53.4231million, a decrease of 162.89%over the same period of the previous year; the net profit attributable to owners of the parent company recorded a lossof RMB 22.9806 million, a YOY decline of 143.54%. The main reasons for the Company's losses were: first, due tothe adverse impact of the decline in the price of the display terminal during the reporting period, the sales price ofpolarizer for TV products of the Company declined; secondly, the project of Line 6 was still in the climbing stageafter the project was put into production, resulting in a fixed cost of the product unit was relatively high, third, in the
reporting period, due to the decline of the exchange rate of RMB against the Japanese yen, the purchase cost ofimported raw materials increased, and the exchange loss increased; fourth, due to the decline in the selling price ofthe products during the reporting period, the provision for inventory falling price increased.
Facing the increasingly severe overall operation situation of polarizer and the weakening global economicsituation under the trade protectionism, the Company faced up to the difficulties, overcame the difficulties, gavefull play to its internal advantages, deepened and promoted the mixed-ownership reform work, and laid a solidfoundation for further transformation and development of the Company. It optimized the product structure oftraditional textile business to turn loss into profit; strengthened the management services of property-kindenterprises and improved the efficiency.Review of the company's key works carried out in 2018 as follows:
(I) Polarizer's operating capability has been improvedIn 2018, based on market-oriented, the Company optimized the product structure, expanded the panel product tohigh-value-added orders such as large-size and thin-form product, and shifted the emphasis from sales volume tosales profit, sped up the introduction and start-up of new projects. Meanwhile, it had comprehensively carried outhigh-profit machine verification work; second, focusing on technology research and development and the overallstrategic deployment, it increased the research and development efforts in new products, new materials,production processes, etc.; third, optimized the production processes, improved the quality control, and controlledthe inventory quantity by reducing product quality abnormality and improving the inventory turnover; fourth,actively strived for scientific research policy support funds.
Furthermore, the Company increased research & development of independent intellectual property rights.Throughout the year, the Company applied for 10 patents (including 4 invention patents and 6 utility modelpatents) and imported 1 PCT patent (utility model patent) into South Korea and Japan respectively. Till December31, 2018, the Company applied for 91 patents in total (66 licensed), including 23 national invention patents (8licensed), 61 national utility model patents (54 licensed), 1 international invention patent (0 licensed) and 6international utility model patents (4 licensed). The Company studied and formulated 4 national standards and 2industrial standards which have been adopted and put into practice. The Company has two technicalplatforms--"Shenzhen Polarizing Materials and Technology Engineering Lab" and "Municipal Research andDevelopment Center" where focus is given to research & development and industrialization of key LCD polarizerproduction techniques, research & development and industrialization of new OLED polarizer products andresearch on localization of polarizer production materials. The Company raised its research & developmentstandard in all respects by taking measures of introducing all types of precision testing equipment, improvingmethods of preliminary and pilot tests and research & development incentive system and building an"industry-university-research" integrated innovation platform among others.
(II) Enhancement of management services of property management and textile enterprises for the sake ofbenefit increase
In 2018, the Company further reinforced all the management service ideas of property managemententerprises, handled all the adverse effects caused by economic downturn and market depression to propertyleasing and management in a scientific way, faced up to difficulty with courage, made great efforts in leasingoperation to promote services and stabilize customers, carried out standardized management, enhanced correctionof potential safety threats, elaborated management process, lowered disbursement and enhanced efficiency toincrease the rental income.
Confronted the depression in the traditional textile industry, the Company took the initiative to overcomeeffects of such unfavorable factors as a rise in the cost of raw materials and labor and gave priority to orderproduction through optimization of customer and product structure to bring the money-losing textile business into
the black.
（III) Completion of construction and optimization of Line 6 Project as scheduledIn view of a certain decline in the price of 32-inch products at the polarizer market at the end of 2017, theCompany optimized and promoted the main equipment in the Line 6 at the end of 2017, wherein the fullacceleration of the first three processes stood out, filling the gap of the Company in shape polarizer processing. InJune 2018, the Company completed the optimization, promotion and test run of the Line 6 Project that wastransferred to fixed assets and embarked on a mass production stage in the third quarter.
(IV) Facilitated construction of jumbo TV polarizer industrialization project with effortIn 2018, the Company took the initiative to boost construction of the jumbo TV polarizer industrializationproject (Line 7). In the first place, project approval, feasibility study and examination and approval werecompleted. Adopted at the General Meeting of Shareholders in August 2018 through deliberation, the Line 7Project duly embarked on its construction in September 2018 and passed the EIA in December 2018. Secondly,the plant and equipment design was optimized in the Line 7 Project on the ground of a significant technicalsupport given by Nitto Denko in terms of production technology, plant design, and AGV path optimization amongothers. Thirdly, a business unit was set up for the Line 7 Project where independent accounting and businessmanagement were implemented to push forward project construction with all the efforts.
（V）Tightened safety and environmental protection and safeguarding of enterprise harmony and stabilityIn 2018, the Company kept giving a priority to safe and environment-friendly production by adhering to thephilosophy of safety overriding anything else. As always, the Company highlighted the safety and environmentalprotection work. Throughout the year, the Company invested RMB 18.71 million in adding and maintaining safeand environment-friendly equipment, predominantly completed upgrading and transformation the waste waterprocessing system and updating the RTO waste gas processing equipment in the Line 6 and updating andeliminating high liquor ratio dying equipment for Beauty Century among other work, and fulfilled 100%up-to-standard waste water and gas emission, 0 more-than-average environmental pollution accident and 0environmental protection irregularity to practically perform its social responsibility.
（VI) Constant reinforcement of foundation and strengthening of primary Party building workOn the ground of implementing and putting into practice the spirit of the 19
th
National Congress of theCommunist Party of China, the Company thoroughly carried out the Party's new deployment and demand forseeing Party self-governance exercised fully and with rigor, carefully fulfilled the entity responsibility of the PartyCommittee and supervision responsibility of the Disciplinary Inspection Commission, reinforced the system of"one post taking a dual responsibility", and implemented the Party Building Responsibility Statement to guaranteethat the Party building work was put into practice; it pushed forward Party building system building and raised thestandard of the normalization of the Party building work step by step; it took the initiative to explore and drive theParty building work in enterprises involved in mixed-ownership reform and guided corporate businessdevelopment by Party building work.Ⅱ.Main business analysis1. GeneralRefer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”.
2. Revenue and cost(1)Component of Business Income
In RMB
| 2018 | 2017 | Increase /decrease | |||
| Amount | Proportion | Amount | Proportion | ||
| Total operating revenue | 1,272,356,771.34 | 100% | 1,475,545,719.72 | 100% | -13.77% |
| On Industry | |||||
| Domestic and foreign trade | 288,744,806.35 | 22.69% | 490,391,227.85 | 33.23% | -41.12% |
| Manufacturing | 879,409,830.28 | 69.12% | 869,112,546.94 | 58.90% | 1.18% |
| Lease and Management of Property | 98,327,018.46 | 7.73% | 93,781,583.42 | 6.36% | 4.85% |
| Other | 5,875,116.25 | 0.46% | 22,260,361.51 | 1.51% | -73.61% |
| On Products | |||||
| Lease and Management of Property | 98,327,018.46 | 7.73% | 93,781,583.42 | 6.36% | 4.85% |
| Textile | 47,188,632.17 | 3.71% | 41,273,987.57 | 2.80% | 14.33% |
| Polarizer sheet | 832,221,198.11 | 65.41% | 851,531,250.79 | 57.71% | -2.27% |
| Trade | 288,744,806.35 | 22.69% | 466,698,536.43 | 31.63% | -38.13% |
| Other | 5,875,116.25 | 0.46% | 22,260,361.51 | 1.51% | -73.61% |
| Area | |||||
| Domestic | 944,994,550.59 | 74.27% | 1,103,749,604.72 | 74.80% | -13.69% |
| Overseas | 327,362,220.75 | 25.73% | 371,796,115.00 | 25.20% | -11.95% |
| Turnover | Operation cost | Gross profit rate(%) | Increase/decrease of revenue in the same period of | Increase/decrease of business cost over the same | Increase/decrease of gross profit rate over the same |
| the previous year(%) | period of previous year (%) | period of the previous year (%) | ||||
| On Industry | ||||||
| Domestic and foreign trade | 288,744,806.35 | 271,514,631.70 | 5.97% | -41.12% | -43.59% | 4.12% |
| Manufacturing | 879,409,830.28 | 839,415,041.00 | 4.55% | 1.18% | 6.74% | -4.97% |
| Lease and Management of Property | 98,327,018.46 | 25,838,344.67 | 73.72% | 4.85% | -2.75% | 2.05% |
| On Products | ||||||
| Lease and Management of Property | 98,327,018.46 | 25,838,344.67 | 73.72% | 4.85% | -2.75% | 2.05% |
| Textile | 47,188,632.17 | 41,092,884.63 | 12.92% | 14.33% | 10.23% | 3.24% |
| Polarizer sheet | 832,221,198.11 | 798,322,156.37 | 4.07% | -2.27% | 3.44% | -5.29% |
| Trade | 288,744,806.35 | 271,514,631.70 | 5.97% | -38.13% | -40.80% | 4.25% |
| Area | ||||||
| Domestic | 944,994,550.59 | 824,950,912.58 | 12.70% | -14.38% | -11.99% | -2.37% |
| Overseas | 327,362,220.75 | 317,299,372.09 | 3.07% | -11.95% | -11.11% | -0.92% |
| Classification | Items | Unit | 2018 | 2017 | Changes |
| Polarizer sheet | Sales | (0000’ square meters) | 1,079.2 | 881.73 | 22.40% |
| Production | (0000’ square meters) | 1,110.26 | 853.29 | 30.12% | |
| Stock | (0000’ square meters) | 118.45 | 87.39 | 35.54% | |
| Knitted clothing | Sales | 0000’ pieces | 295 | 249 | 18.47% |
| Production | 0000’ pieces | 296 | 234 | 26.50% | |
| Stock | 0000’ pieces | 49 | 48 | 2.08% |
The production volume of polarizers was increased by 30.12% and the inventory increased by 35.54%, mainly due to the production of the company's polarizer line 6 in 2018, with increased production and sales.
(4)Degree of Performance of the Significant Sales Contract Signed up to this Report Period□ Applicable √Not applicable(5)Component of business costIndustry and product classification
In RMB
| Industry | Items | 2018 | 2017 | Increase/Decrease (%) | ||
| Amount | Proportion in the operating costs (%) | Amount | Proportion in the operating costs (%) | |||
| Domestic and foreign trade | Polarizer sheet, Textile | 271,514,631.70 | 23.77% | 481,342,760.55 | 37.04% | -43.59% |
| Manufacturing | Polarizer sheet, Knitted clothing | 839,415,041.00 | 73.49% | 786,401,813.99 | 60.51% | 7.83% |
| Lease and Management of Property | Rental， Accommodation | 25,838,344.67 | 2.26% | 26,568,634.40 | 2.04% | -2.75% |
| Other | Other | 5,482,267.30 | 0.48% | 5,290,510.43 | 0.41% | 3.62% |
| Classification of products | Items | 2018 | 2017 | Increase/Decrease(%) | ||
| Amount | Proportion in operation costs(%) | Amount | Proportion in operation costs(%) | |||
| Polarizer sheet | Direct materials | 633,828,818.77 | 55.49% | 585,570,976.73 | 45.06% | 9.54% |
| Polarizer sheet | Direct labor | 31,895,556.85 | 2.79% | 34,391,814.72 | 2.65% | -7.26% |
| Polarizer sheet | Power costs | 23,825,672.61 | 2.09% | 28,735,642.71 | 2.21% | -17.09% |
| Polarizer sheet | Manufacturing costs | 108,772,108.14 | 9.52% | 100,422,875.03 | 7.73% | 8.31% |
| Knitted clothing | Direct materials | 21,024,776.26 | 1.84% | 17,539,683.14 | 1.35% | 19.87% |
| Knitted clothing | Direct labor | 9,321,761.79 | 0.82% | 8,028,204.05 | 0.62% | 16.11% |
| Knitted clothing | Power costs | 1,851,454.61 | 0.16% | 1,720,566.62 | 0.13% | 7.61% |
| Knitted clothing | Manufacturing costs | 8,903,943.69 | 0.78% | 9,992,050.99 | 0.77% | -10.89% |
Note
(6)Whether Changes Occurred in Consolidation Scope in the Report Period□Yes √ No(7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in the Company’sReport Period□ Applicable √Not applicable(8)Situation of Main Customers and Main SupplierInformation of Main Customers
| Total sales amount to top 5 customers (RMB) | 789,064,703.69 |
| Proportion of sales to top 5 customers in the annual sales(%) | 62.02% |
| Proportion of the sales volume to the top five customers in the total sales to the related parties in the year | 6.88% |
| No | Name | Amount(RMB) | Proportion(%) |
| 1 | Customer 1 | 378,093,076.16 | 29.72% |
| 2 | Customer 2 | 151,566,770.47 | 11.91% |
| 3 | Customer 3 | 107,607,236.64 | 8.46% |
| 4 | Customer 4 | 87,524,774.55 | 6.88% |
| 5 | Customer 5 | 64,272,845.87 | 5.05% |
| Total | -- | 789,064,703.69 | 62.02% |
| Total purchase of top 5 Suppliers（RMB） | 447,712,128.10 |
| Percentage of total purchase of top 5 suppliers In total annual purchase(%) | 39.20% |
| Proportion of purchase amount from the top 5 suppliers in the total purchase amount from the related parties in the year | 4.27% |
| No | Name | Amount（RMB） | Proportion |
| 1 | Supplier 1 | 166,425,066.85 | 14.57% |
| 2 | Supplier 2 | 105,561,846.29 | 9.24% |
| 3 | Supplier 3 | 72,276,354.70 | 6.33% |
| 4 | Supplier 4 | 54,677,850.65 | 4.79% |
| 5 | Supplier 5 | 48,771,009.61 | 4.27% |
| Total | -- | 447,712,128.10 | 39.20% |
| 2018 | 2017 | Increase/Decrease(%) | Notes | |
| Sale expenses | 9,636,559.05 | 9,940,696.87 | -3.06% | |
| Administration expenses | 88,590,439.30 | 75,320,512.60 | 17.62% | |
| Financial expenses | -971,661.37 | -31,171,160.81 | -96.88% | 1. Exchange loss increases due to changes in the yen's exchange rate; 2.Increase in interest on bank borrowings |
| R & D cost | 41,951,786.15 | 39,036,089.05 | 7.47% |
products, development, performance improvement and research of pressure sensitive adhesive materials,development of raw materials suppliers at multiple levels, etc. In the report period, the Company successfullymade 225 new products in total (by product model), significantly improved its innovation capacity, furtherpromoted its product competitiveness and kept increasing its market share.Situation of Research and Development Input by the Company
| 2018 | 2017 | Increase/Decrease(%) | |
| Number of Research and Development persons (persons) | 107 | 105 | 1.90% |
| Proportion of Research and Development persons | 10.18% | 10.20% | -0.02% |
| Amount of Research and Development Investment (In RMB) | 41,951,786.15 | 39,036,089.05 | 7.47% |
| Proportion of Research and Development Investment of Operation Revenue | 3.30% | 2.65% | 0.65% |
| Amount of Research and Development Investment Capitalization (In RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of Capitalization Research and Development Investment of Research and Development Investment | 0.00% | 0.00% | 0.00% |
| Items | 2018 | 2017 | Increase/Decrease(%) |
| Subtotal of cash inflow received from operation activities | 1,573,802,884.38 | 1,746,560,969.61 | -9.89% |
| Subtotal of cash outflow received from operation activities | 2,034,297,205.53 | 1,775,079,671.92 | 14.60% |
| Net cash flow arising from | -460,494,321.15 | -28,518,702.31 | -1,514.71% |
| operating activities | |||
| Subtotal of cash inflow received from investing activities | 4,176,293,175.68 | 3,571,994,746.81 | 16.92% |
| Subtotal of cash outflow for investment activities | 4,006,115,720.59 | 3,375,984,019.80 | 18.67% |
| Net cash flow arising from investment activities | 170,177,455.09 | 196,010,727.01 | -13.18% |
| Subtotal cash inflow received from financing activities | 630,493,275.82 | 216,890,764.68 | 190.70% |
| Subtotal cash outflow for financing activities | 367,419,548.31 | 151,388,307.46 | 142.70% |
| Net cash flow arising from financing activities | 263,073,727.51 | 65,502,457.22 | 301.62% |
| Net increase in cash and cash equivalents | -27,665,904.11 | 231,125,702.76 | -111.97% |
| Amount | Proportion in total profit | Explanation of cause | Sustainable (yes or no) | |
| Investment income | 51,793,705.47 | -96.95% | Obtained the dividends from the share-participating enterprise, obtained contracting fees, and gains from trust wealth | The dividends from the share-participating enterprise and the contracting fees possess the sustainability, but the proceeds from the trust wealth management does not |
| management | possess the sustainability | |||
| Impairment of assets | 106,348,320.75 | -199.07% | Loss of inventory price falling, loss of bad debts | Have the sustainability |
| Non-operating income | 1,265,178.66 | -2.35% | Mainly due to the insurance claims | Not sustainable. |
| Non-operating expenses | 219,103.78 | -0.41% | Mainly due to the payment of compensation | Not sustainable. |
| Other income | 17,228,202.21 | -32.04% | Mainly government subsidies | Have the sustainability |
| End of 2018 | End of 2017 | Proportion increase/decrease | Notes to the significant change | |||
| Amount | Proportion in the total assets(%) | |||||
| Monetary fund | 1,141,759,374.60 | 24.72% | 1,165,048,108.83 | 27.77% | -3.05% | The increase in total assets in the current period has led to a decline in the proportion of monetary funds. |
| Accounts receivable | 528,454,015.59 | 11.44% | 192,503,077.70 | 4.59% | 6.85% | Mainly due to the increase in trade volume this year |
| Inventories | 439,752,718.77 | 9.52% | 275,615,176.16 | 6.57% | 2.95% | Mainly due to the increase in the production of semi-finished products after the coordinated production of No. 4 and No. 6 production lines, and the increase in raw materials purchased. |
| Investment real estate | 167,997,941.98 | 3.64% | 173,105,806.27 | 4.13% | -0.49% | |
| Long-term equity investment | 32,952,085.66 | 0.71% | 20,380,734.56 | 0.49% | 0.22% | |
| Fixed assets | 987,876,247.55 | 21.39% | 656,133,200.19 | 15.64% | 5.75% | The completion of the second phase of the TFT-LCD polarizer project to fixed assets led to an increase in the proportion of fixed assets. |
| Construction in process | 15,621,286.64 | 0.34% | 322,570,173.73 | 7.69% | -7.35% | The second phase of the polarizer for TFT-LCD was completed and transferred to fixed assets, resulting in |
| a decrease in the proportion of construction in progress. | ||||||
| Short-term loans | 411,522,111.40 | 8.91% | 88,638,181.45 | 2.11% | 6.80% | The increase in raw materials purchased by the exchange of borrowings. |
| Long-term loans | 0.00% | 40,000,000.00 | 0.95% | -0.95% | Return Shenchao technology borrowing. |
| Item | Amount at year beginning | Gain/loss on fair value change in the reporting period | Cumulative fair value change recorded into equity | Impairment provisions in the reporting period | Purchased amount in the reporting period | Sold amount in the reporting period | Amount at year end |
| Financial assets | |||||||
| 3. Available-for-sale financial assets | 7,994,294.63 | -2,874,398.17 | 5,119,896.46 | ||||
| Subtotal of financial assets | 7,994,294.63 | -2,874,398.17 | 5,119,896.46 | ||||
| Total | 7,994,294.63 | -2,874,398.17 | 5,119,896.46 | ||||
| Financial Liability | 0.00 | 0.00 | |||||
2.Condition of Acquiring Significant Share Right Investment during the Report Period□Applicable √Not applicable3.Situation of the Significant Non-equity Investment Undergoing in the Report Period□ Applicable √ Not applicable4.Investment of Financial Asset
（1）Securities investment
□ Applicable √ Not applicable
Nil
（2）Investment in Derivatives□ Applicable √ Not applicable
Nil
5.Application of the raised capital√ Applicable □ Not applicable（1）General application of the raised funds√ Applicable □ Not applicable
In RMB10,000
| Year of Raising | Way of Raising | Total raised capital | Total Amount of the Raised Fund Used at the | Total amount of Raised Funds | Amount of raised capital of which the purpose was changed in the report period | Accumulative amount of raised capital of which the purpose has been changed | Proportion of raised capital of which the purpose has been changed (%) | Total Amount of the Unused Raised Fund at the Current Period | Use and Whereabouts of the Unused Raised Fund | Amount of the Raised Fund with over 2 Years’ Idling |
| 2013 | Non-public issue | 96,175.1 | 26,291.36 | 46,667 | 0 | 30,927.22 | 32.16% | 30,333.61 | All deposited in the special account for the raised |
| funds. | ||||||||||
| Total | -- | 96,175.1 | 26,291.36 | 46,667 | 0 | 30,927.22 | 32.16% | 30,333.61 | -- | 0 |
| Note to use of raised capital | ||||||||||
| During the reporting period, the Company actually used the raised funds of 262.9136 million yuan, and the accumulated use of raised funds was 466.67 million yuan, of which 111.9479 million yuan of raised funds was actually used for the second phase of the line 6 project of TFT-LCD polarizer-and the accumulated use of raised funds for it was 315.7043 million yuan; the actual use of the raised funds for the 7th line project was RMB 150.9657 million, with the accumulated use of raised funds for it was RMB 150.9657 million. | ||||||||||
| Committed investment projects and investment | Project changed(including partial change) | Total raised capital invested as committed | Total investment after adjustment (1) | Amount invested in the reporting period | Accumulated amount invested at the end of the reporting period(2) | Investment progress ended the reporting period(%)(3)=(2)(1) | Date when the project has reached the predicted applicable status | Benefit realized in the reporting period | Has the predicted result be realized | Has any material change taken place in feasibility |
| Committed investment projects | ||||||||||
| Phase-II project of polarizer sheet for TFT-LCD | Yes | 96,175.1 | 70,034 | 11,194.79 | 31,570.43 | 45.08% | June 7,2018 | -2,445.79 | Not applicable | Yes |
| The utilization of the surplus raised funds（Line 7 project） | No | 15,096.57 | 15,096.57 | Not applicable | No | |||||
| Subtotal of committed investment projects | -- | 96,175.1 | 70,034 | 26,291.36 | 46,667 | -- | -- | -2,445.79 | -- | -- |
| Subtotal of committed investment projects | ||||||||||
| No | ||||||||||
| Total | -- | 96,175.1 | 70,034 | 26,291.36 | 46,667 | -- | -- | -2,445.79 | -- | -- |
| Situation about not coming up to schemed progress or expected revenue and the reason ( in specific project) | Not applicable | |||||||||
| Notes to significant | According to the latest situation of the industry development, the original second phase construction | |||||||||
| change in feasibility of the project | scheme of the TFT-LCD polarizer was optimized, and then according to the results concluded by the experts, the company decided to continue to promote the construction of the No.6 line project. At the same time, in the light of there was a large funds gap between the actual raised capital and the planned raised capital for the second phase project, then by comprehensive considerations of the company’s production line scale and the operation pressure, the company decided to terminate the project of No.7 line, and the corresponding amount of funds of RMB309.2722 million(including interests) for No.7 line project shall be changed for permanently supplementing the liquidity. The Proposal on Alteration of the Use of Part of the Raised Capital for the Second Phase Project of TFT-LCD Polarizer was examined and approved in the 2015 annual shareholder meeting on April 21, 2016.. |
| Amount, application and application progress of the unbooked proceeds | Not applicable |
| About the change of the implementation site of the projects invested with the proceeds | Not applicable |
| Adjustment of the implementation way of investment funded by raised capital | Not applicable |
| About the initial investment in the projects planned to be invested with the proceeds and the replacement | Not applicable |
| Using the idle proceeds to supplement the working capital on temporary basis | Not applicable |
| Balance of the proceeds in process of project implementation and the cause | Applicable |
| On August 31, 2018, in the company's second extraordinary shareholders’ meeting of 2018, the “Proposal on the Use of Surplus Raised Funds to Invest in the Large-scale TV Polarizer Industrialization Project (Line 7)” was reviewed and approved, agreeing to continue to deposit RMB 134.7172 million in the original special account of raised funds for the follow-up expenditure of line 6 project and the remaining surplus raised funds shall be used for the investment of line 7 project, with the amount shall be subject to the interest settlement of the bank on the day the funds are transferred out. According to the use arrangement for the surplus raised funds, on November 12, 2018, the Company transferred the surplus raised funds for the No. 6 line project by RMB 405.8311 million to the newly opened special account of raised funds for project of Line 7, which will be used for the ultra-large-size TV polarizer industrialization project (Line 7), and as of November 12, 2018, the balance of the special account for raised funds of line 6 |
| was RMB 80.35 69 million. The reasons for the surplus of the raised funds were as follows: 1. the interest income and the investment income of the bank wealth management products were generated during the deposit of the raised funds; 2.to grasp the opportunity of the rapid development of the domestic polarizer industry and accelerate the construction of the No. 6 line project, the Company had in advance invested some funds in the second phase of the polarizer project of Line 6, and in view of the fact that the funds raised at the time were in place, as there was a large funding gap between the actual raised funds and the planned and the original investment project needed to be re-demonstrated, the Company did not replace the advance investment in time after the raised funds were received; 3. the second phase of the polarizer project was subsidized by the National Development and Reform Commission and the Shenzhen Municipal Government after the project was established ,which had been all put into the project construction according to the requirements, thereby reduced the investment of the raised funds accordingly; 4. to ensure the original investment project to have a good market prospect and profitability, the Company optimized the construction plan of the original raised-funds investment project of No. 6 line, and it adopted the cost control, optimized the production process and took other measures to achieve reasonable savings under the premise of ensuring the original design and technical conditions of the project. | |
| About application and status of the proceeds unused | As of December 31, 2018, the balance of the raised funds was 303.3361 million yuan, of which 48.3008 million yuan was deposited in the special account of raised funds for project of the line 6, and the special account of raised funds for project of the line 7 had 255.0353 million yuan. |
| Problems existing in application of the proceeds and the information disclosure or other issues | As of December 31, 2018, the accumulated investment for the second phase of Line 6 project was 699.58 million yuan, accounting for 99.89% of the total investment of 700.34 million yuan after the change, of which the actual investment payment was 652.4692 million yuan (using the raised funds of 315.7043 million yuan, using its own funds and government funds of 336.7649 million yuan). As of December 31, 2018, the cumulative investment to the Line 7 project was 819.6749 million yuan, accounting for 41.83% of the total investment of 1,959.4984 million yuan, of which the actual investment payment was 344.7704 million yuan (using the raised funds of 150.9657 million yuan, using its own funds and government funds of 193.8047 million yuan). |
Ⅶ.Analysis of the Main Share Holding Companies and Share Participating Companies√ Applicable □ Not applicableSituation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company
In RMB
| Company Name | Company type | Sectors engaged in | Registered capital | Total assets | Net assets | Turnover | Operating profit | Net Profit |
| Shenzhen Lisi Industrial Development Co., Ltd. | Subsidiary | Domestic trade, Lease | 2,360,000.00 | 22,569,173.29 | 19,085,808.69 | 8,197,802.35 | 3,904,801.09 | 3,150,624.42 |
| Shenzhen Huaqiang Hotel | Subsidiary | Accommodation, business center; | 10,005,300.00 | 29,751,081.53 | 22,913,499.80 | 11,542,533.52 | 4,663,088.29 | 3,456,946.73 |
| Shenfang Property Management Co., Ltd. | Subsidiary | Property management | 1,600,400.00 | 10,698,821.82 | 3,483,222.03 | 10,155,195.29 | 470,518.45 | 291,930.16 |
| Shenzhen Beauty Century Garment Co., Ltd. | Subsidiary | Production of fully electronic jacquard knitting whole shape | 25,000,000.00 | 47,678,530.96 | 27,463,571.69 | 51,287,550.90 | 3,440,990.70 | 3,318,279.36 |
| SAPO Photoelectric Co., Ltd. | Subsidiary | Production and sales of polarizer | 583,333,333. 00 | 3,672,595,288.68 | 2,693,297,673.78 | 953,843,059.26 | -101,070,513.08 | -99,883,239.36 |
| Shenzhen Shenfang Import & export Co., Ltd. | Subsidiary | Operating import and export bus iness | 5,000,000.00 | 94,382,820.22 | 16,215,190.50 | 170,532,287.72 | 2,891,553.61 | 2,158,905.18 |
| Shengtou（HK）Co., Ltd. | Subsidiary | Sales of polarizer | HKD10,000 | 21,536,315.94 | 5,505,226.90 | 70,670,771.67 | 711,955.39 | 351,790.95 |
and Export Co., Ltd. and Shengbo Photoelectric Company Limited are Shengbo Photoelectric Company.
The fluctuation of subsidiary Shengbo Optoelectronic Performance and the reasons for its change aredescribed in detail in Section IV Operating Situation Discussions and Analysis and Section V Important Matters.Section III: Performance of Commitments. The commitment made by shareholders and counterparties in reportingannual operating performance.VIII.Special purpose vehicle controlled by the Company□ Applicable √ Not applicableⅨ.Prospect for future development of the Company1. The Development Trend of the Industry
In the wake of price stabilization of LCD panels and capacity release in advanced-line panel production linesin Mainland China, polarizer market demand has risen and major polarizer enterprises around the world have seena modified profitability as a whole. On a global scale, the shipping area of jumbo panels accounts for more than80% of the total shipping area, indicating that the shipping area of LCD TV panels has remained flat as a whole inrecent years. Regarding the industry, jumbo is inevitable and gradual mass production of 10.5-line is bound tosteadily increase the supply capacity of jumbo panels and more quickly further popularize jumbo TV sets.
The dominance of production at the world's LCD TV panel market has sped up its shift from the 8.5-line to10.5-line, hence the jumbo will be a focus of competition among manufacturers on market in the future. In thewake of the 10.5-line capacity release, the supply and demand situation in the global LCD panel market is notpromising, which will faster drive a variation in the industrial pattern. After hitting the highest growth rate in 2018,the world's panel display area demand is expected to still continue to rise but at a slow growth in 2019-2021. It isestimated that panel manufacturers in Mainland China will account for more than 40％ at the world's LCD TVpanel market in 2019 in respect of capacity, which will rise to 50％+ in 2022. Besides, as polarizer enterprisesexpand production slower than panel enterprises, it is expected that polarizers will be short of supply in 2019.
The polarizer industry shows a certain periodicity. Most panel display terminal products are consumables in astable annual demand but as electronic products, they are to be substituted by new techniques in 2-3 years inaverage in the long run. As a result, the polarizer industry will basically keep pace with such products inupgrading.
At the moment, the global polarizer industry mainly comprises three echelons: major manufacturers in Japanand South Korea stand in the first echelon; some famous Japanese and Korean enterprises and enterprises inTaiwan, P. R. China stand in the second echelon; the Company stands in the third echelon and serves as thepredominant enterprise of polarizer research & development, production and sales in China.2.The company's development strategy
In 2018, the Company integrated and utilized its existing assets, optimized allocation of its resources, andimproved the total asset operation capacity to give a full support to the development of its mainbusiness--polarizers.
In the period of the "13
th
Five-Year Plan", the Company will keep quickly driving the polarizer industry to goprofessional, mass and efficient, seize the good opportunity of great development in the industry, make full use ofpolicies of the state and Shenzhen in favor of development of the polarizer industry, further deepen themixed-ownership reform, boost industrial integration, accelerate ultra-wide production line construction, raise theproduction technology and business management standards with effort, enhance talent team building, give full
play to effects of the long-term incentive mechanism and inspire its vitality to boost a constant growth of its mainbusiness--polarizers.
Looking ahead in 2019, the United States will not put an end to the increase of interest rates; affected by theChina-US trade friction, though under the instruction of the monetary policy of "handling the relation ofstabilizing growth, deleveraging and tightening regulation", China need further relieve its tension of liquidity andrecover its macro economy and will sustain increasingly more pressure of a slowdown in economic growth andface a severe challenge of "two-way pressure" inflicted by developed countries and other developing countries inmanufacturing. China proposes to implement the strategy of "building a manufacturing power" and drives thestructural reform at supply side in manufacturing and right now, it is in a critical period of overcoming difficultiesin building a manufacturing power. The industry where the Company is involved is an essential part of theelectronic information industry and sees a fierce market competition where world-class giant enterprises fromJapan and South Korea are at an advantage with high strengths in raw materials, scientific research and fundsamong others and highly resistant to macro economic fluctuation risks while the Company may sustain some risksin performance if an unpredictable fluctuation occurs to the macro economy.
3.Possible risks
1. Macroeconomic Risks
Looking ahead in 2019, the United States will not put an end to the increase of interest rates; affected by theChina-US trade friction, though under the instruction of the monetary policy of "handling the relation ofstabilizing growth, deleveraging and tightening regulation", China need further relieve its tension of liquidity andrecover its macro economy and will sustain increasingly more pressure of a slowdown in economic growth andface a severe challenge of "two-way pressure" inflicted by developed countries and other developing countries inmanufacturing. China proposes to implement the strategy of "building a manufacturing power" and drives thestructural reform at supply side in manufacturing and right now, it is in a critical period of overcoming difficultiesin building a manufacturing power. The industry where the Company is involved is an essential part of theelectronic information industry and sees a fierce market competition where world-class giant enterprises fromJapan and South Korea are at an advantage with high strengths in raw materials, scientific research and fundsamong others and highly resistant to macro economic fluctuation risks while the Company may sustain some risksin performance if an unpredictable fluctuation occurs to the macro economy.
2. Market risks
Due to the characteristics of rapid replacement and upgrading of display end-product, there is higherrequirement for the timely response ability of technology and products, while the price decline-trend alsoincreasingly squeezes the profit space of upstream polarizer business. China's manufacturing industry has faced along-term “lack of cores and screens”. The polarizer industry is an important part of China's future manufacturingindustry, and the process of domestic substitution of polarizers is in progress. With the gradual mass production ofthe 10.5-generation line, the ultra-large size market will usher in new changes.If the company's technology andproducts cannot timely respond to the needs of the application fields or the market competition leads to lowerprices, the company will get an adverse impact.
3. Raw-material risks
At present, the key raw materials required for the manufacture of polarizer, PVA film and TAC film, arebasically monopolized by Japanese companies, making the company constrained in the upstream supporting rawmaterial production line and production technology. Compared with the complete industry chain model of
upstream raw materials - polarizer - display panel from international manufacturers, the company does not realizeindustrial integration effect for the time being due to lack of corresponding supporting material. The price of themain film materials is affected by the supplier’s production capacity, market demand and the Yen exchange rate,which affects the unit cost of the company’s products.4.The key work in 2019
1. Deepening reform and highlighting the main business to improve the current business situationFirstly, SAPO Photoelectric will deepen reform, enhance communication, facilitate integration, adjust andoptimize implementation paths for cooperation with Jinjiang Group with effort and solve a plurality ofcontradictions in operation. For that end, the Company will focus on operation of its own main business andpromote the profitability of all its niches; secondly, the Company will further deepen industrial collaboration andcooperation, give full play to the advantage of synergy in all respects such as production technology, purchase ofraw materials and sales, and take such specific measures as accelerating production lines, improving the productyield, importing new materials, enhancing quality but lowering disbursement to invigorate its operation andpromote the operation capacity of its polarizer business in all respects.
2. Driving construction of the Line 7 Project and tightening project's purchasing process supervisionThe Company will speed up construction of the Line 7 Project and complete project construction as plannedwith a guarantee on both quality and quantity. Granted with a construction permit, the project is expected to enterthe civil construction stage in April 2019 and lay a foundation for being available for moving equipment in March2020. During construction, the Company will ensure that routine operation department will well do their work andthat the supervision committee and supervision work unit will implement their assignments and carry outcorresponding supervision management measures to the letter, and practically tighten the effective supervision ofthe discipline inspection on engineering construction to guarantee that the new project is an honest project.
3. Driving property management enterprises to promote service quality, guarantee earnings and take theinitiative to seek new growth points
Concerning leasing rate and rate of recovery of funds, property management enterprises will take advantageof customer resources accumulated in years to overcome unfavorable effects, further promote service quality,continue to facilitate the property leasing promotion plan and fulfill a reasonable increase in the rental of newcontracts concluded to render a solid cash flow support to the Company; work pertaining to leasing of GuanhuaBuilding will be facilitated and good customers will be selected to guarantee a stable return on leasing of GuanhuaBuilding.
4. Enhancing talent echelon building and reinforcing core competitiveness of company
At a critical period of transformation and development, the Company has a rapid business development,hence it is advised to highlight team building of all kinds of talents, adhere to the orientation of employing talentswith both morality and professional competence, wherein morality comes first, implement a reform in humanresources work, get through the occupational development channel, reserve talents beforehand, continue tooptimize the compensation mechanism and system, and stabilize the talent team to keep promoting its corecompetitiveness and sustainable development capacity.
5. Having a clear picture of the current work safety situation and ensuring no major work safety accident
The safety director of each enterprise shall carefully do the work safety work with a highly responsibleattitude and take the initiative to put into practice the superior work safety deployment and work safety dutieslevel by level and adopt a work safety assessment.
At all levels, the Company must be vigilant in work safety, continue to handle work safety, energyconservation & emission reduction, and environmental protection among other work in each enterprise,implement the work safety responsibility system in all respects, and tighten the construction of the long-term work
safety mechanism and inspection and correction of potential safety threats to guarantee no work safety liabilityaccident throughout the year and fully recognize, and institutionalize work safety, discharge duties and takemeasures in this respect.
6. Boosting Party building work, cultivating enterprise culture and strengthening construction of the Partyconduct and a clean organization
Under the instruction of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, theCompany will thoroughly study and implement the spirit of the 19
th
National Congress of the Communist Party ofChina, continue toe boost construction of the enterprise culture, reinforce and fulfill the entity responsibility ofthe Party Committee and supervision responsibility of the Disciplinary Inspection Commission, enhanceconstruction of the Party conduct and a clean organization and continue to carry out the in-depth special educationactivity of "studies on the theoretical and practical issues of party building".
7. Elevating risk management standard in all respects and tightening risk controlIn 2019, the Company will spare no effort to do the internal control and total risk management work,improve the risk management awareness, hike risk control standard, make an evaluation, study and judgment onmajor risks, and prepare corresponding risk response measures and solutions to well combine total riskmanagement with routine operation. The Company will further tighten risk control, guarantee the safety of thetrading business, decrease capital risks, and assure safety of state-owned assets, wherein as far as financialproducts are concerned, the Company will follow state-owned asset supervision procedures, give a considerationto risk control methods beforehand, and select low-risk guaranteed financial services to ensure safety in both theprincipal and return.Ⅹ.Particulars about researches, visits and interviews received in this reporting period1.Particulars about researches, visits and interviews received in this reporting periodApplicable √ □ Not applicableThe company did not receive researches, visits and interviews received in this reporting period.
V. Important Events
ⅠSpecification of profit distribution of common shares and capitalizing of common reservesFormulation, implementation and adjustment of profit distribution policy of common shares especially cashdividend policy during the reporting period□ Applicable √ Not applicableThe profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve intoshare capital in the past three years(with the reporting period inclusive):
Based on the needs of the construction of TFT-LCD polarizer project and the company business development,there were no cash dividends and there were no capital reserves converted into share capital in the last three years.Dividend distribution of the latest three years
In RMB
| Year for bonus shares | Amount for cash bonus(tax included) | Net profit attributable to common stock shareholders of listed company in consolidation statement for bonus year | Ratio of the cash bonus in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Proportion for cash bonus by other ways(i.e. share buy-backs) | Ratio of the cash bonus by other ways in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Total cash bonus(other ways included) | Ratio of the total cash bonus (other ways included) in net profit attributable to common stock shareholders of listed company contained in consolidation statement |
| 2018 | 0.00 | -22,980,624.93 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2017 | 0.00 | 52,776,101.46 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2016 | 0.00 | -87,270,604.54 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
III. Commitments to fulfill the situation
1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of thereporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, seniormanagement personnel and other related parities.√ Applicable □ Not applicable
| Commitment | Commitment maker | Type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| Commitment on share reform | Shenzhen Investment Holdings Co., Ltd. | Share reduction commitment | As Shenzhen Investment Holdings Co., Ltd., the controlling shareholder of the company, committed when the restricted-for-sale shares from the shares restructuring were listed for circulation in the market: i. if they plan to sell the shares through the securities exchange system in the future, and the decrease of the shares they hold reaches 5% within 6 months after the first decrease, they will disclose an announcement indicating the sale through the company within two trading days before the first decrease; ii. They shall strictly observe the “Guidelines on Transfer of Restricted-for-sale Original Shares of Listed Companies” and the provisions of the relevant business principles of Shenzhen Stock Exchange. | August 4, 2006 | Sustained and effective | Under Fulfillment |
| Commitment in the acquisition report or the report on equity changes | ||||||
| Commitment made upon the assets replacement | ||||||
| Commitments made upon issuance | Shenzhen Investment Holdings Co., Ltd. | Commitments on horizontal competition, related transacti | Shenzhen Investment Holdings Co., Ltd. signed a “Letter of Commitment and Statement on Horizontal Competition Avoidance” when the company issued non-public stocks in 2009. Pursuant to the Letter of Commitment and Statement, Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiary, subsidiaries under control or any other companies that have actual control of it shall not be involved in the business the same as or similar to those Shenzhen Textile currently or will run in the future, or any | October 9, 2009 | Sustained and effective | Under Fulfillment |
| on and capital occupation | businesses or activities that may constitute direct or indirect competition with Shenzhen Textile; if the operations of Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it compete with Shenzhen Textile in the same industry or contradict the interest of the issuer in the future, Shenzhen Investment Holdings Co., Ltd. shall urge such companies to sell the equity, assets or business to Shenzhen Textile or a third party; when the horizontal competition may occur due to the business expansion concurrently necessary for Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it and Shenzhen Textile, Shenzhen Textile shall have priority. | |||||
| Shenzhen Investment Holdings Co., Ltd. | Commitments on horizontal competition, related transaction and capital occupation | The commitments during the period non-public issuance in 2012: 1. Shenzhen Investment Holdings, as the controlling shareholder of Shenzhen Textile, currently hasn't the production and business activities of inter-industry competition with Shenzhen Textile or its share-holding subsidiary. 2. Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights can't be directly and indirectly on behalf of any person, company or unit to engage in the same or similar business in any districts in the future by the form of share-holding, equity participation, joint venture, cooperation, partnership, contract, lease, etc., and ensure not to use the controlling shareholder's status to damage the legitimate rights and interests of Shenzhen Textile and other shareholders, or to gain the additional benefits. 3. If there will be the situation of inter-industry competition with Shenzhen Textile for Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights in the future, Shenzhen Investment Holdings will promote the related enterprises to avoid the inter-industry competition through the transfer of equity, assets, business and other ways. 4. Above commitments will be continuously effective and irrevocable during Shenzhen Investment Holdings as the controlling shareholder of Shenzhen Textile or indirectly controlling Shenzhen Textile. | July 14, 2012 | Sustained and effective | Under Fulfillment | |
| Equity incentive | Shenzhen Textile(Holdings) | Other commit | 1.The company undertakes not to provide loans, loan guarantees, and any other forms of financial assistance to the incentive objects for obtaining the restricted stocks in | November 27,2017 | December 27,2021 | Under Fulfillme |
| commitment | Co., Ltd. | ment | the incentive plan; 2. The company undertakes that there is no circumstance that the stock incentive shall be prohibited as stipulated in the provisions of Article 7 of the “Measures for the Management of Stock Incentives of Listed Companies”. | nt | ||
| Other commitments made to minority shareholders | ||||||
| Executed timely or not? | Yes | |||||
| If the commitments failed to complete the execution when expired, should specifically explain the reasons of unfulfillment and the net stage of the working plan | Not applicable | |||||
| Asset or Project Name of Earnings Forecast | Start date of the forecasting period | End date of the forecasting period | Forecast earnings(RMB 10,000) | Actual earnings(RMB 10,000) | Reason for less than forecast | Disclosure date of the Forecast | Reference for the Forecast |
| Subsidiary- SAPO Photoelectric Introduces strategic investors | January 1,2017 | December 31,2018 | 10,000 | -9,726.87 | See on http://www.cninfo.com.cn | December 31,2016 | See on http://www.cninfo.com.cn announcement (Announcement No.:2016 -67) |
Commitments made by shareholders or counterparties in reporting annual operating results
√ Applicable □Not applicable
I. Basic information
In order to improve the operation of Shengbo Optoelectronics, at the end of 2016, the company introducedJinjiang Group as a strategic investor by increasing capital and shares at Shengbo Optoelectronics level. Thecompany, Shengbo Optoelectronics, Jinjiang Group and Jinjiang Group, a limited partnership established byJinjiang Group as actual controllers, jointly signed the Capital Increase Agreement of Shenzhen ShengboOptoelectronics Technology Co., Ltd. and Jinhang Investment as capital increase. The main body subscribes for40% of Shengbo Optoelectronics, with an additional capital of 135.64 million yuan. In order to give full play tothe institutional and institutional advantages of private enterprises and the resource advantages of state-ownedenterprises, the company signed the "Cooperation Agreement" with Jinjiang Group and Jinhang Investment on thepremise of reaching consensus on the future management and development of Shengbo Optoelectronics. JinjiangGroup undertook performance commitment to Shengbo Optoelectronics in order to achieve better results afterintroducing strategic investors.II. Performance Commitments and Compensation Arrangements
According to the Cooperation Agreement, Jinjiang Group will give full play to the advantages of JinjiangGroup in system, mechanism, industry, management and successful experience of industry integration afterinvesting in Shengbo Optoelectronics through Jinhang Airlines, and make performance commitments to ShengboOptoelectronics.
The sales revenue and net profit in 2017, 2018 and 2019 are not less than 1.5 billion yuan/50 million yuan, 2billion yuan/100 million yuan and 2.5 billion yuan/150 million yuan, respectively. In principle, the sales revenueof polarizers and related optical film products accounted for no less than 70% of the total revenue in 2017 and noless than 80% after 2018. If the above performance fails to be achieved, Jinjiang Group shall make up thedifference of net profit in cash within 10 days from the date of completion of annual sales revenue and annual netprofit statistics.
The calculation method of the actual annual earnings is based on the current effective accounting standardsin China, and is determined by the results of the special audit issued by the qualified accounting firms hired by thecompany.III. Completion of Performance Commitments1. Achievement of Shengbo Optoelectronics Performance Commitment in 2018
In 2018, Shengbo Optoelectronics Co., Ltd. and Jinjiang Group cooperated actively to cope with manyproblems, such as fiercer market competition, rising commodity prices leading to high procurement costs ofconsumables and great changes in internal organizational structure. Through actively adjusting product salesstructure, introducing low-cost raw materials, and establishing small and medium-sized business departments,Shengbo Optoelectronics Co., Ltd. was facing severe external conditions. Under the circumstances, to ensure thestable operation of the company and reduce the impact of adverse factors on the company. Audited by ZhongqinWanxin Accounting Firm (Special General Partnership), Shengbo Optoelectronics realized business income of1.125 billion yuan in 2018, net profit of - 97.2687 million yuan, and sales revenue of polarizers and related opticalfilm products accounted for 74.01% of the total revenue. Therefore, Shengbo Optoelectronics has not fulfilled itsperformance commitment in 2018.2. Explanation of Performance Commitment Differences
Although sales of key products continued to increase this year, the sales scale of products was not up toexpectations. The difference between the promised sales revenue, net profit and the proportion of sales revenue of
polarizers and related optical film products to total revenue was 87,545.9 million yuan, 19,726.87 million yuanand 5.99% respectively. According to the "Cooperation Agreement", Jinjiang Group needs to make up thedifference of net profit by cash.3. Reasons for unfulfilled performance commitments
The main reasons for the unfulfilled performance commitment are as follows: firstly, due to the adverseeffects of shrinking sales of display terminals and falling prices during the reporting period, the sales price of TVproducts of the company declined with polarizers; secondly, the project of TFT-LCD Phase II Line 6 is still in theclimbing stage after putting into operation, resulting in higher fixed cost per unit of products; thirdly, theoccupancy rate of small and medium-sized markets with original profits declined due to the relocation ofproduction lines of Longhua Plant. Fourthly, due to the impact of the falling exchange rate of RMB, the purchasecost of imported raw materials increased and the exchange loss increased during the reporting period. Fifthly, dueto the decline in product prices, the preparation for the reduction of inventory prices increased during the reportingperiod.
IV.Compensation for Performance Commitment and the Measures to be taken in the Follow-up
1. The company and Jinjiang Group have conducted in-depth analysis and frank exchanges on the objectivesituation and main reasons for the unfulfilled performance commitments in 2018, formulated the objectives andmeasures for improving the main business in 2019, and further consultation on the follow-up cooperation matters.At the same time, preliminary communication has been conducted on the compensation of performancecommitments in 2018. Jinjiang Group has proposed that it should be based on the actual situation and fair andreasonable. Principle and properly handle the issue of performance compensation through consultation. Before thetwo sides reached an agreement, Jinjiang Group temporarily failed to fulfill its performance commitmentcompensation obligations under the Cooperation Agreement. At present, the company has not consulted withJinjiang Group on the compensation of performance commitment, and the two sides have not yet reached aperformance compensation scheme.
2. The company will continue to urge Jinjiang Group to fulfil its compensation obligations as stipulated inthe Cooperation Agreement. It will continue to pay attention to the progress of the matter and timely fulfill itsrelevant review procedures and announcement obligations.
3. Whether the company and Jinjiang Group can reach an agreement is still uncertain. The actual amount ofcompensation for performance and the time of payment for compensation are not yet predictable. If no agreementcan be reached, the company will settle the compensation for performance commitment through arbitrationaccording to the agreement of the Cooperation Agreement.IV. Particulars about the non-operating occupation of funds by the controlling shareholder□ Applicable √ Not applicableNo non-operating occupation from controlling shareholders and its related party in the period.V. Explanation of the Supervisory Committee and Independent Directors (If applicable)on the QualifiedAuditor’s Report Issued by the CPAs.□ Applicable √ Not applicable
VI. Explain change of the accounting policy, accounting estimate and measurement methods as comparedwith the financial reporting of last year.√ Applicable □ Not applicable
On June 15, 2018, Ministry of Finance released a Notice on Revision and Issue of 2018 Format of FinancialStatements for General Enterprises (Cai Kuai [2018] No.15) to revise the format of financial statements for generalenterprises. The Company started to implement the above notice as scheduled by the Ministry of Finance afteradopting a proposal at the fifteenth meeting of the seventh board of directors on October 29, 2018.
Before implementing the Notice on Revision and Issue of 2018 Format of Financial Statements for GeneralEnterprises (Cai Kuai [2018] No.15), the Company followed the Accounting Standard for BusinessEnterprises-Basic Standard, all the particular accounting standards, guides to application of accounting standardsfor business enterprises, interpretations and announcements of accounting standards for business enterprises andother relevant regulations promulgated by Ministry of Finance. Upon the alteration, the Company started tocomply with relevant terms in the Notice on Revision and Issue of 2018 Format of Financial Statements forGeneral Enterprises (Cai Kuai [2018] No.15) released by the Ministry of Finance on June 15, 2018 in itsaccounting policies. In addition to the above alteration of the accounting policies, others still followed the priorrelevant rules, guides, announcements and other relevant terms issued by the Ministry of Finance.
Effects of alteration of accounting policies on the Company's beginning amount of this year and amount ofthe prior year
| No | Contents and reasons for the changes of accounting policies | Statement items affected | Amount |
| Retroactive adjustment | |||
| 1 | "Accounts receivable" and "notes receivable" were incorporated into "accounts receivable and notes receivable" for presentation | Notes receivable | -44,207,119.00 |
| Account receivable | -192,503,077.70 | ||
| Notes receivable & Account receivable | 236,710,196.70 | ||
| 2 | "Interests receivable", "dividends receivable" and "other receivables" were combined into "other receivables" for presentation | Interest receivable | -15,728,872.62 |
| Dividend receivable | |||
| Other receivable | 15,728,872.62 | ||
| 3 | "Accounts payable" and "notes payable" were combined into "accounts payable and notes payable" for presentation | Notes payable | |
| Account Payable | -97,104,697.18 |
| No | Contents and reasons for the changes of accounting policies | Statement items affected | Amount |
| Notes payable & Account payable | 97,104,697.18 | ||
| 4 | "Management expenses" fell into "management expenses" and "R&D expenses" for presentation | Management expenses | -39,036,089.05 |
| R & D cost | 39,036,089.05 |
| Name of the domestic CPAs | Peking Certified Public Accountants（Special General Partnership） |
| Remuneration for domestic accounting firm (RMB10,000) | 60 |
| Continuous life of auditing service for domestic accounting firm | 8 |
| Name of domestic CPA | Lan Tao, Liu Ru |
| Continuous fixed number of year for the auditing service provided by CPA in domestic CPA Firms | 5 |
X.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report□Applicable √ Not applicableXI.Bankruptcy reorganization□Applicable √ Not applicableNo bankruptcy reorganization for the Company in reporting period.XII.Significant lawsuits and arbitrations of the Company□Applicable √ Not applicableNo significant lawsuits and arbitrations occourred in the reporting period.XIII. Situation of Punishment and Rectification□Applicable √ Not applicableNo penalty and rectification for the Company in reporting period.XIV. Credit Condition of the Company and its Controlling Shareholders and Actual Controllers√Applicable □ Not applicableDuring reporting period, there was no effective judgment of a court and large amount of debt maturity that thecompany, its controlling shareholders and actual controller failed to perform or pay off.XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan orOther Employee Incentive Measures√Applicable □ Not applicable
(I) Formulation of Restricted Stock Incentive PlanOn November 27, 2017, the Proposal on the Company's Implementation Measures of Evaluation for the 2017Restricted Stock Incentive Plan (Draft) and summary and the Proposal on the Company's ImplementationMeasures of Evaluation for the 2017 Restricted Stock Incentive Plan was examined and approved in the 7
th
boardmeeting of the company’s 7
th
session board of directors, and related proposals agreed to fulfill the relevantprocedures and related proposals agreed to fulfill the relevant procedures
On December 11, 2017, the SASAC agreed in principle to implement the restricted stock incentive plan.On December 14, 2017, the company held the third extraordinary shareholders' general meeting in 2017,which reviewed and approved the Proposal on the Company's Implementation Measures of Evaluation for the2017 Restricted Stock Incentive Plan (Draft) and summary and Proposal on the Company's ImplementationMeasures of Evaluation for the 2017 Restricted Stock Incentive Plan and other issues.(II) Information on granting the restricted stockOn December 14, 2017, the company held the 8th meeting of the 7th Board of Directors, which reviewed andapproved the “Proposal on Adjusting the List of Incentive Objects and Granting Quantity of the 2017 Restricted
Stock Incentive Plan” and the “Proposal on Granting the Restricted Stocks to Incentive Objects”. The restrictedshares actually granted by this stock incentive plan totaled 4,752,300 shares, and 119 incentive objects were granted,with the granting price was 5.73 yuan per share.On December 27, 2017, the company’s restricted stock completed the grant registration formalities at ChinaSecurities Depository and Clearing Corporation Shenzhen Branch.XVI. Material related transactions1. Related transactions in connection with daily operation
√Applicable □ Not applicable
| Related parties | Relationship | Type of trade | Subjects of the related transactions | Principle of pricing the related transactions | Price of trade | Amount of trade RMB10,000) | Ratio in similar trades | Trading limit approved（RMB’0000） | Whether over the approved limited or not (Y/N) | Way of payment | Market price of similar trade available | Date of disclosure | Index of information disclosure |
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Kunshan Zhiqimei is a holding subsidiary of SAPO Photoelectric, wherein the Company owns 40% of its equity and Jinjiang Group is a shareholding enterprise | Purchase of products from related parties | Purchase of optical film products and relevant materials | Market Principle | Agreement price | 4,877.1 | 71.63% | 8,000 | No | Transfer | 4,877.1 | August 15,2018 | http://www.cninfo.com.cnOn August 15, 1018(Announcement No.2018-35) |
| Kunshan Zhiqimei Materials | Kunshan Zhiqimei is a holding subsidiary of SAPO Photoelectric, | Sale of goods to related | Selling polarizing film | Market Principle | Agreement price | 8,752.47 | 10.66% | 21,600 | No | Transfer | 8,752.47 | August 15, 2018 | http://www.cninfo.com.cnOn August 15, 1018(Annoucement No.2018 -35) |
| Technology Co., Ltd. | wherein the Company owns 40% of its equity and Jinjiang Group is a shareholding enterprise | parties | |||||||||||
| Total | -- | -- | 14,585.48 | -- | 30,200 | -- | -- | -- | -- | -- | |||
| Details of any sales return of a large amount | Not applicable | ||||||||||||
| Give the actual situation in the report period where a forecast had been made for the total amounts of routine related-party transactions by type to occur in the current period(if any) | Not applicable | ||||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | Not applicable | ||||||||||||
| Related parties | Relationship | Causes of formation | Does there exist non-operation capital occupancy? | Opening balance (RMB 10,000) | Newly increased amount in the reporting period(RM | Amount recovered in the reporting period(RMB10,000) | Interest rate | Interest in the reporting period(RMB10,000) | Ending balance (RMB10,000) |
| B’0000) | |||||||||
| Shenzhen Dailishi Underwear Co., Ltd. | Sharing company | Investment dividend | No | 44.05 | 100 | 102.4 | 41.64 | ||
| Anhui Huapeng Textile Co., Ltd. | Joint venture | Investment dividend | No | 180 | 180 | ||||
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Sale products | No | 0 | 10,266.4 | 1,860.14 | 8,406.26 | ||
| Shenzhen Tianma Microelectronics Co., Ltd. | The Chairman of the Company was Vice Chairman of the company | Sale products | No | 155.55 | 286.78 | 352.88 | 89.44 | ||
| Influence of the related rights of credit and liabilities upon the company’s operation results and financial position | In the report period, Increase investment income of RMB1 million. | ||||||||
| Related parties | Relationship | Causes of formation | Opening balance(RMB10,000) | Amount newly increased in the reporting period(RMB10,000) | Amount repaid in the reporting period(RMB10,000) | Interest rate | Interest in the reporting period(RMB10,000) | Ending balance (RMB10,000) |
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Purchase | 0 | 1,740.57 | 1,740.57 | |||
| Shenzhen Xinfang | Sharing | Current | 24.48 | 24.48 |
| Knitting Co., Ltd. | company | amount | ||||||
| Shenzhen Changlianfa Printing & dyeing Co., Ltd. | Sharing company | Current amount | 117.84 | 117.84 | ||||
| Shenzhen Haohao Property Leasing Co., Ltd | Sharing company | Current amount | 410.45 | 35 | 445.45 | |||
| Yehui International Co., Ltd. | Sharing company | Current amount | 113.54 | 5.47 | 119.01 | |||
| SAPO （HK）Co., Ltd. | Sharing company | Current amount | 31.5 | 31.5 | ||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | Controlled by the same party | Interest payable | 4,557.07 | 163.47 | 1,000 | 3,720.54 | ||
| Influence of the related rights of credit and liabilities upon the company’s operation results and financial position. | In the report period, Increase financial interest expense of RMB 1.6347 million. | |||||||
6. Other significant related-party transactions√Applicable □Not applicableTo ensure the construction progress of polarizer with TFT-LCD, SAPO Photoelectric, Shenzhen ShenchaoTechnology Investment Co., Ltd. and Shenzhen Development Bank, Shenzhen Branch, First Tower Subbranchsigned “Contract on Consigned Loan”, of whose main content is: Shenzhen Shenchao Technology Investment Co.,Ltd applied to the bank for 200 million RMB of construction of dedicated plant and auxiliary projects for polarizerwith TFT-LCD for SAPO Photoelectric, The term of the loan is 108 months from the day when the firstinstallment of entrusted loan is transferred to the account of the Company. The interest rate of the entrusted loan isthe rate of commercial loans with a term of 5 years quoted by People's Bank of China minus 2%. In case ofadjustment of such commercial loan rate, the rate of commercial loans with a term of 5 years after adjustmentminus 2% shall apply as interest rate of entrusted loan from the first day of the next month after the adjustment ofbasic interest rate. The term of the loan is 108 months from the day when the first installment of entrusted loan istransferred to the account of the Company. As of December 31,2018,The Company actually received a loan ofRMB 40 million.Website for temporary disclosure of the connected transaction
| Announcement | Date of disclosure | Website for disclosure |
| Announcement of related Transactions | December 12, 2009 | http//www.cninfo.com.cn. Announcement No.2009-55 |
| Announcement of Resolutions of the Second provisional shareholders’ general meeting | December 30,2009 | http//www.cninfo.com.cn. Announcement No.2009-57 |
| Announcement of related Transactions progress | July 1, 2010 | http//www.cninfo.com.cn. Announcement No.2010-26 |
2.Guarantees□Applicable √ Not applicableNo any guarantees for the Company in the reporting period..3.Situation of Entrusting Others for Managing Spot Asset(1)Situation of Entrusted Finance
√ Applicable □Not applicable
Overview of entrusted wealth-management during the reporting period
In RMB 10,000
| Specific type | Source of funds for entrusted financial management | The Occurred Amount of Entrusted Wealth-management | Undue balance | Un-recovered of overdue amount |
| Bank financial products | Self fund | 32,000 | 0 | 0 |
| Trust financial products | Self fund | 120,000 | 0 | 0 |
| Total | 152,000 | 0 | 0 | |
In RMB10,000
| Name of Trustee Organization (or Trustee Name) | Type of Trustee Organization(or Trustee) | Product Type | Amount | Capital Source | Start Date | Expiry Date | Funds Allocation | Method of Reward Determination | Reference Annualized Rate of Return | Expected Income (if any) | Actual profit and loss during the reporting period | The actual recovery of profit and loss during the reporting period | Amount of provision for impairment (if any) | Whether passed the statutory procedure | Whether there is any entrusted financial plan in the future | Summary of events and related search index (if any) |
| WanxiangTrust Co., Ltd. | Trust | Designated Use Business Management Funding Trust | 40,000 | Self fund | January 13,2017 | January 13,2018 | Trust financial products | Quarterly interest payments | 6.00% | 2,430.61 | 2,430.61 | 2,430.61 | Yes | Not applicable | Http://www.cninfo.com.cn: (Announcement No. 2017-04) | |
| WanxiangTrust Co., Ltd. | Trust | Designated Use Business Management Funding Trust | 20,000 | Self fund | February 17,2017 | December 17,2018 | Trust financial products | Quarterly interest payments | 7.50% | 2,733.49 | 2,733.49 | 2,733.49 | Yes | Not applicable | Http://www.cninfo.com.cn: (Announcement No. 2017-26) | |
| WanxiangTrust Co., Ltd. | Trust | Designated Use Business Management Funding Trust | 20,000 | Self fund | February 20,2017 | August 20,2018 | Trust financial products | Quarterly interest payments | 7.50% | 2,242.3 | 2,242.3 | 2,242.3 | Yes | Not applicable | Http://www.cninfo.com.cn: (Announcement No. 2017-26) |
| WanxiangTrust Co., Ltd. | Turst | Designated Use Business Management Funding Trust | 40,000 | Self fund | January 13,2018 | December 28,2018 | Trust financial products | Quarterly interest payments | 7.50% | 2,809.35 | 2,809.35 | 2,809.35 | Yes | Not applicable | Http://www.cninfo.com.cn: (Announcement No. 2018-04) | |
| Shenzhen Textile Building Branch of China Merchants Bank Co., Ltd. | Bank | Structured deposits | 22,000 | Self fund | October 9,2018 | January 7,2019 | Bank financial products | Due payment at a time | 3.88% | 213.19 | 213.19 | 213.19 | Yes | Not applicable | ||
| Shenzhen Textile Building Branch of China Merchants Bank Co., Ltd. | Bank | Structured deposits | 10,000 | Self fund | December 14,2018 | March 14,2019 | Bank financial products | Due payment at a time | 3.71% | 92.71 | 92.71 | 92.71 | Yes | Not applicable | ||
| Total | 152,000 | -- | -- | -- | -- | -- | -- | 10,521.65 | 10,521.65 | -- | -- | -- | -- | |||
（2）Situation of Entrusted Loans□ Applicable √ Not applicableNo any Entrusted loans for the Company in the reporting period..4. Other significant contract
√ Applicable □Not applicable
| Company Name of the Party Making the contract | Company Name of the Other Party of the Contract | Contract Object | Contract Signing Date | Book Value of the Assets Involved by the Contract (RMB10,000) (If Any) | Assessed Value of the Assets Involved by the Contract (RMB10,000) | Appraisal Agency Name (If Any) | Base Date of Assessment (if any) | Pricing Principle | Transaction Price (RMB10,000) | Whether A Related Traction | Connection Relation | Execution Condition As Of The End Of The Reporting Period | Date of Disclosure | Disclosure Index |
| SAPO Photoelectric | Hangzhou Jinjiang Group Co., Ltd., Kunshan Zhiqimei Material Technology Co., Ltd., Japan Nitto Denko Corporation | Nitto Denko provides polarizer manufacturing technology and related corporation. | November 6, 2017 | No | Considering the formulation of market price and technical service period, the final transaction price is based on the commercial negotiation results of both parties. | 86,900 | No | With no association relationship with the company | In normal performance | November 7, 2017 | Http://www.cninfo.com.cn: (Announcement No. 2017-53 )on November 7, 2017 |
XVIII. Social responsibilities
1. Performance of poverty relieving responsibilities(1)The protection of shareholder’s rights and interests
During the reporting period, the company operated with in accordance with laws and strictly conformed tothe requirements of laws and regulations such as The Company Law, The Securities Law and CorporateGovernance Guidelines for Listed Companies, and the company continuously perfected the governance structureand further standardized the operation of the company. Adhered to the core system constituted by shareholders'meeting, board of directors, board of supervisors and the independent director system, further improved thecorporate governance structure and the management system, constantly improved the company's internal controlsystem in the process of business management, adopted effective measures to prevent operational risks andsoundly safeguarded and protected the rights and interests of shareholders to lay a solid foundation for thecompany's healthy, sustainable development. The company strictly enforces information disclosure obligations inaccordance with the law, and truthfully, accurately, completely, timely, and fairly discloses information that has asignificant impact on investment decisions, the disclosure content is concise and easy to understand, and fullyreveals risks, facilitates access for all shareholders. And according to regulatory requirements, the companyfurther sort out and improve relevant systems and improve the quality of information disclosure.During the reporting period, the company further improved information disclosure and information transparency,strictly fulfilled the obligation of information disclosure in accordance with regulatory requirements,communicated and communicated with investors through multiple channels, answered questions raised byinvestors in a timely manner, improved information transparency, and cooperated with regulatory authorities andat the same time, cooperated with the regulatory authorities to purify the market space, safeguard the interests ofinvestors, especially small and medium-sized investors, and achieve positive interaction and harmonious (2) Theprotection of legal right of staff(2) The protection of legal right of staff
Subject to the enterprise development strategy, the Company worked out a compliance, legitimate, scientificand reasonable human resources management system. The Company established a labor relation with eachemployee by concluding an employment contract and made necessary management on employees pursuant toLabor Law and relevant management regulations in the Company. The Company formulated assessmentmanagement systems separately geared to senior executives, middle management and regular employees andestablished a systematic and standardized performance assessment and evaluation system for a comprehensive,objective, fair and accurate assessment on all the employees regarding performance of duties and completion oftasks, results of which were seen as the basis for determination of the employee compensation, reward orpunishment and appointment.
In 2018, the Company set up an Employee Business Promotion Channel Management System of ShenzhenTextile (Holdings) Co., Ltd., wherein the business personnel promotion channel management system and valuedistribution system based on performance and ability evaluation were improved and development channels wereopened for employees in all respects; it revised Middle Management Appointment and Dismissal ManagementSystem of Shenzhen Textile (Holdings) Co., Ltd., wherein procedures for selection and appointment of the middlemanagement leaders were improved and guaranteed to be compliance and legitimate; it built a Market-orientedEnterprise Management Selection and Hiring Management System of Shenzhen Textile (Holdings) Co., Ltd.,wherein procedures and requirements for selecting and hiring enterprise management and contractingmanagement and exit mechanism were improved. Besides, the Company optimized and modified its talent
training system, performance assessment system, hiring management and other HR-related work to raise its HRmanagement standard and further mobilize the initiative of employees at work.(3) The protection of environment
Building a modern "green enterprise" with effort is a permanent responsibility which the Company keepstaking. For that end, the Company holds firm to building a green and recycled industry chain throughout the entireprocess to realize green and recycling economy in real means and improves quality of environment surroundingthe Company to facilitate its production. In the report period, the Company's out-of-boundary noise, industrialwaste water and gas emission passed the surveillance of the environmental protection administration and metstandard requirements in relevant laws and regulations. In the report period, through a rotary RTO treatmentprocess, more than 99% of VOCs were removed from the Company's organic waste gas and on the ground ofup-to-standard emission, the Company further reduced emission of pollutants to practically fulfill the socialresponsibility as a listed company and inflicted no major environmental protection accident. Furthermore, theCompany advocated for green office with effort and carried out environmental protection publicity and educationactivities in a variety of forms to enhance the energy-saving and emission reduction awareness among employeesand coordinate production & operation and environmental protection in production to fulfill its socialresponsibility literally.(4) The protection of consumer rights and interestsThe company always sticks to the core values of "honesty, responsibility first". As the responsibility to thecustomer is the source of enterprise value, the company committed to provide customers with professional,personalized, full range of products and services.Sustainable customer-oriented service and impeccable productquality motive our performance and sustainable development and guarantee long-term customers. And ourlong-term partnership is established on the basis of initiative attention, quick responding and sincere care tocustomers.2. Execution of social responsibility of targeted poverty alleviation(1) Precision poverty alleviation program(2) Annual precision poverty alleviation(3) Accuracy of poverty alleviation
| Index | Measurement unit | Quantity / Status |
| I. General situation | —— | —— |
| II. Breakdown Input | —— | —— |
| 1. Poverty alleviation by industrial development | —— | —— |
| 2. Poverty alleviation by transfer employment | —— | —— |
| 3. Poverty alleviation by relocation | —— | —— |
| 4. Educational poverty alleviation | —— | —— |
| 5. Health poverty alleviation | —— | —— |
| 6. Ecological protection poverty alleviation | —— | —— |
| 7. Guarantee of all the details | —— | —— |
| 8. Social poverty alleviation | —— | —— |
| 9. Other projects | —— | —— |
| III. Awards (Content and level) | —— | —— |
| Company or subsidiary name | Main pollutant and specific pollutant name | Emission way | Emission port number | Emission port distribution condition | Emission concentration | Implemented pollutant emission standards | Total emission | Verified total emission | Excessive emission condition |
| SAPO Photoelectric | Exhaust gas:non-methane total hydrocarbons | Altitude emission | 2 | The discharge port is located on the east side of the roof of Building No. 1 | <100mg/m3 | 120mg/m3 | 840kg/d | 1728kg/d | No |
| SAPO Photoelectric | Waste water：COD | Open channel discharge after treatment | 1 | Southeast side of plant area | <80mg/L | 90mg/L | 56kg/d | 96kg/d | No |
environmental protection requirements of standard discharge after being treated by waste water treatmentfacilities.Waste gas of Longhua factory:
The process related to generation of organic waste gas in Longhua Plant was removed as a whole at the end of2017, indicating that Longhua Plant is generating no organic waste gas.Situation of Construction project environmental impact assessment and other environmental protectionadministrative licensesThe Company complied with relevant environmental protection regulations at such three stages as project design,construction and operation and obtained environmental protection approvals needed at each corresponding stageincluding EIA report, EIA approval, environmental protection acceptance decision and emission permit amongothers.Emergency Plan for Emergency Environmental IncidentsAccording to the actual situation of the company, the preparation of the emergency plan for emergencyenvironmental incidents was completed, and an emergency environmental emergency plan filing application
Environmental Self-Monitoring ProgramSurveillance done subject to surveillance requirements made by the surveillance station and operation needs of allsystems of SAPO，the specific monitoring programs are as follows: organic exhaust gas is 8 times per year (2 perquarter), wastewater discharge is 4 times per year (once per quarter), boiler exhaust gas is 2 times per year (onceevery six months), and canteen fume is 2 times per year (once every six months), the noise at the plant boundaryis 2 times per year (once every six months).
Other Environmental Information That Should Be DisclosedNil
Other Environmental Related InformationNil
XIX. Other material events
√ Applicable □ Not applicable（I）Progress of Renting of Guanhua Building
During the reporting period, the company first reached a common intention with the Hong Kongshareholder Qiaohui Industrial Co., Ltd. on the external rent of Guanhua Building, and formed a public rentscheme. At present, this work is still in progress; second, the completion of the settlement of Guanhua Buildinghas been completed.
In order to smooth the equity relationship between Shenzhen Guanhua Printing and Dyeing Co., Ltd. andGuanhua Building, the company and Qiaohui Industrial Co., Ltd. signed an equity transfer agreement to transfer5.16% of the shares of Shenzhen Guanhua Printing and Dyeing Co., Ltd. and completed the equity transfer. Afterthe transfer, the company and Qiaohui Industrial Co., Ltd. hold 50.16% and 49.84% of the shares of ShenzhenGuanhua Printing and Dyeing Co., Ltd. On February 28, 2019, in order to improve the investment obligations ofthe shareholders of Shenzhen Guanhua Printing and Dyeing Co., Ltd., the company and Qiaohui Industrial Co.,Ltd. increased the capital of Shenzhen Guanhua Printing and Dyeing Co., Ltd. according to the proportion of50.16% and 49.84% of the rights and interests occupied by the buildings of Guanhua Building, respectively, andthe corresponding evaluation value of the buildings of Guanhua Building was 49.9351 million yuan and 49.616
million yuan. Shenzhen Guanhua Printing and Dyeing Co., Ltd. signed the Capital Increase Agreement withQiaohui Industry Co., Ltd. and Shenzhen Guanhua Printing and Dyeing Co., Ltd. After the capital increase iscompleted, Shenzhen Guanhua Printing and Dyeing Co., Ltd. is an enterprise jointly controlled by the companyand Qiaohui Industry Co., Ltd. See the announcement of Juchao Information Network (http://www.cninfo.com.cn)Co., Ltd. 2019-07. Up to the disclosure date of this report, Shenzhen Guanhua Printing and Dyeing Co., Ltd. hasobtained the "Real Property Registration Certificate" of Guanhua Building, and the registration procedures for thechange of shareholding rights and the increase of registered capital have been completed.
（II) Progress of the transfer of equity of Union Development Group Co., Ltd.
The Company held the fifteenth meeting of the seventh board of directors and the third extraordinaryshareholders, meeting of 2018 on October 29, 2018 and November 14, 2018, respectively, in which the Proposalon the Transfer of Equity of Union Development Group Co. Ltd was reviewed and approved, agreed that the2.8694% equity of
Union Development Group Co., Ltd. held by the Company shall be openly listed for transfer in ShenzhenUnited Property Exchange at a price not lower than the estimated value of RMB 152.4936 million, with the finallisting price not lower than the evaluation result by the state-owned asset management. The matter wasfile-recorded on November 15, 2018 by the state-owned assets management department, and the evaluation resultconfirmed by the file-record was 152.4692 million yuan, which was 24, 400 yuan lower than the pre-recordevaluation result of 152.4936 million yuan.For details, please refer to the Announcement of2018-45,2018-48 ,2018-52 and 2018-53 on the website of http://www.cninfo.com.cn.
On December 28, 2018, the Company received the “Description of Purchase Information” from the ShenzhenUnited Property Exchange. The Company listed its 2.8694% holding equity of Union Development Group Co.,Ltd on the Shenzhen United Property Exchange for transfer from November 22, 2018 to December 26, 2018, anduntil the expiration of the listing announcement period, there was no intended transferee filing the application tothe Shenzhen United Property Exchange for transfer.For details, please refer to the Announcement of 2018-58 onthe website of http://www.cninfo.com.cn.
XX. Material events of subsidiaries
√ Applicable □Not applicable
(I) Matters on the end of capital and share increase and introduction of strategic investors to the subsidiary SAPOPhotoelectricOn June 1, 2018, the Company convened the 12th meeting of the seventh board of directors, where it deliberatedand adopted the Proposal on Capital and Share Increase and Introduction of Strategic Investors to the SubsidiaryShenzhen SAPO Photoelectric Co., Ltd. and agreed that the subsidiary SAPO Photoelectric would solicit no morethan 5 strategic investors in public at Shenzhen United Property and Share Rights Exchange through capital andshare increase based on the registered asset evaluation results and determine the final strategic investors throughcompetitive negotiation in compliance with state-owned asset supervision regulations.For details, please refer tothe Announcement of 2018-24 on the website of http://www.cninfo.com.cn.As SAPO Photoelectric was pushing forward matters pertaining to capital and share increase and introduction ofstrategic investors, the Company took the initiative to negotiate and consult with investors with an intention onmatters of capital increase, whereas in the context of fluctuating national investment environment and financialpolicies, a financial strain in the financial market and a more prudent attitude held by investors, investors with anintention took lots of factors into account regarding conditions of cooperation, indicating that the Company wasconfronted a great uncertainty in continuing to drive SAPO Photoelectric to increase capital and share and bring in
strategic investors. Whereas the Company still failed to come into terms with any investor with an intention ondetails of cooperation on capital increase, the Company gave a comprehensive consideration to all the abovefactors to convene the sixteenth meeting of the seventh board of directors on January 29, 2019, where itdeliberated and adopted the Proposal on the End of Capital and Share Increase and Introduction of StrategicInvestors to the Subsidiary Shenzhen SAPO Photoelectric Co., Ltd. and agreed to end matters of capital and shareincrease and introduction of strategic shareholders to the subsidiary SAPO Photoelectric.For details, please referto the Announcement of 2019-02 and 2019-03 on the website of http://www.cninfo.com.cn.(II) Matters on progress of conclusion of a technical cooperation contract between the subsidiary SAPOPhotoelectric and Nitto Denko
In order to bring in techniques of the Japanese polarizer enterprise that takes the lead in the world andprepare for building the 2,500 mm ultra-wide TFT-LCD polarizer production project (Line 7 Project), theCompany's holding subsidiary SAPO Photoelectric, together with Jinjiang Group and Kunshan Zhiqimei, enteredinto a Contract of Technical Cooperation with Nitto Denko on matters pertaining to introduction of techniques of2,500 mm polarizer production line on November 6, 2017, which was signed on the ground of all the essentialcooperation-related conditions specified by Nitto Denko and parties that give a support hereinbefore. In additionto this contract, a technical support contract and appendix are planned to be concluded later. For details, pleaserefer to the Announcement of 2018-53 on the website of http://www.cninfo.com.cn.To take and bring in ultra-wide polarizer production techniques of Nitto Denko as soon as possible, constructionof the Line 7 Project need accelerating. On November 13, 2018, SAPO Photoelectric agreed with Nitto Denko ondetails of "equipment startup support", "instruction on manufacturing know-how", and "technical support (qualitymaintenance support)" among others regarding Nitto Denko's offer of ultra-wide polarizer production techniquesin Contract of Technical Cooperation (Manufacturing Line 2) (Manufacturing Line 1 refers to the 2,500 mmproduction line of Kunshan Zhiqimei) which as a technical support contract based on Contract of TechnicalCooperation applied to what was specified in the Contract of Technical Cooperation.For details, please refer to theAnnouncement of 2018-51 on the website of http://www.cninfo.com.cn.
(III)Progress in subsidiaries participating in the establishment of industrial fundsOn November 16, 2017, the company's controlling subsidiary SAPO Photoelectric signed the Changxing JunyingEquity Investment Partnership (Limited Partnership) Agreement with the fund manager Huizhi InvestmentManagement Co., Ltd, general partner Jinxin Investment Co., Ltd and other limited partners, and co-sponsored theestablishment of an industrial fund, focusing on the optical film industry chain related projects related to thecompany's main business, with a fund size of 50 million yuan. SAPO Photoelectric, as one of the limited partnersof the industrial fund, subscribed for a capital contribution of 28.5 million yuan.For details Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2017--55).
On February 10, 2018, Changxing Junying Equity Investment Partnership completed the industrial andcommercial registration and completed the private equity investment fund registration on February 8, 2018. Fordetails Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2018--05).As of December 31, 2018, Changxing Junying had accumulated 3 investment projects with a total investment ofRMB 42 million. The profit during the reporting period was RMB 2,150,943.40
| No | Name | Investment | Fund contribution （RMB 10,000） |
| 1 | Shenzhen Kaichuang Shijia Technology Co., Ltd. | Optical Film | 1,400 |
| 2 | Shenzhen Shenfuyu Electronic Technology Co., Ltd. | Optical Film | 1,300 |
| 3 | Shenzhen Hengbaoshun Technology Development Co., Ltd. | Optical Film | 1,500 |
VI. Change of share capital and shareholding of Principal Shareholders
Ⅰ.Changes in share capital1. Changes in share capital
In Shares
| Before the change | Increase/decrease（+，-） | After the Change | |||||||
| Amount | Proportion | Share allotment | Bonus shares | Capitalization of common reserve fund | Other | Subtotal | Quantity | Proportion | |
| 1.Shares with conditional subscription | 4,824,300 | 0.94% | 5,250 | 5,250 | 4,829,550 | 0.94% | |||
| 3.Other domestic shares | 4,824,300 | 0.94% | 5,250 | 5,250 | 4,829,550 | 0.94% | |||
| Domestic Nature shares | 4,824,300 | 0.94% | 5,250 | 5,250 | 4,829,550 | 0.94% | |||
| II.Shares with unconditional subscription | 506,449,849 | 99.06% | -5,250 | -5,250 | 506,444,599 | 99.06% | |||
| 1.Common shares in RMB | 457,021,849 | 89.39% | -5,250 | -5,250 | 457,016,599 | 89.39% | |||
| 2.Foreign shares in domestic market | 49,428,000 | 9.67% | 49,428,000 | 9.67% | |||||
| III. Total of capital shares | 511,274,149 | 100.00% | 511,274,149 | 100.00% | |||||
regulators
□ Applicable √Not applicable
2. Change of shares with limited sales condition
√ Applicable □ Not applicable
In shares
| Shareholder Name | Initial Restricted Shares | Number of Unrestricted Shares This Term | Number of Increased Restricted Shares This Term | Restricted Shares in the End of the Term | Reason for Restricted Shares | Date of Restriction Removal |
| Zhang Xiaodong | 0 | 0 | 5,250 | 5,250 | Supervisors hold 75% of the shares as required | The shares transferred annually during the term of office determined during the term of office and within 6 months after the expiration of the term of office shall not exceed 25% of the total number of shares of the company held by the company. |
| Total | 0 | 0 | 5,250 | 5,250 | -- | -- |
Ⅲ.Shareholders and actual controlling shareholder1. Number of shareholders and shareholding
In Share
| Total number of common shareholders at the end of the reporting period | 36,891 | Total shareholders at the end of the month from the date of disclosing the annual report | 35,264 | The total number of preferred shareholders voting rights restored at period-end(if any)(See Notes 8) | 0 | Total preferred shareholders at the end of the month from the date of disclosing the annual report(if any)(See Notes 8) | 0 | ||||||||
| Particulars about shares held above 5% by shareholders or top ten shareholders | |||||||||||||||
| Shareholders | Nature of shareholder | Proportion of shares held（%） | Number of shares held at period -end | Changes in reporting period | Amount of restricted shares held | Amount of un-restricted shares held | Number of share pledged/frozen | ||||||||
| State of share | Amount | ||||||||||||||
| Shenzhen Investment Holdings Co., Ltd. | State-owned legal person | 45.78% | 234,069,436 | 0 | 0 | 234,069,436 | |||||||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | State-owned Legal person | 3.15% | 16,129,032 | 0 | 0 | 16,129,032 | |||||||||
| Fujiang Bairui Jiayuan, Asset Management Co., Ltd.－Bairui Jiayuan Growth I Fund | Other | 0.77% | 3,934,035 | -20,700 | 0 | 3,934,035 | |||||||||
| Sun Huiming | Domestic Nature person | 0.62% | 3,192,767 | 0 | 0 | 3,192,767 | |||||||||
| Li Songqiang | Domestic Nature person | 0.56% | 2,873,078 | 40,000 | 0 | 2,873,078 | |||||||||
| Zheng Junsheng | Domestic Nature person | 0.36% | 1,830,000 | 0 | 0 | 1,830,000 | |||||||||
| Kuang Guowei | Domestic Nature | 0.28% | 1,457,000 | 520,800 | 0 | 1,457,000 | |||||||||
| person | ||||||||
| Zhu Ye | Domestic Nature person | 0.22% | 1,131,945 | 0 | 0 | 1,131,945 | ||
| Li Zengmao | Domestic Nature person | 0.20% | 1,038,800 | 505,300 | 0 | 1,038,800 | ||
| Hong Fan | Domestic Nature person | 0.20% | 1,028,900 | 0 | 0 | 1,028,900 | ||
| Related or acting-in-concert parties among shareholders above | Shenzhen Shenchao Technology Investment Co., Ltd. is a wholly-owned subsidiary of Shenzhen Investment Holding Co., Ltd. and a person taking concerted action. Except this, the Company did not whether there is relationship between the top ten shareholders holding non-restricted negotiable shares and between the top ten shareholders holding non-restricted negotiable shares and the top 10 shareholders or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Companies. | |||||||
| Shareholding of top 10 shareholders of unrestricted shares | ||||||||
| Name of the shareholder | Quantity of unrestricted shares held at the end of the reporting period | Share type | ||||||
| Share type | Quantity | |||||||
| Shenzhen Investment Holdings Co., Ltd. | 234,069,436 | Common shares in RMB | 234,069,436 | |||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | 16,129,032 | Common shares in RMB | 16,129,032 | |||||
| Fujiang Bairui Jiayuan, Asset Management Co., Ltd.－Bairui Jiayuan Growth I Fund | 3,934,035 | Common shares in RMB | 3,934,035 | |||||
| Sun Huiming | 3,192,767 | Foreign shares in domestic market | 3,192,767 | |||||
| Li Songqiang | 2,873,078 | Common shares in RMB | 2,873,078 | |||||
| Zheng Junsheng | 1,830,000 | Common shares in RMB | 1,830,000 | |||||
| Kuang Guowei | 1,457,000 | Common shares in RMB | 1,457,000 | |||||
| Zhu Ye | 1,131,945 | Common shares in RMB | 1,131,945 | |||||
| Li Zengyin | 1,038,800 | Common shares in RMB | 1,038,800 | |||||
| Hong Fan | 1,028,900 | Common shares in RMB | 1,028,900 | |||||
| Explanation on associated relationship | Shenzhen Shenchao Technology Investment Co., Ltd. is a wholly-owned subsidiary of | |||||||
| or consistent action among the top 10 shareholders of non-restricted negotiable shares and that between the top 10 shareholders of non-restricted negotiable shares and top 10 shareholders | Shenzhen Investment Holdings Co., Ltd. and a person taking concerted action. Except this, the Company did not whether there is relationship between the top ten shareholders holding non-restricted negotiable shares and between the top ten shareholders holding non-restricted negotiable shares and the top 10 shareholders or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Companies. |
| Explanation on shareholders participating in the margin trading bus iness(if any )(See Notes 4) | The Company Shareholder Fujiang Bairui Jiayuan, Asset Management Co., Ltd.－Bairui Jiayuan Growth I Fund holds 3,954,735 shares of the Company through stock account with credit transaction; The Company Shareholder Li Songqiang holds 2,872,653 shares of the Company through stock account with credit transaction ; The Company Shareholder Zhu Ye holds 1,031,945 shares of the Company through stock account with credit transaction. |
| Name of the Controlling shareholder | Legal representative/Leader | Date of incorporation | Organization code | Principal business activities |
| Shenzhen Investment Holdings Co., Ltd. | Wang Yongjian | October 13,2004 | 76756642-1 | Investment and acquisition of financial and similar financial stock rights such as bank, security, insurance, fund and guarantee; (Ⅱ) Engage in real estate development and management business within the limit of legally-acquired land use right; (Ⅲ) Carry out investment and service in the field of strategic emerging industry; (Ⅳ) Carry out investment, operation and management of state-owned stocks of wholly-owned, holding and joint-stock company by |
| reorganization & integration, capital operation and asset disposal; (Ⅴ) Other businesses undertaken by authorization of municipal SASAC(State Asset Supervision and Administration Commission) | ||
| Equity of other domestic/foreign listed company with share controlling and share participation by controlling shareholder in reporting period | Shen Property A（000011），Quantity of shares 380.38 million，Shareholding ratio：63.82%； SPG A（000019），Quantity of shares 642.88 million，shareholding ratio：63.55%；Shen Universe A（000023），Quantity of shares 12.36 million，shareholding ratio：8.91%；Pingan（601318），Quantity of shares 962.72 million，shareholding ratio：5.27%；Guosen Seurities（002736），Quantity of shares 2749.52 million，shareholding ratio：33.53%；Guotai Junan（601211），Quantity of shares 609.24 million，H shareholding ratio：103.37%,Total shareholding ratio :8.18%；Telling holding（000829），Quantity of shares 195.03 million，shareholding ratio：18.8%；Etop information（834386），Quantity of shares 42 million，shareholding ratio：60.00%；Inspection test（836325），Quantity of shares：20 million，shareholding ratio：40.00% ,Shenzhen International（00152），Quantity of shares：952.01 million，shareholding ratio：44.81%；Beauty Star（002243），Quantity of shares：188 million，shareholding ratio：51.52%； Hopewell Highway (00737），Quantity of shares：2213.45 million，shareholding ratio：71.83%;Infinova（002528），Quantity of shares：225.90 million，shareholding ratio：21.35%; Eternal Asia（002183），Quantity of shares：338.45 million，shareholding ratio：18.3%；Shen Enerty（000027)，Quantity of shares：5.64 million，shareholding ratio：0.14% and BCM（601328），Quantity of shares：9.52 million，shareholding ratio：0.01%, | |
| Name of the controlling shareholder | Legal representative/person in charge | Date of establishment | Organization code | Principal business activities |
| State-owned Assets Regulatory Commission of Shenzhen Municipal People's Government | Yu Gang | July 31,2004 | K3172806-7 | Performing the responsibilities of investors on behalf of the state and supervising and managing state-owned assets according to authorization and law. |
| Equity of other domestic/foreign listed company with share controlling and share participation by controlling shareholder in reporting period | Except for Shenzhen Holdings Co., Ltd., the holding shareholder of the company, other domestic and foreign listed companies of the equity held by the actual controller haven’t been shown in the list of the top ten shareholders of the company. |
5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Partyand Other Commitment Subjects□Applicable √Not applicable
VII. Situation of the Preferred Shares
□ Applicable √Not applicable
The Company had no preferred shares in the reporting period.
VIII. Information about Directors, Supervisors and Senior Executives
I. Change in shares held by directors, supervisors and senior executives
| Name | Positions | Office status | Sex | Age | Starting date of tenure | Expiry date of tenure | Shares held at the year-begin(share) | Amount of shares increased at the reporting period(share) | Amount of shares decreased at the reporting period(share) | Other changes increase/decrease | Shares held at the year-gegin(share) |
| Zhu Jun | Board chairman, Director | Appoint | Male | 55 | January 16,2015 | July 18,2020 | 137,000 | 0 | 0 | 0 | 137,000 |
| Zhu Meizhu | Director,General Manager | Appoint | Male | 54 | July 19,2017 | July 18,2020 | 228,000 | 0 | 0 | 0 | 228,000 |
| Ning Maozai | Director, Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | In office | Male | 43 | December14,2017 | July 18,2020 | 122,000 | 0 | 0 | 0 | 122,000 |
| Huang Yu | Director | In office | Male | 44 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Di Yan | Director,CFO | In office | Female | 48 | April 28,2017 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Wang Chuan | Director | In office | Male | 46 | September 1,2018 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| He Qiang | Independent Director | In office | Male | 66 | August 16,2013 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| He Zhuowen | Independent Director | In office | Male | 56 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Cai Yuanqing | Independent Director | In office | Male | 49 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Wang Weixing | Chairman of the supervisory committee | In office | Male | 50 | May 20,2015 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Zou Zhiwei | Supervisor | In office | Male | 36 | December14,2017 | July 18,2020 | 0 | 0 | 0 | 0 | 0 |
| Zhang Xiaodong | Employee supervisor | In office | Male | 43 | August 9,2013 | July 18,2020 | 0 | 7,000 | 0 | 0 | 7,000 |
| Le Kunjui | Deputy GM | In office | Male | 55 | April 28,2017 | July 18,2020 | 122,000 | 0 | 0 | 0 | 122,000 |
| Liu Honglei | Deputy GM | In office | Male | 54 | July 19,2017 | July 18,2020 | 125,000 | 0 | 0 | 0 | 125,000 |
| Jiang Peng | Secretary to the board of directors | In office | Female | 48 | January 16,2015 | July 18,2020 | 100,000 | 0 | 0 | 0 | 100,000 |
| Total | -- | -- | -- | -- | -- | -- | 834,000 | 7,000 | 0 | 0 | 841,000 |
| Name | Positions | Types | Date | Reason |
| Lin Lebo | Director | Dimission | May 24,2018 | Job change |
| Zhao Lin | Director | Dimission | July 24,2018 | Job change |
Jining Cotton Mill, deputy factory director of Jining Chemical Fibre Factory, office director of Jining TextileIndustry Company, deputy county head of Wenshang County, Shandong Province, office director of ShandongTextile Department, chief of Personnel Education Division, manager, general manager assistant , Deputy GeneralManager, General Manager of Enterprise management Dept of the Company. He served as secretary of PartyCommittee ,Board Chairman of the Company, Director and Vice Board chairman of Tianma Microelectronic Co.,Ltd.Zhu Meizhu, Male, Born in 1964, Master degree, Senior engineer, once served successively as chief Deputygeneral Manager of Enterprise Management Dept of the Company, Director of R& D Center, Assistant GeneralManager and Deputy General Manager, He serves as director and General Manager of the Company, and BoardChairman of SAPO Photoelectric Co., Ltd.Ning Maozai, male, born in 1975, bachelor degree, senior administration engineer, Chinese Communist Partymember; he has served successively as the office clerk of Shenzhen Guomao Automobile Industry Co., Ltd, theclerk, principal staff member, associate director and director of party-mass office of Shenzhen PropertyDevelopment (Group) Corp. and hold a concurrent post of deputy human resource Deputy manager and manager;At present he holds the position of company director, deputy party secretary and secretary of Discipline InspectionCommittee.Huang Yu, male, born in 1974, postgraduate, senior accountant, Chinese Communist Party member; he has servedsuccessively as the manger of audit department Ⅱ of Shenzhen Hengdaxin Accounting Firm and assistantdirector, senior staff member of the audit department of Shenzhen Commerce Trading Invest-holding Company,senior staff member and principal staff member of the social undertaking division of Shenzhen SASAC, principalstaff member of the business division Ⅱ of Shenzhen SASAC, vice minister and minister of the financial budgetdepartment of Shenzhen Investment Holdings Co., Ltd, office director of Shenzhen Investment Holdings Co., Ltd;At present he holds the position of chief accountant and director of Shenzhen Investment Holdings Co., Ltd.anddirector of the Company.
Di Yan, female, born in 1970, postgraduate degree, senior economist, accountant positional title, ChineseCommunist Party member; she has served successively as the cashier, correspondent bank accountant andintegrated accountant of Development Zone Sub-branch, Xi’an Branch, Agricultural Bank of China, manager ofthe fund department, chief of the financial management section and chief of the accounting section of financialdepartment of Shenzhen Airport(Group) Company, capital settlement business manager of the financing plandepartment of Shenzhen Airport Co., Ltd, manager of the financial department of Shenzhen Airport InternationalExpress Supervision Center of Shenzhen Airport Co., Ltd, manager of the financial department of ShenzhenAirport Air Cargo Co., Ltd, finance minister of Shenzhen General Institute of Architectural Design and Researchand chief financial officer of Shenzhen Yuetong Construction Engineering Co., Ltd and hold a concurrent post ofchief financial officer of Shenzhen Zhongye Pipe Gallery Construction Investment Co., Ltd; At present he holdsthe position of director and chief financial officer of the Company.Mr. Wang Chuan, male, was born in 1972 with a master's degree, economist, engineer, CCP. He had servedsuccessively as deputy minister, minister and assistant director to the cooperation and development department ofShenzhen National High-tech Industry Innovation Center, served as chairman and general manager of ShenzhenInnovation Start Technology Co., Ltd., and served as deputy general manager of Shenzhen Tongchan Group Co.,Ltd. He is currently the Minister of Industry Management Department of Shenzhen Investment Holdings Co., Ltdand director of the Company.He Qiang , Male, born in 1952, Professor of finance at the Central University of Finance and Economics, Ph.D.
tutor, Director of Securities and Futures Institute, enjoy special government allowances. He was a member of 11thand 12th CPPCC National Committee, of China Finance Society, the China Investment Association, of ChinaEconomic and Social Council of the other positions. He served as independent director in the Air InvestmentHolding Co., Ltd., in Hengyi Petrochemical Co., Ltd., in Golden State Securities corporation, Dongbei Securitiesand in the Company. the Company's independent directors.He Zuowen, male, born in 1962, MBA, associate professor in accountancy, charted certified accountant andcertified tax agent in securities and futures industry. At present he acts as a partner of Da Hua Certified PublicAccountants(Special General Partnership) and secretary of Party General Branch of Shenzhen Branch, meanwhilehe holds the position of chairman of Shenzhen Tianye Certified Tax Agents Limited Corporation, consultancyexpert of Internal Control Standard Committee of the Ministry of Treasury, judge of Guangdong SeniorAccountant Evaluation Committee, member of CPC Shenzhen Social Organization Disciplinary ExaminationCommittee, deputy secretary & secretary of Discipline Inspection Commission of CPC Shenzhen CPA IndustryBoard, director of Shenzhen Certified Tax Agents Association and independent director of Shenzhen JPTOPTO-ELECTRONICS Co., Ltd., Independent director of Shenzhen Yirui Biology Co., Ltd., the Company'sindependent directors.Cai Yuanqing, born in 1969, Doctor of Laws of Hiroshima University, professor of Law School of ShenzhenUniversity, director of Company Law Research Center and GSI(Graduate Student Instructor); Meanwhile, he actsas an arbitrator of Shenzhen Arbitration Commission ,independent director of Shenzhen Rongda PhotosensitiveScience & Technology Co., Ltd., Independent director of Shenzhen Oufei Technology Co., Ltd., the Company'sindependent directors.
（2）Supervisor
Wang Weixing, male, born in 1968, graduate degree, economist, member of Communist Party of China, hasserved successively as cadre of Qingdao TV Factory, staff and senior staff member of Shenzhen Administration ofIndustry and Commerce (price bureau) Futian, Che Kung Temple branch, senior staff member and principal staffmember of Shenzhen Administration of Industry and Commerce (price bureau) registration sub-office, principalstaff member of Shenzhen General Asset Management Office, deputy director of Shenzhen Asset ManagementOffice collective enterprise department, deputy director of general office of Shenzhen Asset Management Office,deputy director of petition acceptance office of Shenzhen Asset Management Office, director, vice-secretary ofCPC and secretary of discipline commission of Shenzhen Tongchan Packaging Group Co., Ltd, director,vice-secretary of CPC and secretary of discipline commission of Shenzhen Tongchan Group Co., Ltd andcurrently takes the post of chairman of supervisory board of the Company.
Zhou Zhiwei, male, born in 1982, bachelor degree and CPC member; he has served successively as amember of Shenzhen Prison Political Section, office clerk of Luohu District Bureau of Culture, senior staffmember of Publicity and Education Office and principal staff member of 1
st
-Case Examination Room ofShenzhen Discipline Inspection Commission, Board Secretary of Shenzhen Stepwell Environmental ProtectionTechnology Co., Ltd and executive director of Shenzhen Xuriwenhua Investment Consulting Co., Ltd; At presenthe acts as the associate director of Office of Discipline Supervision & Investigation of Shenzhen InvestmentHoldings Co., Ltd and supervisor of this company.
Zhang Xiaodong, male, born in 1975, postgraduate degree and CPC member. He began to work for thiscompany in August 1999 and had served successively as the assistant manager and manager of subsidiary of thiscompany, manager of business management department of this company and manager of Shenzhen MeibainianGarment Co., Ltd; At present he acts as the employee supervisor of this company and the head of businessmanagement department.
（3）Senior Executives
Le Kunjiu, male, born in 1963, bachelor degree economist professional title and CPC member; he has servedsuccessively as the loan officer of the finance department of Zhejiang Ningbo International Trust and InvestmentCorporation, deputy director and director of the finance department of CITIC Group Corporation, Ningbo Branch,manager of the research department of Hainan Fudao Asset Management Co., Ltd, assistant manager of ShenzhenLeaguer Venture Capital Co., Ltd, vice president & chief financial officer of Shenzhen Leaguer Digital TelevisionCo., Ltd, chairman & general manager of Shenzhen Oriscape Electronic Co., Ltd, vice president of ShenzhenInternational Technology Transfer Center, Tsinghua University, associate director of the industrial fundspreparatory office of Shenzhen Investment Holdings Co., Ltd and Deputy general manager of Shentou Education;At present he acts as chairman of supervisory board of SAPO Photoelectric Co., Ltd., Board chairman ofShenzhen Guanhua Printing & Dyeing Co., Ltd., Deputy general manager of the Company.
Liu Honglei, male, born in 1964, bachelor degree and CPC member, Senior engineer, He has servedTechnician , Work director, Deputy director of office of First film factory of Ministry of ChemicalEngineering,Director of personnel Education Dept of Education Department of China Lekai Film Group, he hasserved as the deputy general manager and general manager of SAPO Photoelectric Co., Ltd from June 2012 toMay 2013 and the head of the party-mass work department and the manager of the business managementdepartment of Shenzhen Textile (Holdings) Co., Ltd; At present he holds the position of deputy general managerof the company.Jiang Peng, Female, born in 1970, Bachelor Degree, member of communist party, She served as officer of theSecretary Office of Shandong Fishery Group Co.,Ltd., Deputy Director of the Secretary office and Securitiesaffairs Representative of Shandong Zhonglu Oceanic Fisheries Co., Ltd., Securities Representative of HuafuHolding Co., Ltd., Securities affairs representative and Officer of the Secretariat of the Board of the Company,now serves as the secretary of the Board of the Company.Office taking in shareholder companies√Applicable □Not applicable
| Names of the persons in office | Names of the shareholders | Titles engaged in the shareholders | Sharing date of office term | Expiry date of office term | Does he /she receive remuneration or allowance from the shareholder |
| Huang Yu | Shenzhen Investment Holdings Co., Ltd. | Chief accountant | March 4,2017 | Yes | |
| Wang Chuan | Shenzhen Investment Holdings Co., Ltd. | Minister of Industry Management Department | May 23,2018 | Yes | |
| Zou Zhiwei | Shenzhen Investment Holdings Co., Ltd. | Deputy Director of discipline Inspection & Supervision | June 16,2017 | Yes |
Office
Offices taken in other organizations√Applicable □Not applicable
| Name of the persons in office | Name of other organizations | Titles engaged in the other organizations | Starting date of office term | Expiry date of office term | Does he/she receive remuneration or allowance from other organization |
| Zhu Jun | Tianma Microelectronic Co., Ltd. | Vice Chairman , Chairman | February 28,2013 | June 29,2019 | No |
| Huang Yu | Shenzhen General Institute of Architectural Design and Research Co. ,Ltd. | Director | October 12,2009 | No | |
| Huang Yu | Shenzhen Kunpeng Equity Investment Management Co., Ltd. | Director | December 23,2016 | No | |
| Huang Yu | Shenzhen City Construction Development(Group) Co., Ltd. | Director | April 7,2017 | No | |
| Wang Chuan | Shenzhen Shenfubao(Group) Co., Ltd. | Director | June 21,2018 | No | |
| Wang Chuan | Shenzhen Shentou Environment Technology Co., Ltd. | Director | June 27,2018 | No | |
| Wang Chuan | Shenzhen Shentou Education Co., Ltd. | Director | July 27,2018 | No | |
| Wang Chuan | Shenzhen International Tendering Co., Ltd. | Director | July 27,2018 | No | |
| Zou Zhiwei | Shenzhen Xinxin Paper Co., Ltd. | Director | October 17,2017 | ||
| He Qiang | Central university of finance and economics | Director of the institute of securities and futures, professor, doctoral supervisor | July 1,1982 | Yes | |
| He Qiang | Guojin Securities Co., Ltd. | Independent director | May 25,2016 | September 14,2018 | Yes |
| He Qiang | Northeast Securities Co., Ltd. | Independent director | March 1,2017 | Yes | |
| He Zuowen | Dahua certified public accountants (special general partnership) Shenzhen branch | Partner | December 1,2002 | Yes | |
| He Zuowen | Shenzhen Certified Tax Agents Associatio | Chairman | December 1,2008 | August 30,2020 | Yes |
| He Zuowen | Shenzhen Tongyi Industry Co., Ltd. | Independent director | October 11,2018 | Yes | |
| He Zuowen | Shenzhen JPT OPTO-ELECTRONICS Co., Ltd. | Independent director | June 1,2017 | Yes | |
| He Zuowen | Shenzhen Yirui Biology Co., Ltd., | Independent director | October 1,2017 | Yes | |
| Cai Yuanqing | Shenzhen University, | Law professor | April 1,2001 | Yes | |
| Cai Yuanqing | Shenzhen arbitration commission | Arbitrator | April 1,2007 | Yes | |
| Cai Yuanqing | Shenzhen Rongda Photosensitive & Technology Co.,Ltd. | Independent director | December 31,2014 | August 30,2020 | Yes |
| Le Kunjiu | Shenzhen Guanhua Printing & Dyeing Co.,Ltd. | Chairman | June 6,2017 | No |
| Name | Positions | Sex | Age | Office status | Total remuneration received from the shareholder | Remuneration actually receives at the end of the reporting period |
| Zhu Jun | Board Chairman | Male | 55 | Appoint | 101.42 | No |
| Zhu Meizhu | Director , GM | Male | 54 | Appoint | 76.5 | No |
| Ning Maozai | Director, Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | Male | 43 | In Office | 46.78 | No |
| Huang Yu | Director | Male | 44 | In office | 0 | Yes |
| Di Yan | Director, CFO | Female | 48 | In Office | 62.82 | No |
| Wang Chuan | Director | Male | 46 | In office | 0 | Yes |
| He Qiang | Independent Director | Male | 66 | In Office | 10 | No |
| He Zhuowen | Independent Director | Male | 56 | In office | 10 | No |
| Cai Yuanqing | Independent Director | Male | 49 | In Office | 10 | No |
| Wang Weixing | Chairman of the supervisory committee | Male | 50 | In Office | 65.79 | No |
| Zou Zhiwei | Supervisor | Male | 36 | In office | 0 | Yes |
| Zhang Xiaodong | Employee supervisor | Male | 43 | In Office | 39.37 | No |
| Le Kunjiu | Deputy GM | Male | 55 | In office | 65.7 | No |
| Liu Honglei | Deputy GM | Male | 54 | In Office | 72.14 | No |
| Jiang Peng | Secretary to the board of directors | Female | 48 | In office | 45.08 | No |
| Lin Lebo | Director | Male | 57 | Dimission | 0 | No |
| Zhao Lin | Director | Female | 39 | Dimission | 0 | No |
| Total | -- | -- | -- | -- | 605.6 | -- |
| Name | Position | Number of vested shares during the report period | Number of exercise stocks during the report period | Exercise price of the exercise stock during the report period (Yuan per share) | Market price at the end of report period (Yuan per share) | Number of restrictive stock hold at the beginning of the report period | Number of shares unlocked in the current period | Number of newly-awarded restrictive stock during the report period | Granting price of restrictive stock (Yuan per share) | Number of restrictive stock hold at the end of the report period |
| Zhu Jun | Board Chairman | 0 | 0 | 5.79 | 137,000 | 0 | 0 | 5.73 | 137,000 | |
| Zhu Meizhu | Director , GM | 0 | 0 | 5.79 | 135,000 | 0 | 0 | 5.73 | 135,000 | |
| Ning | Director, | 0 | 0 | 5.79 | 122,000 | 0 | 0 | 5.73 | 122,000 |
| Maozai | Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | |||||||||
| Le Kunjiu | Deputy GM | 0 | 0 | 5.79 | 122,000 | 0 | 0 | 5.73 | 122,000 | |
| Liu Honglei | Deputy GM | 0 | 0 | 5.79 | 122,000 | 0 | 0 | 5.73 | 122,000 | |
| Jiang Peng | Secretary to the board of directors | 0 | 0 | 5.79 | 100,000 | 0 | 0 | 5.73 | 100,000 | |
| Total | -- | 0 | 0 | -- | -- | 738,000 | 0 | 0 | -- | 738,000 |
| Number of in-service staff of the parent company（person） | 46 |
| Number of in-service staff of the main subsidiaries（person） | 1,291 |
| Total number of the in-service staff（person） | 1,337 |
| Total number of staff receiving remuneration in the current period（person） | 1,337 |
| The number of the parent company and the main subsidiary’s retired staffs who need to bear the cost（person） | 0 |
| Professional | |
| Classified according by Professions | Number of persons（person） |
| Production | 889 |
| Sales | 26 |
| Technical | 152 |
| Financial | 41 |
| Administrative | 229 |
| Total | 1,337 |
| Education | |
| Classified according by education background | Number of persons（person） |
| Postgraduate or above | 38 |
| Universities | 195 |
| Colleges | 116 |
| Mid-school or below | 988 |
| Total | 1,337 |
IX. Administrative structure
I. Basic state of corporate governance
In the reporting period, the company regulated operations and strengthen risk control in strict accordance with
Securities Law, Corporation Law, the Shenzhen Stock Exchange Standard Operation Instructions for Main-BoardListed Companies, Corporate Governance Standards for Listed Companies and other related laws and regulations,to ensure a healthy and stable development. At present, the basically sound governance system, normativebusiness operation and impeccable corporate governance structure meet the requirements of the normativedocuments for regarding corporate governance of listed companies issued by the China Securities RegulatoryCommission.In 2018, company held a total of 4 general meetings, convened general meetings, standardized voting proceduresto safeguard the effectiveness and legality in strict accordance with the regulations and requirements ofCorporation Law, Articles of Corporation and Rule of Procedure of Shareholders' Meeting. Companies activelyprotected the voting rights of minority investors, and general meetings were convened in the form of live networkto adequately assure small investors of their rights to exercise.
In 2018, the board of directors held 7 general meetings, and the convening and voting procedures were all
conducted in strict accordance with the Articles of Corporation and Rule of Procedure of Shareholders' Meeting.All the directors performed directors ' duties, exercise directors’ rights, attended related meetings and activelyparticipated in the training and became familiar with relevant laws and regulations with serious, diligent andhonest attitudes. Independent directors independently performed their duties in strict accordance with Articles ofCorporation, The independent director system and other relevant laws and regulations, expressed fully theirindependent opinions on corporate operation, decision-making, and important matters, etc. Strategy, audit,remuneration, evaluation, nomination committees were established under board of directors, all committeesfunctioned properly, and performed duties such as internal audits, compensation assessment, nomination of seniormanagement personnel, and provided scientific and professional advisory opinions for board of directors’decision-making.
In 2018, the board of supervisors held 6 meetings. The board of supervisors strictly followed the requirements
of Articles of Corporation and Rules of procedure of the board of supervisors and other relevant laws andregulations, supervised the legal compliance of the duties performed by company's financial personnel anddirectors, managers and other senior management personnel in the aim of maintaining the legitimate rights andinterests of the company and its shareholders. All the supervisors fulfilled their obligations, exercised their rightsaccording to the laws. The convening and voting procedures of the board of supervisors were legal, and theresolutions were legal and valid. The establishment and implementation of board of supervisors played an activerole in improving corporate governance structure and regulating corporate operations.
In 2018, we further increased information transparency, accomplished investors’ protection and
propaganda work. In the reporting period, except disclosing information in a real accurate, timely, fair andcomplete manner in accordance with the regulatory requirements,
Moreover, the Company carried out the special work Blue Sky Action according to Notification onImplementing Special Work where Investors Protect Blue Sky Action published by Shenzhen Securities Bureau toenhance the quality of information disclosure as the key point, to continuously perfect the communication
mechanism and to promote the normative development of the Company. Meanwhile, the Company continued toperfect the voting mechanism for minority investors. In 2018, the minority investors’ voting was countedseparately at each of the two shareholder’s meetings, and whose result was disclosed at the decisionannouncement at the shareholder’s meeting, which fully guaranteed the execution of power of the minorityinvestors.
Moreover, the Company carried out the special work Blue Sky Action according to Notification onImplementing Special Work where Investors Protect Blue Sky Action published by Shenzhen Securities Bureau toenhance the quality of information disclosure as the key point, to continuously perfect the communicationmechanism and to promote the normative development of the Company. various platforms were made full use of,such as telephone, e-mail, website, especially the interactive platform of investors in Shenzhen Stock Exchange,solved questions brought by investors, and communicated with medium and small investors interactively, andensure all the investors obtained equal opportunities for informal access. Meanwhile, in the aim of improving thetransparency of listed companies, company accepted investors’ on-site investigation to have comprehensiveunderstandings of the company's business situation through face-to-face communication with management, alsourged the company established a responsibility to return on investors, improved and enhanced the corporategovernance standards. Meanwhile, the Company continued to perfect the voting mechanism forminority investors. In 2018, the minority investors’ voting was counted separately at each of the 4 shareholder’smeetings, and whose result was disclosed at the decision announcement at the shareholder’s meeting, which fullyguaranteed the execution of power of the minority investors.Does there exist any difference in compliance with the corporate governance , the PRC Company Law and therelevant provisions of CSRC,
√ Yes □No
There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevantprovisions of CSRC.Shenzhen Investment Holdings Co., Ltd., the holding shareholder of the company, is a Shenzhen SASACenterprise. The company has complied with the relevant provisions on the state-owned asset management ofholding shareholders to report non-public information to holding shareholders, mainly including:Letters submittedmonthly index table; fee schedule during the reporting, financial assets table, summary quarterly deposits andborrowings and financing.In order to strengthen the management of non-public information, the company hasstrictly controlled the scope of learners, standardized the process of information delivery and strictly implementedas per the “Management System on Learner of Insider Information”, took practical measures to prevent insideinformation leaks and insider trading.In addition, there is no difference among the governance of the company, “Company Law” and the relevantprovisions of China Securities Regulatory Commission.
II. Independence and Completeness in business, personnel , assets, organization and finance
The code of conduct of the controlling shareholders of the company did not go beyond the general meetingsdirectly or indirectly to interfere with the decision-making and business activities, the company had independentand complete business and autonomous operation capacity , achieved “five point separation” in respect ofpersonnel, financial, asset, agencies, business.
III. Competition situations of the industry□ Applicable √ Not ApplicableIV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period1.Annual General Meeting
| Sessions | Type | Investor participation ratio | Meeting Date | Disclosure date | Disclosure index |
| Annual General Meeting of 2017 | Provisional shareholders’ General Meeting | 48.94% | April 19,2018 | April 20,2018 | Announcement No.2018-19 （http://www.cninfo.com.cn） |
| The first provisional shareholders’ General meeting in 2018 | Provisional shareholders’ General Meeting | 48.95% | June 20,2018 | June 21,2018 | Announcement No.2018-27 （http://www.cninfo.com.cn） |
| The second provisional shareholders’ General meeting in 2018 | Provisional shareholders’ General Meeting | 49.01% | August 31,2018 | September 1,2018 | Announcement No.2018-41 （http://www.cninfo.com.cn） |
| The third provisional shareholders’ General meeting in 2018 | Provisional shareholders’ General Meeting | 48.98% | November 14,2018 | November 15,2018 | Announcement No.2018-52 （http://www.cninfo.com.cn） |
| The attending of independent directors | |||||||
| Independent Directors | Number of Board meetings necessary to be attended in the | Number of spot attendances | Number of meetings attended by Communication | Number of attendances by representative | Number of absence | Failure to personally attend board meetings successively | Number of attendance at general meetings of shareholders |
| reporting period | twice (Yes/No) | ||||||
| He Qiang | 7 | 1 | 6 | 0 | 0 | No | 1 |
| He Zuowen | 7 | 2 | 5 | 0 | 0 | No | 4 |
| Cai Yuanqing | 7 | 2 | 5 | 0 | 0 | No | 3 |
Refer to the announcement of the http://www.cninfo.com.cn disclosure on April 27,2019VI. Duty Performance of Special Committees under the Board of Directors in the Reporting PeriodThe independent directors of the company are the key members of all professional committees of the Board ofDirectors, and are in the majority and the conveners of Audit Committee, Remuneration and Appraisal Committeeand Nomination Committee. Also, all the three independent directors can attend the daily meeting held by everyspecial committee on time.
(1) Audit Committee: during the reporting period, the Audit Committee has held two meetings, carefullyexamined the regular reports of the company and effectively implemented the work schedule of annual reports.Also, the Audit Committee has reviewed the internal control of the company, supervised the effectiveimplementation of internal control, the self-assessment of internal control. Before the board meeting fordeliberating annual report was convened, the Company will strengthen the communication with the certifiedpublic accountant for annual audit, carefully review related information,and will learn about and master thearrangement and progress of accountant’s audit. The Company will interview the accountant for annual audit toeffectively communicate with the accountant about the problems found during the audit progress, will superviseand examine the disclosed information, will ensure the Company’s situation will be factually reflected by theaudit report, and will make a comprehensive assessment for accountant for the completion situation of the annualwork and the practising quality. In the report period, the Company will convene meeting sand formed solutionsfor audit institution recruitment, self-assessment report of internal control and financial final statementDuring the reporting period, Proposal on Carry a meeting ficused on hiring audit institutions, self-assessmentreport of the internal control, the Final Accounting Report and other matters and reach a resolution.
（II) Compensation and Assessment Committee: In the report period, the Compensation and Assessment
Committee convened 1 meeting in total on the Company's compensation assessment of senior executives in 2017with a resolution formed.(3)Nomination committee: The nomination committee has held during the report period. 2 meetings in total atwhich the nominated candidates of independent director and hired senior managers are convened and a resolutionis formed.VII. Work of the supervisory CommitteeDid the supervisory Committee find any risk existing in performing the supervision activities in the reportingperiod□Yes √NoThe supervisory Committee has no objection opinion any matters under supervision in the reporting periodVIII. Assessment and incentive Mechanism for Senior executivesThe company complies with “Executive Compensation Management and Evaluation System” to conduct theevaluation for the accomplishment of annual work of the senior executives. The salaries of the senior executivesare determined according to the duty scope, post value, individual ability, wages level on the market, economicprofits of the company and operation goal accomplishment of senior executives with adhering to the principle ofmarket orientation, responsibility with unified right, and incentive and equal restriction. During the reporting
period, the senior executives are all qualified in 2018 after evaluation. The directors and the general manager haveconducted the feedback on the annual appraisal evaluation for the senior executives in accordance with the“Executive Compensation Management and Evaluation System” and proposed the recommendation forimprovement.IX. Internal control situations1.Specific situations on major defects of internal control discovered during report period
√ Yes □No
| About the significant Defects of the internal control found in the internal control self-assessment report in the reporting period |
| The identification and rectification of deficiency of the internal control: 1. The identification and rectification of deficiency of the internal control in the financial statement In accordance with above identification standard of deficiency of the internal control in the financial statement, there is no the serious and important deficiency of internal control in the financial statement during the reporting period. 2.The identification and rectification of deficiency of the internal control except for that of the financial statement in accordance with above identification standard of deficiency of the internal control except for that of the financial statement, there is no the serious and important deficiency of internal control except for that of the financial statement during the reporting period. |
| Disclosure date of appraisal report on internal control | April 27,2019 | |
| Disclosure index of appraisal report on internal control | Juchao Website:（http://www.cninfo.com.cn）, Self-evaluation report of internal control | |
| Proportion of total unit assets covered by appraisal in the total assets of the consolidated financial statements of the company | 100.00% | |
| Proportion of total unit incomes covered by appraisal in the total business incomes of the consolidated financial statements of the company | 100.00% | |
| Standards of Defects Evaluation | ||
| Category | Financial Report | Non-financial Report |
| Qualitative standard | The defects related to financial reports were divided into general defects, important defects and significant defects according to their severity. Significant defects referred to one or multiple combinations of controlling defects, which may lead to serious deviation from the controlling objectives. Important | In the following circumstances, the company was identified as existing non-financial –reporting related significant defects of internal controlling defects: The business activities of the company seriously violated national laws and |
| defects referred to one or multiple combinations of controlling defects, and their severity and economic consequences were below significant defects, but they could still lead to serious deviation from the controlling objectives. General defects referred to other internal controlling defects which couldn't constitute significant defects or important defects. | regulations; (2) The decision-making process of "Three-Importance& One-Large" were unscientific, leading to major decision errors, and causing major property loses to the company; (3) Massive loss of key posts or technology talents; (4) The controlling system involving important business fields of the company failed; (5) It Caused serious negative effects on business of the company, and the effects couldn’t be eliminated; (6) The evaluation results of internal control were significant defects, and couldn’t get effective rectification. Important defects referred to one or multiple combinations of controlling defects, and their severity and economic consequences were below significant defects, but they could still lead to serious deviation from the controlling objectives. General defects referred to other internal controlling defects which couldn't constitute significant defects or important defects. | |
| Quantitative criteria | Misstatement amount of financial statement fell into the following intervals: significant defects: Misstatement amount ≥ 1.5% of total revenue; Misstatement amount ≥ 10% of gross profit; Misstatement amount ≥ 1% of total asset; Misstatement amount ≥ 5% of net asset. significant defects: 0.5% of Total revenue ≤Misstatement amount ＜ 1.5% of total revenue; 5% of gross profit ≤Misstatement amount ＜ 10% of gross profit; 0.5% of Total asset ≤Misstatement amount ＜ 1% of total revenue; 3% of Net assets ≤Misstatement amount ＜ 5% of net assets. General defects:0% of total revenue ＜Misstatement amount＜0.5% of Total revenue; 2% of gross profitt ＜Misstatement amount＜5% of total profit; 0% of total assets ＜Misstatement amount＜0.5 of total assets; 0% of net assets ＜Misstatement amount＜3% of net assets. | Not applicable |
| Number of major defects in financial reporting（a） | 0 |
| Number of major defects in non financial reporting (a) | 0 |
| Number of important defects in financial reporting（a） | 0 |
| Number of important defects in non financial reporting（a） | 0 |
Review opinions in the internal control audit report
To all shareholders of Shenzhen Textile (Holdings) Co., Ltd.：
According to the relevant requirements of the “Audit Guideline of Enterprise Internal Control” and the ChineseCPA criteria, the company has audited the effectiveness of internal control of the financial statement of ShenzhenTextile (Holdings) Co., Ltd. (Shenzhen Textile) at the date of December 31, 2018.1. The responsibility of enterprise for the internal control. According to the provisions of “Fundamental Norms forEnterprise Internal Control”, “Operation Guideline of Enterprise Internal Control” and “Evaluation Guideline ofEnterprise Internal Control”, the company has established, perfected and effectively implemented the internalcontrol, and made an evaluation for its effectiveness, which are the responsibilities of the Board of Directors ofShenzhen Textile.2. The responsibility of CPA. The company shall be responsible for the expression of audit opinions on theeffectiveness of internal control in the financial statement and the disclosure of serious deficiency of internalcontrol except for the financial statement on the basis of the implementation of audit.3. The inherent limitation of internal control. There is the possibility of unpreventable errors. In addition, due tothe change of situation, the inappropriate internal control is maybe shown, or the control policy and the abidanceof procedure can be reduced. Based on the audit results of internal control, the future internal control is expectedto have a certain risk.4. The audit opinions of internal control in the financial statement. The company believes that Shenzhen Textilehas maintained the effective internal control of the financial statement in all the major aspects according to“Fundamental Norms for Enterprise Internal Control” and the relevant provisions on December 31, 2018.Peking Certified Public Accountants(Special General Partnership)
Chinese C.P.A.
(Project partner)Lan Tao
Chinese C.P.A.
Liu Ru
April 25,2019
| Disclosure date of audit report of internal control (full-text) | Disclosure |
| Index of audit report of internal control (full-text) | April 27,2019 |
| Internal audit report’s opinion | Juchao Website: （http://www.cninfo.com.cn）;Audit report of internal control of Peking Certified Public Accountants qin xin shen zi 【2019】No.410 |
| Type of audit report on internal control | Unqualified auditor’s report |
| Whether there is significant defection non-financial report | No |
XI. Financial Report
I. Audit report
| Type of audit opinion | Standard Unqualified opinion |
| Type of audit opinion | April 25,2019 |
| Name of audit firm | Peking Certified Public Accountants(Special General Partnership) |
| Name of the certified accountants | Lan Tao , Liu Ru |
The management of the Company is responsible for the other information. The other information comprises information of the Company'sannual report in 2018, but excludes the financial statements and our auditor's report.Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assuranceconclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so,consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, orotherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we concludethat there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard
V. Responsibilities of Management and Those Charged with Governance for the Financial StatementsThe Company's management is responsible for preparing the financial statements in accordance with the requirements of AccountingStandards for Business Enterprises to achieve a fair presentation, and for designing, implementing and maintaining internal control that isnecessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors.In preparing the financial statements, management of the Company is responsible for assessing the Company's ability to continue as a goingconcern, disclosing matters related to going concern and using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, butis not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout theaudit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by management of the Company.(4) Conclude on the appropriateness of using the going concern assumption by the management of the Company, and conclude, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may causethe Company to cease to continue as a going concern.(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Companyto express an opinion on the financial statements and bear all liability for the opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit matters, including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance in the auditof the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh thepublic interest benefits of such communication.Peking Certified Public Accountants(Special General Partnership)
Chinese C.P.A. Lan Tao（Project Partner)
Chinese C.P.A. Liu Ru
April 25,2019
II. Financial StatementsStatement in Financial Notes are carried in RMB/CNY
Consolidated balance sheetPrepared by: Shenzhen Textile (Holdings) Co., Ltd. December 31,2018 In RMB
| Items | Notes V | At the end of term | Beginning of term |
| Current asset： | |||
| Monetary fund | (1) | 1,141,759,374.60 | 1,165,048,108.83 |
| Financial assets measured at fair value with variations accounted into current income account | |||
| Derivative financial assets | |||
| Notes receivable & Account receivable | （2） | 529,340,447.65 | 236,710,196.70 |
| Prepayments | （3） | 229,028,791.15 | 13,755,152.05 |
| Other account receivable | （4） | 14,846,896.50 | 28,654,857.07 |
| Inventories | （5） | 439,752,718.77 | 275,615,176.16 |
| Assets held for sales | |||
| Non-current asset due within 1 year | |||
| Other current asset | （6） | 639,797,959.30 | 1,148,689,874.10 |
| Total of current assets | 2,994,526,187.97 | 2,868,473,364.91 | |
| Non-current assets： | |||
| Available-for-sale financial assets | （7） | 45,373,784.87 | 66,035,733.04 |
| Expired investment in possess | |||
| Long-term receivable | |||
| Long term share equity investment | （8） | 32,952,085.66 | 20,380,734.56 |
| Property investment | （9） | 167,997,941.98 | 173,105,806.27 |
| Fixed assets | （10） | 987,876,247.55 | 656,133,200.19 |
| Construction in progress | （11） | 15,621,286.64 | 322,570,173.73 |
| Productive biological assets | |||
| Oil and natural gas assets | |||
| Intangible assets | （12） | 37,880,815.85 | 38,870,673.40 |
| Development expenses | |||
| Goodwill | （13） | ||
| Long-germ expenses to be amortized | （14） | 1,486,209.03 | 1,035,290.08 |
| Deferred income tax asset | （15） | 6,036,198.23 | 1,974,536.90 |
| Other non-current asset | （16） | 329,452,659.01 | 47,166,994.48 |
| Total of non-current assets | 1,624,677,228.82 | 1,327,273,142.65 | |
| Total of assets | 4,619,203,416.79 | 4,195,746,507.56 |
| Items | Note V | At the end of term | Beginning of term |
| Current liabilities | |||
| Short-term loans | （17） | 411,522,111.40 | 88,638,181.45 |
| Current liabilities | |||
| Short-term loans | |||
| Notes payable & account payable | （18） | 180,239,452.90 | 97,104,697.18 |
| Advance payment | （19） | 120,702,951.37 | 34,952,567.83 |
| Employees’ wage payable | （20） | 32,506,267.08 | 29,503,260.65 |
| Tax payable | （21） | 7,745,128.99 | 6,935,262.57 |
| Other account payable | （22） | 229,015,279.98 | 200,826,343.58 |
| Liabilities held for sales |
| Non-current liability due within 1 year | （23） | 40,000,000.00 | 40,000,000.00 |
| Other current liability |
| Total of current liability | 1,021,731,191.72 | 497,960,313.26 | |
| Non-current liabilities： | |||
| Long-term loan | （24） | - | 40,000,000.00 |
| Bond payable | - | - | |
| Including：preferred stock | |||
| Sustainable debt | |||
| Long-term payable | |||
| Long-term payable employees' remuneration | |||
| Expected liabilities | |||
| Deferred income | （25） | 137,991,698.33 | 134,767,064.72 |
| Deferred income tax liability | （15） | - | - |
| Other non-current liabilities | |||
| Total non-current liabilities | 137,991,698.33 | 174,767,064.72 | |
| Total of liability | 1,159,722,890.05 | 672,727,377.98 | |
| Owners’ equity | |||
| Share capital | （26） | 511,274,149.00 | 511,274,149.00 |
| Other equity instruments | |||
| Including：preferred stock | |||
| Sustainable debt | |||
| Capital reserves | （27） | 1,865,716,983.63 | 1,866,001,475.17 |
| Less：Shares in stock | （28） | 27,230,679.00 | 27,230,679.00 |
| Other comprehensive income | （29） | 1,339,208.41 | 2,218,703.87 |
| Special reserves | |||
| Surplus reserves | （30） | 80,004,803.23 | 77,477,042.19 |
| Common risk provision |
| Retained profit | （31） | -57,774,473.41 | -32,266,087.44 |
| Total of owner’s equity belong to the parent company | 2,373,329,991.86 | 2,397,474,603.79 | |
| Minority shareholders’ equity | 1,086,150,534.88 | 1,125,544,525.79 | |
| Total of owners’ equity | 3,459,480,526.74 | 3,523,019,129.58 | |
| Total of liabilities and owners’ equity | 4,619,203,416.79 | 4,195,746,507.56 |
| Notes | Notes XV | Year-end balance | Year-beginning balance |
| Current asset： | |||
| Monetary fund | 85,416,567.74 | 413,700,327.95 | |
| Financial assets measured at fair value with variations accounted into current income account | |||
| Derivative financial assets | |||
| Notes receivable & account receivable | （1） | 541,948.21 | 449,536.21 |
| Prepayments | 17,436.00 | 10,000.00 | |
| Other account receivable | （2） | 13,856,382.02 | 19,443,487.43 |
| Inventories | |||
| Assets held for sales | |||
| Non-current asset due within 1 year | |||
| Other current asset | 500,000,000.00 | 120,000,000.00 | |
| Total of current assets | 599,832,333.97 | 553,603,351.59 | |
| Non-current assets： |
| Available-for-sale financial assets | 15,373,784.87 | 36,035,733.04 | |
| Held-to-maturity investments | |||
| Long-term receivable | |||
| Long term share equity investment | （3） | 1,997,175,852.27 | 1,984,849,008.23 |
| Property investment | 161,053,628.71 | 165,607,900.07 | |
| Fixed assets | 26,565,399.91 | 28,119,990.58 | |
| Construction in progress | - | - | |
| Productive biological assets | |||
| Oil and natural gas assets | |||
| Intangible assets | 1,012,374.75 | 1,413,305.67 | |
| R & D costs | |||
| Goodwill | - | - | |
| Long-germ expenses to be amortized | - | - | |
| Deferred tax assets | 5,818,069.48 | 1,526,871.33 | |
| Other non-current asset | - | 493,620.44 | |
| Total of non-current assets | 2,206,999,109.99 | 2,218,046,429.36 | |
| Total of assets | 2,806,831,443.96 | 2,771,649,780.95 |
| Notes | Notes | Year-end balance | Year-beginning balance |
| Current liabilities | |||
| Short-term loans | |||
| Financial liabilities measured at fair value with variations accounted into current income account | |||
| Derivative financial liabilities | |||
| Notes payable and account payable | 411,743.57 | 411,743.57 | |
| Advance payment | 639,024.58 | 639,024.58 | |
| Employees’ wage payable | 9,760,306.51 | 8,495,538.21 |
| Tax payable | 5,494,627.33 | 3,247,028.64 | |
| Other account payable | 141,746,352.67 | 134,018,771.57 | |
| Liabilities held for sales | |||
| Non-current liability due within 1 year | |||
| Other current liability | |||
| Total of current liability | 158,052,054.66 | 146,812,106.57 | |
| Non-current liabilities： | |||
| Long-term loan | |||
| Bond payable | |||
| Including：preferred stock | |||
| Sustainable debt | |||
| Long-term payable | |||
| Employees’ wage payable |
| Expected liabilities | |||
| Deferred income | 700,000.00 | 800,000.00 | |
| Deferred income tax liability | - | - | |
| Other non-current liabilities | |||
| Total of Non-current liabilities | 700,000.00 | 800,000.00 | |
| Total of liability | 158,752,054.66 | 147,612,106.57 | |
| Owners’ equity | |||
| Share capital | 511,274,149.00 | 511,274,149.00 | |
| Other equity instrument | |||
| Including：preferred stock | |||
| Sustainable debt | |||
| Capital reserves | 1,599,025,454.96 | 1,599,381,854.96 | |
| Less：Shares in stock | 27,230,679.00 | 27,230,679.00 | |
| Other comprehensive income | 1,339,208.41 | 2,218,703.87 | |
| Special reserves | |||
| Surplus reserves | 80,004,803.23 | 77,477,042.19 | |
| Retained profit | 483,666,452.70 | 460,916,603.36 | |
| Total of owners’ equity | 2,648,079,389.30 | 2,624,037,674.38 | |
| Total of liabilities and owners’ equity | 2,806,831,443.96 | 2,771,649,780.95 |
| Items | Notes V | Report period | Same period of the previous year |
| I. Income from the key business | （32） | 1,272,356,771.34 | 1,475,545,719.72 |
| less：Business cost | （32） | 1,142,250,284.67 | 1,299,603,719.37 |
| Business tax and surcharge | （33） | 8,042,137.62 | 13,962,996.87 |
| Sales expense | （34） | 9,636,559.05 | 9,940,696.87 |
| Administrative expense | （35） | 88,590,439.30 | 75,320,512.60 |
| R & D costs | （36） | 41,951,786.15 | 39,036,089.05 |
| Financial expenses | （37） | -971,661.37 | -31,171,160.81 |
| Including：Interest expense | （37） | 14,179,121.73 | 4,130,427.79 |
| Interest income | （37） | -27,438,299.41 | -34,831,809.25 |
| Asset impairment loss | （38） | 106,348,320.75 | 48,807,727.39 |
| Add：Other income | （39） | 17,228,202.21 | 12,567,426.98 |
| Investment gain（“-”for loss） | （40） | 51,793,705.47 | 53,555,819.95 |
| Incl: investment gains from affiliates | 1,260,154.95 | 1,101,479.62 | |
| Changing income of fair value | |||
| Income on disposal of assets | |||
| II. Operational profit（“-”for loss） | -54,469,187.15 | 86,168,385.31 | |
| Add ：Non-operational income | （41） | 1,265,178.66 | 787,567.93 |
| Less: Non-operating expense | （42） | 219,103.78 | 2,015,456.96 |
| III.Total profit(“-”for loss) | -53,423,112.27 | 84,940,496.28 | |
| Less：Income tax expenses | （43） | 8,879,595.11 | 11,278,818.41 |
| IV. Net profit | -62,302,707.38 | 73,661,677.87 |
| （I）Classification by business continuity | |||
| 1.Net continuing operating profit | -62,302,707.38 | 73,661,677.87 | |
| 2.Termination of operating net profit | |||
| （II）Classification by ownership | |||
| 1.Net profit attributable to the owners of parent company | -22,980,624.93 | 52,776,101.46 | |
| 2.Minority shareholders’ equity | -39,322,082.45 | 20,885,576.41 | |
| VI. Net after-tax of other comprehensive income | （44） | -879,495.46 | -1,173,518.20 |
| Net of profit of other comprehensive income attributable to owners of the parent company. | -879,495.46 | -1,173,518.20 | |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | - | - | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | |||
| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | |||
| （II） Other comprehensive income that will be reclassified into profit or loss. | -879,495.46 | -1,173,518.20 | |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | |||
| 2.Gains and losses from changes in fair value available for sale financial assets | -1,500,778.50 | -288,326.89 | |
| 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets | |||
| 4.The effective portion of cash flow hedges and losses | |||
| 5.Translation differences in currency financial statements | 621,283.04 | -885,191.31 | |
| 6.Other | |||
| Net of profit of other comprehensive income attributable to Minority shareholders’ equity | |||
| V. Total comprehensive income | -63,182,202.84 | 72,488,159.67 | |
| Total comprehensive income attributable to the owner of the parent company | -23,860,120.39 | 51,602,583.26 | |
| Total comprehensive income attributable minority shareholders | -39,322,082.45 | 20,885,576.41 | |
| VI. Earnings per share | |||
| （I）Basic earnings per share | -0.04 | 0.10 | |
| (II)Diluted earnings per share | -0.04 | 0.10 |
Income statement of the Parent Company
Prepared by: Shenzhen Textile (Holdings) Co., Ltd. Year 2018 In RMB
| Items | Notes XV XV | Report period | Same period of the previous year |
| I. Operating revenue | （4) | 68,327,680.40 | 65,474,614.36 |
| Incl：Business cost | （4) | 14,479,527.62 | 14,205,521.55 |
| Business tax and surcharge | 2,907,383.37 | 5,875,973.65 | |
| Sales expense | - | - | |
| Administrative expense | 31,726,924.70 | 29,587,958.60 | |
| R & D costs | |||
| Financial expenses | -16,480,997.63 | -13,663,222.04 | |
| Including：Interest expenses | 571,844.26 | ||
| Interest income | -17,084,555.65 | -13,653,213.00 | |
| Asset impairment loss | 1,488,429.82 | 5,554,598.81 |
| Add：Other income | 107,858.68 | 5,638.35 | |
| Investment gain（“-”for loss） | （5） | -3,527,451.56 | 22,719,665.90 |
| Incl: investment gains from affiliates | 1,260,154.95 | 1,101,479.62 | |
| Gains from change of fir value （“-”for loss） | |||
| Assets disposal income | |||
| II. Operational profit（“-”for loss） | 30,786,819.64 | 46,639,088.04 | |
| Add ：Non-operational income | 24,597.81 | 1,510.00 | |
| Less：Non business expenses | 5,061.99 | 477,949.40 | |
| III.Total profit(“-”for loss) | 30,806,355.46 | 46,162,648.64 | |
| Less：Income tax expenses | 5,528,745.08 | 8,499,047.25 | |
| IV. Net profit | 25,277,610.38 | 37,663,601.39 | |
| 1.Net continuing operating profit | |||
| 2.Termination of operating net profit | |||
| V. Net after-tax of other comprehensive income | -879,495.46 | -1,173,518.20 | |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | - | - | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | |||
| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | |||
| （II） Other comprehensive income that will be reclassified into profit or loss. | -879,495.46 | -1,173,518.20 | |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | |||
| 2.Gains and losses from changes in fair value available for sale financial assets | -1,500,778.50 | -288,326.89 | |
| 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets | |||
| 4.The effective portion of cash flow hedges and losses | |||
| 5.Translation differences in currency financial statements | 621,283.04 | -885,191.31 |
| 6.Other | |||
| VI. Total comprehensive income | 24,398,114.92 | 36,490,083.19 | |
| VII. Earnings per share | |||
| （I）Basic earnings per share | |||
| (II)Diluted earnings per share |
Consolidated Cash flow statement
Prepared by: Shenzhen Textile (Holdings) Co., Ltd. Year 2018 In RMB
| Items | Notes V | Report period | Same period of the previous year |
| I.Cash flows from operating activities | |||
| Cash received from sales of goods or rending of services | 1,178,134,497.59 | 1,587,525,262.02 | |
| Tax returned | 96,325,044.45 | 47,028,145.81 | |
| Other cash received from business operation | （45） | 299,343,342.34 | 112,007,561.78 |
| Sub-total of cash inflow | 1,573,802,884.38 | 1,746,560,969.61 | |
| Cash paid for purchasing of merchandise and services | 1,459,074,751.17 | 1,511,459,801.99 | |
| Cash paid to staffs or paid for staffs | 146,910,083.29 | 133,551,583.94 | |
| Taxes paid | 45,580,651.00 | 77,287,145.15 | |
| Other cash paid for business activities | （45） | 382,731,720.07 | 52,781,140.84 |
| Sub-total of cash outflow from business activities | 2,034,297,205.53 | 1,775,079,671.92 | |
| Cash flow generated by business operation, net | -460,494,321.15 | -28,518,702.31 | |
| II.Cash flow generated by investing | |||
| Cash received from investment retrieving | - | - | |
| Cash received as investment gains | 5,359,325.16 | 5,921,598.83 | |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | 13,045.98 | 6,740.00 | |
| Net cash received from disposal of subsidiaries or other operational units | - | - | |
| Other investment-related cash received | （45） | 4,170,920,804.54 | 3,566,066,407.98 |
| Sub-total of cash inflow due to investment activities | 4,176,293,175.68 | 3,571,994,746.81 | |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 380,415,720.59 | 254,484,019.80 | |
| Cash paid as investment | - | 28,500,000.00 | |
| Net cash received from subsidiaries and other operational units | - | - | |
| Other cash paid for investment activities | （45） | 3,625,700,000.00 | 3,093,000,000.00 |
| Sub-total of cash outflow due to investment activities | 4,006,115,720.59 | 3,375,984,019.80 | |
| Net cash flow generated by investment | 170,177,455.09 | 196,010,727.01 | |
| III.Cash flow generated by financing | |||
| Cash received as investment | - | 27,230,679.00 | |
| Incl: Cash received as investment from minor shareholders | - | - | |
| Cash received as loans | 630,493,275.82 | 189,660,085.68 | |
| Cash received from bond placing | - | - | |
| Other financing –related ash received | - | - | |
| Sub-total of cash inflow from financing activities | 630,493,275.82 | 216,890,764.68 | |
| Cash to repay debts | 347,609,345.87 | 150,340,039.30 | |
| Cash paid as dividend, profit, or interests | 19,810,202.44 | 1,048,268.16 | |
| Incl: Dividend and profit paid by subsidiaries to minor shareholders | - | - | |
| Other cash paid for financing activities | - | - | |
| Sub-total of cash outflow due to financing activities | 367,419,548.31 | 151,388,307.46 | |
| Net cash flow generated by financing | 263,073,727.51 | 65,502,457.22 | |
| IV. Influence of exchange rate alternation on cash and cash equivalents | -422,765.56 | -1,868,779.16 | |
| V.Net increase of cash and cash equivalents | -27,665,904.11 | 231,125,702.76 | |
| Add: balance of cash and cash equivalents at the beginning of term | 1,161,240,139.33 | 930,114,436.57 | |
| VI ..Balance of cash and cash equivalents at the end of term | 1,133,574,235.22 | 1,161,240,139.33 |
Person-in -charge of the accounting organ：Mu Linying
Cash Flow Statement of the Parent CompanyPrepared by: Shenzhen Textile (Holdings) Co., Ltd. Year 2018 In RMB
| Items | Notes | Report period | Same period of the previous year |
| I.Cash flows from operating activities | |||
| Cash received from sales of goods or rending of services | 70,428,184.75 | 66,552,835.48 | |
| Tax returned | - | - | |
| Other cash received from business operation | 22,064,255.92 | 14,836,257.91 | |
| Sub-total of cash inflow | 92,492,440.67 | 81,389,093.39 | |
| Cash paid for purchasing of merchandise and services | 5,684,253.84 | 5,055,450.06 | |
| Cash paid to staffs or paid for staffs | 19,166,726.43 | 17,811,799.19 | |
| Taxes paid | 15,493,316.47 | 18,156,899.52 | |
| Other cash paid for business activities | 6,553,493.05 | 7,297,312.65 | |
| Sub-total of cash outflow from business activities | 46,897,789.79 | 48,321,461.42 | |
| Cash flow generated by business operation, net | 45,594,650.88 | 33,067,631.97 | |
| II.Cash flow generated by investing | |||
| Cash received from investment retrieving | - | - | |
| Cash received as investment gains | 2,310,030.38 | 5,087,575.52 | |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | - | 1,510.00 | |
| Net cash received from disposal of subsidiaries or other operational units | - | - | |
| Other investment-related cash received | 566,305,459.40 | 262,490,733.61 | |
| Sub-total of cash inflow due to investment activities | 568,615,489.78 | 267,579,819.13 | |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 2,493,900.87 | 4,857,553.44 | |
| Cash paid as investment | - | - | |
| Net cash received from subsidiaries and other operational units | - | - | |
| Other cash paid for investment activities | 940,000,000.00 | 350,000,000.00 | |
| Sub-total of cash outflow due to investment activities | 942,493,900.87 | 354,857,553.44 | |
| Net cash flow generated by investment | -373,878,411.09 | -87,277,734.31 | |
| III.Cash flow generated by financing | |||
| Cash received as investment | - | 27,230,679.00 | |
| Cash received as loans | - | - | |
| Other financing –related ash received | - | - | |
| Sub-total of cash inflow from financing activities | - | 27,230,679.00 | |
| Cash to repay debts | - | - | |
| Cash paid as dividend, profit, or interests | - | - | |
| Other cash paid for financing activities | - | - | |
| Sub-total of cash outflow due to financing activities | - | - | |
| Net cash flow generated by financing | - | 27,230,679.00 | |
| IV. Influence of exchange rate alternation on cash and cash equivalents | - | -5,858.82 | |
| V.Net increase of cash and cash equivalents | -328,283,760.21 | -26,985,282.16 | |
| Add: balance of cash and cash equivalents at the beginning of term | 413,700,327.95 | 440,685,610.11 | |
| VI ..Balance of cash and cash equivalents at the end of term | 85,416,567.74 | 413,700,327.95 |
Consolidated Statement on Change in Owners’ Equity
Prepared by: Shenzhen Textile (Holdings) Co., Ltd. In RMB
| Items | Amount in this period | ||||||||||||
| Owner’s equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||||||||
| Share Capital | Other Equity instrument | Share Capital | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Common risk provision | Retained profit | |||||
| preferred stock | Sustainable debt | Other | |||||||||||
| I.Balance at the end of last year | 511,274,149.00 | - | - | - | 1,866,001,475.17 | 27,230,679.00 | 2,218,703.87 | - | 77,477,042.19 | - | -32,266,087.44 | 1,125,544,525.79 | 3,523,019,129.58 |
| Add: Change of accounting policy | - | ||||||||||||
| Correcting of previous errors | - | ||||||||||||
| Merger of entities under common control | - | ||||||||||||
| Other | - | ||||||||||||
| II.Balance at the beginning of current year | 511,274,149.00 | - | - | - | 1,866,001,475.17 | 27,230,679.00 | 2,218,703.87 | - | 77,477,042.19 | - | -32,266,087.44 | 1,125,544,525.79 | 3,523,019,129.58 |
| III.Changed in the current year | - | - | - | - | -284,491.54 | - | -879,495.46 | - | 2,527,761.04 | - | -25,508,385.97 | -39,393,990.91 | -63,538,602.84 |
| （1）Total comprehensive income | -879,495.46 | -22,980,624.93 | -39,322,082.45 | -63,182,202.84 | |||||||||
| （II）Investment or decreasing of capital by owners | - | - | - | - | -284,491.54 | - | - | - | - | - | - | -284,491.54 | |
| 1．Ordinary Shares invested by shareholders | - | - | |||||||||||
| 2．Holders of other equity instruments invested capital | - | - | |||||||||||
| 3．Amount of shares paid and accounted as owners’ equity | -284,491.54 | -284,491.54 | |||||||||||
| 4．Other | - | ||||||||||||
| （III）Profit allotment | - | - | - | - | - | - | - | - | 2,527,761.04 | - | -2,527,761.04 | - | - |
| 1.Providing of surplus reserves | 2,527,761.04 | -2,527,761.04 | - | ||||||||||
| 2.Providing of common risk provisions | - | ||||||||||||
| 3．Allotment to the owners (or shareholders) | - | ||||||||||||
| 4．Other | - | ||||||||||||
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | ||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | - | ||||||||||||
| 3．Making up losses by surplus reserves. | - | ||||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | |||||||||||||
| 5.Other | - | ||||||||||||
| (V). Special reserves | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Provided this year | - | ||||||||||||
| 2．Used this term | - | ||||||||||||
| （VI）Other | -71,908.46 | -71,908.46 | |||||||||||
| IV. Balance at the end of this term | 511,274,149.00 | - | - | - | 1,865,716,983.63 | 27,230,679.00 | 1,339,208.41 | - | 80,004,803.23 | - | -57,774,473.41 | 1,086,150,534.88 | 3,459,480,526.74 |
Consolidated Statement on Change in Owners’ EquityPrepared by: Shenzhen Textile (Holdings) Co., Ltd.
In RMB
| Items | Amount in last year | ||||||||||||
| Owner’s equity Attributable to the Parent Company | |||||||||||||
| Minor shareholders’ equity | Total of owners’ equity | ||||||||||||
| Share Capital | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Common risk provision | Retained profit | |||||
| preferred stock | Sustainable debt | Other | |||||||||||
| I.Balance at the end of last year | 506,521,849 .00 | - | - | - | 1,837 ,205 ,251.95 | - | 3,392 ,222 .07 | - | 73,710,682 .05 | - | -81,275 ,828.76 | 1,100 ,564 ,805.80 | 3,440 ,118 ,982.11 |
| Add: Change of accounting policy | - | ||||||||||||
| Correcting of previous errors | - | ||||||||||||
| Merger of entities under common control | - | ||||||||||||
| Other | - | ||||||||||||
| II.Balance at the beginning of current year | 506,521,849 .00 | - | - | - | 1,837 ,205 ,251.95 | - | 3,392 ,222 .07 | - | 73,710,682 .05 | - | -81,275 ,828.76 | 1,100 ,564 ,805.80 | 3,440 ,118 ,982.11 |
| III.Changed in the current year | 4,752 ,300 .00 | - | - | - | 28,796,223 .22 | 27,230,679 .00 | -1,173,518.20 | - | 3,766 ,360 .14 | - | 49,009,741 .32 | 24,979,719 .99 | 82,900,147 .47 |
| （1）Total comprehensive income | -1,173,518.20 | 52,776,101 .46 | 20,885,576 .41 | 72,488,159 .67 | |||||||||
| （II）Investment or decreasing of capital by owners | 4,752 ,300 .00 | - | - | - | 22,762,870 .54 | 27,230,679 .00 | - | - | - | - | - | - | 284,491.54 |
| 1．Ordinary Shares invested by shareholders | 4,752 ,300 .00 | 22,478,379 .00 | 27,230,679 .00 | - | |||||||||
| 2．Holders of other equity instruments invested capital | - | - | |||||||||||
| 3．Amount of shares paid and accounted as owners’ equity | 284,491.54 | 284,491.54 | |||||||||||
| 4．Other | - | ||||||||||||
| （III）Profit allotment | - | - | - | - | - | - | - | - | 3,766 ,360 .14 | - | -3,766,360.14 | - | - |
| 1.Providing of surplus reserves | 3,766 ,360 .14 | -3,766,360.14 | - | ||||||||||
| 2.Providing of common risk provisions | - | ||||||||||||
| 3．Allotment to the owners (or shareholders) | - | ||||||||||||
| 4．Other | - | ||||||||||||
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | ||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | - | ||||||||||||
| 3．Making up losses by surplus reserves. | - | ||||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | |||||||||||||
| 5．Other | - | ||||||||||||
| (V). Special reserves | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Provided this year | - | ||||||||||||
| 2．Used this term | - | ||||||||||||
| （VI）Other | 6,033 ,352 .68 | 4,094 ,143 .58 | 10,127,49 6.26 | ||||||||||
| IV. Balance at the end of this term | 511,274,149 .00 | - | - | - | 1,866 ,001 ,475.17 | 27,230,679 .00 | 2,218 ,703 .87 | - | 77,477,042 .19 | - | -32,266 ,087.44 | 1,125 ,544 ,525.79 | 3,523 ,019 ,129.58 |
Statement of change in owner’s Equity of the Parent CompanyPrepared by: Shenzhen Textile (Holdings) Co., Ltd
In RMB
| Items | Amount in this period | ||||||||||
| Owner’s equity Attributable to the Parent Company | Total of owners’ equity | ||||||||||
| Share Capital | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Retained profit | ||||
| preferred stock | Sustainable debt | Other | |||||||||
| I.Balance at the end of last year | 511,274,149 .00 | - | - | - | 1,599 ,381 ,854.96 | 27,230,679 .00 | 2,218 ,703 .87 | - | 77,477,042 .19 | 460,916,603 .36 | 2,624 ,037 ,674.38 |
| Add: Change of accounting policy | - | ||||||||||
| Correcting of previous errors | - | ||||||||||
| Other | - | ||||||||||
| II.Balance at the beginning of current year | 511,274,149 .00 | - | - | - | 1,599 ,381 ,854.96 | 27,230,679 .00 | 2,218 ,703 .87 | - | 77,477,042 .19 | 460,916,603 .36 | 2,624 ,037 ,674.38 |
| III.Changed in the current year | - | - | - | - | -356,400 .00 | - | -879,495 .46 | - | 2,527 ,761 .04 | 22,749,849 .34 | 24,041,714 .92 |
| （I）Total comprehensive income | -879,495 .46 | 25,277,610 .38 | 24,398,114 .92 | ||||||||
| (II) Investment or decreasing of capital by owners | - | - | - | - | -356,400 .00 | - | - | - | - | - | -356,400 .00 |
| 1．Ordinary Shares invested by shareholders | - | ||||||||||
| 2．Holders of other equity instruments invested capital | - | - | |||||||||
| 3.Amount of shares paid and accounted as owners’ equity | -356,400 .00 | -356,400 .00 | |||||||||
| 4．Other | - | ||||||||||
| （III）Profit allotment | - | - | - | - | - | - | - | - | 2,527 ,761 .04 | -2,527,761.04 | - |
| 1.Providing of surplus reserves | 2,527 ,761 .04 | -2,527,761.04 | - | ||||||||
| 2．Allotment to the owners (or shareholders) | - | ||||||||||
| 3．Other | - | ||||||||||
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | ||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | - | ||||||||||
| 3．Making up losses by surplus reserves. | - | ||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | |||||||||||
| 5．Other | - | ||||||||||
| (V) Special reserves | - | - | - | - | - | - | - | - | - | - | - |
| 1. Provided this year | - | ||||||||||
| 2．Used this term | - | ||||||||||
| （VI）Other | - | ||||||||||
| IV. Balance at the end of this term | 511,274,149 .00 | - | - | - | 1,599 ,025 ,454.96 | 27,230,679 .00 | 1,339 ,208 .41 | - | 80,004,803 .23 | 483,666,452 .70 | 2,648 ,079 ,389 .30 |
Statement of change in owner’s Equity of the Parent Company
Prepared by: Shenzhen Textile (Holdings) Co., Ltd.
In RMB
| Items | Amount in last year | |||||||||||
| Owner’s equity Attributable to the Parent Company | Total of owners’ equity | |||||||||||
| Share Capital | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Retained profit | |||||
| preferred stock | Sustainable debt | Other | ||||||||||
| I.Balance at the end of last year | 506,521,849 .00 | - | - | - | 1,576 ,547 ,075.96 | - | 3,392 ,222 .07 | - | 73,710,682 .05 | 427,019,362 .11 | 2,587 ,191 ,191.19 | |
| Add: Change of accounting policy | - | |||||||||||
| Correcting of previous errors | - | |||||||||||
| Other | - | |||||||||||
| II.Balance at the beginning of current year | 506,521,849 .00 | - | - | - | 1,576 ,547 ,075.96 | - | 3,392 ,222 .07 | - | 73,710,682 .05 | 427,019,362 .11 | 2,587 ,191 ,191.19 | |
| III.Changed in the current year | 4,752 ,300 .00 | - | - | - | 22,834,779 .00 | 27,230,679 .00 | -1,173,518.20 | - | 3,766 ,360 .14 | 33,897,241 .25 | 36,846,483 .19 | |
| （I）Total comprehensive income | -1,173,518.20 | 37,663,601 .39 | 36,490,083 .19 | |||||||||
| (II) Investment or decreasing of capital by owners | 4,752 ,300 .00 | - | - | - | 22,834,779 .00 | 27,230,679 .00 | - | - | - | - | 356,400.00 | |
| 1．Ordinary Shares invested by shareholders | 4,752 ,300 .00 | 22,478,379 .00 | 27,230,679 .00 | - | ||||||||
| 2．Holders of other equity instruments invested capital | - | - | ||||||||||
| 3.Amount of shares paid and accounted as owners’ equity | 356,400.00 | 356,400.00 | ||||||||||
| 4．Other | - | |||||||||||
| （III）Profit allotment | - | - | - | - | - | - | - | - | 3,766 ,360 .14 | -3,766,360.14 | - | |
| 1.Providing of surplus reserves | 3,766 ,360 .14 | -3,766,360.14 | - | |||||||||
| 2．Allotment to the owners (or shareholders) | - | |||||||||||
| 3．Other | - | |||||||||||
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - | - | - | - | - | |
| 1. Capitalizing of capital reserves (or to capital shares) | - | |||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | - | |||||||||||
| 3．Making up losses by surplus reserves. | - | |||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | ||||||||||||
| 5．Other | - | |||||||||||
| (V) Special reserves | - | - | - | - | - | - | - | - | - | - | - | |
| 1. Provided this year | - | |||||||||||
| 2．Used this term | - | |||||||||||
| （VI）Other | - | |||||||||||
| IV. Balance at the end of this term | 511,274,149 .00 | - | - | - | 1,599 ,381 ,854.96 | 27,230,679 .00 | 2,218 ,703 .87 | - | 77,477,042 .19 | 460,916,603 .36 | 2,624 ,037 ,674.38 |
III. Basic Information of the Company
(1)Company Profile
1. Enterprise registration address, organization mode and headquarter address.The company was previously the Shenzhen Textile Industry Company, on April 13, 1994, approvedby the Letter(1994)No.15 issued by Shenzhen Municipal People's Government, the Company wasrestructured and named as Shenzhen Textile (Holdings) Co., Ltd. In the same year, approved by the(1994) No.19 file of Shenzhenshi, the shares of the company were listed in Shenzhen Stock Exchange.The company now holds a unified social credit code for the 91440300192173749Y businesslicense,Registration address and headquarter address are 6/F,Shenfang Building, No.3 Huaqiang Road.North, Futian District, Shenzhen.2.Enterprise’s business nature and major business operation.At present, the Company is mainly engaged in high-tech industry focusing on R&D, production andmarketing of polarizers for liquid crystal display, management of properties in bustling businessdi stricts of Shenzhen and reserved high-class textile and garment business.3. Approval of the financial statements reportedThe financial statements have been authorized for issuance by the Board of Directors of the Group onApril 25,2019.(2)Scope of consolidated financial statements1.As of the end of the reporting period, there are 7 subsidiaries companies included in the consolidated financial statements: SAPO Photoelectric Co., Ltd., Shenzhen Lisi Industrial Development Co.,Ltd.,Shenzhen Huaqiang Hotel, Shenzhen Shenfang Property Management Co., Ltd. ShenzhenBeaufity Garments Co., Ltd.,Shzhen Shenfang Import & Export Co., Ltd., and Shengtou (Hongkong)Co., Ltd.2．The scope of consolidated financial statements this period did not change.
IV.Basis for the preparation of financial statements（1）Basis for the preparation
This company’s financial statements is based on going-concern assumption and worked outaccording to actual transactions and matters, Accounting Standard for Business Enterprises--BasicStandard(issued by No.33 Decree of the Ministry of Finance and revised by No.76 Decree of theMinistry of Finance) issued by the Ministry of Finance, 42 special accounting standards enacted andrevised on and after Feb 15, 2006, guideline for application of accounting standard for businessenterprises, ASBE interpretations and other relevant regulations(hereinafter collectively referred to as“Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules for InformationDisclosure by Companies Offering Securities to the Public-- General Provisions of Financial Reports(revised in 2014) issued by China Securities Regulatory Commission.
(2)Continuation
There will be no such events or situations in the 12 months from the end of the reporting period thatwill cause material doubts as to the continuation capability of the Company.
V. Important accounting policies and estimations1. Statement on complying with corporate accounting standardsThe financial statements prepared by the Company comply with the requirements of corporateaccounting standards. They truly and completely reflect the financial situations, operating results,equity changes and cash flow, and other relevant information of the company.
2.Fiscal YearThe Company adopts the Gregorian calendar year commencing on January 1 and ending onDecember 31 as the fiscal year.3. Operating cycleNormal business cycle is realized by the Company in cash or cash equivalents from the purchase ofassets form processing until. Less than 1 year is for the normal operating cycle in the company.With regard to less than 1 year for the normal operating cycle, the assets realized or the liabilitiesrepaid at maturity within one year as of the balance sheet date shall be classified into the currentassets or the current liabilities.4. Accounting standard moneyThe Company takes RMB as the standard currency for bookkeeping.5. Accounting process method of enterprise consolidation under same and different controlling.（1）Enterprise merger under same control：
For a business combination involving enterprises under common control, the party that, on thecombination date, obtains control of another enterprise participating in the combination is theabsorbing party, while that other enterprise participating in the combination is a party being absorbed.Combination date is the date on which the absorbing party effectively obtains control of the partybeing absorbed.The assets and liabilities obtained are measured at the carrying amounts as recorded by theenterprise being combined at the combination date. The difference between the carrying amount ofthe net assets obtained and the carrying amount of consideration paid for the combination (or the totalface value of shares issued) is adjusted to the capital premium in the capital reserve. If the balance ofthe capital premium is insufficient, any excess is adjusted to retained earnings.The cost of a combination incurred by the absorbing party includes any costs directly attributable tothe combination shall be recognized as an expense through profit or loss for the current period whenincurred.Accounting Treatment of the Consolidated Financial Statements:
The long-term equity investment held by the combining party before the combination will change ifthe relevant profit and loss, other comprehensive income and other owner equity are confirmedbetween the ultimate control date and the combining date for the combining party and the combinedparty on the acquirement date, and shall respectively offset the initial retained incomes or the profits
and losses of the current period during the comparative statement.(2)Business combination involving entities not under common controlA business combination involving enterprises not under common control is a business combination inwhich all of the combining enterprises are not ultimately controlled by the same party or parties bothbefore and after the business combination. For a business combination not involving enterprisesunder common control, the party that, on the acquisition date, obtains control of another enterpriseparticipating in the combination is the acquirer, while that other enterprise participating in thecombination is the acquiree. Acquisition date is the date on which the acquirer effectively obtainscontrol of the acquiree.The difference of the merger cost minus the fair value shares of identifiable net assets obtained by theacquiree during the merger on the acquisition date, is recognized as the business reputation. While themerger cost is less than the fair value shares of identifiable net assets obtained by the acquiree duringthe merger, all the measurement on the identifiable assets, the liabilities, the fair value of liabilitiesand the merger cost obtained by the acquiree should firstly be rechecked, and the difference shall berecorded into the current profits and costs if the merger cost is still less than the fair value shares ofidentifiable net assets obtained by the acquiree during the merger after rechecking.Where the temporary difference obtained by the acquirer was not recognized due to inconformitywith the conditions applied for recognition of deferred income tax, if, within the 12 months afteracquisition, additional information can prove the existence of related information at acquisition dateand the expected economic benefits on the acquisition date arose from deductible temporarydifference by the acquiree can be achieved, relevant income tax assets can be recognized, andgoodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of thecurrent period.For a business combination not involving enterprise under common control, which achieved instages that involves multiple exchange transactions, according to “The notice of the Ministry ofFinance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) andArticle51 of “Accounting Standards for Business Enterprises No.33 - Consolidated FinancialStatements” on the “package deal” criterion, to judge the multiple exchange transations whether theyare the"package deal". If it belong to the “package deal” in reference to the preceding paragraphs ofthis section and “long-term investment” accounting treatment, if it does not belong to the “packagedeal” to distinguish the individual financial statements and the consolidated financial statementsrelated to the accounting treatment:
In the individual financial statements, the total value of the book valueoftheacquiree's equityinvestment before the acquisition date and the cost of new investment at the acquisition date, as theinitial cost of the investment, the acquiree's equity investment before the acquisition date involved inother comprehensive income, in the disposal of the investment will be in other comprehensiveincome associated with the use of infrastructure and the acquiree directly related to the disposal ofassets or liabilities of the same accounting treatment (that is, except in accordance with the equitymethod of accounting in the defined benefit plan acquiree is remeasured net changes in net assets orliabilities other than in the corresponding share of the lead, and the rest into the current investmentincome).
In the combination financial statements, the equity interest in the acquiree previously held before theacquisition date re-assessed at the fair value at the acquisition date, with any difference between itsfair value and its carrying amount is recorded as investment income. The previously-held equityinterest in the acquiree involved in other comprehensive income and other comprehensive incomeassociated with the purchase of the foundation should be used party directly related to the disposal ofassets or liabilities of the same accounting treatment (that is, except in accordance with the equitymethod of accounting in the acquiree is remeasured defined benefit plans other than changes in netliabilities or net assets due to a corresponding share of the rest of the acquisition date into currentinvestment income).6.Preparation of the consolidated financial statements
(1)The scope of consolidationThe scope of consolidation for the consolidated financial statements is determined on the basis ofcontrol. Control is the power to govern the financial and operating policies of an enterprise so as toobtain benefits from its operating activities. The relevant events refer to the activities that havesignificant influence on the return to the invested party. In accordance with the specific conditions,the relevant events of the invested party should conclude the sale and purchase of goods and services,the management of the financial assets, the purchase and disposal of the assets, the research anddevelopment activities, the financing activities and so on.The scope of consolidation includes the Company and all of the subsidiaries. Subsidiary is anenterprise or entity under the control of the Company.Once the change in the relevant facts and circumstances leading to the definition of the relevantelements involved in the control of the change, the company will be re-evaluated.( 2)Preparation of the consolidated financial statements.The Company based on its own and its subsidiaries financial statements, in accordance with otherrelevant information, to prepare the consolidated financial statements.For a subsidiary acquired through a business combination not under common control, the operatingresults and cash flows from the acquisition (the date when the control is obtained) are included in theconsolidated income statement and consolidated statement of cash flows, as appropriated; noadjustment is made to the opening balance and comparative figures in the consolidated financialstatements. Where a subsidiary and a party being absorbed in a merger by absorption was acquiredduring the reporting period, through a business combination involving enterprises under commoncontrol, the financial statements of the subsidiary are included in the consolidated financialstatements. The results of operations and cash flow are included in the consolidated balance sheet andthe consolidated income statement, respectively, based on their carrying amounts, from the date thatcommon control was established, and the opening balances and the comparative figures of theconsolidated financial statements are restated.When the accounting period or accounting policies of a subsidiary are different from those of theCompany, the Company makes necessary adjustments to the financial statements of the subsidiarybased on the Company’s own accounting period or accounting policies. Where a subsidiary wasacquired during the reporting period through a business combination not under common control, the
financial statements was reconciliated on the basis of the fair value of identifiable net assets at thedate of acquisition.Intra-Group balances and transactions, and any unrealized profit or loss arising from intra-Grouptransactions, are eliminated in preparing the consolidated financial statements.Minority interest and the portion in the net profit or loss not attributable to the Company arepresented separately in the consolidated balance sheet within shareholders’/ owners’ equity and netprofit. Net profit or loss attributable to minority shareholders in the subsidiaries is presentedseparately as minority interest in the consolidated income statement below the net profit line item.When the amount of loss for the current period attributable to the minority shareholders of asubsidiary exceeds the minority shareholders’ portion of the opening balance of shareholders’/equityof the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equityinvestment or other reasons, the remaining equity investment is re-measured at its fair value at thedate when control is lost. The difference between 1) the total amount of consideration received fromthe transaction that resulted in the loss of control and the fair value of the remaining equityinvestment and 2) the carrying amounts of the interest in the former subsidiary’s net assetsimmediately before the loss of the control is recognized as investment income for the current periodwhen control is lost. Other comprehensive income related to the former subsidiary's equityinvestment, using the foundation and the acquiree directly related to the disposal of the same assets orliabilities are accounted when the control is lost(ie, in addition to the former subsidiary is remeasuredat the net defined benefit plan or changes in net assets and liabilities resulting from, the rest aretransferred to the current investment income). The retained interest is subsequently measuredaccording to the rules stipulated in the - “Chinese Accounting Standards for Business EnterprisesNo.2 - Long-term equity investment” or “Chinese Accounting Standards for Business EnterprisesNo.22 - Determination and measurement of financial instruments”.The company through multiple transactions step deal with disposal of the subsidiary's equityinvestment until the loss of control, need to distinguish between equity until the disposal of asubsidiary's loss of control over whether the transaction is package deal. Terms of the transactiondisposition of equity investment in a subsidiary, subject to the following conditions and the economicimpact of one or more of cases, usually indicates that several transactions should be accounted for asa package deal:①these transactions are considered。simultaneously, or in the case of mutual influencemade, ②these transactions as a whole in order to achieve a complete business results; ③theoccurrence of a transaction depends on occurs at least one other transaction; ④a transaction lookalone is not economical, but when considered together with other transaction is economical.If they does not belong to the package deal, each of them separately, as the case of a transaction inaccordance with “without losing control over the disposal of a subsidiary part of a long-term equityinvestments“principles applicable accounting treatment. Until the disposal of the equity investmentloss of control of a subsidiary of the transactions belonging to the package deal, the transaction willbe used as a disposal of a subsidiary and the loss of control of the transaction. However, before losingcontrol of the price of each disposal entitled to share in the net assets of the subsidiary 's investmentcorresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the lossof control or loss in the period.7.Joint venture arrangements classification and Co-operation accounting treatment
(1)Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control，depending ofthe rights and obligation of the Company in the joint arrangement. A joint operation is a jointarrangement whereby the Company has rights to the assets, and obligations for the liabilities, relatingto the arrangement. A joint venture is a joint arrangement whereby the Company has rights to the netassets of the arrangement.(2)Co-operation accounting treatmentWhen the joint venture company for joint operations, confirm the following items and share commonbusiness interests related to:
（1）Confirm individual assets and common assets held based on shareholdings;（2）Confirm individual liabilities and shared liabilities held based on shareholdings;（3）Confirm the income from the sales revenue of co-operate business output（4）Confirm the income from the sales of the co-operate business output based on shareholdings;（5）Confirm the individual expenditure and co-operate business cost based on shareholdings.(3)When a company is a joint ventures, joint venture investment will be recognized as long-term equity investments .8.Recognition Standard of Cash & Cash EquivalentsCash and cash equivalents of the Company include cash on hand, ready usable deposits andinvestments having short holding term (normally will be due within three months from the day ofpurchase), with strong liquidity and easy to be exchanged into certain amount of cash that can bemeasured reliably and have low risks of change.9.Foreign Currency Transaction（1）Foreign Currency TransactionThe approximate shot exchange rate on the transaction date is adopted and translated as RMB amountwhen the foreign currency transaction is initially recognized. On the balance sheet date, the monetaryitems of foreign currency are translated as per the shot exchange rate on the balance sheet date, theforeign exchange conversion gap due to the exchange rate, except for the balance of exchangeconversion arising from special foreign currency borrowings capitals and interests for the purchaseand construction of qualified capitalization assets, shall be recorded into the profits and losses of thecurrent period. The non-monetary items of foreign currency measured at the historical cost shall stillbe translated at the spot exchange rate on the transaction date, of which the RMB amount shall not bechanged. The non-monetary items of foreign currency measured at the fair value shall be translated at
the spot exchange rate on the fair value recognized date, the gap shall be recorded into the currentprofits and losses or other comprehensive incomes.
(2) Translation Method of Foreign Currency Financial StatementFor the assets and liabilities in the balance sheet, the shot exchange rate on the balance sheet date isadopted as the translation exchange rate. For the owner’s equity, the shot exchange rate on thetransaction date is adopted as the translation exchange rate, with the exception of “undistributedprofits”. The incomes and expenses in the income statement shall be translated at the spot exchangerate or the approximate exchange rate on the transaction date. The translation gap of financialstatement of foreign currency converted above shall be listed in other comprehensive incomes underthe owner’s equity in the consolidated balance sheet.10.Financial toolsOne financial asset or financial liability shall be recognized when the company becomes the party inthe financial instrument contract. The financial assets and the financial liabilities are measured at thefair value in the initial recognition. For the financial assets and liabilities that measured at the fairvalues and the variation included in the current profits and losses, the relative transaction expensesshall be directly recorded into the profits and losses. For the financial assets and liabilities of othercategories, the expenses related to transactions are recognized as initial amount.1 Determination of financial assets and liabilities’ fair valueFair value is the amount for which an asset could be exchanged, or a liability settled, betweenknowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has anactive market, the Company uses quoted price in the active market to establish its fair value. Thequoted price in the active market refers to the price that can be regularly obtained from exchangemarket, agencies, industry associations, pricing authorities; it represents the fair market trading pricein the actual transaction. For a financial instrument which does not have an active market, theCompany establishes fair value by using a valuation technique. Valuation techniques include usingrecent arm’s length market transactions between knowledgeable, willing parties, reference to thecurrent fair value of another instrument that is substantially the same, discounted cash flow analysisand option pricing models.
2. Classification, recognition and measurement of financial assetsAll regular way purchases or sales of financial assets are recognized and derecognized on a trade datebasis. On initial recognition, the Company’s financial assets are classified into including financialassets at fair value though profit or loss, held-to maturity investments, loans and receivables andavailable-for-trade assets.（1） Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit orloss. Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectivelymanaged, and there is objective evidence indicating that the enterprise recently manages this portfoliofor the purpose of short-term profits;C. the financial asset is a derivative, except for a derivative that is designated and effective hedginginstrument, or a financial guarantee contract, or a derivative that is linked to and must be settled bydelivery of an unquoted equity instrument (without a quoted price from an active market) whose fairvalue cannot be reliably measured. For such kind of financial assets, fair values are adopted forsubsequent measurement.Financial asset is designated on initial recognition as at fair value through profit or loss only when itmeets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement orrecognition of relevant gains or losses that would otherwise arise from measuring the financialinstruments on different bases.B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis,and is reported to the enterprise’s key management personnel. Formal documentation regarding riskmanagement or investment strategy has prepared。Financial assets at fair value through profit or loss are subsequently measured at the fair value. Anygains or losses arising from changes in the fair value and any dividends or interest income earned onthe financial assets are recognized in the profit or loss.
（2）Investment held-to maturityHeld-to-maturity investments are non-derivative financial assets with fixed or determinable paymentsand fixed maturity that an entity has the positive intention and ability to hold to maturity. Such kindof financial assets are subsequently measured at amortized cost using the effective interest method.Gains or losses arising from derecognition, impairment or amortization are recognized in profit orloss for the current period.Effective interest rate is the rate that exactly discounted estimated future cash flows through theexpected life of the financial asset or financial liability or, where appropriate, a shorter period to thenet carrying amount of the financial asset or financial liability. When calculating the effective interestrate, the Company shall estimate future cash flow considering all contractual terms of the financialasset or financial liability without considering future credit losses, and also consider all fees paid orreceived between the parties to the contract giving rise to the financial asset and financial liability thatare an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
（3）Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that arenot quoted in an active market. Financial assets classified as loans and receivables by the Companyinclude note receivables, account receivables, interest receivable dividends receivable and otherreceivables.Loans and receivables are subsequently measured at amortized cost using the effective interestmethod. Gain or loss arising from derecognition, impairment or amortization is recognized in profitor loss.
（4）Financial assets available-for-tradeFinancial assets available-for-trade include non-derivative financial assets that are designated oninitial recognition as available for trade, and financial assets that are not classified as financial assetsat fair value through profit or loss, loans and receivables or investment held-to-maturity.Financial assets available-for-trade are subsequently measured at fair value, and gains or lossesarising from changes in the fair value are recognized as other comprehensive income and included inthe capital reserve, except that impairment losses and exchange differences related to amortized costof monetary financial assets denominated in foreign currencies are recognized in profit or loss, untilthe financial assets are derecognized, at which time the gains or losses are released and recognized inprofit or loss. Interests obtained and dividends declared by the investee during the period in which thefinancial assets available-for-trade are held, are recognized in investment gains.
3. Impairment of financial assetsThe Group assesses at the balance sheet date the carrying amount of every financial asset except forthe financial assets that measured by the fair value. If there is objective evidence indicating afinancial asset may be impaired, a provision is provided for the impairment.The company shall make an independent impairment test on the financial assets with significantsingle amounts, and carry out an independent impairment test on the financial assets withinsignificant single amounts, or conduct an impairment-related test after they are included in acombination of financial assets with similar credit risk features so as to carry out. Where, uponindependent test, the financial asset (including those financial assets with significant single amountsand those with insignificant amounts) has not been impaired, it shall be included in a combination offinancial assets with similar risk features so as to conduct another impairment test. The financialassets which have suffered from an impairment loss in any single amount shall not be included in anycombination of financial assets with similar risk features for any impairment test.
（1）Impairment on held-to maturity investment, loans and receivablesThe financial assets measured by cost or amortized cost write down their carrying value by theestimated present value of future cash flow. The difference is recorded as impairment loss. If there isobjective evidence to indicate the recovery of value of financial assets after impairment, and it isrelated with subsequent event after recognition of loss, the impairment loss recorded originally can bereversed. The carrying value of financial assets after impairment loss reversed shall not exceed theamortized cost of the financial assets without provisions of impairment loss on the reserving date.
（2）Impairment loss on available-for-trade financial assetsWhere the fair value of the equity instrument investment drops significantly or not contemporarilyaccording to the integrated relevant factors, an available-for-trade financial asset is impaired. The"serious decline" refers to the cumulative fair value declines more than 30%; "non-temporarydecline" refers to the continuous decline in the fair value of time over 12 months.When an available-for-trade financial asset is impaired, the cumulative loss arising from declining infair value that had been recognized in capital reserve shall be removed and recognized in profit orloss. The amount of the cumulative loss that is removed shall be difference between the acquisitioncost with deduction of recoverable amount less amortized cost, current fair value and any impairmentloss on that financial asset previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of thefinancial asset is recovered, and it is objectively related to an event occurring after the impairmentloss was recognized, the initial impairment loss can be reversed and the reserved impairment loss onavailable-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss onavailable-for-trade debt instrument is recorded in the current profit or loss.The equity instrument where there is no quoted price in an active market, and whose fair value cannotbe reliably measured, or impairment loss on a derivative asset that is linked to and must be settled bydelivery of such an unquoted equity instrument shall not be reversed.
4. Recognition and measurement of financial assets transferThe Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under apass-through arrangement; or3) the enterprise has transferred its rights to receive cash flows from the asset and either hastransferred substantially all the risks and rewards of the asset, or has neither transferred norretainedsubstantially all the risks and rewards of the asset, but has transferred control of the asset.If the enterprise has neither retained all the risks and rewards from the financial asset nor control overthe asset, the asset is recognized according to the extent it exists as financial asset, and correspondentliability is recognized. The extent of existence refers the level of risk by the financial asset changesthe enterprise is facing.For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the carryingamount of the financial asset transferred; and the sum of the consideration received from the transferand any cumulative gain or loss that had been recognized in other comprehensive income, isrecognized in profit or loss.If a part of the transferred financial asset qualifies for derecognition, the carrying amount of thetransferred financial asset is allocated between the part that continues to be recognized and the partthat is derecognized, based on the relative fair value of those parts. The difference between (a) thecarrying amount allocated to the part derecognized; and (b) the sum of the consideration received forthe part derecognized and any cumulative gain or loss allocated to the part derecognized which hasbeen previously recognized in other comprehensive income, is recognized in profit or loss.The Company uses recourse sale financial assets, or financial assets held endorser, determine almostall of the risks and rewards of ownership of the financial assets have been transferred if. Hastransferred the ownership of the financial assets of almost all the risks and rewards to the transferee,the derecognition of the financial asset; retains ownership of the financial assets of almost all of therisks and rewards of financial assets that are not derecognised; neither transfers nor retains ownershipof the financial assets of almost all of the risks and rewards, then continue to determine whether theenterprise retains control of the assets and the accounting treatment in accordance with the principlesdescribed in the preceding paragraphs.
5. Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fairvalue through profit or loss and other financial liabilities. For financial liabilities at fair value throughprofit or loss, relevant transaction costs are immediately recognized in profit or loss for the currentperiod, and transaction costs relating to other financial liabilities are included in the initial recognitionamounts.
(1)Financial liabilities measured by the fair value and the changes recorded in profit or lossThe classification by which financial liabilities held-for-trade and financial liabilities designed at theinitial recognition to be measured by the fair value follows the same criteria as the classification bywhich financial assets held-for-trade and financial assets designed at the initial recognition to bemeasured by the fair value and their changes are recorded in the current profit or loss.For thefinancial liabilities measured by the fair value and changes recorded in the profit or loss, fair valuesare adopted for subsequent measurement. All the gains or losses on the change of fair value and theexpenses on dividends or interests related to these financial liabilities are recognized in profit or lossfor the current period.（2）Other financial liabilitiesDerivative financial liabilities that linked with equity instruments, which do not have a quoted pricein an active market and their fair value cannot be measured reliably, is subsequently measured by costOther financial liabilities are subsequently measured at amortized cost using the effective interestmethod. Gains or losses arising from derecognition or amortization is recognized in profit or loss forthe current period.6. Derecognition of financial liabilitiesThe Group derecognizes a financial liability (or part of it) when the underlying present obligation(or part of it) is discharged or cancelled or has expired. An agreement between the Company (anexisting borrower) and existing lender to replace original financial liability with a new financialliability with substantially different terms is accounted for as an extinguishment of the originalfinancial liability and the recognition of a new liability.When the Company derecognizes a financial liability or a part of it, it recognizes the differencebetween the carrying amount of the financial liability (or part of the financial liability) derecognizedthe consideration paid (including any non-cash assets transferred or new financial liabilities assumed)in profit or loss.7. Offsetting financial assets and financial liabilitiesWhen the Company has a legal right that is currently enforceable to set off the recognizedfinancial assets and financial liabilities, and intends either to settle on a net basis, or to realize thefinancial asset and settle the financial liability simultaneously, a financial asset and a financialliability shall be offset and the net amount is presented in the balance sheet. Except for the abovecircumstances, financial assets and financial liabilities shall be presented separately in the balancesheet and shall not be offset.8. Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of the Companyafter deducting all of its liabilities. The consideration received from issuing equity instruments, net of
transaction costs, are added to shareholders’ equity. All types of distribution (excluding stockdividends) made by the Company to holders of equity instruments are deducted from shareholders’equity. The Group does not recognize any changes in the fair value of equity instruments.11.Accounts Receivable1.Accounts receivable with material specific amount and specific provisioned bad debt preparation.
| Judgment criteria or amount standard of material specific amount or amount criterial： | The Client Identifies single amount of accounts receivable that is not less than RMB 1 million as account receivable that are individually significant in amount. The Client Identifies single amount of accounts receivable that is not less than RMB 0.5 million as account receivable that are individually significant in amount. |
| Provision method with material specific amount and provision of specific bad debt preparation： | Making an independent impairment test. If any objective evidence shows that it has been impaired, the impairment-related losses shall be recognized according to the gap between its present value of future cash flow less than its book value, and the several shall be determined to withdraw the bad debt provision. If there exists no the impairment after the impairment test, they shall be included in a combination of the receivables with similar risk features so as to withdraw the bad debt provision. |
| Name | Recognition Criteria | Withdrawing Method |
| Aging Group | Division by Aging | Aging Analysis Method |
| Aging | Rate for receivables(%) | Rate for other receivables(%) |
| Within 1 year（Included 1 year） | 5.00 | 5.00 |
| 1－2 years | 10.00 | 10.00 |
| 2－3 years | 30.00 | 30.00 |
| Over 3 years | 50.00 | 50.00 |
(3)Account receivable with non-material specific amount but specific bad debt preparation
| Reasons of Withdrawing Individual Bad Debt Provision | There is any objective evidence shows that it has been impaired. |
| Withdrawing Method of Bad Debt Provision | The impairment-related losses shall be recognized according to the gap between its present value of future cash flow less than its book value. |
（2）Packaging materials
Packaging materials are amortized using
13. Available-for-sale non-current asset and disposal groupIf the company recovers its book value mainly by sale of non-current asset (including exchangeof non-monetary assets of commercial nature and similarly hereinafter) , instead of continued use ofone non-current asset or disposal group, which shall be included into available-for-sale. In specificstandards, the following conditions shall be met at the same time: One non-current asset or disposalgroup is available for sale at all times under current status depending on standard practice of sellingthem in similar transactions; the company has made a resolution on the sale plan and gaineddefinitive purchase commitments; the sale is expected to be finished within one year. In which, thedisposal group refers to one set of assets that may be disposed as a whole along with other assets bysale or other ways in one deal and the liability transferred and related directly to such assets. If theasset group or combination of asset group under account title disposal group amortizes the goodwillobtained from business combination in accordance with No.8 of Accounting Standards for BusinessEnterprises-- Asset Impairment, the disposal group shall include the goodwill amortized to it.
When the company’s initial measurement or re-measurement on the balance sheet date isclassified into available-for-sale non-current asset and disposal group, the book value shall be writtendown to the net amount of fair value minus selling expenses if it is higher than the net amount of fairvalue minus selling expenses, the write-down shall be confirmed as the assets impairment loss andincluded in current profits and losses, meanwhile the available-for-sale asset depreciation reservesshall be accrued. For the disposal group, the asset impairment loss shall be written off pro rata thebook value of each non-current asset that is applicable to No.42 of Accounting Standards forBusiness Enterprises: Available-for-sale Non-current Assets, Disposal Group and DiscontinuedOperations (hereinafter referred to as “Available-for-sale rule for measurement”) after deducting thebook value of goodwill in it.
If the net amount of the fair value of available-for-sale disposal group minus selling expensesincreases after the balance sheet date, the previous write-downs shall be recovered and reversed inasset impairment loss of non-current assets that are applicable to available-for-sale rule formeasurement after being included into available-for-sale account title, the amount of reversal shall beincluded in current profits and losses and increased pro rata its book value based on the proportion ofthe book value of each non-current asset in the disposal group that is applicable to available-for-salerule for measurement except for goodwill; the book value of written-off goodwill and the assetimpairment loss confirmed before the non-current asset specified in available-for-sale rule formeasurement is classified into available-for-sale asset must not be reversed.
The available-for-sale non-current assets or the non-current assets in the disposal group shall notbe accrued depreciation or amortization, the interest of debit in available-for-sale disposal group andother expenses shall continue to be confirmed.
The non-current asset will no longer be included into available-for-sale category or will beremoved from the available-for-sale disposal group if it or the disposal group has no longer satisfiedthe conditions for classifying available-for-sale assets and measured as per the lower of: (1) bookvalue of the non-current asset before being classified into available-for-sale asset adjusted on the
basis of the depreciation, amortization or impairment that shall be confirmed on the assumption thatthe non-current asset is not included into available-for-sale account title; (2)Recoverable amount.14.Long-term equity investmentsLong-term equity investments referred to in this section refer to the Company invested entity hascontrol, joint control or significant influence over the long-term equity investments. The Companyinvested does not have control, joint control or significant influence over the long-term equityinvestments as financial assets available for sale or at fair value and the changes included financialassets through profit or loss.Joint control is the Company control over an arrangement in accordance with the relevant stipulationsare common, related activities and the arrangement must be after sharing control participants agreedto the decision-making. Significant influence is the Company s financial and operating policies of theentity has the right to participate in decision-making, but can not control or with other parties jointcontrol over those policies.
1. Determination of Investment costThe cost of a long-term equity investment acquired through business combination under commoncontrol is measured at the acquirer's share of the combination date book value of the acquiree's netequity in the ultimate controller's consolidated financial statements. The difference between the costand book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted tocapital reserves, and to retained earnings if capital reserves is insufficient. If the consideration istransferred by way of issuing equity instruments, the face value of the equity instruments issued isrecognised in share capital and the difference between the cost of the face value of the equityinstruments issued is adjusted to capital reserves, and to retained earnings if capital reserves isinsufficient.The cost of a long-term equity investment acquired through business combination notunder common control is the fair value of the assets transferred, liabilities incurred or assumed andequity instruments issued. (For the equity of the combined party under common control obtainedstep-by-step through multiple transactions and the business combination under common controlultimately formed, the company should respectively dispose all the transactions if belong to thepackage deal. For the package deal, all the transactions will be conducted the accounting treatment asthe deal with acquisition of control. For the non-package deal, the shares of the book value of thestockholders’ equity/owners’ equity of the combined party in the consolidated financial statements ofthe ultimate control party shall be as the initial investment cost of the long-term equity investment,and the capital reserves shall be adjusted for the difference between the initial investment cost oflong-term equity investment and the sum of the book value of long-term equity investment beforemerging and that of new consideration payment obtained on the merger date, or the retained earningsshall be adjusted if the capital reserves are insufficient to offset. As for the equity investment heldbefore the merger date, the accounting treatment will not be conducted temporarily for othercomprehensive income accounted by equity method or confirmed for the financial assets available forsale.)All expenses incurred directly associated with the acquisition by the acquirer, including expenditureof audit, legal services, valuation and consultancy and other administrative expenses, are recognisedin profit or loss for the period during which the acquisition occurs. For the merger of enterprises not
under the same control through gaining the shares of the combined enterprise by multiple steps ofdeals, it shall deal with it in the following two ways depending on that if it belongs to "a packagedeal": if it belongs to "a package deal", it shall deal with all the deals as one obtaining the controlpower; if it does not belong to "a package deal", it shall, on the date of merger, regard the sum ofbook value of the owner’s original equity of the merged enterprise and the newly increasedinvestment cost as the initial cost of the long-term equity investment. For the shares originally heldby this enterprise accounted for by weighted equity method, the relevant other comprehensive incomeshall not be accounted for temporarily.If the equity investment held originally can be classified as thefinancial assets for sale, the difference between the fair value and the book value, and the variation inthe accumulative fair value of other comprehensive returns recorded originally will be transferred intothe current profits and losses.All expenses incurred directly associated with the acquisition by the acquirer, including expenditureof audit, legal services, valuation and consultancy and other administrative expenses, are recognisedin profit or loss for the period during which the acquisition occurs.Long-term equity investments acquired not through business combination are measured at cost oninitial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cashpaid, the fair value of equity instrument issued, the contract price, the fair value or book value of theassets given away in the case of non-monetary asset exchange, or the fair value of the relevantlong-term equity investments. The cost of acquisition of a long-term equity investment acquired notthrough business combination also includes all directly associated expenses, applicable taxes and fees,and other necessary expenses. When the significant impact or the joint control but non-control on theinvested party can be implemented due to the additional investment, the long-term equity investmentcost is the sum of the fair value of the equity investment originally held and the new investment costsbased on the recognition of “Accounting Standards for Enterprises No.22 – Recognition andMeasurement of Financial Instruments”.
2. Subsequent MeasurementTo be invested joint control ( except constitute common operator ) or long-term equity investmentssignificant influence are accounted for using the equity method. In addition, the Company's financialstatements using the cost method of accounting for long-term equity can exercise control over theinvestee.(1)Cost method of accounting for long-term equity investmentsUnder the cost method, a long-term equity investment is measured at initial investment cost. Exceptfor cash dividends or profits declared but not yet paid that are included in the price or considerationactually paid upon acquisition of the long-term equity investment, investment income is recognized inthe period in accordance with the attributable share of cash dividends or profit distributions declaredby the investee.(2)Equity method of accounting for long-term equity investmentsWhen using the equity method, the initial investment cost of long-term equity investment exceeds theinvestor's net identifiable assets of the fair share of the investment value, do not adjust the initial investment cost of long-term equity investment; the initial investment cost is less than the investee unit sh
are of identifiable net assets at fair value, the difference is recognized in profit or loss, while the long-term equity investment adjustment costs.Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’sinterest in the fair values of the investee’s identifiable net assets at the time of acquisition, noadjustment shall be made to the initial investment cost. The carrying amount of an long-term equityinvestment measured using the equity method is adjusted by the Company's share of the investee's netprofit and other comprehensive income, which is recognised as investment income and othercomprehensive income respectively. The carrying amount of an long-term equity investmentmeasured using the equity method is reduced by profit distribution or cash dividends announced bythe investee. The carrying amount of an long-term equity investment measured using the equitymethod is also adjusted by the investee's equity movement other than net profit, other comprehensiveincome and profit distribution, which is adjusted to capital reserves。The net profit of the investee isadjusted by the fair value of the investee's identifiable assets as at acquistion. The financial statementsand hence the net profit and other comprehensive income of an investee which does not adoptaccounting policies or accounting period uniform with the Company is adjusted by the Company'saccounting policies and accounting period. The Company's share of unrealised profit or loss arisingfrom related party transactions between the Company and an associate or joint venture is deductedfrom investment income. Unrealised loss arising from related party transactions between theCompany and an associate or joint venture which is associated with asset impairment is not adjusted.Where assets transferred to an associate or joint venture which form part of the Company'sinvestment in the investee but which does not enable the Company obtain control over the investee,the cost of the additional investment acquired is measured at the fair value of assets transferred andthe difference between the cost of the additional investment and the book value of the assetstransferred is recognised in profit or loss. Where assets transferred to an associate or joint ventureform an operation, the difference between the consideration received and the book value of the assetstransferred in recognised in profit or loss. Where assets transferred from an associate or joint ventureform an operation, the transaction is accounted for in accordance with CAS 20 - BusinessCombination, any gain or loss is reocgnised in profit or loss.The Company's share of an investee's net loss is limited by the sum of the book value of thelong-term equity investment and other net long-term investments in the investees. Where theCompany has obligation to share additional net loss of the investee, the estimatedshare of lossrecognised as accrued liabilities and investment loss. Where the Company has unrecognised share ofloss of the investee when the investee generates net profit, the Company's unrecognised share of lossis reduced by the Company's share of net profit and when the Company's unrecognised share or lossis eliminated in full, the Company's share of net profit, if any, is recognised as investment income.(3)Acquisition of minority interestThe difference between newly increased equity investment due to acquisition of minority interestsand portion of net asset cumulatively calculated from the acquisition date is adjusted as capitalreserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted againstreturned earnings.(4)Disposal of long-term equity investmentWhere the parent company disposes long-term investment in a subsidiary without a change in control,
the difference in the net asset between the amount of disposed long-term investment and the amountof the consideration paid or received is adjusted to the owner’s equity. If the disposal of long-terminvestment in a subsidiary involves loss of control over the subsidiary, the related accounting policiesin Note applies. For disposal of long-term equity investments in any situation other than thefore-mentioned situation, the difference between the book value of the investment disposed and theconsideration received is recognised in profit or loss.The investee's equity movement other than net profit, other comprehensive income and profitdistribution is reocgnised in profit or loss proportionate to the disposal.Where a long-term equity investment is measured by the equity method both before and after partdisposal of the investment, cumulative other comprehensive income relevant to the investmentrecognised prior to the acquistion is treated in the same manner that the investee disposes the relevantassets or liabilities proportionate to the disposal. The investee's equity movement other than net profit,other comprehensive income and profit distribution is reocgnised in profit or loss proportionate to thedisposal.Where a long-term equity investment is measured at cost both before and after part disposal of theinvestment, cumulative other comprehensive income relevant to the investment recognised, as a resultof accounting by equity method or recognition and measurement principles applicable to financialinstruments, prior to the Company's acquisition of control over the investee is treated in the samemanner that the investee disposes the relevant assets or liabilities and recognised in profit or lossproportionate to the disposal.The investee's equity movement other than net profit, othercomprehensive income and profit distribution, as a result of accounting by equity method, isreocgnised in profit or loss proportionate to the disposal.
Where the Company's control over an investee is lost due to partial disposal of investment in theinvestee and the Company continues to have significant influence over the investee after the partialdisposal, the investment in measured by the equity method in the Company's separate financialstatements; where the Company's control over an investee is lost due to partial disposal of investmentin the investee and the Company ceases to have significant influence over the investee after thepartial disposal, the investment in measured in accordance with the recognition and measurementprinciples applicable to financial instruments in the Company's separate financialstatements and thedi fference between the fair value and the book value of the remaining investment at the date of loss ofcontrol is recognised in profit or loss. Cumulative other comprehensive income relevant to theinvestment recognised, as a result of accounting by equity method or recognition and measurementprinciples applicable to financial instruments, prior to the Company's acquisition of control over theinvestee is treated in the same manner that the investee disposes the relevant assets or liabilities onthe date of loss of control. The investee's equity movement other than net profit, other comprehensiveincome and profit distribution, as a result of accounting by equity method, is reocgnised in profit orloss when control is lost. Where the remaining investment is measured by equity method, thefore-mentioned other comprehensive income and other equity movement are recognised in profit orloss proportionate to the disposal; Where the remaining investment is measured in accordance withthe recognition and measurement principles applicable to financial instruments, the fore-mentionedother comprehensive income and other equity movement are recognised in profit or loss in full.
Where the Company's joint control or significant influence over an investee is lost due to partialdisposal of investment in the investee,the remaining investment in the investee is measured inaccordance with the recognition and measurement principles applicable to financial instruments, thedi fference between the fair value and the book value of the remaining investment at the date of loss ofjoint control or significant influence is recognised in profit or loss.Cumulative other comprehensiveincome relevant to the investment recognised, as a result of accounting by equity method, prior to thepartial disposal is treated in the same manner that the investee disposes the relevant assets orliabilities on the date of loss of joint control or significant influence. The investee's equity movementother than net profit, other comprehensive income and profit distribution is reocgnised in profit orloss when joint control or significant influence is lost.Where the Company's control over an investee is lost through multiple disposals and the multipledisposals shall be viewed as one single transaction, the multiple disposals is accounted for one singletransaction which result in the Company's loss of control over the investee. Each difference betweenthe consideration received and the book value of the investment disposed is recognised in othercomprehensive income and reclassified in full to profit or loss at the time when control over theinvestee is lost.15.Investment property1．The measurement mode of investment propertyThe investment property of the company includes the leased land use rights, the leased buildings, theland use rights held and prepared to transfer after appreciation.The company shall adopt the cost mode to measure the investment property.2. Depreciation or Amortization Method by Use of Cost ModeThe leased buildings of the investment property in the company shall be withdrawn the depreciationby the service life average method, and the depreciation policy is the same with that of the fixedassets. The land use rights held and prepared to transfer after appreciation in the investment propertyshall be amortized by the line method, and the specific accounting policy is same with that of theintangible assets.16.Fixed assets1．The conditions of recognitionFixed assets refers to the tangible assets that are held for the sake of producing commodities,rendering labor service, renting or business management and their useful life is in excess of one fiscalyear. The fixed assets can be recognized when the following requirements are all met: (1) theeconomic benefits relevant to the fixed assets will flow into the enterprise. (2) the cost of the fixedassets can be measured reliably.The fixed assets of the company include the houses and buildings, the decoration of the fixed assets,the machinery equipment, the transportation equipment, the electronic instrument and other devices.2. Initial Measurement and Subsequent Measurement of the Fixed Assets
The fixed assets shall be book kept as per the acquired actual cost, and the depreciation shall bewithdrawn from the subsequent month after the usable status reserved and achieved.3．The method for depreciation
| Category | The method for depreciation | Expected useful life（Year） | Estimated residual value | Depreciation |
| House and Building- Production | Straight-line method | 35 year | 4% | 2.74% |
| House and Building-Non- Production | Straight-line method | 40 years | 4% | 2.40% |
| Decoration of Fixed assets | Straight-line method | 10 years | 10.00% | |
| Machinery and equipment | Straight-line method | 10-14 years | 4% | 9.60%-6.86% |
| Transportation equipment | Straight-line method | 8 years | 4% | 12.00% |
| Electronic equipment | Straight-line method | 8 years | 4% | 12.00% |
| Other equipment | Straight-line method | 8 years | 4% | 12.00% |
(3) Depreciation Method of Fixed Assets Acquired under Finance Leases: the depreciation shall bewithdrawn for the fixed assets acquired under finance leases as per the depreciation policy of ownfixed assets.17.Construction in progress1. The projects under construction shall be recognized when the economic benefits may flow into andthe cost can be reliably measured. Meanwhile, the projects under construction shall be measuredaccording to the actual cost occurred before the assets are built to achieve the expected usablecondition.2. The projects under construction shall be transferred into the fixed assets according to the actualproject costs when the expected usable condition achieved. For the expected usable conditionachieved while the final accounts for completed projects not handled yet, the projects shall betransferred into the fixed assets as per the estimated value. After the final accounts for completedprojects handled, the original estimated value shall be adjusted as per the actual cost, but the originalwithdrawn depreciation shall not be adjusted again.18.Borrowing costs
1. Recognition principles for capitalizing of loan expensesBorrowing expenses occurred to the Company that can be accounted as purchasing orproduction of asset satisfying the conditions of capitalizing, are capitalized and accounted as cost ofrelated asset. Other borrowing expenses are recognized as expenses according to the occurred amount,and accounted into gain/loss of current term.
2. Duration of capitalization of Loan costs(1).When a loan expense satisfies all of the following conditions, it is capitalized:
1. Expenditures on assets have taken place.2. Loan costs have taken place;3. The construction or production activities to make assets to reach the intended use or sale of statehave begun.（2）Capitalization of borrowing costs is suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted by activities other than those necessaryto prepare the asset for its intended use or sale, when the interruption is for a continuous period ofmore than 3 months. Borrowing costs incurred during these periods recognized as an expense for thecurrent period until the acquisition, construction or production is resumed.（3）When the construction or production meets the intended use or sale of state of capitalizationconditions, the Loan costs should stop capitalization.
3. Computation Method for Capitalization Rate and Amount of Borrowing CostsWith regard to the special borrowings for the purchase and construction of qualified assets, thecapitalized interest amount shall be recognized according to the amount of the interest cost for the
special borrowings actually occurred during the current period (including the amortization of discountor premium recognized as per the effective interest method) minus the interest income acquired afterthe borrowings deposit in bank or the investment income obtained from the temporary investment.For the general borrowings for the purchase and construction of qualified assets, the capitalizedinterest amount of the general borrowings shall be computed and recognized according to theweighted average of accumulative asset expense beyond the expense of the special borrowings,multiplying the capitalization rate of general borrowings.19.Intangible assets1. Valuation Method, Service Life and Impairment Test of Intangible Assets(1) The intangible assets include the land use rights, the professional technology and the software,which are conducted the initial measurement as per the cost.(2) The service life of intangible assets is analyzed and judged when of the company acquires theintangible assets. For the finite service life of the intangible assets, the years of service life or thequantity of service life formed and the number of similar measurement unit shall be estimated. If theterm of economic benefits of the intangible assets brought for the company is not able to be foreseen,the intangible assets shall be recognized as that with the indefinite service life.(3) Estimation Method of Service life of Intangible Assets1) For the intangible assets with the finite service life, the company shall generally consider thefollowing factors to estimate the service life: ① the normal service life of products produced withthe assets, and the acquired information of the service life of similar assets. ② the estimation of thecurrent stage conditions and the future development trends in the aspects of technology and craft. ③the demand of the products produced by the assets or the offered services in the market. ④ theexpectation of actions adopted by current or potential competitors. ⑤ the expected maintenanceexpense for sustaining the capacity to economic benefits brought by the assets and the ability to therelevant expense expected. ⑥ the relevant law provision or the similar limit to the control term ofthe assets, such as the licensed use term and the lease term. ⑦ the correlation with the service life ofother assets held by the company.2) Intangible Assets with Indefinite Service Life, Judgment Criteria on Indefinite Service Life andReview Procedure of Its Service LifeThe company shall be unable to foresee the term of economic benefits brought by the assets for thecompany, or the indefinite term of intangible assets recognized as the indefinite service life ofintangible assets.The judgment criteria of Indefinite service life: ① as from the contractual rights or other legal rights,but the indefinite service life of contract provision or legal provisions. ② unable to judge the term ofeconomic benefits brought by the intangible assets for the company after the integration ofinformation in the same industry or the relevant expert argumentation.At the end of every year, the review should be made for the service life of the intangible assets withthe indefinite service life, and the relevant department that uses the intangible assets, shall conductthe basic review by the method from up to down, in order to evaluate the judgment criteria of the
indefinite service life if there is the change.(4) Amortization Method of Intangible Assets Value
The intangible assets with the finite service life shall be systematically and reasonably amortizedaccording to the expected implementation mode of the economic benefits related to the intangibleassets during the service life, and the line method shall be adopted to amortize for the intangibleassets unable to reliably recognize the expected implementation mode. The specific service life is asfollows:
| Items | Amortization life time（Year） |
| Land use right | 50 years |
| Proprietary technology | 15 years |
| Software | 5 years |
achievement.20.Long-term Assets ImpairmentThe company shall make judgment of the long-term assets including the long-term equity investment,the investment property measured by the cost mode, the fixed assets and the projects underconstruction if there is possible impairment on the balance sheet date. If there exists the evidenceshows that the long-term assets have the impairment, the impairment test should be conducted, andthe recoverable amount should be estimated. The impairment shall be confirmed if there exists afterthe comparison of the estimated recoverable amount of the assets and its book value, and if the assetsimpairment provision shall be withdrawn to recognize the corresponding impairment losses. Theestimation of the recoverable amount of assets should be confirmed according to the higher onebetween the net amount of the fair value minus the disposal costs and the present value of the cashflow of assets expected in the future.The company shall conduct the impairment test at least every year for the goodwill established by thebusiness combination and the intangible assets with the indefinite service life whether there exists theimpairment.The impairment loss of long-term assets after recognized shouldn’t be reversed in the futureaccounting period.21.Long-term amortizable expensesDeferred charges represent expenses incurred that should be borne and amortized over the current andsubsequent period (together of more than one year).The long-term unamortized expense shall be bookkept as per the actual amount occurred, and shall beaveragely amortize within the benefit period or the specified period. If the long-term unamortizedexpense can’t make the benefits for the future accounting period, the amortized value of theunamortized project shall all be transferred into the current profits and losses.22.RemunerationThe employee benefits of the company include short-term employee benefits, post-employmentbenefits, termination benefits and other long-term employee benefits.1. Accounting Treatment Method of Short-term CompensationDuring the accounting period of service provision of staff, the company shall regard the actualshort-term compensation as the liability and record into the current profits and losses or the relevantassets cost as per the beneficiary. Of which, the non-monetary welfare shall be measured as per thefair value.2. Accounting Treatment Method of Severance Benefit PlansThe severance benefit plans can be divided into the defined contribution plan and the defined benefitplan according to the risk and obligation borne.
(1) The Defined Contribution PlanThe contribution deposits that paid to the individual subject for the services provided by the staffs onthe balance sheet date during the accounting period, shall be recognized as the liability, and recordedinto the current profits and losses or the relevant asset costs as per the beneficiary.(2) The Defined Benefit PlanThe defined benefit plan is the severance benefit plans with the exception of the defined contributionplans.1) Based on the expected cumulative welfare unit method, the company shall adopt unbiased andmutually consistent actuarial assumptions to make evaluation of demographic variables and financialvariables, measure and define the obligations arising from the benefit plan, and determine the periodof the relevant obligations. The company shall discount all the defined benefit plan obligations,including the obligation within twelve months after the end of the annual report during the expectedservices provision of employee. The discount rate adopted in discounting shall be recognizedaccording to the bonds matched with the defined benefit plan obligation term and the currency at thebalance sheet date or the market return of high-quality corporate bonds in the active market.2) If there exist the assets for the defined benefit plan, the deficit or surplus arising from the presentvalue of the defined benefit plan obligations minus the fair value of the defined benefit plan assets arerecognized as the net liability or the net assets of the defined benefit plan. If there exists the surplus ofthe defined benefit plan, the lower one between the surplus of the define benefit plan and the upperlimit of assets shall be used to measure the net assets of the defined benefit plan. The upper limit ofassets refers to the present value of economic benefits obtained from the refund of the defined benefitplans or the reduction of deposit funds of future defined benefit plans.3) At the end of period, the employee’s payroll costs arising from the defined benefit plan arerecognized as the service costs, the net interests on the net liabilities or the net assets of the definedbenefit plan, and the changes caused by the net liabilities and the net assets of the defined benefit planthat re-measured. Of which, the service costs and the net interests on the net liabilities or the netassets of the defined benefit plan shall be recorded into the current profits and losses or the relevantassets costs, the changes caused by the net liabilities and the net assets of the defined benefit plan thatre-measured shall be recorded into other comprehensive incomes, which should not be switched backto the profits and losses during the subsequent accounting period, but the amount recognized fromother comprehensive incomes can be transferred within the scope of the rights and interests.4) The profit or loss of one settlement shall be recognized when settling the defined benefit plan.3. Accounting Treatment Method of Demission WelfareThe employee compensation liabilities generated by the demission welfare shall be recognized on theearly date and recorded into the current profits and losses: (1) when the company can’t withdraw thedemission welfare provided due to the rundown suggestion or the termination of labor relations plans.(2) when the company recognizes the costs or the expenses related to the reorganization of demissionwelfare payment.The earlier one between when the company can’t withdraw the rundown suggestion or thetermination of labor relations plans at its side and when the costs relevant to the recombination ofdismission welfare payment, shall be recognized as the liabilities arising from the compensation due
to the termination of labor relations with staff and shall be recorded into the current profits and losses.Then company shall reasonably predict and recognize the payroll payable arising from the dismissionwelfare. The dismission welfare, which is expected to finish the payment within twelve months afterthe end of the annual report recognized, shall apply to the relevant provisions of short-termcompensation. The dismission welfare, which is expected to be unfinished for the payment withintwelve months after the end of the annual report recognized, shall apply to the relevant provisions ofshort-term compensation, shall apply to the provisions related to other long-term employee benefits.4. Accounting Treatment Method of Other Long-term Employee BenefitsIf other long-term employee benefits of employees provided by the company meet the conditions ofthe defined contribution plan, the accounting treatment shall be made in accordance with the definedcontribution plan. Except for these, other long-term benefits shall be made the accounting treatmentaccording to the defined benefit plan, but the changes arising from the re-measurement of netliabilities or net assets of other long-term employee benefits shall be recorded into the current profitsand losses or the relevant assets costs.23. Estimated Liabilities1. Recognition Criteria of Estimated LiabilitiesThe liabilities shall be recognized when external guarantee, pending litigation or arbitration, productquality assurance, staff reduction plan, loss contract, recombination obligation, disposal obligation ofthe fixed assets and other pertinent businesses all meet the following requirements:
(1) The obligation is the current obligation borne by the company.(2) The implementation of the obligation may cause the economic benefits out of the enterprise.(3) The amount of the obligation can be measured reliably.2. Measurement Method of Estimated LiabilitiesThe estimated liabilities shall be made the initial measurement according to the best estimate of theexpenditure required to settle the present obligation. There is the continuous scope for the requiredexpenditure, and the best estimate with the same possibilities resulted from various outcomes withinthe scope shall be recognized as per the intermediate value. The best estimate should be recognizeaccording to the following methods:
(1) The best estimate shall be recognized as per the most possible amount if there are mattersinvolved in the single item.(2) The best estimate shall be calculated and recognized as per the possible amount if there arematters involved in the multiple item.If the company pays all the expenses for paying off the estimated liabilities, or partial estimates arecompensated by the third party or other parties, the compensation amount should be separatelyrecognized as the assets when the receipt of the compensation amount is basically determined.Meanwhile, the determined compensation amount shall not exceed the book value of the estimatedliabilities recognized.
The company shall make review of the book value of estimated liabilities at the balance sheet date. Ifthere is conclusive evidence that the book value cannot really reflect the current best estimate, theadjustment shall be made for the book value in accordance with the current best estimate.24. Share payment1.Accounting Treatment Methods of Share Payment
Share payment is a transaction which is for obtaining the service provided by employees or otherparties, where thus the equity instrument is granted , or for bearing the liability confirmed basing onthe equity instrument. Share payment is divided into the payment settled by equities and the paymentsettled by cash.(1)Shared Payment settled by Equities
The share payment settled by equities, which is used for exchanging the service provided byemployees, will be measured according to the fair value of the equity instrument granted toemployees on date of grant. The amount of such fair value, under the situation that the rights can onlybe exercised after the service is finished and the set performance is achieved within the waitingperiod, and basing on the optimum estimation for the number of equity instrument which exerciserights within the waiting period, will be measured according to straight-line method and counted intorelevant costs and expenses. When the rights can be exercised immediately after being granted, thepayment will be counted into relevant costs and expenses, and the capital reserve will be increasedcorrespondingly.
On each and every balance sheet date within the waiting period, the Company will make optimumestimations according to the newly-obtained subsequent information after the changes occurred in thenumber of employees who exercise rights so as to modify the predicted number of the equityinstrument of exercising rights. The influence from above-mentioned estimations will be counted intorelevant costs and expenses at the current period, and the corresponding adjustment will be made forthe capital reserve.If the fair value of the other parties’ service can be reliably measured, the share-based payment settledby equities which is used for exchanging the service of other parties will be measured according tothat fair value on date of acquisition. If not, but the fair value of the equity instrument can be reliablymeasured, the payment will be counted according to the fair value of the equity instrument on date ofservice acquisition, and it will be counted into relevant costs and expenses, and the equity of theshareholders will be increased correspondingly.
(2) Share Payment settled by Cash
The share payment settled by cash will be measured according to the fair value of the liabilityconfirmed basing on the shares borne by the Company and other equity instruments. If the rights canbe exercised immediately after being granted, the payment will be counted into relevant costs orexpenses and the liability will be increased correspondingly. If the rights can only be exercised afterthe situation that service within the waiting period is completed and set performance is achieved, theservice obtained at the current period, according to the fair value amount of the liability borne by theCompany, and basing on the optimum estimation for the condition of exercising rights, will becounted into costs or expenses on each and every balance sheet date during the waiting period, andthe liability will be increased correspondingly.
Each and every balance sheet date and settlement before relevant liability settlement, the fairvalue of liability will be remeasured, of which changes occurred will be counted into the currentperiod.
2.Relevant Accounting Treatment of Modification and Termination for Share-based PaymentPlanWhen the Company modifies the share payment plan, if the fair value of the equity instrumentgranted is increased after the modification, the increase in the service obtained will becorrespondingly confirmed according to the increase in the fair value of equity instrument. Theincrease in the fair value of equity instrument means the balance between the equity instrumentbefore modification and the equity instrument after modification on modification date. If decreaseoccurred in the total fair value of the equity instrument after the modification or methods which areunbeneficial to employees are adopted in the modification, accounting treatment will still continue tobe made for the service obtained, and such changes will be regarded as changes that have neveroccurred unless the Company has canceled partial or all equity instruments.
During the waiting period, if the granted equity instrument is cancelled, the company will treatthe cancelled equity instrument as the accelerated exercise of power, and immediately include thebalance that should be recognized in the remaining waiting period into the current profit and loss, andsimultaneously confirm the capital reserve. If the employee or other party can choose to satisfy thenon-exercisable condition but not satisfied in the waiting period, then the company will treat it ascancellation of the granted equity instrument.
3. Accounting treatment involving the share payment transaction between the Company and theshareholders or the actual controller of the Company
Where involves the share payment transaction between the Company and the shareholders or theactual controller of the Company and one of the parties of the settlement company and theservice-accepting company is within the company and the other is not within the company, then thecompany performs the accounting treatment in the consolidated financial statements of the companyaccording to the following provisions:
(1) If the settlement company settles in its own equity instrument, then it treats the equitypayment transaction as the equity-settled equity payment; otherwise, it treats as the cash-settledequity payment.
If the settlement company is an investor to the service-accepting company, it shall be recognizedas a long-term equity investment in the service-accepting company in accordance with the fair valueof the equity instrument or the fair value of the liability it is assumed to bear on the grant date, andthe capital reserve (other capital reserve) or liabilities shall be recognized at the same time.
(2) If the service-accepting company has no settlement obligation or confers its own equity toolson the employees of the company, then such equity payment transaction shall be treated asequity-settled equity payment; if the service-accepting company has the settlement obligation andconfers the employees of the company with not its own equity instrument, then such equity paymenttransaction shall be treated as cash-settled equity payment;
In the case of the equity payment transaction occurs between the companies within the company,and the service-accepting company and the settlement company are not the same company, then theconfirmation and measurement of the equity payment transaction shall be carried out respectively inthe financial report of the service-accepting company and the settlement company, with the sameanalogy of the above-said principle.25. Revenue1. Recognition Principle of Revenue
(1) The Goods for Sale
The revenue of the goods for sale shall be recognized when the following requirements are metsimultaneously: the transfer of main risks and rewards on ownership of the goods to the buyers, thecontinual management rights related to ownership no longer retained by the company and theeffective control of the sold goods no longer implemented, the reliable measurement of the revenueamount, the possible inflow of the relevant economic benefits, and the reliable measurement of therelevant costs incurred or to be incurred.
(2) The Service Provision
If the provided services transaction results can be reliably estimated at the balance sheet date (thereliable measurement of the revenue amount, the possible inflow of the relevant economic benefits,the reliable recognition of the completion schedule of transaction, and the reliable measurement of therelevant costs incurred or to be incurred in the transaction), the company shall recognize the relevantservice incomes according to the completion percentage method and recognized the completionschedule of the provided service transaction according to the proportion of the costs occurredaccounting for the total estimated costs. If the provided services transaction results cannot be reliablyestimated at the balance sheet date and the occurred service costs can be expected to havecompensation, the company shall recognize to provide the service revenue according to the occurredservice cost amount and transfer the service costs as per the same amount. If the occurred servicecosts cannot be expected to have compensation, the occurred service costs shall be recorded into thecurrent profits and losses and not be recognized as the service revenue.(3) The Abalienation of the Right to Use AssetsThe revenue of abalienation of the right to use assets shall be recognized when the abalienation of theright to use assets meets the requirements of the possible inflow of the relevant economic benefits andthe reliable measurement of revenue amount. The interest income shall be calculated and determinedaccording to time and actual interest rate of the monetary capital of the company used by others, andthe royalty revenue shall be measured and determined in accordance with the charging time andmethod appointed in the relevant contract or agree.2. The Specific Recognition Method of RevenueThe company mainly sells the polaroid, textiles and other products. The revenue of the sale ofproducts in domestic market shall be recognized after the following requirements are met: Thecompany has agreed to deliver the goods to the purchaser under the contract and the revenue amountof product sales has been determined, the payment for goods has been withdrawn or the paymentvouchers has been obtained and related economic benefits are likely to inflow, and the costs related tothe products can be measured reliably. The revenue of the sale of products in foreign market shall berecognized after the following requirements are met: The company has made customs clearance anddeparture from port under the contract, the bill of landing has obtained and the revenue of the sale ofproducts has been recognized, the payment for goods has been withdrawn or the payment vouchershas been obtained and related economic benefits are likely to inflow, and the costs related to theproducts can be measured reliably.26.Government subsidy
Government grants are monetary assets and non-monetary assets that the company has obtainedfree of charge from the government and are divided into government grants related to assets and
government grants related to income. Asset-related government grants refer to government grantsobtained by the company that are used to purchase or construct or otherwise form long-term assets.Income-related government subsidies refer to government subsidies other than government subsidiesrelated to assets.
If there is evidence at the end of the period that the company is able to meet the relevantconditions stipulated in the financial support policy and it is expected to receive financial supportfunds, the government subsidies shall be recognized according to the amount receivable. In addition,government grants are confirmed upon actual receipt.
Asset-related government grants are recognized as deferred income and are charged to profit orloss for the current period in a reasonable and systematic manner over the useful life of the relevantassets. Revenue-related government subsidies, which are used to compensate for the related costs orlosses of the Company in the future period, are recognized as deferred income, and are recognized inthe profits and losses of the current period in the period in which the relevant costs, expenses orlosses are recognized. The relevant costs, expenses or losses that have been used to compensate theCompany have been directly recorded in the current profits and losses. Government grants related tothe company's daily activities are included in other income; those unrelated to the daily activities ofthe company are included in non-operating income.
For the policy-subsidized discounted loans obtained by the company, the accounting treatment isdivided into the following two cases: when the finance allocates the interest-subsidy funds to the loanbank and the loan bank provides the company with a policy-based preferential interest rate, thecompany uses the actual amount of the loan received as the entry value of the loan, and calculates therelevant borrowing costs according to the loan principal and the preferential policy interest rate; if thefinance allocates the interest-free funds directly to the company, the company will reduce the relevantborrowing costs by the corresponding discount interest.27.The Deferred Tax Assets / The deferred Tax Liabilities1. Temporary DifferenceThe temporary difference includes the difference of the book value of assets and liabilities and the taxbasis, and the difference of the book value and the tax basis that no confirmation of assets andliabilities but able to confirm the tax basis as per the provisions of tax law. The temporary differencecan be classified into the taxable temporary difference and the deductible temporary difference.2. Recognition Basis of Deferred Tax AssetsFor the deductible temporary difference, the deductible loss and the tax payment offset, the companyshall recognize the deferred tax assets arising from the future taxable income that obtained to deducethe deductible temporary difference, the deductible loss and the tax payment offset.The deferred tax assets with the following features and arising from the initial recognition of assets orliabilities in the transaction shall not be recognized: (1) the transaction is not the businesscombination. (2) the transaction doesn’t influence the accounting profits and the taxable incomes (orthe deductible losses).The company shall recognize the corresponding deferred tax assets for the deductible temporary
difference related to the investment of subsidiaries, cooperative enterprises and joint ventures if thefollowing requirements are simultaneously met: (1) the temporary difference is possible to bereversed in the foreseeable future. (2) the taxable income used to offset the deductible temporarydifference is possible to be obtained in the future.3. Recognition Basis of Deferred Tax LiabilitiesAll the taxable temporary differences shall be recognized as the deferred tax liabilities.But the company shall not recognize the taxable temporary differences arising from the followingtransactions as the deferred tax liabilities: (1) the initial recognition of goodwill. (2) the initialrecognition of assets or liabilities arising from the transactions with the following features: thistransaction is not the business combination, and the transaction doesn’t influence the accountingprofits and the taxable incomes (or the deductible losses).The company shall recognize the corresponding deferred tax liabilities for the taxable temporarydi fference related to the investment of subsidiaries, cooperative enterprises and joint ventures. Exceptthat the following requirements are simultaneously met: (1) the investment enterprise can control thereversal time of the temporary difference. (2) the temporary difference is possible to not be reversedin the foreseeable future.4. Impairment of Deferred Tax AssetsThe company shall review the book value of the deferred tax assets at the balance sheet date. If it isnot possible to obtain sufficient taxable income for the reduction of the benefit of the deferred taxassets in the future, the book value of the deferred tax assets shall be deduced. Except that thedeferred tax assets and the reduction amount are recorded into the owner’s equity when the originalrecognition, others shall be recorded into the current income tax expense. The book value of thedeferred tax assets reduced can be recovered when sufficient taxable income is possibly obtained.5. Income Tax ExpenseThe income tax expense should include the current income tax and the deferred income tax.Other comprehensive income or the current income tax and the deferred income tax related to thetransactions and items directly recorded into the stockholders’ equity, shall be recorded into othercomprehensive incomes or the stockholders’ equity, and the book value of goodwill shall be adjustedby the deferred income tax arising from the business combination, but the rest of the current incometax and the deferred income tax expense or income shall be recorded into the current profits andlosses.28.Lease1. Accounting Treatment Method of Operating LeaseWhen the company is as the tenant, the rental within the lease term shall be recorded into the relevantassets cost or recognized as the current profits and losses as per the line method, and the initial directexpense occurred shall be directly recorded into the current profit and loss. The contingent rentalshall be recorded into the current profit and loss once the actual occurrence.When the company is as the leaser, the rental within the lease term shall be recognized as the current
profits and losses as per the line method, and the initial direct expense occurred shall be directlyrecorded into the current profit and loss, except that the large amounts are capitalized and recordedinto the profit and loss by stages. The contingent rental shall be recorded into the current profit andloss once the actual occurrence.2. Accounting Treatment Method of Finance LeaseWhen the company is as the tenant, the company shall recognize the less one between the fair valueof leasing assets and the present value of minimum lease payment at the lease commencement date asthe book value of rented assets, recognize the minimum lease payment as the book value of thelong-term payables, and the undetermined fiancé expense of the difference and the initial direct costsoccurred shall be recorded into the leasing asset value. During each lease period, the current financingcharges shall be measured and recognized by the effective interest method.When the company is as the leaser, the company shall recognize the sum of minimum leasereceivables and initial direct expense at the lease commencement date as the book value of financelease receivables, and record the unguaranteed residual value. Meanwhile, the company shallrecognize the difference between the sums of minimum lease receivables, minimum lease receivablesand unguaranteed minus the sum of the present value as the unrealized financing income. Duringeach lease period, the current financing charges shall be measured and recognized by the effectiveinterest method.29.Change of main accounting policies and estimations(1)Change of main accounting policies
On June 15, 2018, Ministry of Finance released a Notice on Revision and Issue of 2018 Formatof Financial Statements for General Enterprises (Cai Kuai [2018] No.15) to revise the format offinancial statements for general enterprises. The Company started to implement the above notice asscheduled by the Ministry of Finance after adopting a proposal at the fifteenth meeting of the seventhboard of directors on October 29, 2018.
Before implementing the Notice on Revision and Issue of 2018 Format of Financial Statementsfor General Enterprises (Cai Kuai [2018] No.15), the Company followed the Accounting Standard forBusiness Enterprises-Basic Standard, all the particular accounting standards, guides to application ofaccounting standards for business enterprises, interpretations and announcements of accountingstandards for business enterprises and other relevant regulations promulgated by Ministry of Finance.Upon the alteration, the Company started to comply with relevant terms in the Notice on Revision andIssue of 2018 Format of Financial Statements for General Enterprises (Cai Kuai [2018] No.15)released by the Ministry of Finance on June 15, 2018 in its accounting policies. In addition to theabove alteration of the accounting policies, others still followed the prior relevant rules, guides,announcements and other relevant terms issued by the Ministry of Finance.
Effects of alteration of accounting policies on the Company's beginning amount of this year and
amount of the prior year
| No | Contents and reasons for the changes of accounting policies | Statement items affected | Amount |
| Retroactive adjustment | |||
| 1 | "Accounts receivable" and "notes receivable" were incorporated into "accounts receivable and notes receivable" for presentation | Notes receivable | -44,207,119.00 |
| Account receivable | -192,503,077.70 | ||
| Notes receivable & Account receivable | 236,710,196.70 | ||
| 2 | "Interests receivable", "dividends receivable" and "other receivables" were combined into "other receivables" for presentation | Interest receivable | -15,728,872.62 |
| Dividend receivable | |||
| Other receivable | 15,728,872.62 | ||
| 3 | "Accounts payable" and "notes payable" were combined into "accounts payable and notes payable" for presentation | Notes payable | |
| Account Payable | -97,104,697.18 | ||
| Notes payable & Account payable | 97,104,697.18 | ||
| 4 | "Management expenses" fell into "management expenses" and "R&D expenses" for presentation | Management expenses | -39,036,089.05 |
| R & D cost | 39,036,089.05 |
| Taxes | Tax references | Applicable tax rates |
| Taxes | Tax references | Applicable tax rates |
| VAT | The taxable turnover | 17%、16%、5% |
| City construction tax | Turnover tax to be paid allowances | 7% |
| Education surcharge | Turnover tax to be paid allowances | 3% |
| Local education surcharge | Turnover tax to be paid allowances | 2% |
| Business income tax | Taxable income | 25%、16.5%、15% |
| Items | Year-end balance | Year-beginning balance |
| Cash at hand | 13,559.60 | 17,771.09 |
| Bank deposit | 1,137,431,239.39 | 1,163,010,967.65 |
| Other monetary funds | 4,314 ,575.61 | 2,019,370.09 |
| Total | 1,141,759,374.60 | 1,165,048,108.83 |
| Including : The total amount of deposit abroad | 9,294,408.13 | 9,044,548.79 |
Note: ① Ending amount of other monetary funds was margin deposit RMB 4,310,530.42 andinvestment eposit RMB 4,045.19.②As of December 31, 2018，The fixed-term deposit balance of money fund is RMB 8,185,139.38 ,this part will not be treated as closing cash or closing cash equivalent in preparing cash flowstatement.
（II）Notes receivable & Account receivable
| Items | Year-end balance | Year-beginning balance |
| Notes receivable | 886,432.06 | 44,207,119.00 |
| Account receivable | 528,454,015.59 | 192,503,077.70 |
| Total | 529,340,447.65 | 236,710,196.70 |
| Items | Year-end balance | Year-beginning balance |
| Bank acceptance | 886,432.06 | 44,207,119.00 |
| Total | 886,432.06 | 44,207,119.00 |
| Items | Amount derecognizing at period –end | Amount derecognizing at period-end |
| Bank acceptance | 60,485,268.08 | 0 |
| Total | 60,485,268.08 | 0 |
| Classification | Amount in year-end | ||
| Book balance | Bad debt provision | Book value | |
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Accounts receivable of individual significance and subject to individual impairment assessment | 6,300,455.84 | 1.11 | 3,998,201.79 | 63.46 | 2,302,254.05 |
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 552,278,688.56 | 97.66 | 27,621,586.89 | 5.00 | 524,657,101.67 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | 6,933,008.49 | 1.23 | 5,438,348.62 | 78.44 | 1,494,659.87 |
| Total | 565,512,152.89 | 100.00 | 37,058,137.30 | 6.55 | 528,454,015.59 |
| Classification | Amount in year-begin | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Proportion(%) | |||
| Accounts receivable of individual significance and subject to individual impairment assessment | 6,301,057.07 | 2.97 | 3,998,803.02 | 63.46 | 2,302,254.05 |
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 199,198,855.51 | 93.99 | 10,386,734.84 | 5.21 | 188,812,120.67 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | 6,448,803.57 | 3.04 | 5,060,100.59 | 78.47 | 1,388,702.98 |
| Total | 211,948,716.15 | 100.00 | 19,445,638.45 | 9.17 | 192,503,077.70 |
| Account receivable （Unit） | Amount in year-end | |||
| Account receivable | Bad debt provision | Proportion(%) | Reason for allowance | |
| Dongguan Fair LCD Co., Ltd. | 1,695,947.73 | 1,695,947.73 | 100.00 | Beyond the credit period for a long time, unlikely to |
| recover. | ||||
| Guangdong Ruili Baolai Technology Co., Ltd. | 1,348,965.36 | 674,482.68 | 50.00 | Beyond the credit period for a long time, uncertain recovered. |
| Dongguan Yaxing Semiconductor Co., Ltd. | 3,255,542.75 | 1,627,771.38 | 50.00 | Beyond the credit period for a long time, uncertain recovered. |
| Total | 6,300,455.84 | 3,998,201.79 |
| Aging | Balance in year-end | ||
| Account receivable | Bad debt provision | Proportion(%) | |
| Within 1 year | 552,152,553.49 | 27,607,627.64 | 5.00 |
| 1-2 years | 119,406.37 | 11,940.64 | 10.00 |
| 2-3 years | 6,728.70 | 2,018.61 | 30.00 |
| Over 3 years | 50.00 | ||
| Total | 552,278,688.56 | 27,621,586.89 | |
| Name | Nature | Balance in year-end | Aging | Proportion(%) | Bad debt provision |
| First | Goods | 133,592,500.00 | Within 1 year | 23.62 | 6,679,625.00 |
| Second | Goods | 106,136,195.38 | Within 1 year | 18.77 | 5,306,809.77 |
| Third | Goods | 84,062,627.96 | Within 1 year | 14.86 | 4,203,131.40 |
| Fourth | Goods | 47,287,500.00 | Within 1 year | 8.36 | 2,364,375.00 |
| Fifth | Goods | 36,375,000.00 | Within 1 year | 6.43 | 1,818,750.00 |
| Total | 407,453,823.34 | 72.04 | 20,372,691.17 |
（5）Account receivable which terminate the recognition owning to the transfer of the financial assetsNil(6)The amount of the assets and liabilities formed by the transfer and the continues involvement ofaccounts receivableNil3.Prepayments
(1)Disclosure by age
| Aging | Balance in year-end | Balance in year-begin | ||
| Amount | Proportion（%） | Amount | Proportion（%） | |
| Within 1 year | 226,726,744.30 | 98.99 | 13,705,047.27 | 99.63 |
| 1-2 years | 2,263,886.85 | 0.99 | 11,944.78 | 0.09 |
| 2-3 years | ||||
| Over 3 years | 38,160.00 | 0.02 | 38,160.00 | 0.28 |
| Total | 229,028,791.15 | 100.00 | 13,755,152.05 | 100.00 |
| Name | Balance in year-end | Proportion |
| First | 196,426,857.54 | 85.77 |
| Second | 7,474,329.32 | 3.26 |
| Third | 4,168,476.05 | 1.82 |
| Fourth | 4,095,000.00 | 1.79 |
| Fifth | 2,835,000.00 | 1.24 |
| Total | 214,999,662.91 | 93.88 |
| Items | Amount in year-end | Amount in year-beginning |
| Other account receivable | 9,257,192.06 | 12,925,984.45 |
| Items | Amount in year-end | Amount in year-beginning |
| Interest receivable | 5,589,704.44 | 15,728,872.62 |
| Dividend receivable | ||
| Total | 14,846,896.50 | 28,654,857.07 |
| Classification | Amount in year-end | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Other accounts receivable of individual significance and subject to individual impairment assessment | 13,781,464.60 | 54.47 | 13,781,464.60 | 100.00 | |
| Other accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 10,909,282.88 | 43.12 | 1,652,090.82 | 15.14 | 9,257,192.06 |
| Other accounts receivable of individual insignificance but subject to individual impairment assessment | 611,820.77 | 2.41 | 611,820.77 | 100.00 | |
| Total | 25,302,568.25 | 100.00 | 16,045,376.19 | 63.41 | 9,257,192.06 |
| Classification | Amount in year-beginning | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Other accounts receivable of individual significance and subject to individual impairment assessment | 13,781,464.60 | 47.54 | 13,781,464.60 | 100.00 | |
| Classification | Amount in year-beginning | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Other accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 14,596,383.53 | 50.35 | 1,670,399.08 | 11.44 | 12,925,984.45 |
| Other accounts receivable of individual insignificance but subject to individual impairment assessment | 611,820.77 | 2.11 | 611,820.77 | 100.00 | |
| Total | 28,989,668.90 | 100.00 | 16,063,684.45 | 55.41 | 12,925,984.45 |
| Other receivable accounts （Unit） | Amount in year-end | |||
| Other account receivable | Bad debt provision | Withdrawal proportion (%) | Reason for allowance | |
| Jiangxi Xuanli String Co., Ltd. | 11,389,044.60 | 11,389,044.60 | 100.00 | No executable property, unlikely to recover. |
| Anhui Huapeng Textile Co.,Ltd. | 1,800,000.00 | 1,800,000.00 | 100.00 | Estimated irrecoverable |
| Shenzhen Tianlong Induatry& Trade Co., Ltd. | 592,420.00 | 592,420.00 | 100.00 | Has been concealed, unlikely to recover |
| Total | 13,781,464.60 | 13,781,464.60 | ||
| Aging | Amount in year-end | ||
| Other receivable | Bad debt provision | Withdrawal proportion | |
| Within 1 year | 7,809,057.45 | 390,452.87 | 5.00 |
| 1-2 years | 663,844.79 | 66,384.48 | 10.00 |
| 2-3 years | 114,684.29 | 34,405.29 | 30.00 |
| Over 3 years | 2,321,696.35 | 1,160,848.18 | 50.00 |
| Total | 10,909,282.88 | 1,652,090.82 |
| Category | Year-end balance | Year-beginning balance |
| Customs bond | 101,758.24 | 1,454,781.62 |
| Export rebate | 3,140,110.71 | 7,804,119.33 |
| Unit account | 15,451,643.71 | 15,211,367.96 |
| Deposit | 1,875,008.00 | 1,752,199.92 |
| Reserve fund and staff loans | 506,154.77 | 849,212.52 |
| Other | 4,227,892.82 | 1,917,987.55 |
| Total | 25,302,568.25 | 28,989,668.90 |
| Name | Nature | Closing balance | Aging | Proportion of the total year end balance of the accounts receivable(%) | Bad debt provision |
| First | Unit account | Over 5 years | 11,389,044.60 | ||
| Second | Export rebate | 3,381,960.39 | Within 1 year | 13.37 | 169,098.02 |
| Third | Unit account | 3,140,110.71 | Within 1 year | 12.41 | 476,068.35 |
| Fourth | Deposit | 1,800,000.00 | 2-3 years | 7.11 | 1,800,000.00 |
| Fifth | Deposit | 980,461.06 | Over 5 years | 3.87 | 490,230.53 |
| Total | 20,691,576.76 | 81.77 | 14,324,441.50 |
(6) Accounts receivable involved with government subsidiesNil(7) Other account receivable which terminate the recognition owning to the transfer of the financialassets Nil(8) The amount of the assets and liabilities formed by the transfer and the continues involvement ofother accounts receivableNil2. Classification of interest receivable
| Items | Balance in year-end | Balance in year-begin |
| Trust income | 1,627,397.26 | |
| Fixed deposit interest | 1,302,963.56 | 12,676,572.40 |
| Structure deposit interest | 4,286,740.88 | 1,418,738.58 |
| Other financing products | 6,164.38 | |
| Total | 5,589,704.44 | 15,728,872.62 |
| Items | Year-end balance | Year-beginning balance | ||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |
| Raw materials | 164,096,057.16 | 14,452,368.67 | 149,643,688.49 | 134,843,713.96 | 12,679,234.15 | 122,164,479.81 |
| Processing products | 3,895,184.01 | 3,895,184.01 | 3,234,902.35 | 3,234,902.35 | ||
| Finished product | 129,671,772.49 | 44,801,099.13 | 84,870,673.36 | 108,902,736.97 | 24,036,100.64 | 84,866,636.33 |
| Semi-finished product | 139,867,237.30 | 28,508,834.52 | 111,358,402.78 | 79,495,655.06 | 15,302,692.03 | 64,192,963.03 |
| Goods in transit | 80,839,399.33 | 937,486.83 | 79,901,912.50 | |||
| Commissioned materials | 10,082,857.63 | 10,082,857.63 | 1,156,194.64 | 1,156,194.64 | ||
| Total | 528,452,507.92 | 88,699,789.15 | 439,752,718.77 | 327,633,202.98 | 52,018,026.82 | 275,615,176.16 |
（2）Inventory Impairment provision
| Items | Year-beginning balance | Increased in current period | Decreased in current period | Year-end balance | ||
| Provision | Other | Transferred back | Other | |||
| Raw materials | 12,679,234.15 | 11,781,266.11 | 10,008,131.59 | 14,452,368.67 | ||
| Processing products | 24,036,100.64 | 55,567,970.26 | 34,802,971.77 | 44,801,099.13 | ||
| Semi-finished product | 15,302,692.03 | 18,584,013.93 | 5,377,871.44 | 28,508,834.52 | ||
| Consigned processing | 937,486.83 | 937,486.83 | ||||
| Total | 52,018,026.82 | 86,870,737.13 | 50,188,974.80 | 88,699,789.15 | ||
| Items | Specific basis for withdrawal of provision for inventory | Reason for recovery of provision for inventory in this year | Reason for write-off of provision for inventory in this year |
| Raw materials | Net realizable value below inventory cost | Use of relevant materials | |
| Processing products | Net realizable value below inventory cost | Selling related finished goods | |
| Semi-finished product | Net realizable value below inventory cost | Selling related semi-finished products |
| Items | Year-end balance | Year-beginning balance |
| Structural Deposit | 540,000,000.00 | 210,000,000.00 |
| Trust financing | 800,000,000.00 | |
| Other financing product | 10,000,000.00 | |
| After the deduction of input VAT | 99,797,959.30 | 128,689,874.10 |
| Total | 639,797,959.30 | 1,148,689,874.10 |
| Items | Year-end balance | Year-beginning balance | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Available-for-sale equity instruments | ||||||
| Measured by fair value | 5,119,896.46 | 5,119,896.46 | 7,994,294.63 | 7,994,294.63 | ||
| Measured by cost | 77,210,531.91 | 36,956,643.50 | 40,253,888.41 | 102,620,741.41 | 44,579,303.00 | 58,041,438.41 |
| Total | 82,330,428.37 | 36,956,643.50 | 45,373,784.87 | 110,615,036.04 | 44,579,303.00 | 66,035,733.04 |
| Items | Cost | Fair value |
| Equity instrument available for sale | ||
| Fawer （000030） | 8,940,598.31 | 5,119,896.46 |
| Total | 8,940,598.31 | 5,119,896.46 |
(3) Available-for-sale financial assets measured by cost at the period-end
| Investee | Book balance | Impairment provision | Shareholding proportion among the investees | Cash bonus of the reporting period | ||||||
| Period-begin | Increase | Period-begin | Increase | Decrease | Period-end | |||||
| Shenzhen Jintian Industry（Group） Co., Ltd. | 14,831,681.50 | 14,831,681.50 | 14,831,681.50 | 14,831,681.50 | 2.39 | |||||
| Shenzhen Jiafeng Textile Co., ltd. | 16,800,000.00 | 16,800,000.00 | 16,800,000.00 | 16,800,000.00 | 10.80 | |||||
| Shenzhen Guanhua Prnting & dyeing Co., Ltd. | 5,491,288.71 | 5,491,288.71 | 5,058,307.01 | 5,058,307.01 | 45.00 | |||||
| Shenzhen Union Development Group Co., Ltd | 2,600,000.00 | 2,600,000.00 | 2.87 | |||||||
| Shenzhen Xiangjiang Trade Co., Ltd. | 160,000.00 | 160,000.00 | 20.00 | 74,774.15 | ||||||
| Shenzhen Xinfang Knitting Co., Ltd. | 524,000.00 | 524,000.00 | 20.00 | |||||||
| Shenzhen Dailisi Knitting Co., Ltd. | 2,559,856.26 | 2,559,856.26 | 30.00 | 943,396.23 | ||||||
| Anhui Huapeng Textile Co., Ltd. | 25,410,209.50 | 25,410,209.50 | 7,622,659.50 | 7,622,659.50 | ||||||
| Shenzhen South Textile Co., Ltd. | 1,500,000.00 | 1,500,000.00 | 9.84 | 898,351.38 | ||||||
| Shenzhen Xieli Automobile Co., \ltd. | 4,243,705.44 | 4,243,705.44 | 266,654.99 | 266,654.99 | 50.00 | |||||
| Changxing Junying Investment Partnership（LP） | 28,500,000.00 | 28,500,000.00 | 57.00 | 2,150,943.40 | ||||||
| Total | 102,620,741.41 | 25,410,209.50 | 77,210,531.91 | 44,579,303.00 | 7,622,659.50 | 36,956,643.50 | 4,067,465.16 |
(4)Changes of the impairment of the available-for-sale financial assets during the reportingperiod
| Category | Available for sale equity instruments | Available for sale debts instruments | Total |
| Impairment amount at the beginning period | 44,579,303.00 | 44,579,303.00 | |
| Current provision | |||
| Including: Transferred from other comprehensive income | |||
| Decreased of this period | 7,622,659.50 | 7,622,659.50 | |
| Including:transferred from the increased fair value | |||
| Impairment amount at the end of period | 36,956,643.50 | 36,956,643.50 |
8.Long-term equity investment
(1)Long-term equity investment
| Investees | Opening balance | Increase/decrease | Closing balance | Closing balance of impairment provision | |||||||
| Additional investment | Negative investment | Investment profit and loss recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint venture | |||||||||||
| Shenzhen Haohao Property Leasing Co., Ltd. | 5,369,450.56 | 671,689.37 | 400,000.00 | 5,641,139.93 | |||||||
| Anhui Huapeng Textile Co.,Ltd. | 11,784,626.51 | 11,784,626.51 | |||||||||
| Subtotal | 5,369,450.56 | 671,689.37 | 400,000.00 | 11,784,626.51 | 17,425,766.44 | ||||||
| 2. Affiliated Company | |||||||||||
| Shenzhen Changlianfa Printing & dyeing Company | 2,107,155.01 | 126,902.18 | 2,234,057.19 | ||||||||
| Jordan Garment Factory | 2,233,902.64 | 16,820.96 | 112,891.10 | 2,363,614.70 | |||||||
| Hongkong Yehui | 10,670,226.35 | 444,742.44 | 508,391.94 | 694,713.40 | 10,928,647.33 | ||||||
| Investees | Opening balance | Increase/decrease | Closing balance | Closing balance of impairment provision | |||||||
| Additional investment | Negative investment | Investment profit and loss recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| International Co., Ltd. | |||||||||||
| Subtotal | 15,011,284.00 | 588,465.58 | 621,283.04 | 694,713.40 | 15,526,319.22 | ||||||
| Total | 20,380,734.56 | 1,260,154.95 | 621,283.04 | 1,094,713.40 | 11,784,626.51 | 32,952,085.66 | |||||
9.Investment real estate
（1）Measured by the cost of investment in real estate
| Items | House, Building | Land use right | Construction in process | Total |
| I. Original price | ||||
| 1. Balance at period-beginning | 306,466,721.91 | 306,466,721.91 | ||
| 2.Increase in the current period | 2,767,538.83 | 2,767,538.83 | ||
| 3.Decrease in the current period | ||||
| 4 Year-end balance | 309,234,260.74 | 309,234,260.74 | ||
| II.Total accumulated depreciation accumulated amortization | ||||
| 1. Year-begin balance | 133,360,915.64 | 133,360,915.64 | ||
| 2.Increase in the current period | 7,875,403.12 | 7,875,403.12 | ||
| (1) Withdrawal | 7,875,403.12 | 7,875,403.12 | ||
| 3.Decrease in the current period | ||||
| 4 Year-end balance | 141,236,318.76 | 141,236,318.76 | ||
| III. Impairment provision | ||||
| 1. Balance at period-beginning | ||||
| 2.Increased amount of the period | ||||
| 3.Decrease in the current period | ||||
| 4. Balance at period-end | ||||
| IV.Book value | ||||
| 1.Book value at period -end | 167,997,941.98 | 167,997,941.98 | ||
| 2.Book value at period-beginning | 173,105,806.27 | 173,105,806.27 |
10. Fixed assets
| Items | Year-end balance | Year-beginning balance |
| Fixed assets | 987,876,247.55 | 656,133,200.19 |
| Disposal of Fixed assets | ||
| Total | 987,876,247.55 | 656,133,200.19 |
| Items | Houses & buildings | Machinery equipment | Transportations | Other | Total |
| I. Original price | |||||
| 1.Opening balance | 492,709,415.27 | 659,301,895.53 | 3,691,157.72 | 22,260,594.58 | 1,177,963,063.10 |
| 2.Increased amount of the period | 55,874,611.33 | 354,067,043.30 | 6,306,557.81 | 8,369,468.30 | 424,617,680.74 |
| (1) Purchase | 593,690.94 | 44,532,824.16 | 6,306,557.81 | 2,839,422.96 | 54,272,495.87 |
| (2) Transferred from construction in progress | 55,280,920.39 | 309,534,219.14 | 5,530,045.34 | 370,345,184.87 | |
| 3. Decrease in the current period | 2,307,341.57 | 163,539.08 | 2,470,880.65 | ||
| （1）Disposal | 2,307,341.57 | 163,539.08 | 2,470,880.65 | ||
| 4. Balance at period-end | 548,584,026.60 | 1,011,061,597.26 | 9,997,715.53 | 30,466,523.80 | 1,600,109,863.19 |
| II.Accumulated amortization | |||||
| 1. Balance at period-beginning | 113,563,999.41 | 389,901,922.93 | 3,268,450.66 | 15,095,489.91 | 521,829,862.91 |
| 2. Increase in the current period | 17,011,793.27 | 72,256,353.66 | 450,578.09 | 2,035,352.39 | 91,754,077.41 |
| (1) Withdrawal | 17,011,793.27 | 72,256,353.66 | 450,578.09 | 2,035,352.39 | 91,754,077.41 |
| 3. Decrease in the current period | 2,237,766.57 | 122,590.96 | 2,360,357.53 | ||
| （1）Disposal | 2,237,766.57 | 122,590.96 | 2,360,357.53 | ||
| 4. Balance at period-end | 130,575,792.68 | 459,920,510.02 | 3,719,028.75 | 17,008,251.34 | 611,223,582.79 |
| III. Impairment provision | |||||
| 1. Balance at period-beginning |
| Items | Houses & buildings | Machinery equipment | Transportations | Other | Total |
| 2.Increased amount of the period | 1,004,032.85 | 6,000.00 | 1,010,032.85 | ||
| 3. Decrease in the current period | |||||
| 4. Balance at period-end | 1,004,032.85 | 6,000.00 | 1,010,032.85 | ||
| IV.Book value | |||||
| 1.Book value at period -end | 417,004,201.07 | 551,141,087.24 | 6,278,686.78 | 13,452,272.46 | 987,876,247.55 |
| 2.Book value at period-beginning | 379,145,415.86 | 269,399,972.60 | 422,707.06 | 7,165,104.67 | 656,133,200.19 |
| Items | Year-end balance | Year-beginning balance | ||||
| Book balance | Provision for devaluation | Book Net value | Book balance | Provision for devaluation | Book Net value | |
| TFT-LCD polarizing film II project | 315,430,810.41 | 315,430,810.41 | ||||
| Industrialization project of polaroid for super large size TV | 9,080,815.92 | 9,080,815.92 | 500,168.25 | 500,168.25 | ||
| Other | 6,540,470.72 | 6,540,470.72 | 6,639,195.07 | 6,639,195.07 | ||
| Total | 15,621,286.64 | 15,621,286.64 | 322,570,173.73 | 322,570,173.73 | ||
（2）Changes of significant construction in progress
| Name | Budget | Amount at year beginning | Increase at this period | Transferred to fixed assets | Other decrease | Balance in year-end | Proportion(%) | Capitalisation of interest accumulated balance | Including：Current amount of capitalization of interest | Capitalisation of interest ratio（%) | Source of funds |
| T TFT-LCD polarizing film II project | 700.34 million | 315,430,810.41 | 39,520,202.14 | 354,951,012.55 | Collect and Self-funds | ||||||
| Industrialization Project of Polarizer for Ultra Large Size TV (Line 7) | 195.50 million | 500,168.25 | 8,580,647.67 | 9,080,815.92 | Self-funds | ||||||
| Total | 2659.84 million | 315,930,978.66 | 48,100,849.81 | 354,951,012.55 | 9,080,815.92 |
12.Intangible assets
（1）List of intangible assets
| Items | Land use right | Proprietary technology | Software | Total |
| I. Original price | ||||
| 1.Opening balance | 48,822,064.61 | 11,825,200.00 | 2,591,780.00 | 63,239,044.61 |
| 2.Increased amount of the period | 344,827.54 | 344,827.54 | ||
| (1) Purchase | 344,827.54 | 344,827.54 | ||
| 3.Decreased at this period | ||||
| 4. Balance at period-end | 48,822,064.61 | 11,825,200.00 | 2,936,607.54 | 63,583,872.15 |
| II.Accumulated amortization | ||||
| 1. Balance at period-beginning | 11,283,873.79 | 11,825,200.00 | 1,259,297.42 | 24,368,371.21 |
| 2. Increase in the current period | 960,098.73 | 374,586.36 | 1,334,685.09 | |
| (1) Withdrawal | 960,098.73 | 374,586.36 | 1,334,685.09 | |
| 3.Decreased amount of the period | ||||
| 4. Balance at period-end | 12,243,972.52 | 11,825,200.00 | 1,633,883.78 | 25,703,056.30 |
| III. Impairment provision | ||||
| 1. Balance at period-beginning | ||||
| 2. Increase in the current period | ||||
| 3.Decreased amount of the period | ||||
| 4. Balance at period-end | ||||
| IV. Book value | ||||
| 1.Book value at period -end | 36,578,092.09 | 1,302,723.76 | 37,880,815.85 | |
| 2.Book value at period-beginning | 37,538,190.82 | 1,332,482.58 | 38,870,673.40 |
13.Goodwill
(1)Detail
| Investee | Balance in year-begin | Increased at this period | .Decreased at this period | Balance in year-end |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | 2,167,341.21 | ||
| Shenzhen Shenfang Import and Export Co., Ltd. | 82,246.61 | 82,246.61 | ||
| SAPO Photoelectric Co., Ltd | 9,614,758.55 | 9,614,758.55 | ||
| Total | 11,864,346.37 | 11,864,346.37 |
| Investee | Balance in year-begin | Increased at this period | .Decreased at this period | Balance in year-end |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | 2,167,341.21 | ||
| Shenzhen Shenfang Import and Export Co., Ltd. | 82,246.61 | 82,246.61 | ||
| SAPO Photoelectric Co., Ltd | 9,614,758.55 | 9,614,758.55 | ||
| Total | 11,864,346.37 | 11,864,346.37 |
| Items | Balance in year-begin | Increase in this period | Amortized expenses | Other loss | Balance in year-end |
| Renovation fee | 841,713.23 | 361,148.94 | 217,170.53 | 985,691.64 | |
| Other | 193,576.85 | 375,710.06 | 68,769.52 | 500,517.39 | |
| Total | 1,035,290.08 | 736,859.00 | 285,940.05 | 1,486,209.03 |
15. Deferred income tax assets/deferred income tax liabilities
（1）Details of the un-recognized deferred income tax assets
| Items | Balance in year-end | Balance in year-begin | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Assets depreciation reserves | 18,197,325.09 | 4,549,331.27 | 5,190,838.04 | 1,297,709.51 |
| Unattained internal sales profits | 2,591,536.27 | 388,730.44 | 2,680,650.70 | 402,097.62 |
| Changes in fair value of available for sale financial assets | 3,820,701.85 | 955,175.46 | 946,303.68 | 236,575.93 |
| Temporary differences in the formation of equity incentives | 152,615.37 | 38,153.84 | ||
| Temporary difference formed by the interest of share incentive repurchase | 571,844.26 | 142,961.06 | ||
| Total | 25,181,407.47 | 6,036,198.23 | 8,970,407.79 | 1,974,536.90 |
| Items | Balance in year-end | Balance in year-begin |
| Deductible temporary difference | 128,283,915.49 | 80,615,487.41 |
| Deductible loss | 562,435,574.75 | 486,014,140.23 |
| Total | 690,719,490.24 | 566,629,627.64 |
| Year | Balance in year-end | Balance in year-begin | Remark |
| 2018 | 129,226,944.33 | ||
| 2019 | 148,095,898.11 |
| Year | Balance in year-end | Balance in year-begin | Remark |
| 2020 | 703,241.36 | 83,990,395.00 | |
| 2021 | 3,880,135.73 | 124,700,902.79 | |
| 2023 | 129,226,944.33 | ||
| 2024 | 148,095,898.11 | ||
| 2025 | 83,287,153.64 | ||
| 2026 | 120,820,767.06 | ||
| 2028 | 76,421,434.52 | ||
| Total | 562,435,574.75 | 486,014,140.23 |
| Items | Balance in year-end | Balance in year-begin |
| Advance payment for equipment fund | 152,688,087.18 | 2,772,114.56 |
| Advance payment for technical services | 176,764,571.83 | 44,394,879.92 |
| Total | 329,452,659.01 | 47,166,994.48 |
| Items | Balance in year-end | Balance in year-begin |
| Credit loans | 411,522,111.40 | 88,638,181.45 |
| Total | 411,522,111.40 | 88,638,181.45 |
| Items | Balance in year-end | Balance in year-begin |
| Notes payable | ||
| Account payable | 180,239,452.90 | 97,104,697.18 |
| Items | Balance in year-end | Balance in year-begin |
| Total | 180,239,452.90 | 97,104,697.18 |
| Items | Balance in year-end | Balance in year-begin |
| Within 1 year | 177,140,118.37 | 96,043,721.23 |
| 1-2 years | 2,059,842.85 | 37,402.40 |
| 2-3 years | 37,402.40 | 37,083.00 |
| 3-4 years | 35,075.05 | 300,642.80 |
| 4-5 years | 281,166.48 | 37,090.00 |
| Over 5 years | 685,847.75 | 648,757.75 |
| Total | 180,239,452.90 | 97,104,697.18 |
| Items | Balance in year-end | Balance in year-begin |
| Within 1 year | 119,293,518.44 | 33,708,344.84 |
| 1-2 years | 560,077.61 | 240,275.96 |
| 2-3 years | 210,330.74 | 364,922.45 |
| Over 3 years | 639,024.58 | 639,024.58 |
| Total | 120,702,951.37 | 34,952,567.83 |
| Items | Balance in | Increase in this | Payable in this | Balance in |
| year-begin | period | period | year-end | |
| I. Short-term employee benefits | 29,503,260.65 | 145,744,260.31 | 142,741,253.88 | 32,506,267.08 |
| II. Post-employment benefits | 4,635,302.08 | 4,635,302.08 | ||
| III. Termination benefit | 28,356.00 | 28,356.00 | ||
| Total | 29,503,260.65 | 150,407,918.39 | 147,404,911.96 | 32,506,267.08 |
| Items | Balance in year-begin | Increase in this period | Payable in this period | Balance in year-end |
| 1.Wages, bonuses, allowances and subsidies | 27,846,341.48 | 129,310,803.60 | 126,362,891.87 | 30,794,253.21 |
| 2.Employee welfare | 7,512,572.84 | 7,512,572.84 | ||
| 3. Social insurance premiums | 1,249,692.71 | 1,249,692.71 | ||
| Including：Medical insurance | 1,099,519.75 | 1,099,519.75 | ||
| Work injury insurance | 56,752.81 | 56,752.81 | ||
| Maternity insurance | 93,420.15 | 93,420.15 | ||
| 4. Public reserves for housing | 5,117,114.44 | 5,117,114.44 | ||
| 5.Union funds and staff education fee | 1,656,919.17 | 2,554,076.72 | 2,498,982.02 | 1,712,013.87 |
| Total | 29,503,260.65 | 145,744,260.31 | 142,741,253.88 | 32,506,267.08 |
| Items | Balance in year-begin | Increase in this period | Payable in this period | Balance in year-end |
| 1. Basic old-age insurance premiums | 2,937,894.85 | 2,937,894.85 | ||
| 2.Unemployment insurance | 69,674.43 | 69,674.43 | ||
| 3. Annuity payment | 1,627,732.80 | 1,627,732.80 | ||
| Total | 4,635,302.08 | 4,635,302.08 |
| Items | Balance in year-end | Balance in year-begin |
| VAT | 793,392.58 | 548,014.78 |
| City Construction tax | 54,516.12 | 34,389.37 |
| Enterprise Income tax | 6,198,704.39 | 3,912,084.91 |
| Individual Income tax | 160,823.58 | 704,212.04 |
| House property Tax | 204,941.07 | 1,541,424.38 |
| Education surcharge | 37,825.82 | 22,055.75 |
| Other | 294,925.43 | 173,081.34 |
| Total | 7,745,128.99 | 6,935,262.57 |
| Items | Balance in year-end | Balance in year-begin |
| Other payable | 189,971,235.59 | 155,026,799.54 |
| Including：Engineering Equipment fund | 62,574,657.07 | 34,977,749.54 |
| Unit account | 53,935,705.78 | 48,697,613.74 |
| Deposit | 25,481,743.17 | 25,090,664.49 |
| Restrictive stock repurchase obligation | 27,802,523.26 | 27,230,679.00 |
| Other | 20,176,606.31 | 19,030,092.77 |
| Interest payable | 39,044,044.39 | 45,799,544.04 |
| Dividend payable | ||
| Total | 229,015,279.98 | 200,826,343.58 |
| Items | Balance in year-end | Balance in year-begin |
| Pay the interest for long-term loans by installments. | 37,220,662.08 | 45,570,662.08 |
| Pay the interest for short-term loans by installments. | 1,823,382.31 | 228,881.96 |
| Items | Balance in year-end | Balance in year-begin |
| Total | 39,044,044.39 | 45,799,544.04 |
| Items | Balance in year-end | Balance in year-begin |
| Long-term borrowings due within 1 year | 40,000,000.00 | 40,000,000.00 |
| Total | 40,000,000.00 | 40,000,000.00 |
| Items | Balance in year-end | Balance in year-begin |
| Credit borrowings | 40,000,000.00 | 80,000,000.00 |
| Less：Long-term borrowings due within 1 year | 40,000,000.00 | 40,000,000.00 |
| Total | 40,000,000.00 |
| Items | Balance in year-begin | Increase at this period | Decrease at this period | Balance in year-end |
| Govemment Subsidy | 134,767,064.72 | 12,131,780.00 | 8,907,146.39 | 137,991,698.33 |
| Total | 134,767,064.72 | 12,131,780.00 | 8,907,146.39 | 137,991,698.33 |
| Items | Balance in year-begin | New grants amount of this period | Profit and loss amount recorded in the current period | Other transfer amount | Balance in year-end | Income related to assets |
| Textile special funds | 714,285.73 | 142,857.16 | 571,428.57 | Related to assets | ||
| High-tech Industrialization demonstration projects | 400,000.00 | 200,000.00 | 200,000.00 | Related to assets | ||
| National grant fundsfor new flat panel display industry | 2,000,000.00 | 1,000,000.00 | 1,000,000.00 | Related to assets | ||
| Grant funds for TFT-LCD polarizer industry project | 5,633,333.34 | 1,300,000.00 | 4,333,333.34 | Related to assets | ||
| Grant funds for TFT-LCD polarizer narrow line (line 5) project | 2,500,000.00 | 500,000.00 | 2,000,000.00 | Related to assets | ||
| Purchase of imported equipment and technology | 852,106.98 | 175,090.20 | 677,016.78 | Related to assets | ||
| Innovation and venture capital for TFT-LCD polarier I project | 250,000.00 | 50,000.00 | 200,000.00 | Related to assets | ||
| Shenzhen polarizing materials and Technology Engineering Laboratory innovation venture capital | 362,500.00 | 50,000.00 | 312,500.00 | Related to assets | ||
| Shenzzhen Engineering laboratory polarizing material and technical engineeting | 3,625,000.00 | 500,000.00 | 3,125,000.00 | Related to assets |
| Capital funding for Technology Center | 2,175,000.00 | 300,000.00 | 1,875,000.00 | Related to assets | ||
| Subsidy funds to support the introduction of advanced technology | 71,940.51 | 14,388.10 | 57,552.41 | Related to assets | ||
| Local supporting funds for TFT-LCD polarizer Phase II Project (line 6) | 15,000,000.00 | 750,000.00 | 14,250,000.00 | Related to assets | ||
| State subsidy for TFT-LCD polarizer Phase II Project (line 6) | 10,000,000.00 | 500,000.00 | 9,500,000.00 | Related to assets | ||
| Innovation and venture capital for TFT-LCD polarizer Phase II Project (line 6) | 500,000.00 | 25,000.00 | 475,000.00 | Related to assets | ||
| key technology research and development projects of optical compensation film for polarizer | 4,625,000.00 | 500,000.00 | 4,125,000.00 | Related to assets | ||
| Strategic industries Development fund of Guangdong Province | 25,000,000.00 | 1,250,000.00 | 23,750,000.00 | Related to assets | ||
| Grants of Purchase equipment of TFT-LCD polarizing film phase II project | 30,000,000.00 | 1,500,000.00 | 28,500,000.00 | Related to assets | ||
| Energy saving transformation grant funds | 116,101.49 | 29,642.93 | 86,458.56 | Related to assets | ||
| Old elevator renovation fund subsidies | 941,796.67 | 325,380.00 | 120,168.00 | 1,147,008.67 | Related to assets | |
| Polarization Industrialization Project for Super Large-sized TVs (Line 7) Central Budget Investment | 30,000,000.00 | 30,000,000.00 | Related to assets |
| Research & development subsidy for key technologies of ultra-thin IPS polarizer for smart phone terminals | 2,000,000.00 | 2,000,000.00 | Related to assets | |||
| Finance committee of Shenzhen municipality (R&D of key technology of high-performance polarizer for large size display panel of 2018N007) | 5,000,000.00 | 5,000,000.00 | Related to assets | |||
| The ministry of industry and information technology, the ministry of finance, the circ first batch of new material application insurance compensation | 4,806,400.00 | 4,806,400.00 | Related to income | |||
| Total | 134,767,064.72 | 12,131,780.00 | 8,907,146.39 | 137,991,698.33 |
development in the process of the project of industrialization and the purchase of required softwareand hardware equipment. On June 2012 and September 2013, the company received the nationalgrants of RMB 10,000,000.00.. According to the Notice of Issuing the Governmental Investment Planfor 2011 Regarding Demonstration Project of High-tech Industrialization Including SpecializedServices Such As Disaster Recovery of Financial Information System issued by ShenzhenDevelopment and Reform Commission (Shen Fa Gai (2012) No. 3), the Company received subsidy ofRMB 3,000,000.00 for the project of industrialization of polarizer sheet for TFT-LCD in April 2012.Our company will use 10 years as asset depreciation period for amortization in current period. Thenon-operating income in current period is RMB1,300,000.00. and the balance amount of unfinishedfinal amortization is RMB4,333,333.34.
(4) According to the Notice about the Plan for Supporting the Second Group of Enterprises inBiological, Internet, New Energy and New Material Industries with Special Development Funds(Shen Fa Gai (2011) No. 1782), the Company received subsidy of RMB 5,000,000.00 for thenarrow-width line (line 5) of phase-I project of polarizer sheet for TFT-LCD on February 2012. TheCompany planned to amortize the subsidy over 10 years according to the depreciation period ofrelevant assets. The non-operating income in current period is RMB5,000,000.00 and the balanceamount of unfinished final amortization is RMB2,000,000.00.
(5) On October 2013, The company received the grants for the purchase of imported equipmentand technology in 2012 of RMB 1,750,902.00, the Company planned to amortize the subsidy over 10years according to the depreciation period of relevant assets. The non-operating income in currentperiod is RMB50,000.00 and the balance amount of unfinished final amortization is RMB677,016.78.
(6) On December 2013，The company received the funds for innovation and entrepreneurship ofof TFT-LCD polarizing project from Pingshan New District Development and Finance Bureau ofRMB 500,000.00(matching funding category),the Company planned to amortize the subsidy over 10years according to the depreciation period of relevant assets. The non-operating income in currentperiod is RMB50,000.00 and the balance amount of unfinished final amortization is RMB200,000.00.
(7)On December 2013，The company received the funds for innovation and entrepreneurship ofof TFT-LCD polarizing project from Pingshan New District Development and Finance Bureau ofRMB 500,000.00(matching funding category),the Company planned to amortize the subsidy over 10years according to the depreciation period of relevant assets. The non-operating income in currentperiod is RMB50,000.00 and the balance amount of unfinished final amortization is RMB312,500.00.(8) According to the Approval of Application of SAPO Photoelectric Co., Ltd. for Project Funds forShenzhen Polarization Material and Technology Engineering Laboratory (Shen Fa Gai (2012) No.1385), Shenzhen Polarization Material and Technology Engineering Laboratory was approved to beestablished on the strength of SAPO Photoelectric with total project investment of RMB24,390,000.00. As approved by Shenzhen Municipal People's Government, this project was includedin the plan for supporting the fourth group of enterprises with special fund for the development ofstrategic new industries in Shenzhen in 2012 (new material industry). According to the Notice ofIssuing the Plan for Supporting the Fourth Group of Enterprises with Special Fund for Development ofStrategic New Industries in Shenzhen in 2012 (Shen Fa Gai (2012) No. 1241), the Company receivedsubsidy of RMB 5,000,000.00 on December 2012 for purchasing instruments and equipment and
improving existing technological equipment and test conditions. The fund gap will be filled by theCompany through raising funds by itself. the Company planned to amortize the subsidy over 10 yearsaccording to the depreciation period of relevant assets. The non-operating income in current period isRMB500,000.00 and the balance amount of unfinished final amortization is RMB3,125,000.00.
(9)According to the “Announcement on the Identification of Technology Centers of 24Enterprises including Shenzhen Yuanwanggu Information Technology Joint Stock Company Limitedas the Municipal Research and Development Centers (Technical Center)” (SJMXXJS [2013] No.137),the research and development center of SAPO Photoelectric Co., Ltd. has been regarded as 2012annual municipal R&D center. In December 2013, the company has received the funding subsidy ofRMB3 million for the construction of the technical center. the Company planned to amortize thesubsidy over 10 years according to the depreciation period of relevant assets. The other income incurrent period is RMB300,000.00 and the balance amount of unfinished final amortization isRMB1,875,000.00.
(10)OnMarch 2014 the company received the introduction of advanced technology import subsidy funds of RMB 143,881.00 from Shenzhen Finance Committee, the Company planned to amortizethe subsidy over 10 years according to the depreciation period of relevant assets. The other income incurrent period is RMB14,388.09 and the balance amount of unfinished final amortization isRMB57,552.41.(11)According to the "Shenzhen Municipal Development and Reform Commission Reply for SAPOPhotoelectric Co., Ltd. application for local matching funds of TFT-LCD polarizing film II project(Line 6) " (Shenzhen DRC [2013]No. 1771), the company obtained TFT-LCD polarizing film IIproject (line 6) local matching funds of RMB 15,000,000.00 in April 2014. TFT-LCD polarizer PhaseII project (Line 6) hit the expected available state and transferred to fixed assets in June 2018.Amortized by a period of 10 years in depreciation of relevant assets, RMB 750,000.00 was includedinto other incomes in the current period and the ending outstanding balance was RMB 14,250,000.00.
(12)According to "National Development and Reform Commission issued on industrialtransformation and upgrading projects (2
nd
industrial restructuring) notify the central budget for 2014investment plan" (NDRC Investment [2014] No. 1280), the company obtained TFT- LCD polarizer IIproject (line 6) state grants of RMB 10,000,000.00 in December 2014. TFT-LCD polarizer Phase IIproject (Line 6) hit the expected available state and transferred to fixed assets in June 2018.Amortized by a period of 10 years in depreciation of relevant assets, RMB 500,000.00 was includedinto other incomes in the current period and the ending outstanding balance was RMB 9,500,000.00.
(13) In December 2014, the company received innovation venture capital (matching fundingcategory) for Ping Shan District Development and Finance Bureau of TFT-LCD polarizing film IIproject (line 6) of RMB 500,000.00. TFT-LCD polarizer Phase II project (Line 6) hit the expectedavailable state and transferred to fixed assets in June 2018. Amortized by a period of 10 years indepreciation of relevant assets, RMB 25,000.00 was included into other incomes in the current periodand the ending outstanding balance was RMB475,000.00.
(14)On Jan. 2015, the company received RMB 5 million of grants for key technologyresearch and development projects of optical compensation film for polarizer fromShenzhen Scientific and Technological Innovation Committee. The company has reached the
expected date of use of the assets., the Company planned to amortize the subsidy over 10 yearsaccording to the depreciation period of relevant assets. The other income in current period isRMB500,000.00 and the balance amount of unfinished final amortization is RMB4,125,000.00.
(15)According to “Reply on Congregating Development in Emerging Industrial Area StrategicPilot Implement Scheme of Guangdong Province ”(Reform and Development Office High-Tech[2013] No.2552,On December 2015, the Company received RMB20 million of the pilot projectfund( period II project of TFT-LCD polarizer).On October 2016, the Company received RMB 5million of Shenzhen strategic emerging industries and the future development of industrialmatching funds, TFT-LCD polarizer Phase II project (Line 6) hit the expected available state andtransferred to fixed assets in June 2018. Amortized by a period of 10 years in depreciation of relevantassets, RMB 1,250,000.00 was included into other incomes in the current period and the endingoutstanding balance was RMB 23,750,000.00.
(16). According to Reform and Development Commission of Shenzhen Municipality sendingthe notice of “Reply of National Reform and Development Office on Investing in Petrifaction andMedicine Project within Central Budget of 2013 for Industry Structure Adjustment SpecialProject”(Reform and Development Commission of Shenzhen Municipality [2013]No.1449) , theCompany received 30 million RMB of new production line of TFT-LCD polarizer project period IIand equipment purchase subsidy in August 2015 ,December 2015 and September 2016. TFT-LCDpolarizer Phase II project (Line 6) hit the expected available state and transferred to fixed assets inJune 2018. Amortized by a period of 10 years in depreciation of relevant assets, RMB 1,500,000.00was included into other incomes in the current period and the ending outstanding balance was RMB28,500,000.00.
(17) In 2015 and In 2016, the Company received the subsidy funds of 202,608.00 RMB and34,535.45 RMB on energy-saving reconstruction, amortized by 8-year depreciation life of therelevant asset, the Other income was RMB 29,642.93 at the current period, the ending balancewithout amortization was RMB 86,458.56.
(18). In 2017, the company received 1,218,640.00 yuan for the old elevator upgrade subsidy, thecompany received 160,800.00 yuan for the old elevator upgrade subsidy in 2018,which wasapportioned according to the depreciation period of the relevant assets. The current period wasincluded in other income of 115,760.00 yuan, and the unassessed balance at the end of the period was986,836.67 yuan. Subsidiaries that run property management business were subsidized by RMB164,580.00 for updating and transforming old and obsolete elevators this year and this subsidy wasincome-related; RMB 4,408.00 was included into the non-operating income in the current period andthe ending outstanding balance was RMB 160,172.00.
(19) According to the Notice of the Ministry of Industry and Information Technology of theNational Development and Reform Commission for Releasing the Central Budgetary Investment Planof the 2017 of the Technical Transformation of the Electronic Information Industry (NDRCInvestment {2017} No. 1649), the company received oversize TV for use in November 2017. InNovember 2017, the company received an central budgetary investment of RMB 30,000,000.00 ofthe oversized TV polarizer industry project. The company shall transfer the deferred income to thecurrent profit or loss for the period of depreciation from the date when the relevant assets are readyfor their intended use.
(20) In accordance with the development plans and policies of Shenzhen Municipality for Strategicemerging Industries, the Management Measures of Shenzhen City on Funds for Scientific andTechnological Research and Development, the Management Measures of Shenzhen City on Scienceand Technology Plan Project and other relevant documents, Shenzhen Science and TechnologyInnovation Commission and SAPO Photoelectric completed the development of the key technologyof the 20170535 ultra-thin polarizer used in IPS smart phone terminal in the Shenzhen Science andTechnology Plan issued by SFG [2017] No. 1447 document. In February 2018, the company receivedfunding from Shenzhen Science and Technology Innovation Commission of 2,000,000 yuan for R &D. The company will transfer the deferred income to the current profit and loss according to thedepreciation period from the date when the relevant assets reach the expected usable status.
(21). According to Measures for Management of Science and Technology Research &Development Funds in Shenzhen, Measures for Management of Projects in Shenzhen MunicipalScience and Technology Program and other documents concerned, SAPO Photoelectric Co., Ltd. andShenzhen Science and Technology Innovation Committee entered into a Contract of Projects inShenzhen Municipal Science and Technology Program through consultation to complete developmentof key techniques for high-performance polarizers for 2018N007 jumbo display panels in theprogram delivered in Shen Fa Gai [2018] No.324 document. The Company was granted with afinancial subsidy of RMB 5,000,000.00 this year. The Company amortized and transferred thedeferred income into the current profit and loss by period of depreciation after relevant assets hit theexpected available state.
(22). Compliance with the document spirit of the Notice of Ministry of Industry and InformationTechnology, Ministry of Finance and China Insurance Regulatory Commission on Piloting anInsurance Compensation Mechanism for the First Batch of Key New Materials (Gong Xin Bu LianYuan [2017] No.222 document). In December 2018, the Company received a relevant premiumsubsidy of RMB 4,806,400.00 from the Ministry of Industry and Information Technology but norelevant premium disbursement was incurred for the moment, hence no amortization was made in thecurrent period.26.Stock capital
| Year-beginning balance | Changed（+，-） | Year-end balance | |||||
| Issuance of new share | Bonus shares | Capitalization of public reserve | Other | Subtotal | |||
| Total shares | 511,274,149.00 | 511,274,149.00 | |||||
| Items | Year-beginning balance | Increase in the current period | Decrease in the current period | Year-end balance |
| Share premium | 1,848,960,987.54 | 1,848,960,987.54 | ||
| Other | 17,040,487.63 | 284,491.54 | 16,755,996.09 | |
| Total | 1,866,001,475.17 | 284,491.54 | 1,865,716,983.63 |
| Items | Year-beginning balance | Increase in the current period | Decrease in the current period | Year-end balance |
| Treasury stock | 27,230,679.00 | 27,230,679.00 | ||
| Total | 27,230,679.00 | 27,230,679.00 |
29.Other Comprehensive income
| Items | Year-beginning balance | Amount of current period | Year-end balance | ||||
| Amount for the period before income tax | Less：Previously recognized in profit or loss in other comprehensive income | Less：Income tax | After - tax attributable to the parent company | After - tax attributable to minority shareholders | |||
| 1.Other comprehensive income will be reclassified into income or loss in the future | |||||||
| Including: Re-measurement Setting Benefit Account Change Amount | |||||||
| Other Comprehensive Income Which Can't Transfer Loss and Loss under Equity Law | |||||||
| 2. Other comprehensive gains that will be reclassified into gains and losses | 2,218,703.87 | 621,283.04 | 1,500,778.50 | -879,495.46 | 1,339,208.41 | ||
| Including：Other Comprehensive Benefits of Convertible Profits and Losses under Equity Law | |||||||
| Gains and losses from changes in fair value of financial assets available for sale | 1,500,778.50 | 1,500,778.50 | -1,500,778.50 | ||||
| Held-to-maturity investment that is reclassified as financial assets available for sale | |||||||
| Items | Year-beginning balance | Amount of current period | Year-end balance | ||||
| Amount for the period before income tax | Less：Previously recognized in profit or loss in other comprehensive income | Less：Income tax | After - tax attributable to the parent company | After - tax attributable to minority shareholders | |||
| Effective gains(losses) arising from cash flow hedging instruments | |||||||
| Translation differences of financial statements denominated | 717,925.37 | 621,283.04 | 621,283.04 | 1,339,208.41 | |||
| Total of other comprehensive income | 2,218,703.87 | 621,283.04 | 1,500,778.50 | -879,495.46 | 1,339,208.41 | ||
30.Surplus reserve
| Items | Year-beginning balance | Increase in the current period | Decrease in the current period | Year-end balance |
| Statutory surplus reserve | 77,477,042.19 | 2,527,761.04 | 80,004,803.23 | |
| Total | 77,477,042.19 | 2,527,761.04 | 80,004,803.23 |
| Items | Amount of this period | Amount of last period |
| Before adjustments: Retained profits at the period end | -32,266,087.44 | -81,275,828.76 |
| Adjustment: Total unappropriated profits at the beginning of the year | ||
| After adjustments: Retained profits at the period beginning | -32,266,087.44 | -81,275,828.76 |
| Add: Net profit attributable to owners of the Company for the period | -22,980,624.93 | 52,776,101.46 |
| Less: Appropriation to statutory surplus reserve | 2,527,761.04 | 3,766,360.14 |
| Appropriation to discretionary surplus reserve | ||
| Appropriation to Common risk provision | ||
| Common stock dividend payable | ||
| Common stock dividends Converted to shares | ||
| Retained profits at the period end | -57,774,473.41 | -32,266,087.44 |
| Items | Amount of current period | Amount of previous period |
| Income from Main Business | 1,266,481,655.09 | 1,453,285,358.21 |
| Other Business income | 5,875,116.25 | 22,260,361.51 |
| Total | 1,272,356,771.34 | 1,475,545,719.72 |
| Main business cost | 1,136,768,017.37 | 1,294,313,208.94 |
| Other business cost | 5,482,267.30 | 5,290,510.43 |
| Total | 1,142,250,284.67 | 1,299,603,719.37 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Domestic and foreign trade | 278,139,524.35 | 271,514,631.70 | 490,391,227.85 | 481,342,760.55 |
| Manufacturing | 879,409,830.28 | 839,415,041.00 | 869,112,546.94 | 786,401,813.99 |
| Property management, leasing | 98,327,018.46 | 25,838,344.67 | 93,781,583.42 | 26,568,634.40 |
| Glycol bulk trade | 10,605,282.00 | |||
| Total | 1,266,481,655.09 | 1,136,768,017.37 | 1,453,285,358.21 | 1,294,313,208.94 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Property and rental income | 98,327,018.46 | 25,838,344.67 | 93,781,583.42 | 26,568,634.40 |
| Textile income | 47,188,632.17 | 41,092,884.63 | 41,273,987.57 | 37,280,504.80 |
| Polaroid income | 832,221,198.11 | 798,322,156.37 | 851,531,250.79 | 771,786,016.96 |
| Trade income | 278,139,524.35 | 271,514,631.70 | 466,698,536.43 | 458,678,052.78 |
| Glycol bulk trade | 10,605,282.00 | |||
| Total | 1,266,481,655.09 | 1,136,768,017.37 | 1,453,285,358.21 | 1,294,313,208.94 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Domestic | 939,119,434.34 | 819,468,645.28 | 1,081,489,243.21 | 937,367,743.11 |
| Oversea | 327,362,220.75 | 317,299,372.09 | 371,796,115.00 | 356,945,465.83 |
| Total | 1,266,481,655.09 | 1,136,768,017.37 | 1,453,285,358.21 | 1,294,313,208.94 |
（5）Operating income from top five clients
| Name | Income | Proportion |
| First | 378,093,076.16 | 29.72 |
| Second | 151,566,770.47 | 11.91 |
| Third | 107,607,236.64 | 8.46 |
| Fourth | 87,524,774.55 | 6.88 |
| Fifth | 64,272,845.87 | 5.05 |
| Total | 789,064,703.69 | 62.02 |
| Items | Amount of current period | Amount of previous period |
| Business tax | 2,582,286.91 | |
| Urban construction tax | 645,044.28 | 2,614,191.92 |
| Education surcharge | 462,140.55 | 1,867,281.00 |
| House taxes | 5,803,460.97 | 5,654,961.18 |
| Other | 1,131,491.82 | 1,244,275.86 |
| Total | 8,042,137.62 | 13,962,996.87 |
| Items | Amount of current period | Amount of previous period |
| Wage | 3,301,333.20 | 3,964,710.67 |
| Transportation changes | 4,246,929.38 | 3,658,484.53 |
| Exhibition fee | 124,705.56 | 128,319.69 |
| Business expenses | 442,238.21 | 1,028,166.65 |
| Samples and product loss | 659,642.03 | 546,124.92 |
| Other | 861,710.67 | 614,890.41 |
| Total | 9,636,559.05 | 9,940,696.87 |
35.Administrative expenses
| Items | Amount of current period | Amount of previous period |
| Wage | 52,311,665.52 | 47,129,961.42 |
| Including ：Equity incentive fee | -356,400.00 | 356,400.00 |
| Depreciation of fixed assets | 11,005,866.31 | 7,515,631.05 |
| Water and electricity | 3,749,739.12 | 3,207,271.84 |
| Agency expenses | 3,857,237.09 | 2,463,731.11 |
| Intangible assets amortization | 1,334,685.09 | 1,276,180.92 |
| Travel expenses | 1,606,997.78 | 1,200,930.15 |
| Office expenses | 926,011.06 | 1,056,086.57 |
| Business entertainment | 1,067,901.96 | 987,917.92 |
| Lawsuit expenses | 158,490.57 | 797,131.31 |
| Repair charge | 2,883,879.67 | 670,928.38 |
| Property insurance | 424,962.59 | 448,304.56 |
| Low consumables amortization | 26,694.80 | 205,480.20 |
| Board fees | 65,020.00 | 57,031.35 |
| Other | 9,171,287.74 | 8,303,925.82 |
| Tax | 88,590,439.30 | 75,320,512.60 |
| Items | Amount of current period | Amount of previous period |
| Wage | 13,172,333.89 | 11,950,320.43 |
| Material | 24,537,372.56 | 22,841,196.37 |
| Depreciation | 2,480,311.39 | 2,408,460.62 |
| Fuel & Power | 835,650.39 | 945,775.30 |
| Travel expenses | 460,801.83 | 309,226.37 |
| Other | 465,316.09 | 581,109.96 |
| Total | 41,951,786.15 | 39,036,089.05 |
37.Financial Expenses
| Items | Amount of current period | Amount of previous period |
| Interest expenses | 14,179,121.73 | 4,130,427.79 |
| Interest income | -27,438,299.41 | -34,831,809.25 |
| Exchange loss | 10,070,501.67 | -2,979,397.55 |
| Fees and other | 2,217,014.64 | 2,509,618.20 |
| Total | -971,661.37 | -31,171,160.81 |
| Items | Amount of current period | Amount of previous period |
| I .Losses for bad debts | 17,594,190.59 | -2,541,674.78 |
| II. Losses for falling price of inventory | 86,870,737.13 | 43,726,742.67 |
| III. Impairment losses on financial assets available for sale | 873,360.18 | 7,622,659.50 |
| IV. Fixed assets impairment losses | 1,010,032.85 | |
| Total | 106,348,320.75 | 48,807,727.39 |
| Items | Amount of current period | Amount of previous period |
| Govemment Subsidy | 17,228,202.21 | 12,567,426.98 |
| Total | 17,228,202.21 | 12,567,426.98 |
| Items | Amount of this period | Amount of last period | Assets-related/income -related |
| Subsidy amortization of the project of TFT-LCD polarizer industrialization | 1,300,000.00 | 1,300,000.00 | Related to assets |
| National grant funds for new flat panel display industry | 1,000,000.00 | 1,000,000.00 | Related to assets |
| Grant funds for TFT-LCD polarizer narrow line (line 5) project | 500,000.00 | 500,000.00 | Related to assets |
| Shenzhen polarizing material and technical engineering | 500,000.00 | 500,000.00 | Related to assets |
| Amortization of funds for the Development of key Technology of Optical compensation Film for Polarizer | 500,000.00 | 375,000.00 | Related to assets |
| Subsidy funds to support the introduction of advanced technology | 300,000.00 | 300,000.00 | Related to assets |
| Old Elevator Renovation Fund Subsidy | 120,168.00 | 276,843.33 | Related to assets |
| National grant funds for new flat panel display industry | 200,000.00 | 200,000.00 | Related to assets |
| Imported equipment and technology discount funds | 175,090.20 | 175,090.20 | Related to assets |
| Textile special funds | 142,857.16 | 142,857.15 | Related to assets |
| Innovation entrepreneurship fund amortization of TFT-LCD polarizer period I project for Pingshan New District Development and Finance Bureau | 50,000.00 | 50,000.00 | Related to assets |
| Shenzhen Engineering laboratory polarizing material and technical engineering | 50,000.00 | 50,000.00 | Related to assets |
| Energy saving transformation grant funds amortization | 29,642.93 | 29,642.93 | Related to assets |
| Financing aid amortization of introducing advanced technique | 14,388.10 | 14,388.09 | Related to assets |
| 2016 Finance Committee subsidies for productive utilities | 4,027,500.00 | Related to income | |
| 2016 Enterprise R & D funding | 2,892,000.00 | Related to income | |
| Shenzhen Science & Technology Innovation Committee allocated 2016 annual science and technology award | 500,000.00 | Related to income | |
| Stable employment subsidies | 237,911.40 | 189,605.28 | Related to income |
| Patent funding | 6,000.00 | 27,000.00 | Related to income |
| Subsidy of the exhibition | 17,500.00 | Related to income | |
| Amortization of supporting funds for TFT-LCD polarizer phase II project (line 6) | 750,000.00 | Related to assets | |
| Amortization of production plant and equipment subsidy for line 6 | 2,000,000.00 | Related to assets | |
| Pingshan new Area development and finance bureau special support fund amortization | 25,000.00 | Related to assets |
| Shenzhen finance committee second batch of enterprise research and development subsidy funds | 2,430,000.00 | Related to income | |
| Regional agglomeration of strategic emerging industries development pilot project line 6 subsidy fund amortization | 1,250,000.00 | Related to assets | |
| Cost reduction subsidy for industrial and commercial electricity in Shenzhen in 2018 | 4,613,272.07 | Related to income | |
| Shenzhen standard special fund | 965,000.00 | Related to income | |
| Pingshan science and technology innovation service department national high enterprise award | 30,000.00 | Related to income | |
| Other | 38,872.35 | Related to income | |
| Total | 17,228,202.21 | 12,567,426.98 |
| Items | Amount of this period | Amount of last period |
| Investment income from the disposal of long-term equity investment | 1,260,154.95 | 1,101,479.62 |
| Hold the investment income during from available-for-sale financial assets | 4,264,611.76 | 2,568,609.75 |
| Trust income | 52,271,862.25 | 49,885,730.58 |
| Profits and Losses from the Conversion of Equity Rights into Long-term Equity Rights Investment in Anhui Huapeng Textile Co., Ltd. | -6,002,923.49 |
| Total | 51,793,705.47 | 53,555,819.95 |
| Items | Amount of this period | Amount of last period |
| Shenzhen Haohao Property Leasing Co., Ltd. | 671,689.37 | 262,962.99 |
| Shenzhen Changlianfa Printing and dyeing Company | 126,902.18 | 138,796.89 |
| Jordan Garment Factory | 16,820.96 | -196,831.05 |
| Yehui International Co., Ltd. | 444,742.44 | 896,550.79 |
| Items | Amount of this period | Amount of last period |
| Total | 1,260,154.95 | 1,101,479.62 |
| Items | Amount of current period | Amount of previous period | Recorded in the amount of the non-recurring gains and losses |
| Scrapping loss of non-current assets | 1,510.00 |
| Other | 1,265,178.66 | 786,057.93 | 1,265,178.66 |
| Total | 1,265,178.66 | 787,567.93 | 1,265,178.66 |
| Items | Amount of current period | Amount of previous period | The amount of non-operating gains & lossed |
| Scrapping loss of non-current assets | 97,477.14 | 53,641.44 | 97,477.14 |
| Other | 121,626.64 | 1,961,815.52 | 121,626.64 |
| Total | 219,103.78 | 2,015,456.96 | 219,103.78 |
| Items | Amount of current period | Amount of previous period |
| Current income tax expense | 12,440,996.95 | 11,572,753.97 |
| Deferred income tax expense | -3,561,401.84 | -293,935.56 |
| Total | 8,879,595.11 | 11,278,818.41 |
| Items | Amount of current period |
| Total profits | -53,423,112.27 |
| Income tax computed in accordance with the applicable tax rate | -13,355,778.06 |
| Effect of different tax rate applicable to the subsidiary Company | 10,179,623.11 |
| Influence of income tax before adjustment | 313,006.35 |
| Influence of non taxable income | -843,455.83 |
| Impact of non-deductible costs, expenses and losses | 493,048.41 |
| Affect the use of deferred tax assets early unconfirmed deductible losses | -1,268,754.51 |
| The current period does not affect the deferred tax assets recognized deductible temporary differences or deductible loss | 19,884,594.08 |
| Impact of additional deductions for R & D expense | -4,719,575.94 |
| Other | -1,803,112.50 |
| Income tax expense | 8,879,595.11 |
| Items | Amount of current period | Amount of previous period |
| I. Other Comprehensive Income Which Can't Reclassify Income and Loss | ||
| I. Other Comprehensive Income Which Can't Transfer Loss and Loss under Equity Law | ||
| II. Other comprehensive gains that will be reclassified into gains and losses | -879,495.46 | -1,173,518.20 |
| 1. Other Comprehensive Benefits of Convertible Profits and Losses under Equity Law | ||
| Less：Previously recognized in other comprehensive income, Profit or loss in current period | ||
| Subtotal | ||
| 2. The income gains (losses) amount of available for sale financial assets | -384,435.87 | |
| Less： Recognized in other comprehensive income that tax effect amount | -96,108.98 | |
| Less：Previously recognized in other comprehensive income, Profit or loss in current period | 1,500,778.50 | |
| Subtotal | -1,500,778.50 | -288,326.89 |
| 3.Translation differences of financial statements denominated in foreign currencies | 621,283.04 | -885,191.31 |
| Less：Previously recognized in other comprehensive income, Profit or loss in current period | ||
| Subtotal | 621,283.04 | -885,191.31 |
| III.Total of other comprehensive income | -879,495.46 | -1,173,518.20 |
| Items | Gains and losses from changes in fair value of available for sale financial assets | Foreign currency translation differences of financial statements | Subtotal |
| I. Beginning balance last year | 1,789,105.39 | 1,603,116.68 | 3,392,222.07 |
| II.Changes in the amount last year | -288,326.89 | -885,191.31 | -1,173,518.20 |
| III.Beginning balance this year | 1,500,778.50 | 717,925.37 | 2,218,703.87 |
| IV.Changes in the amount this year | -1,500,778.50 | 621,283.04 | -879,495.46 |
| V.The year-end balance | 1,339,208.41 | 1,339,208.41 |
| Items | Amount of current period | Amount of previous period |
| Government Subsidy | 20,452,835.82 | 39,141,742.28 |
| Customs bonds | 1,454,781.62 | 62,147,586.38 |
| Bank deposit interest income and other | 28,377,924.90 | 10,718,233.12 |
| Ethylene glycol bulk trade | 249,057,800.00 |
| Total | 299,343,342.34 | 112,007,561.78 |
| Items | Amount of current period | Amount of previous period |
| Principal and income | 4,170,920,804.54 | 3,566,066,407.98 |
| Total | 4,170,920,804.54 | 3,566,066,407.98 |
| Items | Amount of current period | Amount of previous period |
| Financing investment | 3,625,700,000.00 | 3,093,000,000.00 |
| Total | 3,625,700,000.00 | 3,093,000,000.00 |
| Supplement Information | Amount of current period | Amount of previous period |
| I. Adjusting net profit to cash flow from operating activities | ||
| Net profit | -62,302,707.38 | 73,661,677.87 |
| Add: Impairment loss provision of assets | 56,159,345.95 | -4,484,259.21 |
| Depreciation of fixed assets, oil and gas assets and consumable biological assets | 99,629,480.53 | 80,633,240.11 |
| Amortization of intangible assets | 1,334,685.09 | 1,276,180.92 |
| Amortization of Long-term deferred expenses | 285,940.05 | 310,697.92 |
| Loss on disposal of fixed assets, intangible assets and other long-term deferred assets | ||
| Loss on scrap of fixed assets | 97,477.14 | 52,131.44 |
| Loss on fair value changes | ||
| Financial cost | -727,282.72 | -13,705,106.94 |
| Loss on investment | -51,793,705.47 | -53,555,819.95 |
| Decrease in deferred income tax assets | -3,561,401.84 | -293,935.56 |
| Increased of deferred income tax liabilities | ||
| Decrease of inventories | -200,819,304.94 | 17,321,781.84 |
| Decease of operating receivables | -394,843,085.92 | 24,700,270.54 |
| Increased of operating Payable | 96,402,638.36 | -165,297,549.09 |
| Other | -356,400.00 | 10,861,987.80 |
| Net cash flows arising from operating activities | -460,494,321.15 | -28,518,702.31 |
| Supplement Information | Amount of current period | Amount of previous period |
| II. Significant investment and financing activities that without cash flows: | ||
| Debt-to -capital conversion | ||
| Convertible loan due within 1 year | ||
| Fixed assets acquired under financial lease | ||
| 3．Movement of cash and cash equivalents： | ||
| Ending balance of cash | 1,133,574,235.22 | 1,161,240,139.33 |
| Less: Beginning balance of cash equivalents | 1,161,240,139.33 | 930,114,436.57 |
| Add：Ending balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase of cash and cash equivalents | -27,665,904.11 | 231,125,702.76 |
| Items | Year-end balance | Year-beginning balance |
| I. Cash | 1,133,574,235.22 | 1,161,240,139.33 |
| Including：Cash at hand | 13,559.60 | 17,771.09 |
| Demand bank deposit | 1,133,556,630.43 | 1,159,202,998.15 |
| Demand other monetary funds | 4,045.19 | 2,019,370.09 |
| Payments to the central bank for payment | ||
| Depositing performs | ||
| Loan to performs | ||
| II. Cash equivalents | ||
| Including：Debt instrument matured within three months | ||
| III. Balance of cash and cash equivalents at the period end | 1,133,574,235.22 | 1,161,240,139.33 |
47.Foreign currency monetary items(1)Foreign currency monetary items
| Items | Closing foreign currency balance | Exchange rate | Closing convert to RMB balance |
| Monetary funds | |||
| Including：USD | 1,533,045.44 | 6.86320 | 10,521,597.46 |
| HKD | 346,842.37 | 0.87620 | 303,903.28 |
| JPY | 1,585,021.00 | 0.061887 | 98,092.19 |
| Account receivable | |||
| Including：USD | 4,820,772.82 | 6.86320 | 33,085,928.04 |
| HKD | 278,280.00 | 0.87620 | 243,828.94 |
| JPY | 2,888,938.00 | 0.061887 | 178,787.71 |
| Other receivable | |||
| Including：USD | 37,399.02 | 6.86320 | 256,676.95 |
| Account payable | |||
| Including：USD | 4,551,505.07 | 6.86320 | 31,237,889.60 |
| JPY | 1,487,770,193.76 | 0.061887 | 92,073,633.98 |
| Other payable | |||
| Including：USD | 812,419.50 | 6.86320 | 5,575,797.51 |
| HKD | 3,044.46 | 0.87620 | 2,667.56 |
| JPY | 132,282,000.00 | 0.061887 | 8,186,536.13 |
| Euro | 148,745.00 | 7.84730 | 1,167,246.64 |
| Short –term loans | |||
| Including：USD | 15,506,119.43 | 6.86320 | 106,421,598.87 |
| JPY | 1,060,416,768.20 | 0.061887 | 65,626,012.53 |
| Interest payable | |||
| Including：USD | 157,578.09 | 6.86320 | 1,081,489.94 |
| JPY | 5,429,015.62 | 0.061887 | 335,985.49 |
| Subsidiary | Main operation | Registered place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| Shenzhen Lishi Industry Development Co., Ltd | Shenzhen | Shenzhen | Domestic trade, Property Management | 100.00 | Establish | |
| Shenzhen Huaqiang Hotel | Shenzhen | Shenzhen | Accommodation, restaurants, business center; | 100.00 | Establish | |
| Shenfang Property Management Co., Ltd. | Shenzhen | Shenzhen | Property Management | 100.00 | Establish | |
| Shenzhen Beauty Century Garment Co., Ltd. | Shenzhen | Shenzhen | Production of fully electronic jacquard knitting whole shape | 100.00 | Establish | |
| SAPO Photoelectric Co., Ltd | Shenzhen | Shenzhen | Operating import and export business | 60.00 | Purchase | |
| Shenzhen Shenfang Import & export Co., Ltd. | Shenzhen | Shenzhen | Operating import and export business | 100.00 | Establish | |
| Shengtou (Hongkong) Co.,Ltd. | Hongkong | Hongkong | Production and sales of polarizer | 100.00 | Establish | |
| Joint venture or associated enterprise | Place of operation | Place of registration | Nature | Holding proportion(%) | The accounting treatment of investment in | |
| Directly | Indirectly | |||||
| Shenzhen Haohao Property Leasing Co., Ltd. | Shenzhen | Shenzhen | Property leasing | 50.00 | Equity method | |
| Shenzhen Changlianfa Printing and dyeing Company | Shenzhen | Shenzhen | Property leasing | 40.25 | Equity method | |
| Jordan Garment Factory | Jordan | Jordan | Manufacturing | 35.00 | Equity method | |
| Yehui International Co., Ltd. | Hongkong | Hongkong | Manufacturing | 22.75 | Equity method | |
| Anhui Huapeng Textile Co., Ltd. | Anhui | Anhui | Manufacturing | 50.00 | Equity method |
| Year-end balance/ Amount of current period | Year-beginning balance/ Amount of previous period | |
| Joint venture： | ||
| Total book value of the investment | 17,425,766.44 | 5,369,450.56 |
| Total amount of the pro rata calculation of the following items | ||
| --Net profit | 671,689.37 | 262,962.99 |
| --Other Comprehensive income | ||
| --Total comprehensive income | 671,689.37 | 262,962.99 |
| Dividends received from joint ventures this period | 400,000.00 | |
| Associated enterprise： | ||
| Total book value of the investment | 15,526,319.22 | 15,011,284.00 |
| Total amount of the pro rata calculation of the following items | ||
| --Net profit | 588,465.58 | 838,516.63 |
| --Other Comprehensive income | 621,283.04 | -885,191.31 |
| --Total comprehensive income | 1,209,748.62 | -46,674.68 |
| Dividends received from joint ventures this period | 694,713.40 | 707,814.30 |
associated with these financial instruments mainly include credit risk, market risk and liquidity risk.The company’s management shall manage and monitor these risks and ensure above risks to becontrolled within certain scope.（I）Credit RiskThe credit risk of the company is primarily attributable to bank deposits and receivables. Of which,the bank deposits are mainly deposited in the medium and large commercial banks with strength, highcredibility. For the receivables, the company has developed the relevant policies to control the creditrisk, and set up the corresponding debt and credit limit after the credit status of debtor is evaluatedbased on financial condition of debtor, credit history, external ratings, possibility of guaranteeobtained from the third party. Meanwhile, the company shall regularly monitor the debtor’s credithistory. With regard to the bad credit record for the debtor, the company shall adopt the writtenreminder, shortening or cancel of credit period to ensure the overall credit risks within thecontrollable scope.（II）Market riskMarket risk of financial instrument arises from changes in fair value or future cash flow of financialinstruments affected by market price . Market risks includes foreign exchange risk and interest risk.
(1) Interest Rate Risk
The interest rate risk faced by the company is mainly from the bank borrowings. The company isfaced the interest rate risk of the cash flow due to the financial liability of the floating interest rate,and faced the interest rate risk of the fair value due to the financial liability of the fixed interest rate.The company shall determine the relative proportion in the fixed and floating interest rate contracts.
(2) Foreign Exchange Risk
The foreign exchange risks faced by the company are mainly from the financial assets and liabilitiesbased on the price of US dollar and JPY. The company matches the income and expenditure offoreign currency as far as possible in order to reduce the foreign exchange risk.（III）Liquidity riskLiquidity risk refers to fund shortage problems when fulfilling obligations settled in cash or otherfinancial assets. The company shall guarantee to have the sufficient funds to repay the debts throughmonitoring the cash balance, the marketable securities available to be cash and the rolling forecast forthe future cash flow.IX. The disclosure of the fair value1. Closing fair value of assets and liabilities calculated by fair value
| Items | Closing fair value | |||
| Fir value measurement items at level 1 | Fir value measurement items at level 2 | Fir value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | ||||
| (1).Available for sale financial assets | 5,119,896.46 | 5,119,896.46 | ||
| 1.Equity instrument investment | 5,119,896.46 | 5,119,896.46 | ||
| Total of Consistent fair value measurement | 5,119,896.46 | 5,119,896.46 |
| Name | Registered address | Nature | Registered capital （RMB10,000) | The parent company of the Company's shareholding ratio | The parent company of the Company’s vote ratio |
| Shenzhen Investment Holdings Co.,Ltd. | 18/F, Investment Building, Shennan Road, Futian District, Shenzhen | Equity investment , Real-estate Development and Guarantee | 2,534,900.00 | 45.78 | 48.94 |
| Other related party | Relationship to the Company |
| Shenzhen Shenchao Technology Investment Co., Ltd. | Subject to the same party controls |
| Shenzhen Tianma Microelectronics Co., Ltd. | Chairman of the Board Is the Vice Chairman of the Company |
| Shengbo （HK）Co., Ltd. | The Company Executives are Director of the company |
| Hangzhou Jinjiang Group Co., Ltd. | The controlling party of SAPO Photoelectric Shareholder |
| Lan Xi Jinxin Investment Management Co., Ltd. | A subsidiary of Hangzhou Jinjiang Group Co., Ltd. |
| Zhejiang Hengjie Industry Co., Ltd. | A subsidiary of Hangzhou Jinjiang Group Co., Ltd. |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Sharing Company of Hangzhou Jinjiang Group Co., Ltd. |
| Shenzhen Xinfang Knitting Co., Ltd. | Sharing Company |
| Shenzhen Dailishi Underwear Co., Ltd. | Sharing Company |
| Anhui Huapeng Textile Co., Ltd. | Sharing Company |
| Related party | Content | Amount of current period | Amount of previous period |
| Shenzhen Tianma Microelectronics Co., Ltd. | Sales polarizer sheet | 2,463,750.30 | 4,835,900.92 |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Sales polarizer sheet | 87,524,774.55 |
| Related party | Contents of related transaction | The amount of the current period (tax included) | The amount of the previous period |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Support film | 48,771,009.61 |
commercial loan interest rate. As of December 31, 2018, the balance of the company's borrowingswas 40 million yuan.4. Guarantee provided by related parties
In February 2018, Jinjiang Group issued a guarantee letter to Shengbo Photoelectric Company, asubsidiary of the company, and made the following commitments on its proposed trade businesscarried out by Shengbo Photoelectric Company. If any problems (including but not limited to capitalor other problems) arise in the course of trade transactions, the full responsibility of Jinjiang Groupshall be borne by Jinjiang Group. In January 2019, Henan Fuxin Investment Co., Ltd. pledged 10% ofits stake in Hualian Development Group Co., Ltd. to Shengbo Photoelectric in accordance with thecompany's requirements and coordinated by Jinjiang Group, in order to guarantee the performance ofShengbo Photoelectric's above-mentioned trade business creditor's rights. In addition, Jinjiang Groupissued a guarantee letter for the financial products "Wanxiang Trust-Yuquan 204 Single Fund Trust"and "Wanxiang Trust-Yuquan 205 Single Fund Trust" purchased by Shengbo Photoelectric Company.It promised that if Wanxiang Trust could not return Shengbo Photoelectric Principal and Income intime, the principal and Income of Wanxiang Trust should be returned 10 days after the expiration dateof the principal and income period. Within one working day, Jinjiang Group will transfer its ownfunds to Shengbo Photoelectric designated account for repayment of principal and income. As ofDecember 31, 2018, the principal and income of the above trust funds have been recovered.5. Rewards for the key management personnel
| Items | Amount of current period | Amount of previous period |
| Rewards for the key management personnel | 6.056 \ million | 482.48万元 |
| Name | Related party | Amount at year end | Amount at year beginning | ||
| Balance of Book | Bad debt Provision | Balance of Book | Bad debt Provision | ||
| Account receivable | Shenzhen Tianma Microelectronics Co., Ltd. | 894,474.64 | 44,723.73 | 1,555,500.44 | 77,775.02 |
| Account receivable | Kunshan Zhiqimei Material Technology Co., Ltd. | 84,062,627.96 | 4,203,131.40 | ||
| Other Account receivable | Anhui Huapeng Textile Company | 1,800,000.00 | 1,800,000.00 | 1,800 ,000.00 | 1,800 ,000.00 |
| Other Account receivable | Shenzhen Dailishi Underwear Co., Ltd. | 416,464.86 | 20,823.24 | 440,508.46 | 22,025.42 |
（2）Payables
| Name | Related party | Amount at year end | Amount at year beginning |
| Account payable | Kunshan Zhiqimei Material Technology Co., Ltd. | 17,405,753.46 | |
| Other payable | Shenzhen Xinfang Knitting Co., Ltd. | 244,789.85 | 244,789.85 |
| Other payable | Shenzhen Xiangji ang Trade Co., Ltd. | 40,000.00 | |
| Other payable | Shenzhen Changlianfa Printing and dyeing Co., Ltd. | 1,178,449.95 | 1,178,449.95 |
| Other payable | Shenzhen Haohao Property Leasing Co., Ltd. | 4,454,489.85 | 4,104,489.85 |
| Other payable | Yehui International Co.,Ltd. | 1,190,070.22 | 1,135,399.49 |
| Other payable | SAPO （Hongkong）Co., Ltd. | 315,000.00 | 315,000.00 |
| Interest payable | Shenzhen Shenchao Technology Investment Co., Ltd. | 37,220,662.08 | 45,570,662.08 |
| Items | Related content |
| Total amount of various equity instruments granted by the company during the current period | |
| Total amount of various equity instruments that the company exercises during the period | |
| Total amount of various equity instruments that have expired in the current period | |
| The scope of executive price of the company’s outstanding share options at the end of the period and the remaining term of the contract | The company issued 4,752,300 restricted stocks at the end of the period, and the grant price was 5.73 yuan/share. Restrictions shall be lifted at the rate of 40%, 30%, and 30% respectively after 12 months, 24 months, and 36 months after the first transaction date of 24 months after the completion of the registration. The period of validity of the entire plan shall not exceed 60 months from the date of granting the restricted stock to the date on which |
| The scope of executive price of the company’s other equity instruments at the end of the period and the remaining term of the contract |
| Items | Related content |
| the restricted stocks granted to the incentive object are all released from restrictions on sale or cancelled by repurchase. |
| Restriction lifting period | Performance assessment goals |
| The first restriction lifting period | In 2018, the earnings per share shall be no less than 0.07 yuan, and shall not be lower than the 75 fractiles level of the comparable listed companies in the same industry; the growth rate of operating revenue in 2018 compared with 2016 is not less than 70%, and is not lower than the 75 fractiles level of comparable listed companies in the same industry; in 2018, the proportion of optical film business such as polarizers to operating revenue is no less than 70%. |
| The second restriction lifting period | In 2019, earnings per share shall be no less than 0.08 yuan, and shall not be lower than the 75 fractiles level of the comparable listed companies in the same industry; the growth rate of operating revenue in 2019 compared with 2016 is not less than 130%, and is not lower than the 75 fractiles level of comparable listed companies in the same industry; in 2019, the proportion of optical film business such as polarizers to operating revenue is not less than 75%. |
| The third restriction lifting period | In 2020, the earnings per share shall be no less than 0.20 yuan, and shall not be lower than the 75 fractiles level of comparable listed companies in the same industry; the growth rate of operating revenue in 2020 is not less than 200% compared to 2016, and is not lower than the 75 fractiles level of comparable listed companies in the same industry. In 2020, the proportion of optical film business such as polarizers to operating revenue will be no less than 80%. |
| Items | Related contents |
| Determination method of the fair value of equity instruments on the grant date | The closing price of the company's stock on grant date - grant price |
| Determination basis of the number of vesting equity instruments | On each balance sheet date of the waiting period, it is determined based on the latest information such as the change in the number of people that can be released from restrictions and the completion of performance indicators |
| Equity-settled share-based payment is included in the accumulated amount of capital reserve | |
| Total amount of fees confirmed by equity-settled share-based payments in the current period | -356,400.00 |
In the report period, Shenzhen SAPO Photoelectric Co., Ltd. had a an import trading business inthe pre-paid amount of USD 21,201,000, wherein SAPO Photoelectric failed to deliver to the client asscheduled for the supplier's failure to deliver as scheduled. The client of this trading business agreedon a delayed delivery on April 30, 2019 in the letter and undertook to continue to perform duties ofcontract and exempt any liability for breach of contract caused by delayed delivery in the mastercontract. Till the date when the financial statements were approved and issued, the supplier of thistrading business gave deliverables to SAPO and compensated losses of RMB 1,791,000 caused toSAPO by discount; SAPO handed over the above deliverables to the client of this trading business.XIV.Other Important matters
According to the cooperation agreement made by and between the Company and HangzhouJinjiang Group Co., Ltd. & Hangzhou Jinhang Equity Investment Fund Partnership (LimitedPartnership), Hangzhou Jinjiang Group Co., Ltd. gave the following 2018 performance commitmentto Shenzhen SAPO Photoelectric Co., Ltd.: in 2018, the sales income and net profit are not lowerthan RMB 2 billion and RMB 100 million respectively and in principle, the income from sales ofpolarizers and relevant optical film products accounts for at least 80.00% of the total income in 2018.If the above performance commitment is not fulfilled, Jinjiang Group shall supplement the balance ofnet profit by cash in 10 days after statistics are completed on annual sales income and annual netprofit among other data.
SAPO Photoelectric realized RMB 1.125 billion in the operating income and RMB-97.2687million in the net profit in 2018, whose income from sales of polarizers and relevant opticalfilm products accounted for 74.01% of the total income. In other words, SAPO Photoelectric failed tofulfill the performance commitment in 2018.
The Company and Jinjiang Group made an in-depth analysis and honest communication on theobjective situation and primary reasons for the failure to fulfill the performance commitment in 2018,prepared targets and measures for improvement of main business operation in 2019 and made furthernegotiation on matters of the follow-up cooperation; besides, the parties made a preliminarycommunication on matters of compensation for performance commitment in 2018. However, so farthe parties have failed to come to terms on any performance compensation plan.
XV. Notes s of main items in financial reports of parent company
(1) Notes receivable & Account receivable
| Items | Year-end balance | Year-beginning balance |
| Notes receivable | ||
| Account receivable | 570,471.80 | 473,196.00 |
| Total | 570,471.80 | 473,196.00 |
1.Classification account receivables.
| Classification | Amount in year-end | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Accounts receivable of individual significance and subject to individual impairment assessment | |||||
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 570,471.80 | 100.00 | 28,523.59 | 5.00 | 541,948.21 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | |||||
| Total | 570,471.80 | 100.00 | 28,523.59 | 5.00 | 541,948.21 |
| Classification | Amount in year-begin | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Accounts receivable of individual significance and subject to individual impairment assessment | |||||
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 473,196.00 | 100.00 | 23,659.79 | 5.00 | 449,536.21 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | |||||
| Total | 473,196.00 | 100.00 | 23,659.79 | 5.00 | 449,536.21 |
| Aging | Balance in year-end |
| Account receivable | Bad debt provision | Proportion(%) | |
| Within 1 year | 570,471.80 | 28,523.59 | 5.00 |
| Items | Amount in year-end | Amount in year-beginning |
| Other account receivable | 8,881,582.55 | 5,782,620.63 |
| Interest receivable | 4,974,799.47 | 13,660,866.80 |
| Dividend receivable | ||
| Total | 13,856,382.02 | 19,443,487.43 |
| Classification | Amount in year-end | ||||
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Other accounts receivable of individual significance and subject to individual impairment assessment | 13,781,464.60 | 57.27 | 13,781,464.60 | 100.00 | |
| Other accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 9,971,934.77 | 41.44 | 1,090,352.22 | 10.93 | 8,881,582.55 |
| Other accounts receivable of individual insignificance but subject to individual impairment assessment | 311,486.35 | 1.29 | 311,486.35 | 100.00 | |
| Total | 24,064,885.72 | 100.00 | 15,183,303.17 | 63.09 | 8,881,582.55 |
| Classification | Amount in year-beginning |
| Book Balance | Bad debt provision | Book value | |||
| Amount | Proportion(%) | Amount | Proportion(%) | ||
| Other accounts receivable of individual significance and subject to individual impairment assessment | 13,781,464.60 | 67.70 | 13,781,464.60 | 100.00 | |
| Other accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 6,262,767.01 | 30.77 | 480,146.38 | 7.67 | 5,782,620.63 |
| Other accounts receivable of individual insignificance but subject to individual impairment assessment | 311,486.35 | 1.53 | 311,486.35 | 100.00 | |
| Total | 20,355,717.96 | 100.00 | 14,573,097.33 | 71.59 | 5,782,620.63 |
| Other receivable accounts （Unit） | Amount in year-end | |||
| Other account receivable | Bad debt provision | Withdrawal proportion (%) | Reason for allowance | |
| Jiangxi Xuanli String Co., Ltd. | 11,389,044.60 | 11,389,044.60 | 100.00 | No executable property, unlikely to recover. |
| Anhui Huapeng Textile Co.,Ltd. | 1,800,000.00 | 1,800,000.00 | 100.00 | Estimated irrecoverable |
| Shenzhen Tianlong Induatry & Trade Co., Ltd. | 592,420.00 | 592,420.00 | 100.00 | Has been concealed, unlikely to recover |
| Total | 13,781,464.60 | 13,781,464.60 | ||
| Aging | Amount in year-end | ||
| Other receivable | Bad debt provision | Withdrawal proportion | |
| Within 1 year | 4,248,226.22 | 212,411.31 | 5.00 |
| 1-2 years | 4,454,759.77 | 445,475.98 | 10.00 |
| 2-3 years | 1,010,047.30 | 303,014.19 | 30.00 |
| Over 3 years | 258,901.48 | 129,450.74 | 50.00 |
| Total | 9,971,934.77 | 1,090,352.22 |
| Category | Year-end balance | Year-beginning balance |
| Internal current account | 8,578,542.00 | 5,075,600.00 |
| Unit account | 15,451,143.71 | 15,206,367.96 |
| Other | 35,200.01 | 73,750.00 |
| Total | 24,064,885.72 | 20,355,717.96 |
| Name | Nature | Year-end balance | Age | Portion in total other receivables(%) | Bad debt provision |
| Year-end balance | |||||
| First | Unit account | 11,389,044.60 | Over 5 years | 47.33 | 11,389,044.60 |
| Second | Internal current account | 8,575,600.00 | Within 1 year to Over 5 years | 35.64 | 912,800.00 |
| Third | Unit account | 1,800,000.00 | 2-3 years | 7.48 | 1,800,000.00 |
| Fourth | Unit account | 783,579.12 | Within 1 year, 1-2 years | 3.26 | 61,916.94 |
| Fifth | Unit account | 592,420.00 | Over 5 years | 2.46 | 592,420.00 |
| Total | 23,140,643.72 | 96.17 | 14,756,181.54 |
| Items | Year-end balance | Year-beginning balance |
| Fixed deposit interest | 884,141.92 | 12,312,114.53 |
| Items | Year-end balance | Year-beginning balance |
| Structure deposit interest | 4,090,657.55 | 1,348,752.27 |
| Total | 4,974,799.47 | 13,660,866.80 |
| Items | Year-end balance | Year-beginning balance | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Investment to the subsidiary | 1,980,806,395.91 | 16,582,629.30 | 1,964,223,766.61 | 1,981,050,902.97 | 16,582,629.30 | 1,964,468,273.67 |
| Investment to joint ventures and associated enterprises | 32,952,085.66 | 32,952,085.66 | 20,380,734.56 | 20,380,734.56 | ||
| Total | 2,013,758,481.57 | 16,582,629.30 | 1,997,175,852.27 | 2,001,431,637.53 | 16,582,629.30 | 1,984,849,008.23 |
| Name | Opening balance | Increase | Decrease | Closing balance | Withdrawn impairment provision in the reporting period | Closing balance of impairment provision |
| SAPO Photoelectric Co., Ltd. | 1,924,842,841.18 | 179,771.15 | 1,924,663,070.03 | 14,415,288.09 | ||
| Shenzhen Lisi Industrial Development Co., Ltd. | 8,080,587.80 | 7,199.55 | 8,073,388.25 | |||
| Shenzhen Beauty Centruty Garment Co., Ltd. | 30,895,388.23 | 27,988.23 | 30,867,400.00 | 2,167,341.21 |
| Name | Opening balance | Increase | Decrease | Closing balance | Withdrawn impairment provision in the reporting period | Closing balance of impairment provision |
| Shenzhen Huaqiang Hotal | 15,499,430.44 | 10,079.36 | 15,489,351.08 | |||
| Shenfang Property Management Co., Ltd. | 1,732,655.32 | 19,468.77 | 1,713,186.55 | |||
| Total | 1,981,050,902.97 | 244,507.06 | 1,980,806,395.91 | 16,582,629.30 |
（2）Investment to joint ventures and associated enterprises
| Name | Opening balance | Increase /decrease in reporting period | Closing balance | Closing balance of impairment provision | |||||||
| Add investment | Adjustment of other comprehensive income | Other equity changes | Declaration of cash dividends or profit | Withdrawn impairment provision | Other | ||||||
| I. Joint ventures | |||||||||||
| Shenzhen Haohao Property Leasing Co., Ltd. | 5,369,450.56 | 671,689.37 | 400,000.00 | 5,641,139.93 | |||||||
| Shenzhen Xieli Automobile Co., Ltd. | |||||||||||
| Anhui Huapeng Textile Co., Ltd. | 11,784,626.51 | 11,784,626.51 | |||||||||
| Subtotal | 5,369,450.56 | 671,689.37 | 400,000.00 | 11,784,626.51 | 17,425,766.44 | ||||||
| II. Associated enterprises | |||||||||||
| Shenzhen Changlianfa | 2,107,155.01 | 126,902.18 | 2,234,057.19 | ||||||||
| Printing and dyeing Company | |||||||||||
| Jordan Garnent Factory | 2,233,902.64 | 16,820.96 | 112,891.10 | 2,363,614.70 | |||||||
| Yehui Intern ational Co., Ltd. | 10,670,226.35 | 444,742.44 | 508,391.94 | 694,713.40 | 10,928,647.33 | ||||||
| Subtotal | 15,011,284.00 | 588,465.58 | 621,283.04 | 694,713.40 | 15,526,319.22 | ||||||
| Total | 20,380,734.56 | 1,260,154.95 | 621,283.04 | 1,094,713.40 | 11,784,626.51 | 32,952,085.66 |
4.Business income and Business cost（1）Business income and Business cost
| Items | Amount of current period | Amount of previous period |
| Income from Main Business | 63,874,796.19 | 61,363,107.31 |
| Other Business income | 4,452,884.21 | 4,111,507.05 |
| Total | 68,327,680.40 | 65,474,614.36 |
| Cost from Main Business | 10,026,643.42 | 10,094,014.49 |
| Other Business cost | 4,452,884.20 | 4,111,507.06 |
| Total | 14,479,527.62 | 14,205,521.55 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Rental industry | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Total | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Rental industry | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Total | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Shenzhen | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Total | 63,874,796.19 | 10,026,643.42 | 61,363,107.31 | 10,094,014.49 |
| Name | Business Income | Proportion(%) |
| First | 30,095,391.34 | 44.05 |
| Second | 1,891,171.80 | 2.77 |
| Third | 1,663,348.00 | 2.43 |
| Fourth4 | 1,705,920.00 | 2.50 |
| Fifth | 1,690,755.90 | 2.47 |
| Total | 37,046,587.04 | 54.22 |
| Items | Amount of current period | Amount of previous period |
| Income from long-term equity investment measured by adopting the cost method | 19,883,599.84 |
| Income from long-term equity investment measured by adopting the Equity method | 1,260,154.95 | 1,101,479.62 |
| Investment income received from holding of available-for –sale financial assets | 1,215,316.98 | 1,734,586.44 |
| Profits and Losses from the Conversion of Equity Rights into Long-term Equity Rights Investment in Anhui Huapeng Textile Co., Ltd. | -6,002,923.49 |
| Total | -3,527,451.56 | 22,719,665.90 |
| Supplement information | Amount of current period | Amount of previous period |
| I. Adjusting net profit to cash flow from operating activities | ||
| Net profit | 25,277,610.38 | 37,663,601.39 |
| Add : Impairment loss provision of assets | 1,488,429.82 | 5,554,598.81 |
| Depreciation of fixed assets, oil and gas assets and consumable biological assets | 9,118,693.34 | 9,163,495.84 |
| Amortization of intangible assets | 400,930.92 | 380,740.92 |
| Amortization of long-term deferred expenses | ||
| Loss on disposals of fixed assets, intangible assets and other long-term assets(“-“for gains) | ||
| Loss on discard of fixed assets | 15,020.65 |
| Supplement information | Amount of current period | Amount of previous period |
| Loss on fair value changes | ||
| Financial expenses | -9,027,389.20 | -3,413,625.17 |
| Loss on investment | 3,527,451.56 | -22,719,665.90 |
| Decrease of deferred income tax assets | -3,790,938.66 | 489,041.95 |
| Increase of deferred income tax assets | ||
| Decrease in inventories | ||
| Decrease of operating receivable | 7,120,472.61 | -2,355,629.65 |
| Increase of operating receivable | 11,591,283.05 | 7,728,160.19 |
| Other | -111,892.94 | 561,892.94 |
| Net cash flows arising from operating activities | 45,594,650.88 | 33,067,631.97 |
| II. Significant investment and financing activities that without cash flows | ||
| Debt-to –capital conversion | ||
| Convertible loan due within 1 year | ||
| Fixed assets acquired under financial lease | ||
| III. Net Changes of cash and cash equivalents | ||
| Ending balance of cash | 85,416,567.74 | 413,700,327.95 |
| Less: Beginning balance of cash | 413,700,327.95 | 440,685,610.11 |
| Add：End balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase of cash and cash equivalents | -328,283,760.21 | -26,985,282.16 |
| Items | Amount | Notes |
| Non-current asset disposal gain/loss | -97,477.14 | |
| Government subsidies recognized in current gain and loss(excluding those closely related to the Company’s business and granted under the state’s policies) | 17,228,202.21 | |
| Gain/loss on entrusting others with investment or asset management | 52,271,862.25 | |
| Single impairment test for impairment of receivables transferred back to preparation | ||
| Net amount of non-operating income and expense except the aforesaid items | 1,143,552.02 | |
| Subtotal | 70,546,139.34 | |
| Amount of influence of income tax | 48,007.18 | |
| Amount of influence of minority interests | 28,074,327.28 | |
| Total | 42,423,804.88 |
| Profit of report period | Weighted average returnee equity(%) | Earnings per share | |
| Basic earnings per share(RMB/share） | Diluted earnings per share(RMB/share) | ||
| Net profit attributable to the Common stock shareholders of Company. | -0.96 | -0.04 | -0.04 |
| Net profit attributable to the Common stock shareholders of Company after deducting of non -recurring gain/loss. | -2.74 | -0.13 | -0.13 |
XII．Documents Available for Inspection1.Financial statements bearing the seal and signature of legal representative, General Manaager and financialcontroller;2.The original of the auditor’s report bearing the seal of the certified public accountants and the signature ofC.P.A.3.The originals of all the Company’s documents and the original manuscripts of announcements publiclydi sclosed on the newspapers designated by China Securities Regulatory Commission in the report period.The above documents were completely placed at the Office of Secretaries of the Board of Directors of theCompany.
The Board of Directors of Shenzhen Textile (Holdings) Co., Ltd.April 27,2019