无锡威孚高科技集团股份有限公司Weifu High-Technology Group Co., Ltd.
ANNUAL REPORT 2020
April 2021
Section I. Important Notice, Contents and InterpretationBoard of Directors, Supervisory Committee, all directors, supervisors and seniorexecutives of Weifu High-Technology Group Co., Ltd. (hereinafter referred to asthe Company) hereby confirm that there are no any fictitious statements,misleading statements, or important omissions carried in this report, and shalltake all responsibilities, individual and/or joint, for the reality, accuracy andcompletion of the whole contents.Wang Xiaodong, Principal of the Company, Ou Jianbin, person in charger ofaccounting works and Ou Jianbin, person in charge of accounting organ(accounting principal) hereby confirm that the Financial Report of 2020 AnnualReport is authentic, accurate and complete.All directors are attend the Meeting for the Report deliberation.Concerning the forward-looking statements with future planning involved in theReport, they do not constitute a substantial commitment for investors. Investorsshould be cautious with investment risks.China's economy has entered a critical period of transformation, and the maintheme is to reduce speed and improve quality. China's auto market has alsoentered a period of transformation and adjustment. In a complex economicenvironment, weak consumption is still the main risk point that drags down theauto market. Investors are advised to pay attention to investment risks.The profit distribution plan that deliberated and approved by the Board is:
based on total share capital of 1,008,894,293, distributed 15 Yuan (tax included)bonus in cash for every 10-share hold by all shareholders, 0 share bonus issued(tax included) and no public reserve transfer into share capital either.
Contents
Section I Important Notice, Contents and Interpretation ...... 2
Section II Company Profile and Main Finnaical Indexes ...... 5
Section III Summary of Business ...... 10
Section IV Discussion and Analysis of Operation ...... 15
Section V Material Matters ...... 38
Section VI Changes in shares and particular about shareholders ...... 52Section VII Preferred Stock……………………………………………………………………… 60Section VIII Convertible Bonds ...... 61
Section IX Particulars about Directors, Supervisors,SeniorExecutives and Employees ...... 62
Section X Corporate Governance ...... 73
Section XI Corporate Bond ...... 80
Section XII Financial Report ...... 81
Section XIII Documents Available for Reference ...... 253
Interpretation
| Items | Refers to | Contents |
| Company, The Company, WFHT | Refers to | Weifu High-Technology Group Co., Ltd. |
| Weifu Group | Refers to | Wuxi Weifu Group Co., Ltd. |
| Industry Group | Refers to | Wuxi Industry Development Group Co., Ltd. |
| Robert Bosch, Robert Bosch Company | Refers to | Robert Bosch Co., Ltd, ROBERT BOSCH GMBH |
| Bosch Automobile Diesel, Bosch Diesel System | Refers to | Bosch Automobile Diesel System Co., Ltd. |
| Weifu Leader | Refers to | Wuxi Weifu Leader Catalytic Converter Co., Ltd. |
| Weifu Jinning | Refers to | Nanjing Weifu Jinning Co., Ltd. |
| Weifu Tianli | Refers to | Ningbo Weifu Tianli Supercharging Technique Co., Ltd. |
| Weifu Chang’an | Refers to | Wuxi Weifu Chang’an Co., Ltd. |
| Weifu Mashan | Refers to | Weifu Mashan Pump Glib Co., Ltd. |
| Weifu International Trade | Refers to | Wuxi Weifu International Trade Co. Ltd. |
| Weifu Schmidt | Refers to | Wuxi Weifu Schmidt Power System Spare Parts Co., Ltd. |
| Weifu Autocam | Refers to | Wuxi Weifu Autocam Fine Machinery Co. Ltd. |
| Weifu Electric Drive | Refers to | Wuxi Weifu Electric Drive Technology Co., Ltd. |
| Autosmart Seating | Refers to | Wuxi Weifu Autosmart Seating System Co., Ltd. |
| SPV | Refers to | Weifu Holding ApS |
| IRD | Refers to | IRD Fuel Cells A/S |
| Borit | Refers to | Borit NV |
| Weifu Environment | Refers to | Wuxi Weifu Environment Catalyst Co., Ltd. |
| Weifu Precision Machinery | Refers to | Weifu Precision Machinery Manufacturing Co., Ltd. |
| Zhonglian Electronic | Refers to | Zhonglian Automobile Electronic Co., Ltd. |
| Shinwell Automobile | Refers to | Shinwell Automobile Technology (Wuxi) Co., Ltd. |
| CSRC | Refers to | China Securities Regulatory Commission |
| SZSE | Refers to | Shenzhen Stock Exchange |
| Gongzheng Tianye | Refers to | Gongzheng Tianye Certified Public Accountants (Special General Partnership) |
| The reporting period | Refers to | From 1 Jan. 2020 to 31 Dec. 2020 |
Section II Company Profile and Main Financial IndexesI. Company information
| Short form of the stock | WFHT, Su Weifu-B | Stock code | 000581, 200581 |
| Stock exchange for listing | Shenzhen Stock Exchange | ||
| Name of the Company (in Chinese) | 无锡威孚高科技集团股份有限公司 | ||
| Short form of the Company (in Chinese) | 威孚高科 | ||
| Foreign name of the Company (if applicable) | WEIFU HIGH-TECHNOLOGY GROUP CO.,LTD. | ||
| Short form of foreign name of the Company (if applicable) | WFHT | ||
| Legal representative | Wang Xiaodong | ||
| Registrations add. | No.5 Huashan Road, Xinwu District, Wuxi | ||
| Code for registrations add | 214028 | ||
| Offices add. | No.5 Huashan Road, Xinwu District, Wuxi | ||
| Codes for office add. | 214028 | ||
| Company’s Internet Web Site | http://www.weifu.com.cn | ||
| Web @ weifu.com.cn | |||
II. Person/Way to contact
| Secretary of the Board | Rep. of security affairs | |
| Name | Zhou Weixing | Yan Guohong |
| Contact add. | No.5 Huashan Road, Xinwu District, Wuxi | No.5 Huashan Road, Xinwu District, Wuxi |
| Tel. | 0510-80505999 | 0510-80505999 |
| Fax. | 0510-80505199 | 0510-80505199 |
| wfjt@public1.wx.js.cn | wfjt@public1.wx.js.cn |
III. Information disclosure and preparation place
| Newspaper appointed for information disclosure | China Securities Journal; Securities Times; Hong Kong Commercial Daily |
| Website for annual report publish appointed by CSRC | http://www.cninfo.com.cn |
| Preparation place for annual report | Office of the Board of Directors |
IV. Registration changes of the Company
| Organization code | 91320200250456967N |
| Changes of main business since listing (if applicable) | No change |
| Previous changes for controlling shareholders (if applicable) | Controlling shareholder of the Company was Weifu Group before 2009. and in 2009, controlling shareholder changed to Industry Group since 31 May 2009 due to the merged of Industry Group and Weifu Group. Both Weifu Group and Industry Group were state-owned companies of Wuxi State-owned Assets Supervision & Administration Commission, therefore, actual controller of the Company turns to Wuxi State-owned Assets Supervision & Administration Commission of State Council. |
V. Other relevant information
CPA engaged by the Company
| Name of CPA | Gongzheng Tianye Certified Public Accountants (Special General Partnership) |
| Offices add. for CPA | 10/F, No.5 Building, Jiakaicheng Fortune Center, Jingrong 3rd Street, Taihu Xincheng, Binghu District, Wuxi, Jiangsu Province |
| Signing Accountants | Bai Lingjing, Zhang Qianqian |
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
VI. Main accounting data and financial indexesWhether the Company is required to retrospectively adjust or restate prior year’s accounting data
□ Yes √ No
| 2020 | 2019 | Changes over last year (+,-) | 2018 | |
| Operation revenue (RMB) | 12,883,826,306.60 | 8,784,356,960.30 | 46.67% | 8,721,674,671.18 |
| Net profit attributable to shareholders of the listed company(RMB) | 2,772,769,377.96 | 2,268,026,432.78 | 22.25% | 2,396,077,415.21 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses(RMB) | 2,089,986,086.10 | 1,947,408,959.68 | 7.32% | 2,014,800,714.20 |
| Net cash flows arising from operating activities (RMB) | 781,811,234.01 | 1,048,670,053.23 | -25.45% | 874,381,526.63 |
| Basic earnings per share (RMB/Share) | 2.79 | 2.25 | 24.00% | 2.37 |
| Diluted earnings per share (RMB/Share) | 2.79 | 2.25 | 24.00% | 2.37 |
| Weighted average ROE | 15.78% | 13.77% | 2.01% | 15.48% |
| Year-end of 2020 | Year-end of 2019 | Changes over end of last year (+,-) | Year-end of 2018 | |
| Total assets (RMB) | 27,350,695,388.21 | 23,958,348,185.78 | 14.16% | 20,892,041,460.30 |
| Net assets attributable to shareholder of listed company (RMB) | 18,282,017,990.66 | 16,990,405,136.62 | 7.60% | 15,913,828,778.82 |
The lower of the company’s net profit before or after deduction of non-recurring profit (gain)/loss for the last three financial years isnegative, and the audit report for the latest year indicates that there is uncertainty about the company’s ability to continue as a goingconcern
□Yes √No
The lower of the net profit before or after deduction of non-recurring profit (gain)/loss is negative
□Yes √No
VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (InternationalAccounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accountingrules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules orChinese GAAP (Generally Accepted Accounting Principles) in the period.VIII. Quarterly main financial index
In RMB
| Q 1 | Q 2 | Q 3 | Q 4 | |
| Operation revenue | 2,772,108,717.43 | 3,822,294,907.13 | 3,324,132,346.07 | 2,965,290,335.97 |
| Net profit attributable to shareholders of the listed company | 549,996,717.72 | 776,347,707.26 | 903,901,365.25 | 542,523,587.73 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains | 495,225,376.36 | 680,349,352.50 | 572,795,992.17 | 341,615,365.07 |
| and losses | ||||
| Net cash flows arising from operating activities | 319,204,809.86 | 118,452,262.55 | 624,717,046.92 | -280,562,885.32 |
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financialindex disclosed in the company’s quarterly report and semi-annual report
□Yes √ No
IX. Items and amounts of extraordinary(non-recurring) profit (gains)/loss
√Applicable □ Not applicable
In RMB
| Item | 2020 | 2019 | 2018 | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | 10,719,959.77 | 28,992,604.71 | 96,162,222.57 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 146,475,795.26 | 91,170,663.57 | 48,811,314.99 | |
| Fund possession fees reckoned in current gains/losses that charged to non-financial enterprises | 1,608,477.64 | |||
| Profit and loss of assets delegation on others’ investment or management | 271,684,174.09 | 236,832,172.54 | 311,261,918.65 | |
| Gains/losses of fair value changes from holding the transaction financial asset, derivative financial assets, transaction financial liability and derivative financial liability and investment earnings obtained from disposing the transaction financial asset, derivative financial assets, transaction financial liability, derivative financial liability and other debt investment, except for the effective hedging business related to normal operation of the Company | 375,102,546.00 | 24,394,637.95 | 16,880,487.62 | |
| Switch back of provision for depreciation of account receivable and contractual assets which were singly taken depreciation test | 3,078,424.43 | 1,700,000.00 | 466,200.00 | |
| Other non-operating income and expenditure except for the aforementioned items | -3,090,715.87 | 2,183,276.39 | -597,126.12 | |
| Other gain/loss qualify the definition of non-recurring gains/losses | 353,111.39 | |||
| Less: Impact on income tax | 116,175,046.47 | 57,345,714.82 | 70,234,077.14 | |
| Impact on minority shareholders’ equity (post-tax) | 5,011,845.35 | 8,918,644.88 | 21,827,350.95 | |
| Total | 682,783,291.86 | 320,617,473.10 | 381,276,701.01 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists ofextraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities tothe Public --- Extraordinary Profit/loss
Section III Summary of Business
I. Main businesses of the company in the reporting period
(i) Main business of the Company
According to the data released by China Association of Automobile Manufacturers: the production and salesvolume of automobiles for year of 2020 in the country amounted to 25.22 million and 25.31 million respectively,with 2% and 1.9% down from a year earlier respectively; of which, the production and sales volume of passengervehicles were 19.99 million and 20.18 million respectively, with 6.5% and 6% declined over same period of lastyear respectively. In 2020, driven by the elimination of National III vehicles, the tightening ofoverload/over-speed and infrastructure investment, the annual production and sales of commercial vehiclesshowed significant growth. The production and sales volume of commercial vehicles in 2020 were respectivelyamounted as 5.23 million and 5.13 million, exceeding 5 million for the first time and reaching a record high. Theproduction and sales of commercial vehicle increasing by 20.0% and 18.7% on a y-o-y basis respectively.
During the reporting period, the company's main business was the production and sales of automobile components.The main products included diesel fuel management system products, after-treatment system products and airmanagement system products. Since the beginning of the year, the company has actively seized marketopportunities, seized key products and key customers, and achieved a steady increase in market share. Thebusiness of the three major systems has grown rapidly, and achieved the company's goal of over tens of billions ofoperating income.
Main uses of the Company's products:
1.The fuel management system products are widely used in different power diesel engines supporting all types oftrucks, passenger cars, buses, construction machinery, marine, and generator sets. The company not only makesproducts matching with the main engines used at home but also exports some products to the Americas, SoutheastAsia, and the Middle East. Products can meet the national emission regulation standards.
2.After-treatment system products,which mainly support the major manufacturers of automobile, motorcycle andgeneral machinery at home and meet the national emission standards.
3.Air management system products (supercharger),matches with most of the domestic small-bore diesel engineplants and some 6-cyl diesel engine manufacturers, and meet the needs of the light and heavy commercial vehicles,some passenger cars and engineering machinery. Products can meet the national emission regulation standards.
4. Key parts of the fuel cell, including membrane electrodes, graphite bipolar plates, metal bipolar plates and BOPkey components for domestic and foreign fuel cell reactor and system manufacturers.
(ii) During the reporting period, development stage and periodical characteristics of the industry to whichthe company belongs, as well as the company’s position in the industry2021 is the first year for the development of the "14
th
Five-Year Plan", and is also the year to embark on a newjourney of building a socialist modern country in an all-round way and march towards the second centenary goal.It is a milestone in our country's development process. As the epidemic prevention and control becomes normal,the economy as a whole will maintain growth under the influence of a low base and recovery resonance. Standingat the historical intersection of the "two centenary" goals, the auto industry will fully enter a new stage oftransformation and upgrading with high-quality development. The new development pattern, which is dominatedby the domestic large-scale cycle and the mutual promotion of the international and domestic double cycles, hasgiven China's auto industry more significant responsibilities. During the "14
thFive-Year Plan" period, ourcountry's auto industry will maintain a steady development trend. From the perspective of the developmentsituation, promoting automobile consumption is the main task of stabilizing growth and expanding domesticdemand; enhancing the independent controllability of the supply chain of the industrial chain is the main means toachieve high-quality industrial development; the upgrading of emission regulations and the new dual-slope policyare compelling companies to carry out more stringent reforms to reduce consumption and emissions; carbonpeaking and carbon neutrality promote the further development of new energy vehicles; intelligent networking,rapid penetration of ADAS and smart cockpits, and 5G promote the development of the Internet of Vehicles. In thenew round of technological revolution and industrial transformation, the company will respond to industrychallenges with a positive attitude, seize industry development opportunities, and strive to jointly create a bettertomorrow for the auto industry.
After more than 60 years of hard work, the company has become a backbone enterprise of key parts of domesticauto, 80% products of the existing Automobile components core business are matched with the electronic controlsystems and electronically controlled. The company will actively respond to the national new energy andintelligent network strategy, take the Automobile components industry chain as the core and other related fields assupplements, lay out new energy auto drive technology, and promote the hydrogen fuel cell technology andintelligent network technology research and development capacity building. Market objectives: consolidate theexisting business market position and take a position in the new business potential market. Technical objectives:
strengthen the technical strength of the pillar business, lay out the new business frontier technology, and activelyexpand new areas based on the existing business. Strive to achieve the goal of becoming a leader in the auto coreparts enterprises.
II. Major changes in main assets
1. Major changes in main assets
| Major assets | Cause of major changes |
| Equity assets | No major change |
| Fixed assets | No major change |
| Intangible assets | No major change |
| Construction in progress | No major change |
| Other non-current financial assets | Other non-current financial assets at period-end has major changes over that of year-begin, mainly because the number of financial products held for more than one year increased. |
| Goodwill | Goodwill at period-end has major changes over that of year-begin, mainly because the Company acquired 100% equity of Borit by way of equity acquisition in cash in the Period, cost of consolidation is greater than the fair value of the identifiable net assets of Borit’s |
2. Main overseas assets
√Applicable □ Not applicable
| Specific content of the asset | Cause of formation | Asset size | Location | Operation model | Control measures to guarantee asset security | Income status | The proportion of overseas assets in the company’s net assets | Whether there are significant risks of impairment(Y/N) |
| IRD Fuel Cells A/S | Enterprise combine under the different control | RMB 64.9628 million | Denmark | Wholly-owned subsidiary of the company, R&D, production and sale of the fuel cell component products | The Company will pay full attention to the changes in the industry and markets, strengthen corporate governance, personnel management, financial management, audit supervision and performance assessment | N/A | 0.36% | N |
| Borit NV | Enterprise combine under the different control | RMB 114.6663 million | Belgium | Wholly-owned subsidiary of the company, production and sale of the | The Company will pay full attention to the changes in the industry and markets, strengthen corporate governance, personnel | N/A | 0.63% | N |
| fuel cell component products | management, financial management, audit supervision and performance assessment |
III. Core Competitiveness Analysis
1. Technology and product advantages. The company is a national high-tech enterprise. It has scientific researchplatforms such as "National Enterprise Technology Center", "National High-tech Research and Development PlanAchievement Industrialization Base", "Post-Doctoral Scientific Research Workstation", and "Jiangsu PostgraduateWorkstation". Its subsidiaries have established a number of provincial-level engineering and technologicalresearch centers, provincial-level engineering laboratories, and other research and development institutions,mainly focus on fuel injection systems, exhaust after-treatment systems, and air management systems to conducttechnical research and product development. At present, the company has mastered a number of core patentedtechnologies, the main product technical indicators are at the leading level in the industry, and have strong marketcompetitiveness. In recent years, the company has made arrangements in the fields of new energy and intelligentnetwork technology, and strengthened the development of new business research and development capabilities.The company’s technology center has established a new energy and network technology research institute, built anew energy core component test center, and initially achieved the research and development capabilities for thecore parts and components of hydrogen fuel cell and intelligent network technology products.
2. Industry and brand advantages. After more than 60 years of development, the company has become awell-known enterprise in the domestic automobile components industry, and has established long-term and stablesupporting relationships with major domestic OEMs. 80% of the existing automobile components core businessproducts are matched with electronic control systems and realize electronic control, and take a leading positionamong independent brands. The company is a pioneer in China's internal combustion engine industry and one ofChina's top 100 automobile components companies.
3. Advantages in marketing and service. The company has a stable, professional and experienced marketing teamthat can provide targeted support and services according to customer needs, and customer relationships areharmonious. For long-term strategic customers, the company has established a four-in-one marketingcollaboration organization composed of leaders, key account managers, marketing departments, and businessdepartments. The company’s management exchanges regular visits to promote exchanges and cooperation. Overthe years, the company has won many honors such as "Excellent Quality Award", "Excellent Supplier","Outstanding Supplier" and "Win-Win Cooperation Award" awarded by customers with its stable product qualityand timely delivery. The company has a relatively complete after-sales service system, and has built after-salesservice networks, intelligent service platforms, and has established special maintenance technical service stationsacross the country to regularly conduct maintenance and fault analysis and judgment training for end users, which
can provide customers with fast, timely, and professional all-round after-sales services.
4.Management and manufacturing advantages. The company has a complete organizational structure, continues tooptimize management systems and processes, and has built five major information systems such as financialsharing platforms and IOS & Android applications to realize the effective migration and stable operation oforganization and personnel, business and accounting. The company has established human resources informationsystem platforms, and realized the timely and accurate standardization of basic data of organization, personnel,salary, and attendance; the procurement sharing system has opened the information interconnection between theenterprises and the suppliers, and realized the closed-loop management to the procurement requirements, sourcing,supplier management, and payment settlement process. The company fully implements the Weifu ProductionSystem (WPS) with lean concepts, and promotes continuous improvement of the system and the workshop, whicheffectively improves production efficiency and reduces manufacturing costs. The company has built a qualitymanagement system for the whole process, and guaranteed the product quality level through a transparent,intelligent, and lean quality control platform. The company focuses on intelligent manufacturing, continues tobuild intelligent factories with Weifu characteristics, builds MES, ERP, data center cloud platform, SRM andother systems, and promotes the application of cloud computing and 5G networks, which will strongly supportfuture business development needs.
5. Talent advantage. The company's management team has extensive experience and a good industry reputation inthe Automobile components industry. The company pays attention to the growth of employees and theconstruction of a core talent team. After years of accumulation, it has accumulated a group of professional andhigh-quality management and technical personnel, established a reasonable talent echelon, and provided strongmanpower resource guarantee for the company's long-term and stable development. The company's humanresource management system is relatively complete, focusing on strategy, business, and employees, andcontinuously optimizing various human resource management systems to provide a fair value realization platformfor employees' career development. The company pays attention to the service and care of employees, improvesthe service experience of employees in a mobile, intelligent and self-service way through the establishment ofemployee self-service platform,and creates a working environment with warmth and sense of belonging.
Section IV Discussion and Analysis of the OperationI. Introduction
(i) Overall situationSince the beginning of the year, the market environment has been complex and changeable. In the face of thesevere challenges brought by the epidemic, the government quickly introduced a series of policy measures to dealwith the epidemic and promote the resumption of work and production, so that the macro economy has shown arapid recovery after the COVID-19 epidemic was effectively controlled, realizing the economy from falling torising, maintaining the overall economic and social stability. The performance of the automobile industry wasmuch better than expected. Although the production and sales of the whole year were stable and slightly decreased,the overall performance presented strong development resilience and driving force.According to the data releasedby China Association of Automobile Manufacturers: the production and sales volume of automobiles for thewhole year amounted to 25.22 million and 25.31 million respectively, with 2% and 1.9% down from a year earlierrespectively; of which, the production and sales volume of passenger vehicles were 19.99 million and 20.18million respectively, with 6.5% and 6% declined over same period of last year respectively, the production andsales volume of commercial vehicles were respectively amounted as 5.23 million and 5.13 million, a y-o-y growthof 20.0% and 18.7% respectively.
Facing the complex and changeable external environment, the company’s board of directors actively responded tothe national epidemic prevention requirements, actively did a good job in the epidemic prevention and control andthe resumption of work and production, had the courage to fulfill social responsibilities, seized the policyopportunities of national economic recovery, and concentrated on forging ahead in concert, the companyoutperformed the annual various operating performance indicators established at the beginning of the year.Duringthe reporting period, operating revenue achieved 12.884 billion Yuan with 46.67% up on a y-o-y basis; total profitamounted to 3.003 billion Yuan with 22.54% increase on a y-o-y basis; total assets of the Company was
27.351billion Yuan with 14.16% up from a year earlier; and the owners interest attributable to parent companywas 18.282 billion Yuan, a y-o-y growth of 7.60% achieved.
(ii) Main work carried out
1. Seize market opportunities and achieve a new breakthrough in operating income of tens of billion yuan.Since the beginning of the year, the company actively responds to the complex market environment, seizedopportunities, seized key products and key customers, and achieved a steady increase in market share. The threemajor system businesses grew rapidly, achieving the company's goal of over tens of billion yuan in revenue fromits main business. Fuel management system business achieved annual sales of 2.1 million sets of common railpumps, hitting a record high; VE distribution pumps increased their share in the off-road market, with salesexceeding 350,000 sets, an increase of nearly 20% on a year-on-year basis; in terms of after-treatment system
business, gasoline purifiers achieved annual sales volume exceeding 2 million sets, diesel purifiers achievedannual sales volume exceeding 500,000 sets, both year-on-year increase of over 50%. The overall market share ofpassenger vehicles continued to rise. The commercial vehicle market was actively expanding its core customers'National VI projects. In the off-road market, a customer base for key projects has been established. In terms of airmanagement system business, the four-cylinder turbocharger has been deployed in the gasoline engine market toacquire key project customer groups. The company has maintained a leading position in the diesel engine marketshare. Sales volume of six-cylinder turbochargers increase of over 50%，and it successfully acquired importantcustomers in the National-VI projects. Meanwhile，the company's manufacturing capabilities for precisionmanufacturing and parts processing have been rapidly improved.
2. Intensify technological research and development and promote the development of newproducts.Continued to tap the technical potential of fuel injection system products and expand key customerproject products. The company has gradually achieved mass production in major customer projects for gasolineturbocharger products, six-cylinder turbochargers have won a full range of natural gas projects from importantcustomers, four-cylinder gasoline turbocharger passenger car projects have successively obtained newNational-VI B projects, and four-cylinder diesel turbocharger successfully obtained National-VI projects in keymarkets. The company has completed the packaging development of the National-VI GPF catalyst products ofcore customers on passenger vehicles for exhaust after-treatment system products, and realized mass supply. TheWSP2.0 packaging platform is being developed on commercial vehicles, and each stage of the test has beencompleted on schedule; completed the design, trial production and testing of functional samples of corecomponents for new energy products, and mastered the basic research and development capabilities. In terms ofhydrogen fuel cell products, the company has completed the fully independent development of core materials forthe fuel cell core materials from catalyst, gas diffusion layer (GDL) to membrane electrode (MEA); completed thefull water-based ink formulation optimization and catalyst layer leveling optimization of catalyst coatingmembrane (CCM), and the performance is greatly improved. For extended field products, the first smart seat hasleft the production line, and commercial vehicle seats have officially started mass production.
3. Layout new business in an orderly manner. Continued to promote the strategic planning of fuel cells andcore components of the intelligent network, newly increased and defined planning for key strategic products suchas metal bipolar plates, auxiliary components (BOP), situational awareness systems, automotive smart seats.Focused on the two major fields of hydrogen fuel cell and intelligent network connection for new business layout.The company has continued to increase the layout and investment of hydrogen fuel cells, acquired 100% equity ofBelgian Borit Company, and focused on developing IRD's business in the Chinese market, and accelerated theconstruction of the core competitiveness of bipolar plates with dual technology routes (metal, graphite). In thefield of intelligent network connection, the environmental situation awareness system has won a number ofcustomer projects, and the current focus is on intelligent security and industrial intelligent manufacturing toactively carry out product development, manufacturing and market capacity building. The company hascompleted the establishment of a joint venture of Weifu Autosmart Seating System Co., Ltd. (WFAS) and started
operations.
4. Continuously improve operation and management capabilities. Information construction: the companycontinued to promote projects such as intelligent manufacturing, supply chain collaboration, and processmanagement through information technology’s strong supports to the optimization and upgrading of thecompany's management level. Completed the high-level planning and design of the supply chain, data collectionand preliminary analysis; completed the construction of the Aris process management platform and the unifiedprocess management portal, which provided a guarantee for the efficient operation of the long-term mechanism ofthe process management system. Steadily advanced the company's information security work. Compliancemanagement: the company made plans for the overall construction of the company's risk management system soas to create three lines of defense for risk control with the goal of "essential compliance". Built a risk database forthe company’s people, finance, property, and engineering pilot domains, and integrated risk management andinternal control elements into the business process design. Controlled the legal compliance risks in the company'svarious investments and other major projects.Manufacturing quality: continuously improved the company'squality system management platform, including special process audits, cross-divisional cross-quantitative audits,professional auditor echelon construction and quality system group certification, etc., continued to improveproduct projects, promoted intelligent manufacturing projects, and realized equipment information management;Comprehensively promoted the manufacturing informatization, and completed the on-line of multiple functionalmodules; realized the comprehensive informatization management of the production process. Financialmanagement: strengthened internal business collaboration and optimized related transaction business processes.Strictly controlled slow-moving inventory and accounts receivable beyond credit period.Purchasing and logistics:
completed the second phase construction of the company's procurement sharing system, established andimplemented the indirect material category management processes to achieve cost control goals; completed theplanning and promotion plan of the organizational structure based on "category management", and immediatelystarted organizational optimization work. Carried out the logistics informatization and automation pilot work,started the overall planning project of the supply chain, completed the status survey and high-level design work.Human resources: continued to promote the strategic planning of human resources, and comprehensively analyzedthe future development direction of the management mechanism and the talent team. Starting from thecompetency model and actual business needs, strengthened team building, planned and carried out special training,and improved work efficiency; in order to fully mobilize the enthusiasm, sense of responsibility and mission ofthe company’s senior management and core personnel, paid attention to the interests of all shareholders and thecompany’s long-term development and the preservation and appreciation of state-owned assets, launched thecompany's 2020 restricted stock incentive plan, and the first grant was completed at the end of the year.
(iii) Company business modelThe company has followed the business philosophy of making quality products, creating famous brands, strivingfor first choice, and creating value for users, and implemented the business model of unified management of theparent company and decentralized production of subsidiaries. That is, the group company is responsible for
formulating strategic development plans and business objectives, and carries out unified management, guidanceand assessment of subsidiaries in terms of finance, major personnel management, core raw materials, qualitycontrol, and technology. Subsidiaries arrange production according to the market order management model, sothat the subsidiaries maintain the same quality as the company's products, and at the same time help to understandcustomer needs in a timely manner and save logistics costs, maintain the timeliness of product production andsupply, and improve the company's economic benefits.
There were no significant changes in the company’s main business and business model during the reporting period
Complete vehicle manufacturing, production and operation during the reporting period
□Applicable √Not applicable
Production and operation of the auto components during the reporting period
√Applicable □ Not applicable
Unit: In 10 thousand pieces
| Output | Sales volume | |||||
| Current Period | Same period last year | Year-over-year increase/decrease | Current Period | Same period last year | Year-over-year increase/decrease | |
| According to components | ||||||
| Fuel management system- multi-cylinder pumps | 277 | 226 | 22.57% | 256.8 | 218.4 | 17.58% |
| Fuel management system- fuel injector | 253.7 | 236.14 | 7.44% | 242.8 | 234.34 | 3.61% |
| After-treatment system - purifier | 34 | 32 | 6.25% | 33 | 29 | 14.00% |
| Air management system -turbocharger | 88.2 | 70.4 | 25.28% | 84 | 67.7 | 24.08% |
| According to complete vehicle packages | ||||||
| After-treatment system - purifier | 303 | 161 | 88.20% | 296 | 155 | 91.00% |
| According to after-sale market | ||||||
| Fuel management system- multi-cylinder pumps | 2 | 4 | -50.00% | 2.2 | 4.6 | -52.17% |
| Fuel management system- fuel injector | 1.3 | 0.86 | 51.16% | 1.2 | 0.66 | 81.82% |
| Air management system- turbocharger | 1.8 | 1.6 | 12.50% | 2 | 2.3 | -13.04% |
| According to region | ||||||
| In China | ||||||
| Fuel management system- multi-cylinder pumps | 279 | 230 | 21.30% | 259 | 223 | 16.14% |
| Fuel management system- fuel injector | 255 | 237 | 7.59% | 244 | 235 | 3.83% |
| After-treatment system - purifier | 337 | 193 | 74.61% | 329 | 184 | 78.80% |
| Air management system- turbocharger | 90 | 72 | 25.00% | 86 | 70 | 22.86% |
Explanation of reasons for more than 30% changes on a y-o-y basis
√ Applicable □ Not applicable
Increasing market demand for after-treatment system products in 2020Parts sales model
Over the years, the company has adhered to customer-centric idea, using flexible marketing strategies andstandardized development procedures to meet the needs of different types of customers so as to ensure the smoothprogress of customer development plans and strive for more customers and larger market shares. The companyhas established a mechanism for mutual visits to strategic customers. The company's senior executives regularlyvisit customers or receive customer visits, hold high-level strategic meetings, special cooperation and exchangesand other activities. Implement special management to the company's strategic customers, establish a four-in-onecollaborative organization composed of company leaders, key account managers, marketing departments, andbusiness departments, and do a good job in customer demand analysis and management, customer satisfactionsurvey analysis, etc. At the same time, the company optimizes business processes through information technologymeans to increase the speed of response to customer needs, and assists customer relationship management throughmodern technical tools such as call centers, customer data warehouses, business intelligence, mobile devices, andweb conferences. The company promotes the collaborative marketing of existing and new businesses, strengthensexchanges and cooperation with existing business customers in new businesses, and actively expands newcustomers and develops potential customers.
The Company carries out auto finance business
□ Applicable √ Not applicable
The Company carries out related business of new-energy vehicles
√ Applicable □ Not applicable
Production and operation of the complete and parts of new-energy vehicles
In RMB
| Category | Capacity status | Output | Sales volume | Sales revenue |
| Fuel cell components | 1,500,000 pieces | 700,000 pieces | 600,000 pieces | 77,397,000.00 |
II. Main business analysis
1. Introduction
See the “I-Introduction” in “Discussion and Analysis of the Operation”
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
| 2020 | 2019 | Increase/decrease y-o-y (+,-) | |||
| Amount | Ratio in operation revenue | Amount | Ratio in operation revenue | ||
| Total operation revenue | 12,883,826,306.60 | 100% | 8,784,356,960.30 | 100% | 46.67% |
| According to industries | |||||
| Automobile components | 12,430,431,489.90 | 96.48% | 8,354,743,964.67 | 95.11% | 48.78% |
| Other business | 453,394,816.70 | 3.52% | 429,612,995.63 | 4.89% | 5.54% |
| According to products | |||||
| Fuel management system | 5,365,576,457.96 | 41.65% | 4,872,783,878.47 | 55.47% | 10.11% |
| After-treatment system | 6,408,508,512.76 | 49.74% | 3,036,081,382.54 | 34.56% | 111.08% |
| Air management system | 656,346,519.18 | 5.09% | 445,878,703.66 | 5.08% | 47.20% |
| Other business | 453,394,816.70 | 3.52% | 429,612,995.63 | 4.89% | 5.54% |
| According to region | |||||
| Domestic sales | 12,670,892,115.47 | 98.35% | 8,488,435,602.48 | 96.63% | 49.27% |
| Foreign sales | 212,934,191.13 | 1.65% | 295,921,357.82 | 3.37% | -28.04% |
(2) The industries, products, or regions accounting for over 10% of the company’s operating revenue oroperating profit
√ Applicable □ Not applicable
In RMB
| Operating revenue | Operating cost | Gross profit ratio | Increase/decrease of operating revenue y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industries | ||||||
| Automobile components | 12,430,431,489.90 | 10,124,574,480.95 | 18.55% | 48.78% | 60.13% | -5.77% |
| According to products | ||||||
| Fuel management system | 5,365,576,457.96 | 3,962,691,866.03 | 26.15% | 10.11% | 16.64% | -4.13% |
| After-treatment system | 6,408,508,512.76 | 5,748,550,167.21 | 10.30% | 111.08% | 120.98% | -4.02% |
| Air management system | 656,346,519.18 | 413,332,447.71 | 37.03% | 47.20% | 27.52% | 9.73% |
| According to region | ||||||
| Domestic sales | 12,217,497,298.77 | 9,924,244,563.88 | 18.77% | 51.60% | 64.28% | -6.27% |
| Foreign sales | 212,934,191.13 | 200,329,917.07 | 5.92% | -28.04% | -28.88% | 1.11% |
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based onlatest one year’s scope of period-end
□ Applicable √ Not applicable
(3) Whether the company’s revenue from physical sales is greater than its revenue from labor services
√ Yes □ No
| Industries | Item | Unit | 2020 | 2019 | Increase/decrease y-o-y (+,-) |
| Fuel management system- multi-cylinder pumps | Sales volume | In 10 thousand units | 259 | 223 | 16.14% |
| Output | In 10 thousand units | 279 | 230 | 21.30% | |
| Storage | In 10 thousand units | 44 | 24 | 83.33% | |
| Fuel management system- fuel injector | Sales volume | In 10 thousand sets | 244 | 235 | 3.83% |
| Output | In 10 thousand sets | 255 | 237 | 7.59% | |
| Storage | In 10 thousand sets | 25 | 14 | 78.57% | |
| After-treatment system - purifier | Sales volume | In 10 thousand pieces | 329 | 184 | 78.80% |
| Output | In 10 thousand pieces | 337 | 193 | 74.61% | |
| Storage | In 10 thousand pieces | 45 | 37 | 21.62% | |
| Air management system—turbocharger | Sales volume | In 10 thousand units | 86 | 70 | 22.86% |
| Output | In 10 thousand units | 90 | 72 | 25.00% | |
| Storage | In 10 thousand units | 20 | 16 | 25.00% |
Reasons for y-o-y relevant data with over 30% changes
√ Applicable □ Not applicable
Increasing market demand for after-treatment system products in 2020End of 2020, the y-o-y increase in inventory of fuel management system products is due to the spread ofCOVID-19 in first quarter of 2021 in China, and uncertainty of global COVID-19, the company initiative toincrease inventory in response to the impact of supply chain fluctuations.
(4) Performance of significant sales contracts entered into by the company up to the current reportingperiod
□ Applicable √ Not applicable
(5) Constitute of operation cost
Classification of industries and products
In RMB
| Industries | Item | 2020 | 2019 | Increase/decrease y-o-y (+,-) | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Automobile components | Direct material | 8,569,425,665.05 | 84.64% | 5,073,943,822.40 | 80.25% | 68.89% |
| Automobile components | Labor cost | 698,928,471.64 | 6.90% | 604,002,205.22 | 9.55% | 15.72% |
| Automobile components | Depreciation | 248,063,547.16 | 2.45% | 201,984,066.69 | 3.20% | 22.81% |
| Automobile components | Varieties of consumption | 608,156,797.10 | 6.01% | 442,880,613.36 | 7.00% | 37.32% |
In RMB
| Products | Item | 2020 | 2019 | Increase/decrease y-o-y (+,-) | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Fuel management system | Direct material | 2,715,216,192.48 | 68.52% | 2,341,746,790.78 | 68.93% | 15.95% |
| Fuel management system | Labor cost | 566,823,619.35 | 14.30% | 486,814,730.66 | 14.33% | 16.44% |
| Fuel management system | Depreciation | 192,635,987.10 | 4.86% | 159,352,538.54 | 4.69% | 20.89% |
| Fuel management system | Varieties of consumption | 488,016,067.10 | 12.32% | 409,342,635.04 | 12.05% | 19.22% |
| After-treatment system | Direct material | 5,500,221,875.04 | 95.68% | 2,455,083,907.97 | 94.38% | 124.03% |
| After-treatment system | Labor cost | 104,394,069.57 | 1.82% | 98,440,253.86 | 3.78% | 6.05% |
| After-treatment system | Depreciation | 35,518,676.76 | 0.62% | 24,461,602.33 | 0.94% | 45.20% |
| After-treatment system | Varieties of consumption | 108,415,545.84 | 1.88% | 23,428,346.36 | 0.90% | 362.75% |
| Air management system | Direct material | 353,987,597.53 | 85.64% | 277,113,123.65 | 85.49% | 27.74% |
| Air management system | Labor cost | 27,710,782.72 | 6.70% | 18,747,220.70 | 5.78% | 47.81% |
| Air management system | Depreciation | 19,908,883.30 | 4.82% | 18,169,925.82 | 5.61% | 9.57% |
| Air management system | Varieties of consumption | 11,725,184.16 | 2.84% | 10,109,631.96 | 3.12% | 15.98% |
NoteThe direct material from after-treatment system has significant increase on a y-o-y basis mainly due to the significant increase inprecious metal prices.
(6) Whether there was a change in the scope of consolidation during the reporting period
√Yes □No
| Changes of consolidate scope | Enterprise | Equity obtained method | Contribution ratio |
| Consolidate scope increased | Borit NV | A wholly-owned subsidiary purchased in cash during the period through SPV | 100.00% |
| Consolidate scope increased | Autosmart Seating | The enterprise jointly invested by controlling subsidiary of the Company - Weifu Leader and Qiqiong Automobile Technology (Shanghai) Co., Ltd. | 66% |
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable √ Not applicable
(8) Major sales and main suppliers
Major sales clients of the Company
| Total top five clients in sales (RMB) | 6,700,363,928.17 |
| Proportion in total annual sales volume for top five clients | 52.01% |
| Ratio of the related party sales in total annual sales from top five clients | 29.67% |
Information of top five clients of the Company
| Serial | Name | Sales (RMB) | Proportion in total annual sales |
| 1 | Bosch Diesel System | 2,961,684,269.09 | 22.99% |
| 2 | Client 1 | 1,776,938,391.50 | 13.79% |
| 3 | Robert Bosch | 860,611,502.90 | 6.68% |
| 4 | Client 2 | 604,223,164.56 | 4.69% |
| 5 | Client 3 | 496,906,600.12 | 3.86% |
| Total | -- | 6,700,363,928.17 | 52.01% |
Other situation of main clients
√ Applicable □ Not applicable
The Company has association with Bosch Diesel System and Robert Bosch.In addition, the directors, supervisors,senior executives, core technicians and actual controller of the Company have no equity in main suppliers directly
or indirectly.Main suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 4,502,021,760.55 |
| Proportion in total annual purchase amount for top five suppliers | 39.48% |
| Ratio of the related party purchase in total annual purchase amount from top five suppliers | 28.93% |
Information of top five suppliers of the Company
| Serial | Suppliers | Purchasing amount (RMB) | Ratio in annual total purchasing amount |
| 1 | Weifu Environment | 3,051,513,211.66 | 26.76% |
| 2 | Supplier 1 | 563,585,531.94 | 4.94% |
| 3 | Supplier 2 | 494,641,533.98 | 4.34% |
| 4 | Supplier 3 | 213,197,050.95 | 1.87% |
| 5 | Supplier 4 | 179,084,432.02 | 1.57% |
| Total | -- | 4,502,021,760.55 | 39.48% |
Other notes of main suppliers of the Company
√ Applicable □ Not applicable
The Company has association with Weifu Environment.In addition, the directors, supervisors, senior executives,core technicians and actual controller of the Company have no equity in main suppliers directly or indirectly.
3. Expenses
In RMB
| 2020 | 2019 | Increase/decrease y-o-y (+,-) | Note of major changes | |
| Sales expenses | 406,353,445.10 | 259,650,752.33 | 56.50% | Accrual-warranty expenses |
| Administration expenses | 782,824,422.63 | 514,028,451.76 | 52.29% | Accrual of incentive funds |
| Financial expenses | -23,278,301.84 | -57,892,276.12 | ||
| R&D expenses | 532,581,209.78 | 417,924,908.28 | 27.43% |
4. R&D investment
√ Applicable □ Not applicable
During the reporting period, the Company focused on the development strategy of the enterprise,accelerated theresearch and development of key products, put forth effort to improve the industrialization of new products, andenhanced new power for the enterprises development.The traditional energy products are mainly internalcombustion engine power engineering which meet the requirements of energy saving and emission reduction; withcontinuous improvement of product performance, continue to maintain the leading position in the industry.At thesame time, the company carried out layouts in new energy, intelligent network technology and other fields through
its own research and development, acquisitions and mergers, promoted the research and development and capacitybuilding of core technology and intelligent network technology of hydrogen automobile components to ensure thecompany’s leading position in the future Automobile components industry. In 2020, total R&D expenditure has533 million Yuan, accounting for 2.91% of the net assets and 4.13% of the operating revenue.R&D investment of the Company
| 2020 | 2019 | Change ratio (+,-) | |
| Number of R&D (people) | 1,094 | 1,020 | 7.25% |
| Ratio of number of R&D | 20.30% | 18.75% | 1.55% |
| R&D investment (RMB) | 532,581,209.78 | 417,924,908.28 | 27.43% |
| R&D investment accounted for R&D income | 4.13% | 4.76% | -0.63% |
| R&D investment capitalization (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalization R&D investment accounted for R&D investment | 0.00% | 0.00% | 0.00% |
The reason of great changes in the proportion of total R&D investment accounted for operation income than last year
□ Applicable √ Not applicable
Reason for the great change in R&D investment capitalization rate and rational description
□ Applicable √ Not applicable
5. Cash flow
In RMB
| Item | 2020 | 2019 | Increase/decrease y-o-y (+,-) |
| Subtotal of cash inflow arising from operating activities | 12,043,108,885.31 | 8,341,575,856.11 | 44.37% |
| Subtotal of cash outflow arising from operating activities | 11,261,297,651.30 | 7,292,905,802.88 | 54.41% |
| Net cash flows arising from operating activities | 781,811,234.01 | 1,048,670,053.23 | -25.45% |
| Subtotal of cash inflow from investing activities | 10,622,042,577.88 | 12,833,209,781.87 | -17.23% |
| Subtotal of cash outflow from investing activities | 10,050,595,606.37 | 14,048,725,074.34 | -28.46% |
| Net cash flows arising from investing activities | 571,446,971.51 | -1,215,515,292.47 | |
| Subtotal of cash inflow from financing activities | 714,062,395.41 | 824,385,498.20 | -13.38% |
| Subtotal of cash outflow from financing activities | 1,940,870,096.67 | 2,246,745,266.02 | -13.61% |
| Net cash flows arising from financing activities | -1,226,807,701.26 | -1,422,359,767.82 | |
| Net increase of cash and cash equivalents | 124,447,364.85 | -1,584,175,485.64 |
Main reasons for y-o-y major changes in aspect of relevant data
√ Applicable □ Not applicable
The y-o-y increase in cash inflow arising from operating activities was mainly due to the significant increase inoperating revenue from a year earlier, and the cash received from the sale of goods and provision of services
increased significantly on a y-o-y basis;The y-o-y increase in cash outflow arising from operating activities was mainly due to the increase in cash paidfor purchasing goods and accepting labor services;The y-o-y increase in net cash flows arising from investing activities was mainly due to the cash received frominvestment earnings increased from a year earlier and the cash paid for investment declined on a y-o-y basis.Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
√ Applicable □ Not applicable
Mainly due to the investment earnings, and specific influencing factors found more in supplementary information of cash flowstatement carried in Annotation of the Report.III. Analysis of the non-main business
√ Applicable □ Not applicable
In RMB
| Amount | Ratio in total profit | Cause description | Whether be sustainable | |
| Investment earnings | 1,964,805,688.57 | 65.43% | Earnings mainly form the two joint ventures (Bosch Automobile Diesel and Zhonglian Electronic) with stock participated by the Company | The joint ventures Bosch Automobile Diesel and Zhonglian Electronic have stable production and operation , so the investment returns can be sustained and stable |
| Gain/loss of fair value changes | 383,325,765.19 | 12.76% | ||
| Asset impairment | -178,837,472.85 | -5.96% | ||
| Non-operating income | 66,467,021.62 | 2.21% | ||
| Non-operating expense | 4,158,888.17 | 0.14% |
IV. Assets and liability
1. Major changes of assets composition
Newrevenue standards or new leasing standards implemented by the Company at first time since 2020 and adjusted relevant items ofthe financial statement on beginning of the year when implemented the Standards
Applicable
In RMB
| Year-end of 2020 | Year-begin of 2020 | Ratio changes (+,-) | Note of major changes | |||
| Amount | Ratio in total assets | Amount | Ratio in total assets | |||
| Monetary funds | 1,963,289,832.33 | 7.18% | 1,596,893,711.87 | 6.63% | 0.55% | |
| Account receivable | 2,824,780,352.41 | 10.33% | 2,425,681,942.29 | 10.08% | 0.25% | |
| Inventory | 2,877,182,174.64 | 10.52% | 2,418,744,835.82 | 10.05% | 0.47% | |
| Investment real estate | 20,886,681.62 | 0.08% | 22,410,511.87 | 0.09% | -0.01% | |
| Long-term equity investment | 4,801,488,290.97 | 17.56% | 5,322,405,953.35 | 22.11% | -4.55% | |
| Fixed assets | 2,882,230,191.08 | 10.54% | 2,845,176,078.20 | 11.82% | -1.28% | |
| Construction in progress | 243,795,493.04 | 0.89% | 247,857,777.25 | 1.03% | -0.14% | |
| Short-term borrowings | 302,238,600.05 | 1.11% | 312,153,969.81 | 1.30% | -0.19% | |
| Long-term borrowings | 3,050,640.97 | 0.01% | 0.01% | |||
2. Assets and liability measured by fair value
√ Applicable □ Not applicable
In RMB
| Items | Amount at the beginning period | Changes of fair value gains/losses in this period | Accumulative changes of fair value reckoned into equity | Devaluation of withdrawing in the period | Amount of purchase in the period | Amount of sale in the period | Other changes (+,-) | Amount at period-end | |
| Financial assets | |||||||||
| 1.Transaction financial asset(excluding derivative financial assets) | 4,984,475,661.75 | 383,325,765.19 | 5,171,830,000.00 | -5,215,410,066.84 | 5,324,221,360.10 | ||||
| 2.Other equity instrument investment | 285,048,000.00 | 285,048,000.00 | |||||||
| 3. Financing of accounts receivable | 23,873,317.86 | 981,651,160.02 | 1,005,524,477.88 | |||||
| Subtotal of financial assets | 5,293,396,979.61 | 383,325,765.19 | 5,171,830,000.00 | -4,233,758,906.82 | 6,614,793,837.98 | |||
| Above total | 5,293,396,979.61 | 383,325,765.19 | 5,171,830,000.00 | -4,233,758,906.82 | 6,614,793,837.98 | |||
| Financial liabilities | 0.00 | 0.00 |
Other changesOther changes include the maturity of financial products.Whether there have major changes on measurement attributes for main assets of the Company in report period or not
□ Yes √No
3. The assets rights restricted till end of the period
| Item | Book value at period-end | Restriction reason |
| Monetary funds | 587,241.00 | L/C margin |
| Monetary funds | 51,045,344.11 | Cash deposit paid for bank acceptance |
| Monetary funds | 2,838,880.93 | Dividends on 4.71 million shares of Miracle Automation and 11,739,102 shares of SDEC held by the company have been frozen |
| Monetary funds | 215,720.00 | Cash deposit for Mastercard |
| Note receivable | 881,914,376.95 | Notes pledge for bank acceptance |
| Receivable financing | 646,892,501.28 | Notes pledge for bank acceptance |
| Transaction financial asset | 174,611,992.62 | In accordance with the civil ruling No.(2016)Y03MC2490 and No.(2016) Y03MC2492 of Guangdong Shenzhen Intermediate People's Court (Hereinafter referred to as Shenzhen Intermediate People's Court), the property with the value of 217 million Yuan under the name of the Company and other seven respondents and the third party Shenzhen Hejun Chuangye Holdings Co., Ltd. (Hereinafter referred to as Hejun Company) was frozen. As of the end of the reporting period, 4.71 million shares of Miracle Automation and 11,739,102 shares of SDEC held by the Company were frozen. |
| Total | 1,758,106,056.89 |
V. Investment
1. Overall situation
□ Applicable √ Not applicable
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
√ Applicable □ Not applicable
In RMB
| Variety of securities | Code of securities | Short form of securities | Initial investment cost | Accounting measurement model | Book value at the beginning of the period | Current gain/loss of fair value changes | Cumulative fair value changes in equity | Current purchase amount | Current sales amount | Profit and loss in the Reporting Period | Book value at the end of the period | Accounting subject | Capital Source |
| Domestic and foreign stocks | 600841 | SDEC | 199,208,000.00 | Measured by fair value | 91,822,332.00 | 48,573,624.00 | 48,573,624.00 | 140,395,956.00 | Transaction financial asset | Own funds | |||
| Domestic and foreign stocks | 002009 | Miracle Automation | 69,331,500.00 | Measured by fair value | 36,031,500.00 | 11,680,800.00 | 11,680,800.00 | 47,712,300.00 | Transaction financial asset | Own funds | |||
| Domestic and foreign stocks | 601456 | Guolian Securities | 12,000,000.00 | Measured by fair value | 12,000,000.00 | 314,848,122.00 | 314,848,122.00 | 326,848,122.00 | Transaction financial asset | Own funds | |||
| Total | 280,539,500.00 | -- | 139,853,832.00 | 375,102,546.00 | 0.00 | 0.00 | 0.00 | 375,102,546.00 | 514,956,378.00 | -- | -- | ||
| Disclosure date of securities investment approval of the Board | 24 March 2012 |
| 4 June 2013 |
(2) Derivative investment
□ Applicable √ Not applicable
There are no derivative investment during the reporting period.
5. Application of raised proceeds
□ Applicable √ Not applicable
There are no application of raised proceeds during the reporting period.VI. Sales of major assets and equity
1.Sales of major assets
□ Applicable √ Not applicable
No major assets were sold during the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of the main equity participation and controlling subsidiary
√ Applicable □ Not applicable
Main subsidiary and stock-jointly enterprise with over 10% influence on net profit of the Company
In RMB
| Company name | Type | Main business | Register capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Weifu Leader | Subsidiary | After-treatment system products | 502,596,300.00 | 6,142,804,328.29 | 1,917,799,955.64 | 6,427,844,701.00 | 232,362,335.97 | 245,276,849.88 |
| Weifu Jinning | Subsidiary | Fuel management system products | 346,286,825.80 | 1,476,313,489.99 | 1,000,352,246.07 | 685,608,389.43 | 106,965,043.15 | 110,875,256.44 |
| Bosch Automobile Diesel | Equity participation enterprise | Fuel management system products | USD241,000,000.00 | 14,960,276,527.96 | 7,536,627,965.20 | 15,742,669,081.61 | 3,897,946,535.63 | 3,511,327,740.19 |
| Zhonglian Electronic | Equity participation enterprise | Gasoline system products | 600,620,000.00 | 6,187,034,458.77 | 6,180,707,951.80 | 23,790,158.00 | 1,543,364,746.77 | 1,538,581,105.06 |
Subsidiary obtained and disposed in the Period
□ Applicable √ Not applicable
Explanation on holding equity participation enterpriseThe reasons for substantial y-o-y increase in operating revenue, operating profit and net profit from Weifu Leader are: sale ofafter-treatment system products increased, and the precious metals rose and investment income increased.
VIII. The structured subject controlled by the Company
□ Applicable √ Not applicable
IX. Prospects for future development
(i) Weifu’s future development strategiesCurrently, a global new round of technological and industrial revolution has been prosperous, at thesame time with the raising concept of “carbon emissions peak” and “carbon neutrality" will jointlyquicker the development trend to green、 low carbon、 electric, networked and intelligent in theautomotive industry. Automobile accelerates the integration with related technology among energy,transportation, information and communication, these technologies will energize each other,develop synergistically and form a "mesh" in which more fields of main subjects participate. The"14
th
Five-Year Plan" is a key five-year period for Weifu to achieve the medium-and long-termdevelopment objective of 30 billion revenue in 2030. On the basis of high speed development ofdoubling scale and rapid growth of profits in the "13
thFive-Year Plan", Weifu will continue toadhere to the strategies of "internationalization, automatization and multi-dimension", accelerate the"dual-engine" mode of "consolidating and upgrading existing businesses, exploring and breaking
through new businesses markets", and strive to achieve the strategic goal of doubling the scaleagain and a high level of profit.
1. Existing business will actively promote the strategic marketing, strengthen market synergism, increasevigorously advanced and efficient internal combustion power technology’s research and development level,consolidate and enhance market position of the core business in significant strategic markets and customers.
1) After Treatment as support business for Weifu will achieve leapfrog growth. Promote vigorously strategicmarketing, strengthen strategic customer cooperation, optimize layout of business; reinforce research anddevelopment of high effective After Treatment and China VI new technology and system integration capabilities,improve capacity of forward engineering, systems integration and application development; increase controlcapability of cost and quality, promote steadily delicacy management.
2) FIE business as consolidating and deepening core business will realize organic growth. Consolidate andimprove common rail business process quality, complete reduce costs and increase benefits, expand vigorouslyfilter business, implement differentiation marketing strategy, reduce product cost, improve product developmentcapability, form large-scale sales, stabilize VE/VP pump’s current market share, develop new customers withbetter cost control.
3) Turbo business realize high amplitude increasing. Develop actively strategic markets of four-cylindergasoline engine, six-cylinder diesel engine, strengthen high efficient pressurization technology’s research anddevelopment capability and core product and application technology, reinforce sectors’ research and development,supply chain collaboration and resource sharing, improve process control capability.
4) Manufacturing business realize scale growth. Continue to enhance development of intelligent manufacturing,new technology and investment, focus on cost and quality, process control, and actively expand strategiccustomers and products.
5) Aftermarket business realize steady increase, build commercial vehicle aftermarket service platform.
2. In terms of new business, Fuel Cell and Intelligent Connectivity will be the two main strategic directions,focusing on and promoting driving technology and other innovative businesses, seizing opportunities, activelylaying out the market, continuously defining and optimizing our strategic path, focusing on building corecompetitiveness and striving to achieve industrialization breakthrough.
1) The Fuel Cell core components business will rely on the leading advantages of actively laying out bothinternational and domestic market at the end of the 13
thFive-Year Plan, further accelerate the construction of"Twin Bases" in Europe and China, continuously boost the cooperation of strategic customers、the R&D of coretechnology and the ability of global business and management, therefore establish the competitive advantageposition of Weifu’s main strategic business by: i. Promoting the construction of European R&D centers andChinese R&D centers, strengthening the input of R&D investment, continuously enhancing the R&D capabilitiesand actively promoting the R&D of GDL、 catalyst、 single cell、 valves and other products on the basis ofexisting products such as MEA, graphite BPP, metal BPP and related BOP key components; ii. Strengthening the
capacity building of European and Chinese manufacturing bases, achieving the global production capacity to 8million MEAs、9 million graphite BPPs and 4 million metal BPPs in the middle and late period of the 14
th
Five-Year Plan. Among them, the Chinese manufacturing base will set up a hydrogen energy business departmentto achieve a production capacity of 4 million MEAs、 5 million graphite BPPs and 2 million metal BPPs, withrelevant BOP key components achieve small-scale batch production capacity based on Weifu's existingmanufacturing platform. iii. Intensifying the planning and coordination of global markets and operation process,realizing strategic resources sharing and efficient business collaborative among each base and business segment,and deepen the cooperation with strategic partners like Bosch and other strategic market customers.
2) For the Intelligent Connectivity, Weifu will promote the Environment Situation Awareness business, enhancethe key technical capabilities of millimeter wave radar, take the lead in promoting commercial applications in thefields of intelligent security、industrial intelligence、 smart medical care、 etc.， preliminary achieve large-scaledevelopment; Meanwhile, Weifu will actively propel the Smart Seat business, focus on the middle and high-endcommercial vehicle market, and realize the industrial large-scale development by taking high performance, highquality, and high cost-effective performance as product differentiation competitive advantages, while activelyexploring new potential market and strategic market such as the passenger vehicles and new energy vehicles.Beyond that, Weifu will positively seek development opportunities for other intelligent connectivity businessproducts as well.
3) For other innovative new business areas, Weifu will keep carrying forward the optimization and maturity ofelectric drive products and strive to achieve breakthroughs in key application markets, while actively plan andcultivate the business of hydraulic、 electric chemical and hydrogen technologies, emphasis on upholdingtechnical products such as multi-way control valve, PEMEL, etc.Weifu will continue to deepen the operation plan, budget management and performance management system underthe guidance of Weifu’s strategic planning, implement differentiated management and control, effect coordinationbetween among business sectors, boost the development of strategic core talents, comprehensively enhance theoperation management ability in the new strategic transition period, to meet the needs of Weifu’s medium andlong-term strategic development.
(ii)Key tasks in 2021
1. Accelerate the acquisition of National VI projects and increase market share. Fuel injection systembusiness: ensure stable delivery of common rail pump products throughout the year; ensure the inventory of theoff-road market for VE distribution pump products, and strive to form incremental breakthroughs in the tractor,loader, and generator markets. Air management system business: ensure a stable share of key customers offour-cylinder turbocharger, strengthen the advantages of VNT, and ensure its landing in the important customermarket. Deploy new products, focus on promoting the development of gasoline engine VNT projects in keycustomers, and ensure the acquisition and implementation of major projects. For six-cylinder turbocharger,consolidate the existing market share and continue to expand the influence of natural gas turbochargers of mediumand heavy-duty trucks. After-treatment system business:promote the acquisition of National VI key core
customer projects to ensure market share. In terms of passenger vehicles, we have obtained key customers’National VI packaging projects and focused on the layout of joint venture brand market. In terms of commercialvehicles, we have obtained the National VI project for key customers’ diesel models, and accelerated thedevelopment of major customers’ National VI projects. On the non-road side, with the announcement of theimplementation time of emission regulations, we will accelerate the development of key customers and otherprojects, and strive to obtain the environmental protection announcements for the first batch of engines.Partsmanufacturing business: continue to promote the parts processing business of Bosch and United Electronics,especially new energy projects; strive to develop new customer groups and form new business growth points.Trade and aftermarket business: use host resources to open up turbochargers supporting the main engines to theaftermarket in batches; import trade products urgently needed in the market. Promote the integrated developmentof self-support and self-marketing foreign trade, accelerate the construction of overseas market trade platforms,carry out e-commerce cross-border trade, provide continuous and stable parts supply for overseas strategiccustomers, and enhance the market position in the global supply chain.
2. Accelerate the incubation process of new businesses and improve the ability of investment cooperationmanagement:promote cooperation with global strategic customers for membrane electrodes, graphite bipolarplates, metal bipolar plates, and auxiliary components (BOP) in hydrogen fuel cells to accelerate productdevelopment and global production capacity layout plan, accelerate the localization process of membraneelectrode and bipolar plate business, build and strengthen strategic core competitiveness; environmental situationawareness system business closely focuses on the products required by key strategic customers, accelerateapplication development and market breakthroughs, and steadily expand other customer groups on the basis ofbuilding and consolidating the key core competitiveness. Actively promote the market development and scalecapacity building of the smart seat business. Strengthen the capacity building of the management system afterinternational mergers and acquisitions, focus on strengthening the comprehensive capacity building of businessplanning integration, governance and incubation, cultural integration and talent training, further enhanceinternational professional investment capabilities, and enhance strategic partnership management.
3.Strengthen manufacturing quality management and promote intelligent manufacturinginformatization.Quality management:strengthen the maturity of product quality life cycle management,implement APQP quality valve’s application and improvement in platform development projects, customerapplication development projects and other process development projects; strengthen the effectiveness ofemployees raising their hands, review, and rectification and implementation in process quality control, pay closeattention to induction and changing of the guard training for workers at the production line, and incorporate theQ11 principle into the actions of each employee; improve the new version of FMEA, promote the online use ofECR and the Line Walk activity mechanism; support the forward control and system improvement of specialquality improvements in supplier side. Manufacturing operation: focus on guiding and advancing the company'ssystem continuous improvement projects, aim at covering the company's 30 core product lines, strengtheningon-site 5S inspection and guidance, improving 5S standards for different production scenarios, and carrying out
special rectifications against problems such as the leakage of fuel, gas, etc.,and strive to achieve cost reductionand tap potential. Strengthen the construction of intelligent manufacturing, focus on promoting the developmentof machine processing and production schedule (PPS) & PPM modules, and quality management system (QMS)modules. Complete the full coverage of the common rail business department's electronic standard operatingprocedures (ESOP), EMS & measurement management; accelerate the development of smart storage technology,and complete the pilot.
4.Promote management upgrades and improve operational efficiency. Procurement and logisticsmanagement: organization optimization promotes direct material procurement. In response to the problems in thecategory analysis process, start data management optimization, procurement internal control system construction,and category tree management mechanism establishment. Use category expenditures and internal and externalsupply market environment analysis to support the formulation of procurement strategies, including suppliercompression and integration planning, one-piece two-point development plan, business policy selection, etc.Establish a direct material system platform. Improve the company's inventory management system, optimizeinventory turnover and slow-moving inventory in terms of inventory strategy, inventory analysis, inventoryperformance, physical control, etc., and strengthen the effectiveness and compliance of physical management;continue to promote the information construction of warehousing and transportation, share transportation routesresources, promote lean logistics projects such as direct delivery and recycling packaging, and further realize theresources integration of logistics, efficiency improvements, and cost reductions.Marketingmanagement:strengthen the market objective management, consolidate and increase the market share of strategicbusiness and strategic customers; build and operate a strategic customer management system, further clarify andimplement strategic market segment competition strategies; deepen the company’s key account manager platformoperating mechanism, and promote the company’s marketing team planning and core talent mechanismconstruction, and comprehensively improve the comprehensive ability of strategic marketing. Financialmanagement: further optimize the shared service platform, and improve user experience; optimize budgetmanagement, create a closed-loop management of strategic planning-business plan-budget control-assessment;deeply promote cost standardization and refined management, expand the dimensions of cost analysis, improve thepertinence of cost reduction measures, and enhance the effectiveness and driving force of indicator assessment.Continue to improve the quality of asset operations, further reduce operating capital, and improve capital operatingefficiency;
5. Improve the construction of HR information platform and optimize the talent development system. Basedon the company's strategy, plan and build a talent development system to increase talent reserves; optimize thesalary policy, structure and performance management system, and formulate differentiated performanceevaluation model for matrix projects and key account manager working mechanisms; design customizedperformance incentive programs based on the needs of business departments to enhance employees' sense of gainand promote employees to achieve corporate goals.
(iii)Possible risks and solutionsChina’s economy has entered a critical period of transformation, and the main theme is to reduce speed andimprove quality. China's auto market has also entered a period of transformation and adjustment. In a complexeconomic environment, weak consumption is still the main risk point that drags down the auto market. At thesame time, with the further intensification of industry competition, the emission regulations become stricter andthe raw material prices continue to rise, in order to continue to maintain the company's healthy and stabledevelopment, internally, the company will continue to promote internal management optimization andimprovement, improve processes, and control operating risks. Make great efforts to improve the company's corecompetitiveness and overall anti-risk capabilities. Externally, the company will pay close attention to themacroeconomic situation, national energy conservation and emission reduction regulations and policies, andactively promote product technology upgrades; pay close attention to changes in the market environment andcustomer needs, and rely on the company's existing business production and sales; actively expand new areas andcontinue to develop strategies customers, and gradually strengthen the docking of new business markets, as wellas the promotion of new products, look for new business growth points, and seize the opportunities in thetransformation and changes of the automobile industry.
In short, the company will focus on the strategic vision of "devoting to becoming a leader in automobile corecomponents", stabilize its operating quality, promote management upgrades, implement strategic guidance,accelerate new business development, and strive to achieve a good start for the company's "14
th
Five-Year"strategic transformation and development.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√ Applicable □ Not applicable
| Time | Reception location | Way | Reception type | Object | Main content and information provided | Basic situation index of investigation |
| 22 May 2020 | Conference room | Other | Other | Other | Company fundamentals and views on the market | The Online Performance Presentation for year of 2019 (notice no.: 2020-025) |
| 28 May 2020 | Conference room | Spot research | Institution | Institution | Company fundamentals and views on the market | Meeting site of the shareholders’ meeting |
| 18 June 2020 | Conference room | Spot research | Institution | Institution | Company fundamentals and views on the market | Meeting site of the shareholders’ meeting |
| 3 November 2020 | Conference room | Spot research | Institution | Institution | Company fundamentals and views on the market | Meeting site of the shareholders’ meeting |
| 1 January -31 December 2020 | Investor relations | Written inquiry | Other | Other | Company fundamentals and views on the market | The company answered 100 questions from investors online through the investor |
| interactive platform | relations interactive platform | ||||||
| 1 January -31 December 2020 | Company’s telephone | Telephone communication | Other | Other | Company fundamentals and views on the market | Company fundamentals and views on the market, more than 200 telephone communications with investors. | |
| Reception (times) | 350 | ||||||
| Number of hospitality | 50 | ||||||
| Number of individual reception | 0 | ||||||
| Number of other reception | 300 | ||||||
| Disclosed, released or let out major undisclosed information (Y/N) | N | ||||||
Section V. Material MattersI. Profit distribution plan of common stock and transfer of public reserve into share capitalFormulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy duringthe Reporting Period
√ Applicable □ Not applicable
1. Cash dividend policy: carry out bonus distribution according to the regulations in Articles of Association
2. In reporting period, the Company implemented the profit distribution for year of 2019, based on deducting therepurchased shares in the repurchase account (15,094,870 shares of A-stock) from the total share capital1,008,950,570 shares , distributed 11 Yuan (tax included) bonus in cash for every 10 shares held, no capitalizationfrom public reserves. The plan was completed in June 2020. The implementation of the Company's cash dividendpolicy is in compliance with the provisions of Articles of Association, relevant decision-making procedures arecomplete and fully listen to the views of independent directors and minority shareholders and maintain thelegitimate rights and interests of minority shareholders.
| Special explanation on cash dividend policy | |
| Satisfy regulations of General Meeting or requirement of Article of Association (Y/N): | Y |
| Well-defined and clearly dividend standards and proportion (Y/N): | Y |
| Completed relevant decision-making process and mechanism (Y/N): | Y |
| Independent directors perform duties completely and play a proper role (Y/N): | Y |
| Minority shareholders have opportunity to express opinions and demands totally and their legal rights are fully protected (Y/N): | Y |
| Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed (Y/N): | Not applicable |
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years(including the reporting period)
The profit distribution plan for 2020: with the total share capital of the company at the end of 2020 (1,008,950,570shares), excluding the shares already repurchased on the repurchase account (56,277 shares of A-stock), that is the1,008,894,293 shares as the base, distribute 15.00 Yuan (tax included) in cash for every 10 shares to all shareholderswithout bonus shares and capitalization of capital reserve.The profit distribution plan for 2019: with the total share capital of the company at the end of 2019 (1,008,950,570shares), excluding the shares already repurchased on the repurchase account (15,094,870 shares of A-stock), that isthe 993,855,700 shares as the base, distribute 11.00 Yuan (tax included) in cash for every 10 shares to allshareholders without bonus shares and capitalization of capital reserve. The plan completed in June 2020.The profit distribution plan for 2018: based on total share capital of 1,008,950,570 shares at end of 2018,distribute cash dividend of 12.00 Yuan (tax included) for every 10 shares, and no public reserve transfer into sharecapital. The plan completed in June 2019.
Cash dividend of common stock in latest three years (including the reporting period)
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 (including other ways) | Ratio of the total cash bonus (other ways included) in net profit attributable to common stock shareholders of listed company contained in consolidation statement |
| 2020 | 1,513,341,439.50 | 2,772,769,377.96 | 54.58% | 1,513,341,439.50 | 54.58% | ||
| 2019 | 1,093,241,270.00 | 2,268,026,432.78 | 48.20% | 1,093,241,270.00 | 48.20% | ||
| 2018 | 1,210,740,684.00 | 2,396,077,415.21 | 50.53% | 1,210,740,684.00 | 50.53% |
The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company ispositive but no plan of cash dividend proposed of common stock
□ Applicable √ Not applicable
II. Profit distribution plan and capitalization of capitalreserve in the Period
√ Applicable □ Not applicable
| Bonus shares for every 10-share (Share) | 0 |
| Dividends for every 10-share (RMB) (Tax included) | 15 |
| Equity base of distribution plan (Share) | 1,008,894,293 |
| Total cash dividend (RMB) (Tax included) | 1,513,341,439.50 |
| Cash dividend by other ways (share buy-back included) (RMB) | 0.00 |
| Total cash dividend (other ways included) (RMB) | 1,513,341,439.50 |
| Profits available for distribution (RMB) | 11,698,982,965.62 |
| Ratio of the total cash dividend (other ways included) in total profit distribution | 100% |
| Cash dividend policy | |
| Other | |
| Detail explanation on profit distribution or capitalization from capital public reserve | |
| Audited by Gongzheng Tianye Certified Public Accountants, net profit of the parent company for year of 2020 amount as 2,474,039,400 Yuan, as of 31 December 2020 the profit available for distribution for shareholders amounted as 11,698,983,000 Yuan. The profit distribution plan for 2020: with the total share capital of the company at the end of 2020 (1,008,950,570 shares), excluding the shares already repurchased on the repurchase account (56,277 shares of A-stock), that is the 1,008,894,293 shares as the | |
III. Implementation of undertakings
1. Undertakings that the actual controller, shareholders, related party, buyers and the Company havefulfilled during the reporting period and have not yet fulfilled by the end of reporting period
□ Applicable √ Not applicable
No undertakings that the actual controller, shareholders, related party, buyers and the Company have fulfilled during the reportingperiod and have not yet fulfilled by the end of the period
2. Concerning assets or project of the Company, which has profit forecast, and reporting period still inforecasting period, explain reasons of reaching the original profit forecast
□ Applicable √ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party
□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculationmethod compared with the financial report of last year
√ Applicable □ Not applicable
Implementation of new revenue standards: the Ministry of Finance revised the Accounting Standards for BusinessEnterprise No.14- Revenue in 2017, which go into effect on 1 January 2020. The revised standard requires that thecumulative impact of the first implementation of the standard be adjusted by the amount of opening retainedearnings and other related items in the financial statement for the period of first-time implementation forcomparable periods. Found more in the “V.-35 Change of important accounting policy and estimation” carried inSection XII. Financial Report
VII. Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with last year’s financial report; explain changes in consolidation statement’sscope
√ Applicable □ Not applicable
| Changes of consolidate scope | Enterprise | Equity obtained method | Contribution ratio |
| Consolidate scope increased | Borit NV | A wholly-owned subsidiary purchased in cash during the period through SPV | 100.00% |
| Consolidate scope increased | Autosmart Seating | The enterprise jointly invested by controlling subsidiary of the Company - Weifu Leader and Qiqiong Automobile Technology (Shanghai) Co., Ltd. | 66% |
IX. Appointment and non-reappointment (dismissal) of CPAAccounting firm appointed
| Name of domestic accounting firm | Gongzheng Tianye Certified Public Accountants (Special General Partnership) |
| Remuneration for domestic accounting firm (in 10 thousand Yuan) | 166 |
| Continuous life of auditing service for domestic accounting firm | 29 |
| Name of domestic CPA | Bai Lingjing, Zhang Qianqian |
| Continuous life of auditing service for domestic accounting firm | Bai Lingjing (5 years), Zhang Qianqian (1 year) |
Re-appointed accounting firms in this period
□Yes √No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√ Applicable □ Not applicable
Being deliberated in Annual Shareholders General Meeting of 2019, Gongzheng Tianye was appointed as auditaccounting firm for internal control of the Company for year of 2020. In the Period, auditing charge for internalcontrol amounting to 220,000 Yuan.X.Facing delisting after annual report disclosure
□ Applicable √ Not applicable
XI. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization occurred during the reporting period.XII. Major litigations and arbitrations
√ Applicable □ Not applicable
| Basic Situation of Litigation (Arbitration) | Amount Related to the Case (Yuan) | Whether Formed Accrued Liabilities | Progress of Litigation (Arbitration) | Trial Results and Effects of Litigation (Arbitration) | Judgment Implementation of Litigation (Arbitration) | Disclosure Date | Disclosure Index |
| On March 6, 2017, the company received the civil ruling No.(2016)Y03MC2490 and No.(2016) Y03MC2492 from Shenzhen Intermediate People's Court about the dispute case that the plaintiff applicant China Cinda Asset Management Co., Ltd. Shenzhen Branch (hereinafter referred to as “Cinda Company”) appealed the respondent Weifu High Technology and other seven respondents and the shareholders of the third party Hejun Company damaged the interests of corporate creditors, which adopted the mandatory measures to freeze the assets with value of RMB 217 million under the name of the Company and other seven respondents and Hejun Company. Freeze 4.71 million shares of Miracle Automation and 15.3 million shares of SDEC Stock held by the company. | 21,703 | N | By the company’s application for reconsideration, Shenzhen Intermediate People's Court deemed the total assets that Cinda Company applied for preservation to be RMB 217,027,697.23. The total value of 15.3 million shares of SDEC Stock and 4.71 million shares of Miracle Automation held by the company has exceeded the total assets that Cinda Company applied for preservation, therefore, 3,560,898 shares of SDEC Stock held by the company was unfrozen. Up to the end of the reporting period, the company’s frozen assets were as follows: 4.71 million shares of Miracles Automation held by the company and its fruits, and 11,739,102 shares of SDEC Stock held by the company and its fruits. At present, this litigation is in the first instance (the first trial held on 24 Sept. 2017, and follow trial will wait for notice by the court). | This litigation will not affect the company’s daily operating activities for the time being | Not yet implemented | 8 March 2017 | (Announcement No.: 2017-002) published on Juchao Website (www.cninfo.com.cn) |
| The Company has applied to Futian People's Court of Shenzhen for compulsory liquidation with Hejun Company | 3,300 | N | The Company has applied to Futian People's Court of Shenzhen for compulsory liquidation with Hejun Company. The civil ruling paper (Yue (0304) QS [2017] No. 5) made by Shenzhen Futian District People’s Court ruled that Hejun Company should be made compulsory liquidation. The Company will actively cooperate with the court to work on the liquidation to protect its legitimate rights and interests. | There is no impact on daily operation activities of the Company | Relevant works are in process | 6 Dec. 2017 | (Announcement No.: 2017-023) published on Juchao Website (www.cninfo.com.cn) |
XIII. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.XIV. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the company’s shear incentive scheme, employee stock ownership planor other employee incentives
√ Applicable □ Not applicable
On October 12, 2020, the company held the 17th meeting of the 9th Board of Directors and the 15th meeting ofthe 9th Board of Supervisors which deliberated and passed the "Restricted Stock Incentive Plan 2020 (Draft) ofWeifu High Technology Group Co., Ltd.” and its summary and other related proposals, it is proposed to grant19,555,000 restricted shares to 602 incentive objects, accounting for 1.94% of the company’s total share capital of1,008,950,570 shares at the time the incentive plan was signed.Specific program found more in relevantannouncement released by the Company in Juchao Website (http://www.cninfo.com.cn)dated 13 October 2020.
On October 29, 2020, the company received the "Approval on Weifu Hi-Tech's Implementation of RestrictedStock Incentive Plan" from the State-owned Assets Supervision and Administration Commission of WuxiMunicipal People's Government (XGZK [2020] No. 5), Wuxi SASAC agreed in principle that the company could
implement a restricted stock incentive plan, and agreed the "Restricted Stock Incentive Plan 2020 (Draft) of WeifuHigh Technology Group Co., Ltd.” in principle.Specific program found more in relevant announcement releasedby the Company in Juchao Website (http://www.cninfo.com.cn)dated 30 October 2020.
On November 3, 2020, the company held the second extraordinary general meeting of shareholders in 2020, andreviewed and approved relevant proposals on the "Restricted Stock Incentive Plan 2020 (Draft) of Weifu HighTechnology Group Co., Ltd.” and its summary.Specific program found more in relevant announcement releasedby the Company in Juchao Website (http://www.cninfo.com.cn)dated 4 November 2020.
Authorized by the company’s general meeting of shareholders, on November 12, 2020, the company held the 21stmeeting of the ninth board of directors which deliberated and approved the "Proposal on Adjusting the List ofIncentive Objects of the Restricted Stock Incentive Plan and the Number of Rights Granted" and the "Proposal onthe First Grant of Restricted Stocks to Incentive Objects of the 2020 Restricted Stock Incentive Plan", in view ofthe fact that one incentive object identified in the "2020 Restricted Stock Incentive Plan of Weifu HighTechnology Group Co., Ltd." voluntarily gave up 15,000 shares of restricted stocks that the company intended togrant due to personal reasons, the board of directors agreed to adjust the number of incentive targets and thenumber of rights granted in the equity incentive plan. After the adjustment, the number of incentive objectsgranted by restricted stocks has been adjusted from 602 to 601, and the number of restricted stocks granted hasbeen adjusted from 19,555,000 shares to 19,540,000 shares. Specific program found more in relevantannouncement released by the Company in Juchao Website (http://www.cninfo.com.cn)dated 13 November 2020and 8 December 2020.
The registration for the first grant of restricted shares under the current equity incentive plan was completed on 4December 2020.XVI. Major related party transaction
1. Day-to-day related party transaction
√ Applicable □ Not applicable
| Related party | Relationship | Type of related transaction | Content of related party transaction | Pricing principle | Related party transaction price | Related party transaction amount (in 10 thousand Yuan) | Proportion in similar transactions | Trading limit approved (in 10 thousand Yuan) | Whether over the approved limited or not (Y/N) | Clearing form for related transaction | Available similar market price | Date of disclosure | Index of disclosure |
| Weifu Precisio | Associated enterprise | Procurement of | Procurement | Fair market | Market price | 3,457.08 | 0.30% | 3,000 | Y | According to | Market price | 2020-04-21 | Notice No:202 |
| n Machinery | goods and services | of goods and services | pricing | the contract | 0-014 | ||||||||
| Bosch Automobile Diesel | Associated enterprise, controlling subsidiary of Robert Bosch | Procurement of goods and services | Procurement of goods and services | Fair market pricing | Market price | 2,974.06 | 0.26% | 2,500 | Y | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Weifu Environment | Associated enterprise of Weifu Leader | Procurement of goods | Procurement of goods | Fair market pricing | Market price | 305,141.88 | 26.76% | 320,000 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Robert Bosch Company | Second largest shareholder of the Company | Procurement of goods and services | Procurement of goods and services | Fair market pricing | Market price | 15,085.56 | 1.32% | 15,300 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Shinwell Automobile Technology (Wuxi) | Associated enterprise | Procurement of goods | Procurement of goods | Fair market pricing | Market price | 173.36 | 0.02% | 500 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Weifu Precision Machinery | Associated enterprise | Sales of goods and services | Sales of goods and services | Fair market pricing | Market price | 609.24 | 0.05% | 200 | Y | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Bosch Automobile Diesel | Associated enterprise, controlling subsidiary of Robert Bosch | Sales of goods and services | Sales of goods and service | Fair market pricing | Market price | 296,168.43 | 22.99% | 250,000 | Y | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| s | |||||||||||||
| Weifu Environment | Associated enterprise of Weifu Leader | Sales of goods and services | Sales of goods and services | Fair market pricing | Market price | 2,966.39 | 0.23% | 3,000 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Robert Bosch Company | Second largest shareholder of the Company | Sales of goods and services | Sales of goods and services | Fair market pricing | Market price | 86,061.15 | 6.68% | 76,000 | Y | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 |
| Shinwell Automobile Technology (Wuxi) | Associated enterprise | Sales of goods | Sales of goods | Fair market pricing | Market price | 10.33 | 200 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 | |
| Bosch Automobile Diesel | Associated enterprise, controlling subsidiary of Robert Bosch | Other | Technical service fee payable | Fair market pricing | Market price | 18.47 | 50 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 | |
| Bosch Automobile Diesel | Associated enterprise, controlling subsidiary of Robert Bosch | Other | Payment of technical commission fee etc. | Fair market pricing | Market price | 29.54 | 100 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 | |
| Robert Bosch Company | Second largest shareholder of the Company | Other | Technical commission payable | Fair market pricing | Market price | 507.23 | 550 | N | According to the contract | Market price | 2020-04-21 | Notice No:2020-014 | |
| Weifu Environ | Associated enterprise | Other | Rental fees | Fair market | Market price | 250.81 | 300 | N | According to | Market price | 2020-04-21 | Notice No:202 |
| ment | of Weifu Leader | receivable | pricing | the contract | 0-014 | ||||||||
| Bosch Automobile Diesel | Associated enterprise, controlling subsidiary of Robert Bosch | Other | Purchase of fixed assets | Fair market pricing | Market price | 44.77 | Y | According to the contract | Market price | ||||
| Weifu Precision Machinery | Associated enterprise | Other | Technical service fees payable etc. | Fair market pricing | Market price | 5.48 | Y | According to the contract | Market price | ||||
| Weifu Precision Machinery | Associated enterprise | Other | Purchase of fixed assets | Fair market pricing | Market price | 14.52 | Y | According to the contract | Market price | ||||
| Robert Bosch Company | Second largest shareholder of the Company | Other | Purchase of fixed assets | Fair market pricing | Market price | 2,292.79 | Y | According to the contract | Market price | ||||
| Weifu Environment | Associated enterprise of Weifu Leader | Other | Purchase of fixed assets | Fair market pricing | Market price | 3 | Y | According to the contract | Market price | ||||
| Weifu Environment | Associated enterprise of Weifu Leader | Other | Technical service fees payable etc. | Fair market pricing | Market price | 6.44 | Y | According to the contract | Market price | ||||
| Weifu Environment | Associated enterprise of Weifu Leader | Other | Sales of fixed assets | Fair market pricing | Market price | 0.94 | Y | According to the contract | Market price | ||||
| Total | -- | -- | 715,821.47 | -- | 671,700 | -- | -- | -- | -- | -- | |||
| Detail of sales return with major amount involved | Not applicable |
| Report the actual implementation of the day-to-day related transactions which were projected about their total amount by types during the reporting period (if applicable) | Being deliberated and approved by AGM of 2019, total day-to-day related party transaction for year of 2020 predicted as 6717 million Yuan, actually 7158.2147 million Yuan occurred in the Period, the related transaction classified according to types are as: 1. it estimated that procurement of goods and labor service from related party in 2020 will up to 3413 million Yuan, while 3268.3194 million Yuan occurred actually in the Period; 2. it estimated that sales of goods and labor service to related party in 2020 will up to 3294 million Yuan, actually 3858.1554 million Yuan occurred during the reporting period for the explosive growth of demand in commercial vehicle market, especially for heavy trucks; 3. it estimated that other related transactions with related party for year of 2020 will up to 10 million Yuan while 31.7399 million Yuan actually occurred. |
| Reasons for major differences between trading price and market reference price (if applicable) | Not applicable |
2. Related party transactions of assets acquisition and sold
□ Applicable √ Not applicable
No related party transactions of assets acquisition and sold occurred during the reporting period
3. Related party transactions of mutual investment outside
□ Applicable √ Not applicable
No related party transactions of mutual investment outside occurred during the reporting period.
4. Contact of related party credit and debt
□ Applicable √ Not applicable
The Company had no contact of related party credit and debt in the reporting period.
5. Other material related party transactions
□ Applicable √ Not applicable
The company had no other material related party transactions in reporting period.
XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship occurred during the reporting period
(2) Contract
□ Applicable √ Not applicable
No contract occurred during the reporting period
(3) Leasing
□ Applicable √ Not applicable
No leasing occurred during the reporting period
2. Material guarantees
□ Applicable √ Not applicable
No material guarantees occurred during the reporting period
3. Entrust others to cash asset management
(1) Trust financing
√ Applicable □ Not applicable
Trust financing during the period
In 10 thousand Yuan
| Specific type | Sources of funds | Amount occurred | Undue balance | Overdue amount |
| Financing products | Own funds | 229,484 | 64,000 | 0 |
| Financial products of securities firms | Own funds | 75,000 | 75,000 | 0 |
| Trust financial products | Own funds | 281,280 | 273,280 | 0 |
| Other type | Own funds | 66,030 | 66,030 | 0 |
| Total | 651,794 | 478,310 | 0 | |
Details of the single major amount, or high-risk trust investment with low security, poor fluidity and non-guaranteed
√ Applicable □ Not applicable
In 10 thousand Yuan
| Trustee institution r name | Trustee type | Type | Amount | Source of funds | Start date | End date | Capital investment purpose | Criteria for fixing reward | Reference annual rate of return | Anticipated income (if applicable) | Actual gains/losses in period | Actual collected gains/losses in period | Amount of reserve for devaluation of withdrawing (if | Whether approved by legal procedure (Y/N) | Whether has entrust finance plan in the future | Summary of the items and related query index (if applicable) |
| applicable) | ||||||||||||||||
| Bank | Bank | Non-guaranteed floating income | 156,083 | Own funds | 2020-01-09 | 2021-11-22 | Financial products | Reference annual rate of return by the contract | 3.5%-4.25% | 3,724.93 | 8,896.26 | Collected according to the contract | 0 | Y | Y | Notice No:2020-015 |
| Securities trader | Securities trader | Non-guaranteed floating income | 96,000 | Own funds | 2020-02-18 | 2022-01-04 | Collective assets management plan | Reference annual rate of return by the contract | 4.2% -6% | 3,437.7 | 1,620.9 | Collected according to the contract | 0 | Y | Y | Notice No:2020-015 |
| Trust | Trust | Non-guaranteed floating income | 203,400 | Own funds | 2020-02-14 | 2022-11-25 | Collection trust plan | Reference annual rate of return by the contract | 4.7% -8.4% | 22,495.29 | 16,414.14 | Collected according to the contract | 0 | Y | Y | Notice No:2020-015 |
| Other (Fund etc.) | Other (Fund etc.) | Non-guaranteed floating income | 61,100 | Own funds | 2020-01-10 | 2022-04-18 | Private Equity Products | Reference annual rate of return by the contract | 5% -8.7% | 5,319.99 | 3,500.51 | Collected according to the contract | 0 | Y | Y | Notice No:2020-015 |
| Total | 516,583 | -- | -- | -- | -- | -- | -- | 34,977.91 | 30,431.81 | -- | 0 | -- | -- | -- | ||
Entrust financial expected to be unable to recover the principal or impairment might be occurred
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The company had no entrusted loans in the reporting period.
4.Significant contracts for daily operation
□ Applicable √ Not applicable
5.Other significant contract
□ Applicable √ Not applicable
The company had no other significant contract in the reporting period.XVIII. Social responsibility
1.Performance of social responsibility
As for the Social Responsibility Report 2020 of the Company, found more in the Juchao Website (www.cninfo.com.cn), theinformation disclosure website appointed by Shenzhen Stock Exchange
2. Precise poverty alleviation social responsibility
There is no precise poverty alleviation carried out in the period and no follow plan either
3. Environmental protection
The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection department:
□Yes √No
The company and its subsidiaries are not the key pollutant discharge units announced by the State EnvironmentalProtection Department. The company attaches great importance to environmental protection management. Duringthe production and operation process, the company strictly abides by relevant national and local environmentalprotection laws, regulations and rules, and timely acquires, updates and conveys relevant environmental laws,regulations and standards, and conducts the company’s internal daily environmental management based on newregulations and standards., actively fulfills corporate environmental protection obligations, and implements nationalenergy conservation and emission reduction guidelines and policies.
XIX. Explanation on other material matters
□Applicable √ Not applicable
There are no explanation on other material matters in the periodXX. Material matters of subsidiary of the Company
□ Applicable √ Not applicable
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| Amount | Proportion | New shares issued | Bonus shares | Public reserve transfer into share capital | Others | Subtotal | Amount | Proportion | |
| I. Restricted shares | 80,080 | 0.01% | 19,540,750 | 19,540,750 | 19,620,830 | 1.94% | |||
| 1. State-owned shares | |||||||||
| 2. State-owned legal person’s shares | |||||||||
| 3. Other domestic shares | 80,080 | 0.01% | 19,540,750 | 19,540,750 | 19,620,830 | 1.94% | |||
| Including: Domestic legal person’s shares | |||||||||
| Domestic natural person’s shares | 80,080 | 0.01% | 19,540,750 | 19,540,750 | 19,620,830 | 1.94% | |||
| 4. Foreign shares | |||||||||
| Including: Foreign legal person’s shares | |||||||||
| Foreign natural person’s shares | |||||||||
| II. Unrestricted shares | 1,008,870,490 | 99.99% | -19,540,750 | -19,540,750 | 989,329,740 | 98.06% | |||
| 1. RMB ordinary shares | 836,490,490 | 82.90% | -19,540,750 | -19,540,750 | 816,949,740 | 80.97% | |||
| 2. Domestically listed foreign shares | 172,380,000 | 17.09% | 172,380,000 | 17.09% | |||||
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total shares | 1,008,950,570 | 100.00% | 1,008,950,570 | 100.00% | |||||
Reasons for share changed
□ Applicable √ Not applicable
Approval of share changed
□ Applicable √ Not applicable
Ownership transfer of share changed
□ Applicable √ Not applicable
Progress of shares buy-back
√ Applicable □ Not applicable
i. Basic information on the repurchase of some of the A-shareThe company held the eleventh meeting of the ninth board of directors on February 13, 2020, which reviewed andapproved the "Proposal on Repurchasing Part of the Company's A Shares by Centralized Bidding". It was agreedthat the company should use its own funds not less than 300 million Yuan (inclusive) and not more than 600million Yuan (inclusive) to repurchase the company shares (A shares) for the implementation of equity incentives,and the price of repurchased shares (A shares) shall not exceed 24 Yuan/share (inclusive), the repurchase periodshould not exceed 12 months from the date of approval of the repurchase plan by the company’s board of directors.The total amount of specific repurchase funds was subject to the actual funds used to repurchase shares at the endof the repurchase period. For details, please refer to the "Repurchase Report on the Repurchase of Part of theCompany's A Shares by Means of Centralized Auction Transaction" (Announcement No.: 2020-005) the companydisclosed on "China Securities Journal", "Securities Times", "Hong Kong Commercial Daily" andwww.cninfo.com.cn. On May 28, 2020, the company held the 2019 annual general meeting of shareholders,reviewed and approved the "Company's 2019 Profit Distribution Plan", and agreed that the company shoulddistribute cash dividends of 11.00 Yuan (tax included) to all shareholders for every 10 shares. According to the"Repurchase Plan", after completing the implementation of the company's 2019 profit distribution plan, the priceof the repurchased shares (A shares) should be adjusted from no more than 24 Yuan per share to 22.92 Yuan pershare.
ii. Progress and actual completion of the repurchase of some A-shareOn February 28, 2020, the company disclosed the "Announcement on the Initial Repurchase of the CompanyShares" (Announcement No.: 2020-006), and it disclosed the “Announcement on the Progress of RepurchasingPart of A Shares” (Announcement Nos.: 2020-007, 2020-008, 2020-009, 2020-022, 2020-033, 2020-039,2020-040, 2020-042, 2020-043) on March 3, March 16, April 1, May 7, June 2, July 1, August 3, September 1,October 12, 2020.The 17
th
meeting of the ninth board of directors of the company held on October 12, 2020reviewed and approved the "Proposal on Completing the Implementation of the Plan to Repurchase Part of theCompany’s A Shares by Centralized Auction Transaction", and the company totally repurchased 19,596,277shares (A shares) through a centralized auction transaction method through a dedicated securities repurchaseaccount, accounting for 1.9422% of the company’s total share capital, of which the highest transaction price was
22.89 Yuan/share and the lowest transaction price was 17.95 Yuan/share, and the total amount paid was400,017,180.33 Yuan (including transaction expenses). The repurchase complied with the requirements ofrelevant laws and regulations and complied with the established repurchase plan, and the company completed theimplementation of the share repurchase. There was no difference between the implementation of the company's
share repurchase and the share repurchase plan approved by the board of directors (Announcement No.:
2020-046).
Iii. The company implemented the 2020 restricted stock incentive plan, and the grant was completed for the firsttime. There were a total of 601 restricted stock grant incentive objects, and the number of shares granted was19,540,000 shares, accounting for 1.937% of the company's current total share capital.For details, please refer tothe company’s publication on China Securities Journal, Securities Times, Hong Kong Commercial Daily andwww.cninfo.com.cn (Announcement No.: 2020-044, 2020-045, 2020-048,2020-058, 2020-059, 2020-060,2020-061, 2020-062, 2020-063, 2020-064, 2020-065, 2020-066).
Implementation progress of reducing holdings of shares buy-back by centralized bidding
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to commonshareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of lock-up stocks
√ Applicable □ Not applicable
In Share
| Shareholders | Opening shares restricted | Restricted Shares Increased in the Period | Shares released in Period | Ending shares restricted | Restricted reasons | Date for released |
| Wang Xiaodong | 400,000 | 400,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Xu Yunfeng | 350,000 | 350,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Ou Jianbin | 280,000 | 280,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Miao Yuming | 280,000 | 280,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Xu Sheng | 280,000 | 280,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Rong Bin | 280,000 | 280,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Liu Jinjun | 280,000 | 280,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Li Gang | 280,000 | 280,000 | T The first grant of the 2020 restricted stock | As required |
| incentive plan | by the rules | |||||
| Middle managers and other core personnel (593 people in total) | 17,110,000 | 17,110,000 | The first grant of the 2020 restricted stock incentive plan | As required by the rules | ||
| Chen Ran | 0 | 750 | 750 | Elected supervisor | As required by the rules | |
| Total | 0 | 19,540,750 | 0 | 19,540,750 | -- | -- |
II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
□ Applicable √ Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets andliability structure
□ Applicable √ Not applicable
3. Current internal staff shares
□ Applicable √ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
| Total common stock shareholders in reporting period-end | 58,092 | Total common stock shareholders at end of last month before annual report disclosed | 63,444 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) | 0 | Total preference shareholders with voting rights recovered at end of last month before annual report disclosed (if applicable) | 0 | |||||
| Particulars about shares held above 5% by shareholders or top ten shareholders | ||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Total shareholders at the end of report period | Changes in report period | Number of lock-up stocks held | Amount of un-lock up stock held | Number of share pledged/frozen | |||||
| State of share | Amount | |||||||||||
| Wuxi Industry Development Group Co., Ltd. | State-owned corporate | 20.22% | 204,059,398 | 0 | 204,059,398 | ||||||
| ROBERT BOSCH GMBH | Foreign corporate | 14.16% | 142,841,400 | 0 | 142,841,400 | ||||||
| Hong Kong Securities Clearing Company | Foreign corporate | 6.44% | 65,003,072 | 9,772,409 | 65,003,072 | ||||||
| BBH BOS S/A FIDELITY FD - CHINA FOCUS FD | Foreign corporate | 1.60% | 16,093,515 | -2,436,800 | 16,093,515 | ||||||
| Central Huijin Assets Management Co., Ltd. | State-owned corporate | 1.27% | 12,811,200 | 0 | 12,811,200 | ||||||
| Basic Pension Insurance Fund- 1003 | Other | 1.11% | 11,163,306 | 6,929,142 | 11,163,306 | ||||||
| Monetary Authority of Macao - own fund | Foreign corporate | 0.78% | 7,824,148 | 1,592,014 | 7,824,148 | ||||||
| FIDELITY INVMT TRT FIDELITY INTL SMALL CAP FUND | Foreign corporate | 0.73% | 7,339,586 | 928,584 | 7,339,586 | ||||||
| NSSF - 412 | Other | 0.63% | 6,376,708 | 6,376,708 | 6,376,708 | ||||||
| NSSF - 413 | Other | 0.58% | 5,850,000 | 1,065,022 | 5,850,000 | ||||||
| Strategy investor or general legal person becoming the top 10 shareholders by placing new shares (if applicable) | N/A | ||||||||||
| Explanation on associated relationship among the aforesaid shareholders | Among the aforesaid shareholders, there has no associated relationship between Wuxi Industry Development Croup Co., Ltd. and other shareholders, the first largest shareholder of the Company; and they do not belong to the persons acting in concert regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company. | ||||||||||
| Description of the above shareholders in relation to delegate/entrusted voting rights and abstention from voting rights. | N/A | ||||||||||
| Particular about top ten shareholders with un-lock up stocks held | |||||||||||
| Shareholders’ name | Amount of un-lock up stocks held at Period-end | Type of shares | |||||||||
| Type | Amount | ||||||||||
| Wuxi Industry Development Group Co., Ltd. | 204,059,398 | RMB common shares | 204,059,398 | ||||||||
| ROBERT BOSCH GMBH | 142,841,400 | RMB common shares | 115,260,600 | ||||||||
| Domestically listed foreign shares | 27,580,800 | ||||||||||
| Hong Kong Securities Clearing Company | 65,003,072 | RMB common shares | 65,003,072 | ||||||||
| BBH BOS S/A FIDELITY FD - CHINA | 16,093,515 | Domestically listed foreign shares | 16,093,515 | ||||||||
| FOCUS FD | |||
| Central Huijin Assets Management Co., Ltd. | 12,811,200 | RMB common shares | 12,811,200 |
| Basic Pension Insurance Fund- 1003 | 11,163,306 | RMB common shares | 11,163,306 |
| Monetary Authority of Macao - own fund | 7,824,148 | RMB common shares | 7,824,148 |
| FIDELITY INVMT TRT FIDELITY INTL SMALL CAP FUND | 7,339,586 | Domestically listed foreign shares | 7,339,586 |
| NSSF - 412 | 6,376,708 | RMB common shares | 6,376,708 |
| NSSF - 413 | 5,850,000 | RMB common shares | 5,850,000 |
| Expiation on associated relationship or consistent actors within the top 10 un-lock up shareholders and between top 10 un-lock up shareholders and top 10 shareholders | Among the aforesaid shareholders, there has no associated relationship between Wuxi Industry Development Croup Co., Ltd. and other shareholders, the first largest shareholder of the Company; and they do not belong to the persons acting in concert regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company. | ||
| Explanation on top 10 shareholders involving margin business (if applicable) | N/A | ||
Whether top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held have a buy-backagreement dealing in reporting period
□ Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held of the Company have nobuy-back agreement dealing in reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholders: local state-owned holdingType of controlling shareholders: legal person
| Controlling shareholders | Legal person/person in charge of the unit | Date of foundation | Organization code | Main operation business |
| Wuxi Industry Development Group Co., Ltd. | Jiang Guoxiong | October 05, 1995 | 913202001360026543 | Authorizing the state-owned assets operation within a certain area, investment management of significant project, investment and development of manufacturing and services and venture capital in high-tech achievement, entrust enterprise and management etc. |
| Equity of other domestic/oversea listed company control by controlling shareholder as well as stock-joint in report period | 1. First majority shareholder of the Company—Industry Group is the controlling shareholder of Wuxi Taiji Industry Corporation Limited (stock code: 600667). 2. The majority shareholder of the Company Industry Group holds 2,3185,000 circulating shares (15.65% of total shares of New Hongtai) of Wuxi New Hongtai Electrical Technology Co., Ltd. (Short name: New Hongtai, Stock Code: 603016). | |||
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
The Company had no changes of controlling shareholders in reporting period
3. Actual controller and person acting in concert of the Company
Nature of actual controller: local state-owned assets managementType of actual controller: legal person
| Actual controlling shareholders | Legal person/person in charge of the unit | Date of foundation | Organization code | Main operation business |
| State-owned Assets Supervision & Administration Commission of Wuxi Municipality of Jiangsu Province | ～ | ～ | State-owned Assets management | |
| Equity of domestic/oversea listed company control by actual controller in report period | Not applicable | |||
Changes of actual controller in reporting period
□ Applicable √ Not applicable
No changes of actual controllers for the Company in reporting period.Property right and controlling relationship between the actual controller and the Company is as follow
Actual controller controlling the Company by entrust or other assets management
□ Applicable √ Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
√Applicable □Not applicable
| Corporate shareholders | Legal rep./person in charge of unit | Dated founded | Register capital | Main business or management activity |
| ROBERT BOSCH GMBH | Heiko Carrie, Bettina Holzwarth | November 15, 1886 | 1200 million euros | Development, manufacture and sales of automotive equipment and engine equipment; engaged in electro-technical, electronic technology, machinery manufacturing and optical system as well as produce iron, metal and plastic products and similar commodity. The company engaged in varies trading business concerned with its business scope and established relevant company concerned with its business scope. |
5. Restriction on shares reduction for controlling shareholders, actual controllers, restructuring side andother undertakings entity
□ Applicable √ Not applicable
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the Period.
Section VIII. Convertible Bonds
□ Applicable √ Not applicable
The Company had no convertible bonds in the Period
Section IX. Particulars about Directors, Supervisors, Senior
Executives and EmployeesI. Changes of shares held by directors, supervisors and senior executives
| Name | Title | Working status | Sex (M/F) | Age | Start dated of office term | End date of office term | Shares held at period-begin (Share) | Amount of shares increased in this period (Share) | Amount of shares decreased in this period (Share) | Other changes (share) | Shares held at period-end (Share) |
| Wang Xiaodong | Chairman | Currently in office | M | 54 | May 28, 2020 | June 26, 2021 | 20,781 | 400,000 | 420,781 | ||
| Rudolf Maier | Vice Chairman | Currently in office | M | 63 | March 7, 2012 | June 26, 2021 | |||||
| Xu Yunfeng | Vice Chairman, GM | Currently in office | M | 49 | May 28, 2020 | June 26, 2021 | 13,000 | 350,000 | 363,000 | ||
| Ou Jianbin | Director, Executive Deputy General Manager and financing Charger | Currently in office | M | 54 | March 7, 2012 | June 26, 2021 | 10,000 | 280,000 | 290,000 | ||
| Zhang Xiaogeng | Director | Currently in office | M | 57 | May 28, 2015 | June 26, 2021 | |||||
| Chen Yudong | Director | Currently in office | M | 59 | March 7, 2012 | June 26, 2021 | |||||
| Hua Wanrong | Director | Currently in office | F | 56 | March 7, 2012 | June 26, 2021 | |||||
| Yu Xiaoli | Independent Director | Currently in office | F | 57 | June 27, 2018 | June 26, 2021 | |||||
| Lou Diming | Independent Director | Currently in office | M | 57 | May 28, 2015 | June 26, 2021 |
| Jin Zhangluo | Independent Director | Currently in office | M | 70 | May 28, 2015 | June 26, 2021 | |||||
| Xu Xiaofang | Independent Director | Currently in office | M | 57 | May 28, 2015 | June 26, 2021 | |||||
| Shi XingYuan | Chairman of the Supervisory Committee | Currently in office | M | 58 | March 7, 2012 | June 26, 2021 | 12,673 | 12,673 | |||
| Ma Yuzhou | Supervisor | Currently in office | M | 46 | June 27, 2018 | June 26, 2021 | |||||
| Chen Ran | Supervisor | Currently in office | M | 48 | May 28, 2020 | June 26, 2021 | 1,000 | 1,000 | |||
| Miao Yuming | Deputy GM | Currently in office | M | 57 | April 16, 2003 | June 26, 2021 | 10,000 | 280,000 | 290,000 | ||
| Xu Sheng | Deputy GM | Currently in office | M | 46 | May 28, 2020 | June 26, 2021 | 280,000 | 280,000 | |||
| Rong Bin | Deputy GM | Currently in office | M | 45 | May 28, 2020 | June 26, 2021 | 280,000 | 280,000 | |||
| Liu Jinjun | Deputy GM | Currently in office | M | 45 | May 28, 2020 | June 26, 2021 | 280,000 | 280,000 | |||
| Li Gang | Chief engineer | Currently in office | M | 50 | May 28, 2020 | June 26, 2021 | 280,000 | 280,000 | |||
| Zhou Weixing | Secretary of the Board | Currently in office | M | 57 | June 9, 2005 | June 26, 2021 | 3,565 | 120,000 | 123,565 | ||
| Chen Xuejun | Chairman | Leave office | M | 53 | March 7, 2012 | May 28, 2020 | 34,753 | 34,753 | |||
| Dai Lizhong | Supervisor | Leave office | M | 45 | June 27, 2018 | May 28, 2020 | 2,000 | 2,000 | |||
| Total | -- | -- | -- | -- | -- | -- | 106,772 | 1,000 | 0 | 2,550,000 | 2,657,772 |
II. Changes of directors, supervisors and senior executives
√Applicable □Not applicable
| Name | Position | Type | Date | Cause |
| Wang Xiaodong | Chairman | Be elected | May 28, 2020 | Be elected |
| Xu Yunfeng | Vice Chairman | Be elected | June 18, 2020 | Be elected |
| Xu Yunfeng | GM | Appointment | May 28, 2020 | Appointment |
| Xu Sheng | Deputy GM | Appointment | May 28, 2020 | Appointment |
| Rong Bin | Deputy GM | Appointment | May 28, 2020 | Appointment |
| Liu Jinjun | Deputy GM | Appointment | May 28, 2020 | Appointment |
| Li Gang | Chief engineer | Appointment | May 28, 2020 | Appointment |
| Chen Ran | Supervisor | Be elected | May 28, 2020 | Be elected |
| Chen Xuejun | Chairman | Leave office | May 28, 2020 | Application for resignation due to work reasons |
| Chen Xuejun | Director | Leave office | June 18, 2020 | Application for resignation due to work reasons |
| Dai Lizhong | Supervisor | Leave office | May 28, 2020 | Application for resignation due to work reasons |
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors, supervisors andsenior executiveMr. Wang Xiaodong, was born in November 1966, communist party members, a university graduate, MBA and seniorengineer. He previously served as Division Chief of Products Development Department of the Company, DeputyGM of Bosch Automobile Diesel, supervisor of the Company and vice chairman and GM of the Company.Currently serves as Party Secretary and chairman of the Company.
Mr. Rudolf Maier, was born in October 1957, a German citizenship with a doctor degree. He previously was GMof Bosch Automobile Diesel System Co., Ltd., executive deputy president of diesel system division and chairmanof commercial vehicle dept. in Robert Bosch Group; now he serves as Vice Chairman of the Company.
Mr. Xu Yunfeng, born in November 1971, a member of the Communist Party of China, a university graduate, anengineer, and holds a master's degree. He used to serve as assistant to general manager, general manager of WFDS,deputy general manager of the Company, etc.; He currently serves as deputy secretary of the party committee ofthe Company, vice president and general manager of the Company.
Mr. Ou Jianbin, born in June 1966, communist party members, a senior college graduated and an accountant.Previously served as Deputy Minister of Financial Department of Weifu Company, Director and deputy GM ofsubsidiary Weifu Jinning, Deputy GM and GM of subsidiary Weifu Leader and supervisor of the Company.Currently he serves as director and standing deputy GM as well as chief of the financial of the Company.
Mr. Zhang Xiaogeng, born in March 1963, college degree, senior economist. He previously served as clerk of theproduction system office at commission for restructuring of Wuxi City, deputy director of enterprise reformdepartment of Wuxi City, director of comprehensive institution department of Wuxi City, director of developmentand planning department (policy and regulation division) of SASAC of Wuxi City and deputy GM of WuxiIndustry Asset Management Co., Ltd; now he serves as the deputy President of Industry Group, the first majorityshareholder of the Company and Director of the Company.
Mr. Chen Yudong, was born in September 1961, an America citizenship and a Doctor. He previously served as
senior vice president of the gasoline system division of Robert Bosch Group, executive vice president of Bosch(China) Investment Ltd. Now he serves as President of Bosch (China) Investment Ltd. and director of theCompany.
Ms. Hua Wanrong, born in September 1964, communist party members,graduated from college, a senioraccountant. She previously she served as deputy director of administrative resources division of State-ownedAssets Supervision and Administration Bureau of Wuxi City, director of tax policy and regulations division anddirector of state-owned assets division of Wuxi Municipal Bureau of Finance, director of property managementdepartment and director of development and planning department of State-owned Assets Supervision andAdministration Commission of Wuxi City, director of investment banking department of major shareholder –Industry Group. Currently she serves as Chairman of Holding subsidiary Jiangsu Sunport Power Tech. Co., Ltd.of majority shareholder Industry Group and Director of the Company.
Ms. Yu Xiaoli, born in January 1963, a member of the Communist Party of China, Ph.D., a professor of ZhejiangUniversity,served as an independent director of the sixth and seventh board of directors of the Company and thedean of the engineering branch of Zhejiang University City College. She is currently a professor at ZhejiangUniversity, the chairman of the Society of Automotive Engineers of Zhejiang, an director of Zhejiang BozhongAutomobile Technology Co., Ltd., an independent director of Zhejiang Fenglong Electric Co., Ltd., anindependent director of Hangzhou EVTECH Co., Ltd., an independent director of Zhejiang Wanding PrecisionTechnology Co., Ltd. and an independent director of the Company.
Mr. Lou Diming, born in July 1963, a member of the Communist Party of China, has a Ph.D., and is a professor. Heused to be the deputy director and the secretary of the party branch of the Department of Mechanical Engineering ofShanghai Railway Institute, the deputy secretary of the party committee of the School of Mechanical Engineering ofTongji University and the party secretary of the Department of Locomotive and Vehicle Engineering of TongjiUniversity, and theexecutive vice president of the Institute of Rail Transit, and the secretary of the second jointcommittee of Tongji University, etc. He is currently a professor of Tongji University, a doctoral tutor,director ofNanchang Intelligent New Energy Vehicle Research Institute, vice chairman of the Shanghai Internal CombustionEngines Society, director of the China Society for Internal Combustion Engines, vice chairman of the small andmedium power diesel engine branch and the oils and clean fuelsbranch and the post-processing technology branch,a member of the Expert Technical Committee of the National Technical Committee for Internal Combustion Engineof Standardization Administration of China, a member of the Expert Committee of the China Internal CombustionEngine Industry Association, an independent director of Shanghai Diesel Engine Co., Ltd., an independent directorof Jiangsu Liance Electromechanical Technology Co., Ltd., a senior consultant of Kunming Yunnei Power Co.,Ltd.,and an independent director of the Company.
Mr. Jin Zhangluo, born in August 1950, a member of the Communist Party of China, holds a college degree, and isa certified public accountant and senior accountant. He used to be the financial controller of Jintan Diesel Engine
Factory in Jiangsu Province, deputy section chief, section chief and chief accountant of finance section of WuxiPower Machine Factory, and department manager, deputy director and executive deputy director of JiangsuGongzheng Certified Public Accountants. He currently serves as an independent director ofSuzhou Taihu ElectricNew Materials Co., Ltd. and independent director of the Company.
Mr. Xu Xiaofang, born in March 1963, communist party members,graduate, a lawyer. He previously he served aspart-time lawyer in Beihai Economic Law Firm, staff in China Chamber of International Commerce BeihaiBranch, part-time lawyer of Guangdong Yuanjian Law Firm, and staff of legal affairs in CEIEC and lawyer ofGuangdong Bohe Law Firm. Now he serves as lawyer in Kunlun (Shenzhen) Law Firm, arbitrator of theShenzhen Arbitration Commission, independent director of Shenzhen Kaizhong Precision Technology Co., Ltdindependent director of Doctorglasses Chain Co.,Ltd, and independent director of the Company.
Mr. Shi XingYuan, was born in May 1962, communist party members, a postgraduate,Master of Commerce andIndustry, senior engineer. He previously he served as GM and Director of the Company; now he serves as Chairman ofthe Supervisory Committee and Chairman of the Labor Union of the Company.
Mr. Ma Yuzhou, was born in September 1974, communist party members, owns Master’s degree and a engineer.He previously served as Deputy GM of Weifu Tianli, Deputy GM and GM of the mechanical system division ofthe Company; now he serves as Deputy Secretary of the Party Committee and Supervisor of the Company.
Mr. Chen Ran, born in December 1972, is a member of the Communist Party of China, holds a bachelor’s degree,and is senior human resource manager. He once served as deputy director of the company’s managementdepartment, deputy director of the investment and audit department, director of human resources department,deputy director of the party and mass department, deputy director of administration department, deputy director ofengineering procurement department, director of the company’s party and mass department and director of thedisciplinary inspection and supervision department. He is currently a supervisor of the Company and the directorof the company's organization and personnel department.
Mr. Miao Yuming, born in April 1963, communist party members, a university background, MBA and senior engineer.He previously served as director of sales department and assistant GM in the Company. Currently he serves asdeputy GM of the Company, deputy GM of Bosch Automobile Diesel.
Mr. Xu Sheng, born in March 1974, a member of the Communist Party of China, graduate degree, holds amaster’s degree, and is an engineer. He once served as secretary of the party committee of the company’s partycommittee work department, deputy director of the office of the general manager of the company, deputysecretary of the party branch and deputy factory manager of the company’s injector parts branch, HSE manager ofBosch Automotive Diesel, senior manager of BPS, director of MOE5, and assistant general manager of thecompany. He is currently the deputy general manager of the Company.
Mr. Rong Bin, born in December 1975, a member of the Communist Party of China, holds a bachelor's degree,and is an assistant engineer. He once served as vice plant manager of the company's plunger branch, deputymanager of the common rail component company, deputy manager and manager of the first manufacturingdepartment of the company's mechanical system business department, assistant to the general manager, deputygeneral manager, and general manager of the company's mechanical system business department, and generalmanager of the automotive diesel system division and general manager of the mechanical system division. Hecurrently serves as the deputy general manager of the Company.
Mr. Liu Jinjun, born in September 1975, a member of the Communist Party of China, holds a bachelor’s degreeand a master’s degree, and is an engineer. He once served as the manager of the personnel administrationdepartment and technical sales manager of Wuxi Weifu Automotive Diesel System Co., Ltd., the director of thecompany's human resources department, the director of the company's strategy and marketing department, thecompany's supervisor, the director of the company's strategy and new business department and the director of themarket development department. He is currently the deputy general manager of the Company.
Mr. Li Gang, born in November 1970, is a member of the Chinese Communist Party, holds a bachelor’s degreeand a master’s degree, and is a senior engineer. He once served as the product design engineer of the company'stechnology center, the production supervisor of the production department and the technical director of thetechnical sales department of Wuxi Weifu Automotive Diesel System Co., Ltd., the deputy director of thecompany's technology center, deputy dean of the company's engineering technology research institute and thedirector of the technology center, and the standing deputy director (deputy chief engineer) of the company'stechnology center. He is currently the chief engineer of the Company.
Mr. Zhou Weixing, born in January 1963, communist party members, graduate from University, a senior engineer.He previously served as representative of security affairs and director of security office of the Company; now heserves as secretary of the Board of the Company.
Post-holding in shareholder’s unit
√ Applicable □ Not applicable
| Name | Name of shareholder’s unit | Position in shareholder’s unit n | Start dated of office term | End date of office term | Received remuneration from shareholder’s unit (Y/N) |
| Rudolf Maier | Robert Bosch Group | Consultant | Y | ||
| Chen Yudong | Bosch (China) Investment Ltd. | President | January 1, 2011 | Y | |
| Zhang Xiaogeng | Wuxi Industry Development Group Co., Ltd. | Vice president | April 1, 2008 | Y |
| Hua Wanrong | Jiangsu Sunport Power Tech. Co., Ltd. | Chairman | Y | ||
| Miao Yuming | Bosch Automobile Diesel System Co., Ltd. | Deputy GM | March 1, 2012 | Y |
Post-holding in other unit
√ Applicable □ Not applicable
| Name | Name of other units | Position in other unit | Start dated of office term | End date of office term | Received remuneration from other unit (Y/N) |
| Yu Xiaoli | Zhejiang University | Teacher and professor | August 1, 1985 | ||
| Yu Xiaoli | Society of Automotive Engineers of Zhejiang | Director-general | June 1, 2015 | ||
| Yu Xiaoli | Zhejiang Bozhong Auto Technology Co., Ltd | Director | April 1, 2008 | ||
| Yu Xiaoli | Zhejiang Fenglong Electric Co., Ltd | Independent Director | April 1, 2016 | ||
| Yu Xiaoli | Hangzhou EVTECH Co., Ltd | Independent Director | June 1, 2016 | ||
| Yu Xiaoli | Zhejiang Wanding Precision Technology Co., Ltd. | Independent Director | |||
| Lou Diming | Tongji University | Professor, doctoral supervisor | April 15, 2000 | ||
| Lou Diming | Nanchang Intelligent New Energy Vehicle Research Institute | Director | |||
| Lou Diming | Shanghai Diesel Engine Co., Ltd | Independent Director | May 20, 2015 | ||
| Lou Diming | Jiangsu Liance Electromechanical Technology Co., Ltd | Independent Director | June 1, 2017 | ||
| Lou Diming | Kunming Yunnei Power Co., Ltd | Senior consultant | August 1, 2018 | ||
| Jin Zhangluo | Suzhou Taihu Electric Advanced Material Co., Ltd | Independent Director | February 4, 2016 | ||
| Xu Xiaofang | Kunlun (Shenzhen) Law Firm | Lawyer | September 1, 2004 | ||
| Xu Xiaofang | Shenzhen Kaizhong Precision Technology Co., Ltd | Independent Director | June 1, 2018 | ||
| Xu Xiaofang | independent director of Doctorglasses Chain Co.,Ltd, | Independent Director | |||
| Explanation on post-holding in other unit | The aforesaid are the independent directors of the Company | ||||
Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors andsenior management during the reporting period
□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior executivesDecision-making procedures, recognition basis and payment for directors, supervisors and senior executives
1. Decision-making procedure: the remuneration and review committee of the Board shall make proposalsaccording to completion status of the major annual targets, the implementation of which is subject to submissionto and approval by the Board;
2. Determination reference: remuneration of directors, supervisors and senior management who receiveremuneration from the Company is determined based on the annual operating results assessment measures ofsenior management and remuneration management rules of senior management as approved at the generalmeetings. Salary for independent directors of the Company is determined by general meeting which is set at RMB25,000 per quarter (after tax), and the traveling expense occurred by them arising from attending the Company’sboard meeting, general meetings and relevant activities will be reimbursed according to the actual conditions.
3. Actual payment: remuneration of directors, supervisors and senior management who receive remuneration fromthe Company comprises of basic annual pay and performance related annual salary. The basic annual pay shall bedetermined based on specific positions and paid monthly, while the performance related salary is determined andpaid based on satisfaction of the various performance indicators since it is directly linked with the economicbenefits of the Company. Remuneration of independent directors will be paid on a quarterly basis.Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
| Name | Title | Sex | Age | Post-holding status | Total remuneration obtained from the Company (before taxes) | Whether remuneration obtained from related party of the Company (Y/N) |
| Wang Xiaodong | Chairman | M | 54 | Currently in office | 222.1 | N |
| Rudolf Maier | Vice Chairman | M | 63 | Currently in office | Y | |
| Xu Yunfeng | Vice Chairman, GM | M | 49 | Currently in office | 171.9 | N |
| Ou Jianbin | Director, Executive Deputy General Manager and financing Charger | M | 54 | Currently in office | 171.9 | N |
| Zhang Xiaogeng | Director | M | 57 | Currently in office | Y | |
| Chen Yudong | Director | M | 59 | Currently in office | Y | |
| Hua Wanrong | Director | F | 56 | Currently in office | Y | |
| Yu Xiaoli | Independent Director | F | 57 | Currently in office | 12 | N |
| Lou Diming | Independent Director | M | 57 | Currently in office | 12 | N |
| Jin Zhangluo | Independent Director | M | 70 | Currently in office | 12 | N |
| Xu Xiaofang | Independent Director | M | 57 | Currently in office | 12 | N |
| Shi XingYuan | Chairman of the Supervisory Committee | M | 58 | Currently in office | 171.9 | N |
| Ma Yuzhou | Supervisor | M | 46 | Currently in office | 122.4 | N |
| Chen Ran | Supervisor | M | 48 | Currently in office | 55.5 | N |
| Miao Yuming | Deputy GM | M | 57 | Currently in office | Y | |
| Xu Sheng | Deputy GM | M | 46 | Currently in office | 129.8 | N |
| Rong Bin | Deputy GM | M | 45 | Currently in office | 105 | N |
| Liu Jinjun | Deputy GM | M | 45 | Currently in office | 118.5 | N |
| Li Gang | Chief engineer | M | 50 | Currently in office | 107.1 | N |
| Zhou Weixing | Secretary of the Board | M | 57 | Currently in office | 73.7 | N |
| Chen Xuejun | Chairman | M | 53 | Leave office | 245.6 | N |
| Dai Lizhong | Supervisor | M | 45 | Leave office | 3.2 | N |
| Total | -- | -- | -- | -- | 1,746.6 | -- |
Delegated equity incentive for directors, supervisors and senior executives in reporting period
√ Applicable □ Not applicable
In share
| Name | Position | Number of shares exercisable during the reporting period | Number of shares exercised during the reporting period | Exercise price of the shares exercised (RMB/Share) | Market price at end of the Period (RMB/Share) | Number of restricted shares held at beginning of the Period | Number of shares unlocked during the period | Number of new restricted shares granted during the reporting period | Grant price of restricted shares (RMB/Share) | Number of restricted shares held at end of the reporting period |
| Wang Xiaodong | Chairman, Secretary of the Party Committee | 23.19 | 400,000 | 15.48 | 400,000 | |||||
| Xu Yunfeng | Vice Chairman, General Manager, Deputy Secretary of the Party Committee | 23.19 | 350,000 | 15.48 | 350,000 | |||||
| Ou Jianbin | Director, Executive Deputy General Manager | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Miao Yuming | Deputy GM | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Xu Sheng | Deputy GM | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Rong Bin | Deputy GM | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Liu Jinjun | Deputy GM | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Li Gang | Chief engineer | 23.19 | 280,000 | 15.48 | 280,000 | |||||
| Zhou Weixing | Secretary of the Board | 23.19 | 120,000 | 15.48 | 120,000 | |||||
| Total | -- | 0 | 0 | -- | -- | 0 | 0 | 2,550,000 | -- | 2,550,000 |
V. Particulars of workforce
1.Number of Employees, Professional composition, Education background
| Employee in-post of the parent Company(people) | 2,580 |
| Employee in-post of main Subsidiaries (people) | 2,809 |
| The total number ofcurrent employees(people) | 5,389 |
| The total number of current employees to receive pay (people) | 5,389 |
| Retired employee’ s expenses borne by the parent Company and main Subsidiaries(people) | 0 |
| Professional composition | |
| Category of professional composition | Numbers of professional composition (people) |
| Production personnel | 3,208 |
| Sales personnel | 176 |
| Technical personnel | 1,238 |
| Financial personnel | 89 |
| Administrative personnel | 678 |
| Total | 5,389 |
| Education background | |
| Category of education background | Numbers (people) |
| Master degree and above | 321 |
| Undergraduate | 1,450 |
| Junior college | 1,104 |
| Other | 2,514 |
| Total | 5,389 |
2. Remuneration Policy
The company further improved the performance management and salary management system, strengthened thescientificity and pertinence of performance goals, closely followed the company’s strategy and business plan, andgave full play to the guidance and promotion of the goals; centering on business needs, established adual-dimensional performance evaluation and incentive model based on the business model of the key accountmanager to promote the implementation of the new mechanism; strengthened the close relationship betweenemployee income and business results, and gave full play to the incentive effect. The company further gave playto the role of incentive funds, strengthened the promotion and incentives of major innovative developmentprojects, and promoted the realization of the company's strategic goals.
3. Training programs
Based on the employee competency model, the company strengthened the cooperation with relevant colleges andconsulting management companies, and developed special training plans for management cadres and personnel invarious business lines. Established and formed a pilot plan for an international business talent team, a "voyage +sail" plan for a comprehensive management team, a team of innovative technical talents, and a team ofhigh-quality business talents, and a craftsman plan for on-site skilled operation positions, and formed a talentdevelopment supply chain system to undertake the company's development strategy. In 2020, the companyadhered to the orientation of improving the competence of employees, actively increased talent developmentefforts, and effectively increased the coverage of training, and totally 1,505 people participated in various trainingthroughout the year.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X. Corporate GovernanceI. Corporate governance of the CompanyDuring the reporting period, the Company earnestly implemented the Basic Internal Control Standards forEnterprise and its guidance in strict accordance to the requirements of the Company Law, Securities Law, ListingRules of Shenzhen Stock Exchange as well as Guidance on Standard Operation of Listed Company of Shenzhen StockExchange, continued to improve and enhance legal person governance structure and internal control system, thus to
standardize its operation.The actual status of corporate governance in accordance with the requirements of ChinaSecurities Regulatory Commission regulatory documents related to listing Corporation.The company has established a series of document systems for standardized management including the Rules ofProcedure of three committees, Working Rules, internal control system, Evaluation Management System ofInternal Control, Information Disclosure Management Approach, Financial Decision-making System ofSignificant Investment, Related Party Transaction System and Inside Information and Insider ManagementSystem.According to the Company Law, Articles of Association and relevant laws and regulations, the companyestablished a relatively complete organizational control architecture system. The company’s board ofdirectorsexecutes the resolution of general meeting of stockholders, takes charge of the company’s great decisions,and take responsible for the general meeting of stockholders; the company sets up the general manager accordingto law to preside over the company’s daily production and operation and management, organize and implementthe resolutions of the board of directors, and take responsible for the board of directors; the company’s board ofsupervisors is the company’s supervisory body, takes responsible for behaviors of the directors and seniormanagement and the supervise the company’s financial affairs. The board of directors has four special committeesincluding the strategy committee, remuneration and appraisal committee, audit committee, and nominationscommittee. The company’s general meeting of stockholders, board of directors, board of supervisors, andmanagement layer have clear rights and obligations, perform their own duties, effectively check and balance,scientifically make decisions, coordinate operations, and lay a solid foundation for the company’s sustainable,stable and healthy development.The company’s independent directors perform their duties and faithfully and conscientiously fulfill theirobligations in strict accordance with relevant regulations of Articles of Association and the Independent DirectorSystem, and actively attend the board meetings and shareholders' meetings, understand and obtain relevantinformation before meetings; carefully consider each motion, and actively participate in the discussions and makerecommendations. Seriously make independent opinions, and effectively protect the interests of the company andshareholders, especially the minority shareholders. Independent directors have no objections on relevant mattersof the company.The company further implements the Basic Norms of Enterprise Internal Control and its guidelines, constructs theinternal control system in the company headquarters and major subsidiaries, enhance the company's management
and control level, optimize the work flow, improve the internal control system, identify and control theoperational risks. Please see the detailed contents of 2019 Annual Internal Control Evaluation Report onwww.cninfo.com.cn which is the information disclosure website designated by Shenzhen Stock Exchange.Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance forlisted company from CSRC?
□ Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governancefor listed company from CSRC.II. Independence of the Company relative to controlling shareholders’ in aspect of businesses, personnel,assets, organization and finance
1. Business: the company has a complete independent research and development, procurement, production andsales systems, the main business does not have horizontal competition with the controlling shareholders. Thebusiness is absolutely separated.
2. Personnel: the company has mutual independence with its controlling shareholders in labor, personnel andsalary management; there is no mixed operation and management with the controlling shareholders. Thecompany’s general manager, vice general manager, financial administrator, secretary of the board, and seniorexecutives don’t hold any position in the shareholders’ units.
3. Assets: the company's assets are independent and complete, the property relations with the controllingshareholders are clear.
4. Organization: the company has established organization completely independent from its controllingshareholders, the duty and authority of the company’s stockholders' meeting, board of directors, board ofsupervisors and management level are clearly defined, the internal management system can operateindependently.
5. Finance: the company has set up an independent financial department, established the independent financialaccounting system and financial management system, opened the independent bank account, and paid taxesseparately according to law.
III. Horizontal competition
□ Applicable √ Not applicable
IV. In the report period, the Company held annual shareholders’ general meeting andextraordinary shareholders’ general meeting
1. Annual Shareholders’ General Meeting in the report period
| Ordinal number of the shareholders’ general meeting | Type | Ratio of investor participation | Date | Date of disclosure | Index of disclosure |
| Annual General Meeting of 2019 | AGM | 48.39% | May 28, 2020 | May 29, 2020 | (Notice No.: 2020-026) published on Juchao Website(www.cninfo.com.cn) |
| The first extraordinary shareholders general meeting of 2020 | Extraordinary shareholders general meeting | 44.80% | June 18, 2020 | June 19, 2020 | (Notice No.: 2020-036) published on Juchao Website(www.cninfo.com.cn) |
| The second extraordinary shareholders general meeting of 2020 | Extraordinary shareholders general meeting | 48.53% | November 3, 2020 | November 4, 2020 | (Notice No.: 2020-060) published on Juchao Website(www.cninfo.com.cn) |
2. Request for extraordinary shareholders’ general meeting by preferred stockholders whose voting rightsrestore
□ Applicable √ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
| The attending of independent directors to Board Meeting and general meeting | |||||||
| Independent Director | Times of Board meeting supposed to attend in the report period | Times of Board meeting Presence | Times of attending Board meeting by communication | Times of Board meeting entrusted presence | Times of Board meeting Absence | Absent the Board Meeting for the second time in a row (Y/N) | Times of attending shareholding meeting |
| Yu Xiaoli | 11 | 2 | 9 | N | 3 | ||
| Lou Diming | 11 | 2 | 9 | N | 3 | ||
| Jin Zhangluo | 11 | 2 | 9 | N | 3 | ||
| Xu Xiaofang | 11 | 2 | 9 | N | 3 | ||
Explanation of absent the Board Meeting for the second time in a rowNot applicable
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□ Yes √ No
Independent directors have no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directorsThe opinions from independent directors have been adopted
√ Yes □ No
Explanation on advice that accepted/not accepted from independent directorsDuring the reporting period, the company’s independent directors have paid close attention to the company’soperations, independently performed their duties, made special opinions on the company’s system improvementand daily operating decisions in strict accordance with relevant laws and regulations and the provisions of Articlesof Association, made independent and just opinions on the matters that need the independent directors’ opinionsduring the reporting period, and played the due role in improving the corporate governance mechanism,maintaining the legitimate rights and interests of the company and all shareholders.VI. Duty performance of the special committees under the board during the reporting period
1. Two meetings of Audit committee of the Board, deliberated and approved followed: Financial Result Report of2019, Annual Report of 2019 and its Summary, Conclusion Report of auditing for year of 2019, Engagement ofaudit institute for financial report of 2020, Engagement of audit institute for internal control of the Company of2020 and Semi-Annual Report of 2020 and its Summary etc.;
2. Two meeting of remuneration and appraisal committee of the Board, deliberate and approved the Remunerationevaluation and payment for senior executive of 2019; Report on the Company's 2020 Restricted Stock Incentive Plan (Draft)and its abstract, etc;
3. A meeting of the nomination committee of the board of directors was held to review the non-independentdirector candidates for the by-election, and agreed to submit the director candidates to the company's board ofdirectors for deliberation. The qualifications and related conditions of the senior management personnel to beappointed were reviewed, and there was no objection to the senior management personnel to be appointed, andthey agreed to submit to the board of directors for deliberation.VII. Works from Board of Supervisor (BOS)The Company has risks in reporting period that found in supervisory activity from BOS
□ Yes √ No
BOS has no objection about supervision events in reporting period
VIII. Examination and incentives of senior managementAssessment and incentive of senior management of the Company is conducted pursuant to the Company Law,
Articles of Association, and the Annual Operating Results Assessment Measures of Senior Management andRemuneration Management Rules of Senior Management as approved at the general meetings. Assessment ofoperating results of senior management comprises of annual operating results assessment and term-of-serviceoperating results assessment. Assessment on results and procedure was combined, and assessment results werelinked to incentives and punishment. With respect to annual operating results review, the remuneration and reviewcommittee of the Board made comprehensive assessment on satisfaction of the annual operating targets anddetermined the annual remuneration, incentives or punishment for senior management based on their reviewresults (which was implemented according to remuneration management rules of senior management), based onthe major annual operating targets set by the Board under required procedures and methods through establishmentof scientific performance indicators and assessment system and combination of scoring in terms of quantity andreview comments. During the reporting period, the Company made appropriate assessment on its seniormanagement under the performance indicator and assessment system, the results of which had been reflected inthe annual performance related remuneration.The company held the 17
th
meeting of the ninth board of directors on October 12, 2020 which reviewed andapproved the"Restricted Stock Incentive Plan 2020 (Draft) of Weifu High Technology Group Co., Ltd.”(hereinafter referred to as the "Draft") and its summary proposals and other related proposals. On November 3,2020, the company held the second extraordinary general meeting of shareholders in 2020 and reviewed andapproved the "Draft" and other related proposals. The company held the 21
stmeeting of the ninth board ofdirectors on November 12, 2020, which reviewed and approved the "Proposal on Granting Restricted Stocks toIncentive Objects of the Restricted Stock Incentive Plan 2020 for the First Time". It was determined thatNovember 12, 2020 would be the first grant date, and 19,540,000 restricted shares would be granted to 601incentive objects at a grant price of 15.48 Yuan per share. For details, please refer to the relevant announcementsdisclosed by the company at www.cninfo.com.cn.Given that the company implements the 2020 restricted stock incentive plan, and the incentive targets overlapwith the long-term incentives for core talents, the compensation and appraisal committee of the company’s boardof directors proposes that the company’s 2020 restricted stock incentive plan suspend the provision of incentivefunds during the implementation period and use for medium and long-term incentives for core talents.IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes √ No
2. Appraisal Report of Internal Control
| Disclosure date of full internal control evaluation report | April 20, 2021 |
| Disclosure index of full internal control evaluation report | Self-evaluation report of internal control for 2020, more details found in Juchao website (www.cninfo.com.cn) appointed by Shenzhen Stock Exchange |
| The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the company's consolidated financial statements | 97.77% | |
| The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the company's consolidated financial statements | 99.78% | |
| Defects Evaluation Standards | ||
| Category | Financial Reports | Non-financial Reports |
| Qualitative criteria | See details in (II) Basis for evaluation of internal controls and defect identification standards of internal controls of III Evaluation of Internal Controls in 2020 Annual Internal Control Self-Evaluation Report disclosed on www.cninfo.com.cn on April 20, 2021. | See details in (II) Basis for evaluation of internal controls and defect identification standards of internal controls of III Evaluation of Internal Controls in 2019 Annual Internal Control Self-Evaluation Report disclosed on www.cninfo.com.cn on April 20, 2021. |
| Quantitative standard | See details in (II) Basis for evaluation of internal controls and defect identification standards of internal controls of III Evaluation of Internal Controls in 2020 Annual Internal Control Self-Evaluation Report disclosed on www.cninfo.com.cn on April 20, 2021. | See details in (II) Basis for evaluation of internal controls and defect identification standards of internal controls of III Evaluation of Internal Controls in 2019 Annual Internal Control Self-Evaluation Report disclosed on www.cninfo.com.cn on April 20, 2021. |
| Amount of significant defects in financial reports | 0 | |
| Amount of significant defects in non-financial reports | 0 | |
| Amount of important defects in financial reports | 0 | |
| Amount of important defects in non-financial reports | 0 | |
X. Auditing report of internal control
√Applicable □ Not applicable
| Deliberations in Internal Control Audit Report | |
| Audit institute considers that: according to relevant regulations and Basic Rules of Internal Control for Enterprises, Weifu High-Technology Co., Ltd. in all major aspects, keeps an efficiency of internal control of financial report dated 31 December 2020 | |
| Disclosure details of audit report of internal control | Disclosed |
| Disclosure date of audit report of internal control (full-text) | April 20, 2021 |
| Index of audit report of internal control (full-text) | Audit report of internal control for year of 2020, more details found in Juchao website (www.cninfo.com.cn) appointed by Shenzhen Stock Exchange |
| Opinion type of auditing report of IC | Standard unqualified |
| Whether the non-financial report had major defects | No |
Carried out modified opinion for internal control audit report from CPA
□Yes √ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes □ No
Section XI. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whenannual report approved for released or fail to cash in full on dueNo
Section XII. Financial ReportI. Audit report
| Type of audit opinion | Standard unqualified opinion |
| Signing date of audit report | April 16, 2021 |
| Name of audit institute | Gongzheng Tianye Certified Public Accountants (Special General Partnership) |
| Serial of Auditing Report | Su Gong W[2021]No. A443 |
| Name of CPA | Bai Lingjing, Zhang Qianqian |
Auditor’s Report
Su Gong W[2021]No. A443
To the Shareholders of Weifu High-Technology Group Co., Ltd.:
I. Auditing opinionsWe have audited the financial statement under the name of Weifu High-Technology Group Co., Ltd. (hereinafterreferred to as WFHT), including the consolidated and parent Company’s balance sheet of 31 December 2020 andprofit statement, and cash flow statement, and statement on changes of shareholders’ equity for the year ended,and notes to the financial statements for the year ended.
In our opinion, the Company’s financial statements have been prepared in accordance with the EnterprisesAccounting Standards and Enterprises Accounting System, and they fairly present the financial status of theCompany and of its parent company as of 31 December 2020 and its operation results and cash flows for the yearended.
II. Basis of opinionWe conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Ourresponsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of theFinancial Statements” section of the auditor’s report. We are independent of the Company in accordance with theCertified Public Accountants of China’s Code of Ethics for Professional Accountants, and we have fulfilled ourother ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters.Revenue recognition is the key audit matter that we identified in auditing.
1. Matter description
As described in the 30. Revenue in Note V and 42. Operation revenue and operation cost in Note VII carried inthe financial statement, WFHT achieved an operation revenue of 12,883,826,300 Yuan for year of 2020, 46.67%increase over year of 2019.
As one of the biggest source of profits for WFHT, operating revenue has a significant effect on the generalfinancial statement, in which there are certain of inherent risks existed for the reason that the managementmanipulate the timing of recognition so as to achieve specific objectives or anticipations. Therefore, we will takethe Revenue recognition as the key auditing matter.
2. The solution to the matter in auditing
(1)The Company has tested the design and execution of key internal control related to revenue recycling so as toconfirm the validity of internal control;(2) The Company should make sure whether the recognition condition andmethod of major operating revenue are compliance with the accounting standards for business enterprise; it alsoshould pay an attention to that whether the cyclical and occasional revenue is compliance with the decidedrevenue recognition principle and methods;(3) Combining with status and data of the industry where WFHT islocated, the Company should make a judgment on the rationality of fluctuation of the revenue composition;(4)The Company should carry out the procedure of account receivable and revenue letter of confirmation, and makea judgment on the rationality of the timing of revenue recognition; (5) Combining with the procedure of letter ofconfirmation, the Company should make a random inspection on sales contracts or orders, delivery lists, logisticsbills, customs declaration, sales invoices, signing-off sheet and other documents related to revenue to verify theauthenticity of revenue;(6) Referring to the recorded revenue before and after the Balance Sheet Date, theCompany should select some samples and check out the supportive documents such as delivery lists, customsdeclaration and receipt forms to make a judgment on whether the income has been recorded at the appropriateaccounting period.IV. Other information
The management of WFHT is responsible for other information which includes the information covered in theCompany’s 2020 annual report excluding the financial statement and our audit report.
Our audit opinions on the financial statements do not cover other information, and we do not issue any form ofauthentication conclusions on other information.
In combination with our audit of the financial statements, it is our responsibility to read other information and, inthe process, consider whether there is material inconsistency or material misstatement between the otherinformation and the financial statements or what we learned during the audit.
Based on the work we have carried out, if we determine that there is a material misstatement of other information,we should report that fact and i this regard we have noting to report.
V. Responsibilities of management and those charged with governance for the financial statementsThe management is responsible for the preparation of the financial statements in accordance with the AccountingStandards for Enterprise to secure a fair presentation, and for the design, establishment and maintenance of theinternal control necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing matters related to going concern (if applicable) and using the goingconcern assumption unless the management either intends to liquidate the Company or to cease operations, or hasno realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Responsibilities of the auditor for the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional 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 the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern assumption and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required by the CAS to draw users’ attention in audit report to the related disclosures inthe financial statements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are basedon the information obtained up to the date of audit report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, 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 businessactivities within the Company to express audit opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that weidentify during our audit.
We also provide the governance with a statement of our compliance with the ethical requirements relating to ourindependence and communicate with the governance on all relationships and other matters that may reasonably beconsidered to affect our independence, as well we the relevant precautions (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in the auditor’s report because of the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.Jiangsu Gongzheng Tianye CPA Chinese CPA: Bai Lingjing(Special General Partnership) (engagement partner)Wuxi China Chinese CPA: Zhang Qianqian
16 April 2021
II. Financial StatementStatement in Financial Notes are carried in RMB/CNY
1. Consolidated Balance Sheet
Prepared by Weifu High-Technology Group Co., Ltd.
December 31, 2020
In RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 1,963,289,832.33 | 1,596,893,711.87 |
| Settlement provisions | ||
| Capital lent | ||
| Transaction financial assets | 3,518,432,939.10 | 3,940,885,674.32 |
| Derivative financial assets | ||
| Note receivable | 1,657,315,723.56 | 1,812,141,371.94 |
| Account receivable | 2,824,780,352.41 | 2,310,666,475.89 |
| Receivable financing | 1,005,524,477.88 | 23,873,317.86 |
| Accounts paid in advance | 151,873,357.76 | 139,241,917.78 |
| Insurance receivable | ||
| Reinsurance receivables | ||
| Contract reserve of reinsurance receivable | ||
| Other account receivable | 54,209,580.88 | 43,730,023.31 |
| Including: Interest receivable | 655,052.98 | |
| Dividend receivable | 49,000,000.00 | 1,070,000.00 |
| Buying back the sale of financial assets | ||
| Inventories | 2,877,182,174.64 | 2,418,744,835.82 |
| Contractual assets | ||
| Assets held for sale | ||
| Non-current asset due within one year | ||
| Other current assets | 2,137,921,113.61 | 1,012,055,605.74 |
| Total current assets | 16,190,529,552.17 | 13,298,232,934.53 |
| Non-current assets: | ||
| Loans and payments on behalf |
| Debt investment | ||
| Other debt investment | ||
| Long-term account receivable | ||
| Long-term equity investment | 4,801,488,290.97 | 5,322,405,953.35 |
| Investment in other equity instrument | 285,048,000.00 | 285,048,000.00 |
| Other non-current financial assets | 1,805,788,421.00 | 1,043,589,987.43 |
| Investment real estate | 20,886,681.62 | 22,410,511.87 |
| Fixed assets | 2,882,230,191.08 | 2,845,176,078.20 |
| Construction in progress | 243,795,493.04 | 247,857,777.25 |
| Productive biological asset | ||
| Oil and gas asset | ||
| Right-of-use assets | ||
| Intangible assets | 454,412,947.69 | 430,594,372.12 |
| Expense on Research and Development | ||
| Goodwill | 257,800,696.32 | 1,784,086.79 |
| Long-term expenses to be apportioned | 15,062,171.09 | 18,536,000.25 |
| Deferred income tax asset | 198,393,501.50 | 212,476,501.54 |
| Other non-current asset | 195,259,441.73 | 230,235,982.45 |
| Total non-current asset | 11,160,165,836.04 | 10,660,115,251.25 |
| Total assets | 27,350,695,388.21 | 23,958,348,185.78 |
| Current liabilities: | ||
| Short-term loans | 302,238,600.05 | 312,153,969.81 |
| Loan from central bank | ||
| Capital borrowed | ||
| Trading financial liability | ||
| Derivative financial liability | ||
| Note payable | 2,462,592,372.82 | 1,745,218,439.52 |
| Account payable | 4,100,984,240.39 | 3,312,254,229.84 |
| Accounts received in advance | 4,071,236.87 | 113,737,432.61 |
| Contractual liability | 81,717,387.25 | |
| Selling financial asset of repurchase | ||
| Absorbing deposit and interbank deposit | ||
| Security trading of agency | ||
| Security sales of agency |
| Wage payable | 332,421,811.82 | 314,343,737.66 |
| Taxes payable | 67,493,690.29 | 129,538,411.86 |
| Other account payable | 361,556,257.42 | 65,266,262.39 |
| Including: Interest payable | 4,862.22 | |
| Dividend payable | ||
| Commission charge and commission payable | ||
| Reinsurance payable | ||
| Liability held for sale | ||
| Non-current liabilities due within one year | 36,914,242.02 | |
| Other current liabilities | 222,871,087.33 | |
| Total current liabilities | 7,972,860,926.26 | 5,992,512,483.69 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term loans | 3,050,640.97 | |
| Bonds payable | ||
| Including: Preferred stock | ||
| Perpetual capital securities | ||
| Lease liability | ||
| Long-term account payable | 39,479,218.17 | 35,108,263.11 |
| Long-term wages payable | 181,980,293.94 | 58,392,053.61 |
| Accrual liability | ||
| Deferred income | 328,204,476.73 | 365,116,022.98 |
| Deferred income tax liabilities | 30,653,933.12 | 22,566,051.72 |
| Other non-current liabilities | ||
| Total non-current liabilities | 583,368,562.93 | 481,182,391.42 |
| Total liabilities | 8,556,229,489.19 | 6,473,694,875.11 |
| Owner’s equity: | ||
| Share capital | 1,008,950,570.00 | 1,008,950,570.00 |
| Other equity instrument | ||
| Including: Preferred stock | ||
| Perpetual capital securities | ||
| Capital public reserve | 3,294,242,368.28 | 3,391,527,806.33 |
| Less: Inventory shares | 303,627,977.74 | |
| Other comprehensive income | 13,916,619.47 | 134,871.67 |
| Reasonable reserve | 2,333,490.03 | 3,247,757.06 |
| Surplus public reserve | 510,100,496.00 | 510,100,496.00 |
| Provision of general risk | ||
| Retained profit | 13,756,102,424.62 | 12,076,443,635.56 |
| Total owner’ s equity attributable to parent company | 18,282,017,990.66 | 16,990,405,136.62 |
| Minority interests | 512,447,908.36 | 494,248,174.05 |
| Total owner’ s equity | 18,794,465,899.02 | 17,484,653,310.67 |
| Total liabilities and owner’ s equity | 27,350,695,388.21 | 23,958,348,185.78 |
Legal Representative: Wang XiaodongPerson in charge of accounting works: Ou JianbinPerson in charge of accounting institute: Ou Jianbin
2. Balance Sheet of Parent Company
In RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 1,157,684,053.05 | 965,770,877.82 |
| Trading financial assets | 3,452,348,980.19 | 3,758,789,072.68 |
| Derivative financial assets | ||
| Note receivable | 422,246,979.39 | 202,403,993.13 |
| Account receivable | 982,782,279.22 | 768,500,929.93 |
| Receivable financing | ||
| Accounts paid in advance | 75,650,090.49 | 89,116,730.45 |
| Other account receivable | 197,335,714.63 | 250,014,956.74 |
| Including: Interest receivable | 897,777.78 | 804,929.68 |
| Dividend receivable | 1,070,000.00 | |
| Inventories | 725,276,241.43 | 565,144,234.49 |
| Contractual assets | ||
| Assets held for sale | ||
| Non-current assets maturing within one year | ||
| Other current assets | 2,057,772,839.50 | 938,616,881.51 |
| Total current assets | 9,071,097,177.90 | 7,538,357,676.75 |
| Non-current assets: | ||
| Debt investment |
| Other debt investment | ||
| Long-term receivables | ||
| Long-term equity investments | 5,978,128,303.88 | 6,331,363,630.04 |
| Investment in other equity instrument | 209,108,000.00 | 209,108,000.00 |
| Other non-current financial assets | 1,805,788,421.00 | 1,043,589,987.43 |
| Investment real estate | ||
| Fixed assets | 1,758,198,856.53 | 1,646,333,216.50 |
| Construction in progress | 154,741,266.85 | 136,573,912.28 |
| Productive biological assets | ||
| Oil and natural gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 208,112,706.57 | 203,663,423.60 |
| Research and development costs | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 76,508,392.85 | 105,137,877.84 |
| Other non-current assets | 117,013,906.01 | 172,646,721.05 |
| Total non-current assets | 10,307,599,853.69 | 9,848,416,768.74 |
| Total assets | 19,378,697,031.59 | 17,386,774,445.49 |
| Current liabilities | ||
| Short-term borrowings | 102,088,888.89 | 116,126,459.33 |
| Trading financial liability | ||
| Derivative financial liability | ||
| Notes payable | 448,901,718.36 | 284,054,137.00 |
| Account payable | 1,265,845,068.26 | 930,273,146.35 |
| Accounts received in advance | 12,010,730.30 | |
| Contractual liability | 6,209,575.73 | |
| Wage payable | 216,870,819.60 | 213,626,754.45 |
| Taxes payable | 32,974,322.59 | 56,540,307.59 |
| Other accounts payable | 339,096,991.12 | 11,976,576.21 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liability held for sale | ||
| Non-current liabilities due within one year |
| Other current liabilities | 182,611,991.54 | |
| Total current liabilities | 2,594,599,376.09 | 1,624,608,111.23 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual capital securities | ||
| Lease liability | ||
| Long-term account payable | ||
| Long term employee compensation payable | 176,245,345.03 | 50,058,386.76 |
| Accrued liabilities | ||
| Deferred income | 285,714,239.98 | 322,971,778.82 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 461,959,585.01 | 373,030,165.58 |
| Total liabilities | 3,056,558,961.10 | 1,997,638,276.81 |
| Owners’ equity: | ||
| Share capital | 1,008,950,570.00 | 1,008,950,570.00 |
| Other equity instrument | ||
| Including: preferred stock | ||
| Perpetual capital securities | ||
| Capital public reserve | 3,407,732,016.61 | 3,488,221,286.39 |
| Less: Inventory shares | 303,627,977.74 | |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 510,100,496.00 | 510,100,496.00 |
| Retained profit | 11,698,982,965.62 | 10,381,863,816.29 |
| Total owner’s equity | 16,322,138,070.49 | 15,389,136,168.68 |
| Total liabilities and owner’s equity | 19,378,697,031.59 | 17,386,774,445.49 |
3. Consolidated Profit Statement
In RMB
| Item | 2020 | 2019 |
| I. Total operating income | 12,883,826,306.60 | 8,784,356,960.30 |
| Including: Operating income | 12,883,826,306.60 | 8,784,356,960.30 |
| Interest income | ||
| Insurance gained | ||
| Commission charge and commission income | ||
| II. Total operating cost | 12,193,088,999.51 | 7,870,700,853.45 |
| Including: Operating cost | 10,429,284,441.97 | 6,670,354,380.54 |
| Interest expense | ||
| Commission charge and commission expense | ||
| Cash surrender value | ||
| Net amount of expense of compensation | ||
| Net amount of withdrawal of insurance contract reserve | ||
| Bonus expense of guarantee slip | ||
| Reinsurance expense | ||
| Tax and extras | 65,323,781.87 | 66,634,636.66 |
| Sales expense | 406,353,445.10 | 259,650,752.33 |
| Administrative expense | 782,824,422.63 | 514,028,451.76 |
| R&D expense | 532,581,209.78 | 417,924,908.28 |
| Financial expense | -23,278,301.84 | -57,892,276.12 |
| Including: Interest expenses | 11,466,886.33 | 21,770,516.39 |
| Interest income | 51,622,216.58 | 79,299,239.77 |
| Add: other income | 80,342,497.11 | 91,170,663.57 |
| Investment income (Loss is listed with “-”) | 1,964,805,688.57 | 1,614,540,714.83 |
| Including: Investment income on affiliated company and joint venture | 1,659,752,704.14 | 1,378,264,061.18 |
| The termination of income recognition for financial assets measured by amortized cost(Loss is listed with “-”) | -946,468.33 | -2,214,159.11 |
| Exchange income (Loss is listed with “-”) | ||
| Net exposure hedging income (Loss is listed with “-”) | ||
| Income from change of fair value (Loss is listed with “-”) | 383,325,765.19 | 25,019,666.32 |
| Loss of credit impairment (Loss is listed with “-”) | -11,184,647.60 | -52,825,875.25 |
| Losses of devaluation of asset (Loss is listed with “-”) | -178,837,472.85 | -169,460,299.73 |
| Income from assets disposal (Loss is listed with “-”) | 11,454,408.60 | 32,154,460.21 |
| III. Operating profit (Loss is listed with “-”) | 2,940,643,546.11 | 2,454,255,436.80 |
| Add: Non-operating income | 66,467,021.62 | 2,413,561.54 |
| Less: Non-operating expense | 4,158,888.17 | 6,126,427.17 |
| IV. Total profit (Loss is listed with “-”) | 3,002,951,679.56 | 2,450,542,571.17 |
| Less: Income tax expense | 180,215,749.00 | 147,805,810.06 |
| V. Net profit (Net loss is listed with “-”) | 2,822,735,930.56 | 2,302,736,761.11 |
| (i) Classify by business continuity | ||
| 1.continuous operating net profit (net loss listed with ‘-”) | 2,822,735,930.56 | 2,302,736,761.11 |
| 2.termination of net profit (net loss listed with ‘-”) | ||
| (ii) Classify by ownership | ||
| 1.Net profit attributable to owner’s of parent company | 2,772,769,377.96 | 2,268,026,432.78 |
| 2.Minority shareholders’ gains and losses | 49,966,552.60 | 34,710,328.33 |
| VI. Net after-tax of other comprehensive income | 13,839,596.07 | 203,603.86 |
| Net after-tax of other comprehensive income attributable to owners of parent company | 13,781,747.80 | 134,871.67 |
| (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss | ||
| 1.Changes of the defined benefit plans that re-measured | ||
| 2.Other comprehensive income under equity method that cannot be transfer to gain/loss | ||
| 3.Change of fair value of investment in other equity instrument | ||
| 4.Fair value change of enterprise's credit risk | ||
| 5. Other | ||
| (ii) Other comprehensive income items which will be reclassified subsequently to profit or loss | 13,781,747.80 | 134,871.67 |
| 1.Other comprehensive income under equity method that can transfer to gain/loss | ||
| 2.Change of fair value of other debt investment | ||
| 3.Amount of financial assets re-classify to other comprehensive income | ||
| 4.Credit impairment provision for other debt investment | ||
| 5.Cash flow hedging reserve | ||
| 6.Translation differences arising on translation of foreign currency financial statements | 13,781,747.80 | 134,871.67 |
| 7.Other | ||
| Net after-tax of other comprehensive income attributable to minority shareholders | 57,848.27 | 68,732.19 |
| VII. Total comprehensive income | 2,836,575,526.63 | 2,302,940,364.97 |
| Total comprehensive income attributable to owners of parent Company | 2,786,551,125.76 | 2,268,161,304.45 |
| Total comprehensive income attributable to minority shareholders | 50,024,400.87 | 34,779,060.52 |
| VIII. Earnings per share: | ||
| (i) Basic earnings per share | 2.79 | 2.25 |
| (ii) Diluted earnings per share | 2.79 | 2.25 |
As for the enterprise combined under the same control, net profit of 0 Yuan achieved by the merged party before combination while 0Yuan achieved last periodLegal Representative: Wang XiaodongPerson in charge of accounting works: Ou JianbinPerson in charge of accounting institute: Ou Jianbin
4. Profit Statement of Parent Company
In RMB
| Item | 2020 | 2019 |
| I. Operating income | 4,536,417,803.79 | 3,832,925,360.42 |
| Less: Operating cost | 3,236,311,612.73 | 2,641,612,915.27 |
| Taxes and surcharge | 38,086,034.27 | 31,863,942.28 |
| Sales expenses | 126,442,956.05 | 52,567,986.14 |
| Administration expenses | 533,649,297.97 | 292,983,915.45 |
| R&D expenses | 205,001,982.50 | 197,574,348.21 |
| Financial expenses | -34,275,071.44 | -71,470,479.91 |
| Including: interest expenses | 4,163,923.00 | 6,984,512.71 |
| Interest income | 40,948,820.72 | 74,450,739.86 |
| Add: other income | 58,782,085.85 | 67,874,015.41 |
| Investment income (Loss is listed with “-”) | 1,816,759,403.42 | 1,646,209,064.39 |
| Including: Investment income on affiliated Company and joint venture | 1,457,471,604.06 | 1,310,687,436.86 |
| The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) | ||
| Net exposure hedging income (Loss is listed with “-”) | ||
| Changing income of fair value (Loss is listed with “-”) | 383,241,806.28 | 22,923,064.68 |
| Loss of credit impairment (Loss is listed with “-”) | 2,076,529.99 | -6,132,833.36 |
| Losses of devaluation of asset (Loss is listed with “-”) | -82,232,381.43 | -43,916,712.41 |
| Income on disposal of assets (Loss is listed with “-”) | -520,470.69 | 1,887,302.76 |
| II. Operating profit (Loss is listed with “-”) | 2,609,307,965.13 | 2,376,636,634.45 |
| Add: Non-operating income | 30,937,706.44 | 562,276.63 |
| Less: Non-operating expense | 3,493,103.39 | 3,810,717.52 |
| III. Total Profit (Loss is listed with “-”) | 2,636,752,568.18 | 2,373,388,193.56 |
| Less: Income tax | 162,713,161.17 | 143,606,161.28 |
| IV. Net profit (Net loss is listed with “-”) | 2,474,039,407.01 | 2,229,782,032.28 |
| (i)continuous operating net profit (net loss listed with ‘-”) | 2,474,039,407.01 | 2,229,782,032.28 |
| (ii) termination of net profit (net loss listed with ‘-”) | ||
| V. Net after-tax of other comprehensive income | ||
| (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss | ||
| 1.Changes of the defined benefit plans that re-measured | ||
| 2.Other comprehensive income under equity method that cannot be transfer to gain/loss | ||
| 3.Change of fair value of investment in other equity instrument | ||
| 4.Fair value change of enterprise's credit risk | ||
| 5. Other | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
| 1.Other comprehensive income under equity method that can transfer to gain/loss | ||
| 2.Change of fair value of other debt investment | ||
| 3.Amount of financial assets re-classify to other comprehensive income | ||
| 4.Credit impairment provision for other debt investment | ||
| 5.Cash flow hedging reserve | ||
| 6.Translation differences arising on translation of foreign currency financial statements | ||
| 7.Other | ||
| VI. Total comprehensive income | 2,474,039,407.01 | 2,229,782,032.28 |
| VII. Earnings per share: | ||
| (i) Basic earnings per share | ||
| (ii) Diluted earnings per share |
5. Consolidated Cash Flow Statement
In RMB
| Item | 2020 | 2019 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 11,908,396,653.71 | 8,145,939,987.84 |
| Net increase of customer deposit and interbank deposit | ||
| Net increase of loan from central bank | ||
| Net increase of capital borrowed from other financial institution | ||
| Cash received from original insurance contract fee | ||
| Net cash received from reinsurance business | ||
| Net increase of insured savings and investment | ||
| Cash received from interest, commission charge and commission | ||
| Net increase of capital borrowed | ||
| Net increase of returned business capital | ||
| Net cash received by agents in sale and purchase of securities | ||
| Write-back of tax received | 32,138,413.08 | 51,722,970.47 |
| Other cash received concerning operating activities | 102,573,818.52 | 143,912,897.80 |
| Subtotal of cash inflow arising from operating activities | 12,043,108,885.31 | 8,341,575,856.11 |
| Cash paid for purchasing commodities and receiving labor service | 8,277,296,527.38 | 5,020,827,379.58 |
| Net increase of customer loans and advances | ||
| Net increase of deposits in central bank and interbank | ||
| Cash paid for original insurance contract compensation | ||
| Net increase of capital lent | ||
| Cash paid for interest, commission charge and commission | ||
| Cash paid for bonus of guarantee slip | ||
| Cash paid to/for staff and workers | 1,295,921,487.63 | 1,222,358,828.87 |
| Taxes paid | 788,150,479.38 | 501,167,008.38 |
| Other cash paid concerning operating activities | 899,929,156.91 | 548,552,586.05 |
| Subtotal of cash outflow arising from operating activities | 11,261,297,651.30 | 7,292,905,802.88 |
| Net cash flows arising from operating activities | 781,811,234.01 | 1,048,670,053.23 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | 8,051,178,224.52 | 11,384,917,612.00 |
| Cash received from investment income | 2,462,910,424.30 | 1,230,657,039.85 |
| Net cash received from disposal of fixed, intangible and other long-term | 42,851,678.36 | 147,609,697.19 |
| assets | ||
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | 65,102,250.70 | 70,025,432.83 |
| Subtotal of cash inflow from investing activities | 10,622,042,577.88 | 12,833,209,781.87 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 492,683,539.12 | 589,522,818.28 |
| Cash paid for investment | 9,246,030,000.00 | 13,384,156,157.81 |
| Net increase of mortgaged loans | ||
| Net cash received from subsidiaries and other units obtained | 297,302,758.31 | 49,930,740.75 |
| Other cash paid concerning investing activities | 14,579,308.94 | 25,115,357.50 |
| Subtotal of cash outflow from investing activities | 10,050,595,606.37 | 14,048,725,074.34 |
| Net cash flows arising from investing activities | 571,446,971.51 | -1,215,515,292.47 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | 312,640,853.85 | 14,022,428.73 |
| Including: Cash received from absorbing minority shareholders’ investment by subsidiaries | 10,161,653.85 | 14,022,428.73 |
| Cash received from loans | 395,691,406.43 | 809,517,778.36 |
| Other cash received concerning financing activities | 5,730,135.13 | 845,291.11 |
| Subtotal of cash inflow from financing activities | 714,062,395.41 | 824,385,498.20 |
| Cash paid for settling debts | 371,154,665.80 | 841,746,769.02 |
| Cash paid for dividend and profit distributing or interest paying | 1,120,464,009.41 | 1,258,933,561.00 |
| Including: Dividend and profit of minority shareholder paid by subsidiaries | 15,748,768.80 | 26,271,705.11 |
| Other cash paid concerning financing activities | 449,251,421.46 | 146,064,936.00 |
| Subtotal of cash outflow from financing activities | 1,940,870,096.67 | 2,246,745,266.02 |
| Net cash flows arising from financing activities | -1,226,807,701.26 | -1,422,359,767.82 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -2,003,139.41 | 5,029,521.42 |
| V. Net increase of cash and cash equivalents | 124,447,364.85 | -1,584,175,485.64 |
| Add: Balance of cash and cash equivalents at the period -begin | 820,498,653.85 | 2,404,674,139.49 |
| VI. Balance of cash and cash equivalents at the period -end | 944,946,018.70 | 820,498,653.85 |
6. Cash Flow Statement of Parent Company
In RMB
| Item | 2020 | 2019 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 4,470,039,778.75 | 3,928,802,469.74 |
| Write-back of tax received | ||
| Other cash received concerning operating activities | 61,033,856.80 | 77,926,941.80 |
| Subtotal of cash inflow arising from operating activities | 4,531,073,635.55 | 4,006,729,411.54 |
| Cash paid for purchasing commodities and receiving labor service | 2,312,159,843.14 | 2,163,992,101.67 |
| Cash paid to/for staff and workers | 730,528,257.00 | 645,107,564.57 |
| Taxes paid | 562,371,147.42 | 320,098,914.24 |
| Other cash paid concerning operating activities | 341,484,021.47 | 180,660,925.40 |
| Subtotal of cash outflow arising from operating activities | 3,946,543,269.03 | 3,309,859,505.88 |
| Net cash flows arising from operating activities | 584,530,366.52 | 696,869,905.66 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | 7,324,178,224.52 | 10,054,917,612.00 |
| Cash received from investment income | 2,434,385,770.96 | 1,289,170,321.39 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 810,004.53 | 42,777,932.53 |
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | 214,831,510.69 | 171,801,850.24 |
| Subtotal of cash inflow from investing activities | 9,974,205,510.70 | 11,558,667,716.16 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 262,442,259.33 | 360,473,332.45 |
| Cash paid for investment | 8,853,827,446.85 | 11,870,526,196.52 |
| Net cash received from subsidiaries and other units obtained | ||
| Other cash paid concerning investing activities | 112,342,336.68 | 204,000,000.00 |
| Subtotal of cash outflow from investing activities | 9,228,612,042.86 | 12,434,999,528.97 |
| Net cash flows arising from investing activities | 745,593,467.84 | -876,331,812.81 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | 302,479,200.00 | |
| Cash received from loans | 102,000,000.00 | 231,500,000.00 |
| Other cash received concerning financing activities | ||
| Subtotal of cash inflow from financing activities | 404,479,200.00 | 231,500,000.00 |
| Cash paid for settling debts | 116,000,000.00 | 227,500,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 1,097,442,763.44 | 1,217,748,704.04 |
| Other cash paid concerning financing activities | 400,017,180.33 | |
| Subtotal of cash outflow from financing activities | 1,613,459,943.77 | 1,445,248,704.04 |
| Net cash flows arising from financing activities | -1,208,980,743.77 | -1,213,748,704.04 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -2,070,408.32 | 5,250,115.02 |
| V. Net increase of cash and cash equivalents | 119,072,682.27 | -1,387,960,496.17 |
| Add: Balance of cash and cash equivalents at the period -begin | 532,115,862.26 | 1,920,076,358.43 |
| VI. Balance of cash and cash equivalents at the period -end | 651,188,544.53 | 532,115,862.26 |
7. Statement of Changes in Owners’ Equity (Consolidated)
Current Period
In RMB
| Item | 2020 | ||||||||||||||
| Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||||
| I. Balance at the end of the last year | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 | ||||||
| Add: Changes of accounting policy | |||||||||||||||
| Error correction of | |||||||||||||||
| the last period | |||||||||||||||
| Enterprise combine under the same control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at the beginning of this year | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 | ||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | -97,285,438.05 | 303,627,977.74 | 13,781,747.80 | -914,267.03 | 1,679,658,789.06 | 1,291,612,854.04 | 18,199,734.31 | 1,309,812,588.35 | |||||||
| (i) Total comprehensive income | 13,781,747.80 | 2,772,769,377.96 | 2,786,551,125.76 | 50,024,400.87 | 2,836,575,526.63 | ||||||||||
| (ii) Owners’ devoted and decreased capital | -97,285,438.05 | 303,627,977.74 | -400,913,415.79 | -16,046,487.85 | -416,959,903.64 | ||||||||||
| 1.Common shares invested by shareholders | -96,389,202.59 | 302,479,200.00 | -398,868,402.59 | 25,079,496.04 | -373,788,906.55 | ||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount reckoned into owners equity | 6,280,461.58 | 6,280,461.58 | 204,375.92 | 6,484,837.50 |
| with share-based payment | |||||||||||||||
| 4. Other | -7,176,697.04 | 1,148,777.74 | -8,325,474.78 | -41,330,359.81 | -49,655,834.59 | ||||||||||
| (III) Profit distribution | -1,095,767,216.49 | -1,095,767,216.49 | -15,748,768.80 | -1,111,515,985.29 | |||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk provisions | |||||||||||||||
| 3. Distribution for owners (or shareholders) | -1,093,241,270.00 | -1,093,241,270.00 | -15,748,768.80 | -1,108,990,038.80 | |||||||||||
| 4. Other | -2,525,946.49 | -2,525,946.49 | -2,525,946.49 | ||||||||||||
| (IV) Carrying forward internal owners’ equity | |||||||||||||||
| 1. Capital reserves conversed to capital (share capital) | |||||||||||||||
| 2. Surplus reserves conversed to capital (share capital) |
| 3. Remedying loss with surplus reserve | |||||||||||||||
| 4．Carry-over retained earnings from the defined benefit plans | |||||||||||||||
| 5．Carry-over retained earnings from other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Reasonable reserve | -914,267.03 | -914,267.03 | -29,409.91 | -943,676.94 | |||||||||||
| 1. Withdrawal in the report period | 21,673,368.09 | 21,673,368.09 | 2,158,529.38 | 23,831,897.47 | |||||||||||
| 2. Usage in the report period | 22,587,635.12 | 22,587,635.12 | 2,187,939.29 | 24,775,574.41 | |||||||||||
| (VI)Others | 2,656,627.59 | 2,656,627.59 | 2,656,627.59 | ||||||||||||
| IV. Balance at the end of the report period | 1,008,950,570.00 | 3,294,242,368.28 | 303,627,977.74 | 13,916,619.47 | 2,333,490.03 | 510,100,496.00 | 13,756,102,424.62 | 18,282,017,990.66 | 512,447,908.36 | 18,794,465,899.02 |
Last Period
In RMB
| Item | 2019 | ||||||||||||||
| Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||||
| I. Balance at the end of the last year | 1,008,950,570.00 | 3,416,022,795.14 | -19,809,442.95 | 1,618,490.50 | 510,100,496.00 | 10,996,945,870.13 | 15,913,828,778.82 | 538,142,268.53 | 16,451,971,047.35 | ||||||
| Add: Changes of accounting policy | 19,809,442.95 | 1,584,556.37 | 21,393,999.32 | 21,393,999.32 | |||||||||||
| Error correction of the last period | |||||||||||||||
| Enterprise combine under | |||||||||||||||
| the same control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at the beginning of this year | 1,008,950,570.00 | 3,416,022,795.14 | 1,618,490.50 | 510,100,496.00 | 10,998,530,426.50 | 15,935,222,778.14 | 538,142,268.53 | 16,473,365,046.67 | |||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | -24,494,988.81 | 134,871.67 | 1,629,266.56 | 1,077,913,209.06 | 1,055,182,358.48 | -43,894,094.48 | 1,011,288,264.00 | ||||||||
| (i) Total comprehensive income | 134,871.67 | 2,268,026,432.78 | 2,268,161,304.45 | 34,779,060.52 | 2,302,940,364.97 | ||||||||||
| (ii) Owners’ devoted and decreased capital | -24,494,988.81 | 567,732.83 | -23,927,255.98 | -52,813,665.23 | -76,740,921.21 | ||||||||||
| 1.Common shares invested by shareholders | 14,022,428.73 | 14,022,428.73 | |||||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount reckoned into owners equity with share-based payment |
| 4. Other | -24,494,988.81 | 567,732.83 | -23,927,255.98 | -66,836,093.96 | -90,763,349.94 | ||||||||||
| (III) Profit distribution | -1,210,740,684.00 | -1,210,740,684.00 | -26,271,705.11 | -1,237,012,389.11 | |||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk provisions | |||||||||||||||
| 3. Distribution for owners (or shareholders) | -1,210,740,684.00 | -1,210,740,684.00 | -26,271,705.11 | -1,237,012,389.11 | |||||||||||
| 4. Other | |||||||||||||||
| (IV) Carrying forward internal owners’ equity | |||||||||||||||
| 1. Capital reserves conversed to capital (share capital) | |||||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | |||||||||||||||
| 3. Remedying |
| loss with surplus reserve | |||||||||||||||
| 4．Carry-over retained earnings from the defined benefit plans | |||||||||||||||
| 5．Carry-over retained earnings from other comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Reasonable reserve | 1,061,533.73 | 1,061,533.73 | 412,215.34 | 1,473,749.07 | |||||||||||
| 1. Withdrawal in the report period | 19,156,254.11 | 19,156,254.11 | 2,508,506.58 | 21,664,760.69 | |||||||||||
| 2. Usage in the report period | 18,094,720.38 | 18,094,720.38 | 2,096,291.24 | 20,191,011.62 | |||||||||||
| (VI)Others | 20,627,460.28 | 20,627,460.28 | 20,627,460.28 | ||||||||||||
| IV. Balance at the end of the report period | 1,008,950,570.00 | 3,391,527,806.33 | 134,871.67 | 3,247,757.06 | 510,100,496.00 | 12,076,443,635.56 | 16,990,405,136.62 | 494,248,174.05 | 17,484,653,310.67 |
8. Statement of Changes in Owners’ Equity (Parent Company)
Current Period
In RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
| Preferred stock | Perpetual capital securities | Other | ||||||||||
| I. Balance at the end of the last year | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 | |||||||
| Add: Changes of accounting policy | ||||||||||||
| Error correction of the last period | ||||||||||||
| Other | ||||||||||||
| II. Balance at the beginning of this year | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 | |||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | -80,489,269.78 | 303,627,977.74 | 1,317,119,149.33 | 933,001,901.81 | ||||||||
| (i) Total | 2,474,039,407.01 | 2,474,039,407.01 | ||||||||||
| comprehensive income | ||||||||||||
| (ii) Owners’ devoted and decreased capital | -80,489,269.78 | 303,627,977.74 | -384,117,247.52 | |||||||||
| 1.Common shares invested by shareholders | -96,389,202.59 | 302,479,200.00 | -398,868,402.59 | |||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount reckoned into owners equity with share-based payment | 6,484,837.50 | 6,484,837.50 | ||||||||||
| 4. Other | 9,415,095.31 | 1,148,777.74 | 8,266,317.57 | |||||||||
| (III) Profit distribution | -1,093,241,270.00 | -1,093,241,270.00 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution for owners (or shareholders) | -1,093,241,270.00 | -1,093,241,270.00 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Carrying forward internal |
| owners’ equity | ||||||||||||
| 1. Capital reserves conversed to capital (share capital) | ||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | ||||||||||||
| 3. Remedying loss with surplus reserve | ||||||||||||
| 4．Carry-over retained earnings from the defined benefit plans | ||||||||||||
| 5．Carry-over retained earnings from other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Reasonable reserve | -1,177,442.02 | -1,177,442.02 | ||||||||||
| 1. Withdrawal in the report period | 5,849,756.55 | 5,849,756.55 |
| 2. Usage in the report period | 7,027,198.57 | 7,027,198.57 | ||||||||||
| (VI)Others | 1,177,442.02 | -63,678,987.68 | -62,501,545.66 | |||||||||
| IV. Balance at the end of the report period | 1,008,950,570.00 | 3,407,732,016.61 | 303,627,977.74 | 510,100,496.00 | 11,698,982,965.62 | 16,322,138,070.49 |
Last period
In RMB
| Item | 2019 | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
| Preferred stock | Perpetual capital securities | Other | ||||||||||
| I. Balance at the end of the last year | 1,008,950,570.00 | 3,488,221,286.39 | -19,809,442.95 | 510,100,496.00 | 9,340,610,451.36 | 14,328,073,360.80 | ||||||
| Add: Changes of accounting policy | 19,809,442.95 | 1,584,556.37 | 21,393,999.32 | |||||||||
| Error correction of the last period | ||||||||||||
| Other | ||||||||||||
| II. Balance at the beginning of this | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 9,342,195,007.73 | 14,349,467,360.12 | |||||||
| year | ||||||||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 1,039,668,808.56 | 1,039,668,808.56 | ||||||||||
| (i) Total comprehensive income | 2,229,782,032.28 | 2,229,782,032.28 | ||||||||||
| (ii) Owners’ devoted and decreased capital | ||||||||||||
| 1.Common shares invested by shareholders | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount reckoned into owners equity with share-based payment | ||||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | -1,210,740,684.00 | -1,210,740,684.00 | ||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution for | -1,210,740,684.00 | -1,210,740,684.00 |
| owners (or shareholders) | ||||||||||||
| 3. Other | ||||||||||||
| (IV) Carrying forward internal owners’ equity | ||||||||||||
| 1. Capital reserves conversed to capital (share capital) | ||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | ||||||||||||
| 3. Remedying loss with surplus reserve | ||||||||||||
| 4．Carry-over retained earnings from the defined benefit plans | ||||||||||||
| 5．Carry-over retained earnings from other comprehensive income | ||||||||||||
| 6. Other | ||||||||||||
| (V) Reasonable |
| reserve | ||||||||||||
| 1. Withdrawal in the report period | 5,898,191.19 | 5,898,191.19 | ||||||||||
| 2. Usage in the report period | 5,898,191.19 | 5,898,191.19 | ||||||||||
| (VI)Others | 20,627,460.28 | 20,627,460.28 | ||||||||||
| IV. Balance at the end of the report period | 1,008,950,570.00 | 3,488,221,286.39 | 510,100,496.00 | 10,381,863,816.29 | 15,389,136,168.68 |
III. Basic information of the Company
1. Historical origin of the Company
By the approval of STGS (1992) No. 130 issued by Jiangsu Economic Restructuring Committee, WeifuHigh-Technology Group Co., Ltd. (hereinafter referred to “the Company” or “Company”) was established as acompany of limited liability with funds raised from targeted sources, and registered at Wuxi Administration forIndustry & Commerce in October 1992. The original share capital of the Company totaled 115.4355 million Yuan,including state-owned share capital amounting to 92.4355 million Yuan, public corporate share capital amountingto 8 million Yuan and inner employee share capital amounting to 15 million Yuan.
Between year of 1994 and 1995, the Company was restructured and became a holding subsidiary of Wuxi WeifuGroup Co., Ltd (hereinafter referred to as “Weifu Group”).
By the approval of Jiangsu ERC and Shenzhen Securities Administration Office in August 1995, the Companyissued 68 million special ordinary shares (B-share) with value of 1.00 Yuan for each, and the total value of thoseshares amounted to 68 million Yuan. After the issuance, the Company’s total share capital increased to 183.4355million Yuan.
By the approval of CSRC in June 1998, the Company issued 120 million RMB ordinary shares (A-share) atShenzhen Stock Exchange through on-line pricing and issuing. After the issuance, the total share capital of theCompany amounted to 303.4355 million Yuan.
In the middle of 1999, deliberated and approved by the Board and Shareholders’ General Meeting, the Companyimplemented the plan of granting 3 bonus shares for each 10 shares. After that, the total share capital of theCompany amounted to 394.46615 million Yuan, of which state-owned shares amounted to 120.16615 millionYuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.40 million Yuan, RMBordinary shares (A-share) 156 million Yuan and inner employee shares 19.5 million Yuan.
In the year 2000, by the approval of the CSRC and based upon the total share capital of 303.4355 million sharesafter the issuance of A-share in June 1998, the Company allotted 3 shares for each 10 shares, with a price of 10Yuan for each allotted share. Actually 41.9 million shares was allotted, and the total share capital after theallotment increased to 436.36615 million Yuan, of which state-owned corporate shares amounted to 121.56615million Yuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.4 million Yuan andRMB ordinary shares (A-share) 216 million Yuan.
In April 2005, Board of Directors of the Company has examined and approved 2004 Profit Pre-distribution Plan,and examined and approved by 2004 Shareholders’ General Meeting , the Company distributed 3 shares for each10 shares to the whole shareholders totaling to 130,909,845 shares in 2005.According to the Share Merger Reform Scheme of the Company that passed by related shareholders’ meeting ofShare Merger Reform and SGZF [2006] No.61 Reply on Questions about State-owned Equity Management inShare Merger Reform of Weifu High-Technology Co., Ltd. issued by State-owned Assets Supervision &Administration Commission of Jiangsu Province, the Weifu Group etc. 8 non-circulating shareholders arrangedpricing with granting 1.7 shares for each 10 shares to circulating A-share shareholders (totally granted 47,736,000shares), so as to realize the originally non-circulating shares can be traded on market when satisfied certainconditions, the scheme has been implemented on April 5, 2006.
On 27 May 2009, Weifu Group satisfied the consideration arrangement by dispatching 0.5 shares for each 10shares based on the number of circulating A share as prior to Share Merger Reform, according to the aforesaidShare Merger Reform, with an aggregate of 14,039,979 shares dispatched. Subsequent to implementation ofdispatch of consideration shares, Weifu Group then held 100,021,999 shares of the Company, representing 17.63%of the total share capital of the Company.
Pursuant to the document (XGZQ(2009)No.46) about Approval for Merger of Wuxi Weifu Group Co., Ltd. byWuxi Industry Development Group Co., Ltd. issued by the State-owned Assets Supervision and AdministrationCommission of Wuxi City Government, Wuxi Industry Development Group Co., Ltd. (hereinafter referred to asWuxi Industry Group) acquired Weifu Group. After the merger, Weifu Group was then revoked, and its assets andcredits & debts were transferred to be under the name of Wuxi Industry Group. Accordingly, Wuxi IndustryGroup became the first largest shareholder of the Company since then.
In accordance with the resolutions of shareholders' meeting and provisions of amended constitution, and approvedby [2012] No. 109 document of China Securities Regulatory Commission, in February 2012, the Company issuedRMB ordinary shares (A-share) of 112,858,000 shares to Wuxi Industry Groups and overseas strategic investorprivately, Robert Bosch Co., Ltd. (ROBERT BOSCHGMBH) (hereinafter referred to as Robert Bosch Company),face value was ONE Yuan per share, added registered capital of 112,858,000Yuan, and the registered capital afterchange was 680,133,995Yuan. Wuxi Industry Group is the first majority shareholder of the Company, and RobertBosch Company is the second majority shareholder of the Company.
In March 2013, the profit distribution pre-plan for year of 2012 was deliberated and approved by the Board, andalso passed in Annual General Meeting 2012 of the Company in May 2013. On basis of total share capital680,133,995 shares, distribute 5-share for every 10 shares held by whole shareholders, 340,066,997 shares in totalare distributed. Total share capital of the Company amounting 1,020,200,992Yuan up to 31 December 2013.
Deliberated and approved by the company’s first extraordinary general meeting in 2015, the company hasrepurchased 11,250,422 shares of A shares from August 26, 2015 to September 8, 2015, and has finished thecancellation procedures for above repurchase shares in China Securities Depository and Clearing CorporationLimited Shenzhen Branch on September 16, 2015; after the cancellation of repurchase shares, the company’spaid-up capital (share capital) becomes 1,008,950,570 Yuan after the change.
2. Registered place, organization structure and head office of the Company
Registered place and head office of the Company: No.5 Huashan Road, Xinwu District, WuxiUnified social credit code: 91320200250456967NThe Company sets up Shareholders’ General Meeting, the Board of Directors (BOD) and the Board of Supervisors(BOS)The Company sets up Administration Department, Technology Centre, organization & personnel department,Office of the Board, compliance department, IT department, Strategy & new business Department, marketdevelopment department, Party-massesDepartment, Finance Department, Purchase Department,ManufacturingQuality Department, MS (Mechanical System) division, AC(Automobile Components) divisionand DS (DieselSystem ) division etc. and subsidiaries such as Wuxi Weifu Leader Catalytic Converter Co., Ltd., Nanjing WeifuJinning Co., Ltd., IRD Fuel Cells A/S and Borit NV etc.
3. Business nature and major operation activities of the Company
Operation scope of parent company: Technology development and consulting service in the machinery industry;manufacture of engine fuel oil system products, fuel oil system testers and equipment, manufacturing of autoelectronic parts, automotive electrical components, non-standard equipment, non-standard knife tool and exhaustafter-treatment system; sales of the general machinery, hardware & electrical equipment, chemical products & rawmaterials (excluding hazardous chemicals), automobile components and vehicles (excluding nine-seat passengercar); internal combustion engine maintenance; leasing of the own houses; import and export business in respect ofdiversified commodities and technologies (other than those commodities and technologies limited or forbidden bythe State for import and export) by self-operation and works as agent for such business. Research and testdevelopment of engineering and technical; R&D of the energy recovery system; manufacture of auto componentsand accessories; general equipment manufacturing (excluding special equipment manufacturing), (any projectsthat needs to be approved by laws can only be carried out after getting approval by relevant authorities)Major subsidiaries respectively activate in production and sales of engine accessories, automobile components,mufflers, purifiers and fuel cell components etc.
4. Relevant party offering approval reporting of financial statements and date thereofFinancial statements of the Company were approved by the Board of Directors for reporting dated 16 April 2021.
5. Scope of consolidate financial statement
| Name of subsidiary | Short name of subsidiary | Shareholding ratio (%) | Proportion of votes (%) | Registered capital (in 10 thousand Yuan) | Business scope | Statement consolidate (Y/N) | |
| Directly | Indirectly | ||||||
| Nanjing Weifu Jinning Co., Ltd. | Weifu Jinning | 80.00 | -- | 80.00 | 34,628.70 | Internal-combustion engine accessories | Y |
| Wuxi Weifu Leader Catalytic Converter Co., Ltd. | Weifu Leader | 94.81 | -- | 94.81 | 50,259.63 | Purifier and muffler | Y |
| Weifu Mashan Pump Glib Co., Ltd. | Weifu Mashan | 100.00 | -- | 100.00 | 16,500 | Internal-combustion engine accessories | Y |
| Wuxi Weifu Chang’an Co., Ltd. | Weifu Chang’an | 100.00 | -- | 100.00 | 21,000 | Internal-combustion engine accessories | Y |
| Wuxi Weifu International Trade Co. Ltd. | Weifu International Trade | 100.00 | -- | 100.00 | 3,000 | Trade | Y |
| Wuxi Weifu Schmidt Power System Spare Parts Co., Ltd. | Weifu Schmidt | 66.00 | -- | 66.00 | 7,600 | Internal-combustion engine accessories | Y |
| Ningbo Weifu Tianli Supercharging Technique Co., Ltd. | Weifu Tianli | 98.83 | 1.17 | 100.00 | 11,136 | Internal-combustion engine accessories | Y |
| Wuxi Weifu Autocam Fine Machinery Co. Ltd. | Weifu Autocam | 51.00 | -- | 51.00 | USD2,110 | Automobile components | Y |
| Wuxi Weifu Leader Catalytic Purifier (Wuhan) Co., Ltd. | Weifu Leader (Wuhan) | -- | 60.00 | 60.00 | 1,000 | Purifier and muffler | Y |
| Weifu Leader (Chongqing)Automobile components Co., Ltd. | Weifu Leader (Chongqing) | -- | 100.00 | 100.00 | 5,000 | Purifier and muffler | Y |
| Nanchang Weifu Leader Automobile Components Co., Ltd | Weifu Leader (Nanchang) | -- | 100.00 | 100.00 | 5,000 | Purifier and muffler | Y |
| Wuxi Weifu Autosmart Seating System Co., Ltd. | Autosmart Seating t | -- | 66.00 | 66.00 | 10,000 | Smart car device | Y |
| Wuxi Weifu Electric Drive Technology Co., Ltd. | Weifu Electric Drive | 80.00 | -- | 80.00 | USD2,000 | Wheel motor | Y |
| Weifu Holding ApS | SPV | 100.00 | -- | 100.00 | DKK 38 | Investment | Y |
| IRD Fuel Cells A/S | IRD | -- | 100.00 | 100.00 | DKK8,560 | Fuel cell components | Y |
| IRD FUEL CELLS LLC | IRDAmerica | -- | 100.00 | 100.00 | USD300 | Fuel cell components | Y |
| Borit NV | Borit | -- | 100.00 | 100.00 | EURO316.09 | Fuel cell components | Y |
| Borit Inc. | Borit Inc. | -- | 100.00 | 100.00 | USD0.1 | Fuel cell components | Y |
Compared with the previous period, the scope of consolidated financial statement have increase the follow enterprises includingZhixing Seat, Borit and Borit Inc. Of which, the Autosmart Seating was the subsidiary jointly established by the Company andQiqiong Automobile Technology (Shanghai) Co., Ltd. Found more in the description of 5. Other reasons of change of consolidationscope carried in Note VI; Borit is the subsidiary acquired in the Period through SPV, found more in the description of 1.Enterprisecombine not under the same control carried in Note VI; and Borit Inc. is the wholly-owned subsidiary of Borit established in theU.S.A.On 1 January 2020, the former wholly-owned subsidiary - Wuxi Weifu ITM Supercharging Technique Co., Ltd was merger byabsorption.IV. Basis of preparation of financial statements
1. Preparation base
The financial statement were stated in compliance with Accounting Standard for Business Enterprises –BasicNorms issued by Ministry of Finance, the specific 42 accounting rules revised and issued dated 15 February 2006and later, the Application Instruments of Accounting Standards and interpretation on Accounting standards andother relevant regulations (together as “Accounting Standards for Business Enterprise”), as well as theCompilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 – GeneralProvision of Financial Report (Amended in 2014) issued by CSRC in respect of the actual transactions andproceedings, on a basis of ongoing operation.
In line with relevant regulations of Accounting Standards of Business Enterprise, accounting of the Company ison accrual basis. Except for certain financial instruments, the financial statement measured on historical cost.Assets have impairment been found, corresponding depreciation reserves shall accrual according to relevant rules.
2. Going concern
The Company comprehensively assessed the available information, and there are no obvious factors that impactsustainable operation ability of the Company within 12 months since end of the reporting period.
V. Major Accounting Policies and Estimation
Specific accounting policies and estimation attention:
The Company and its subsidiaries are mainly engaged in the manufacture and sales of engine fuel oil systemproducts, automobile components, mufflers, purifiers and fuel cell components etc., in line with the real
operational characteristics and relevant accounting standards, many specific accounting policies and estimationhave been formulated for the transactions and events with revenue recognized concerned. As for the explanationon major accounting judgment and estimation made by management, please refer to Note V, 34 "Other majoraccounting policies and estimation ".
1. Statement on observation of Accounting Standard for Business EnterprisesFinancial statements prepared by the Company were in accordance with requirements of Accounting Standard forBusiness Enterprises, which truly and completely reflected the financial information of the Company dated 31December 2020, such as financial status, operation achievements and cash flow for the year of 2020.
2. Accounting period
Accounting period of the Company consist of annual and mid-term, mid-term refers to the reporting period shorterthan one annual accounting year. The company adopts Gregorian calendar as accounting period, namely form each1 January to 31 December.
3. Business cycles
Normal business cycle is the period from purchasing assets used for process by the Company to the cash and cashequivalent achieved. The Company’s normal business cycle was one-year (12 months).
4. Recording currency
The Company’s reporting currency is the RMB Yuan.
5. Accounting Treatment Method for Business Combinations under the same/different controlBusiness combination is the transaction or events that two or two above independent enterprises combined as areporting entity. Business combination including enterprise combined under the same control and businesscombined under different control.
(1) The business combination under the same control
Enterprise combination under the same control is the enterprise who take part in the combination are have thesame ultimate controller or under the same controller, the control is not temporary. The assets and liabilityacquired by combining party are measured by book value of the combined party on combination date. Balance ofnet asset’s book value acquired by combining party and combine consideration paid (or total book value of theshares issued), shall adjusted capital reserve (share premium); if the capital reserves (share premium) is notenough for deducted, adjusted for retained earnings. Vary directly expenses occurred for enterprise combination,the combining party shall reckoned into current gains/losses while occurring. Combination day is the date whencombining party obtained controlling rights from the combined party.
(2) Combine not under the same control
A business combination not involving entities under common control is a business combination in which all of thecombining entities are not ultimately controlled by the same party or parties both before and after thecombination.As a purchaser, fair value of the assets (equity of purchaser held before the date of purchasingincluded) for purchasing controlling right from the purchaser, the liability occurred or undertake on purchasingdate less the fair value of identifiable net assets of the purchaser obtained in combination, recognized as goodwillif the results is positive; if the number is negative, the acquirer shall firstly review the measurement of the fairvalue of the identifiable assets obtained, liabilities incurred and contingent liabilities incurred, as well as thecombination costs.After that, if the combination costs are still lower than the fair value of the identifiable netassets obtained, the acquirer shall recognize the difference as the profit or loss in the current period.Other directlyexpenses cost for combination shall be reckoned into current gains/losses. Difference of the fair value of assetspaid and its book values, reckoned into current gains/losses. On purchasing date, the identifiable assets, liability orcontingency of the purchaser obtained by the Company recognized by fair value, that required identificationconditions; Acquisition date refers to the date on which the acquirer effectively obtains control of the purchaser.
6. Preparation method for consolidated financial statement
(1) Recognition principle of consolidated scope
On basis of the financial statement of the parent company and owned subsidiaries, prepared consolidatedstatement in line with relevant information. The scope of consolidation of consolidated financial statements isascertained on the basis of effective control. Once certain elements involved in the above definition of controlchange due to changes of relevant facts or circumstances, the Company will make separate assessment.
(2) Basis of control
Control is the right to govern an invested party so as to obtain variable return through participating in the investedparty’s relevant activities and the ability to affect such return by use of the aforesaid right over the investedparty.Relevant activates refers to activates have major influence on return of the invested party’s.
(3) Consolidation process
Subsidiaries are consolidated from the date on which the company obtains their actual control, and arede-consolidated from the date that such control ceases.All significant inter-group balances, investment,transactions and unrealized profits are eliminated in the consolidated financial statements.For subsidiaries beingdisposed, the operating results and cash flows prior to the date of disposal are included in the consolidated incomestatement and consolidated cash flow statement; for subsidiaries disposed during the period, the opening balancesof the consolidated balance sheet would not be restated. For subsidiaries acquired from a business combinationnot under common control, their operating results and cash flows subsequent to the acquisition date are includedin the consolidated income statement and consolidated cash flow statement, and the opening balances andcomparative figures of the consolidated balance sheet would not be restated. For subsidiaries acquired from a
business combination under common control, their operating results and cash flows from the date ofcommencement of the accounting period in which the combination occurred to the date of combination areincluded in the consolidated income statement and consolidated cash flow statement, and the comparative figuresof the consolidated balance sheet would be restated.
In preparing the consolidated financial statements, where the accounting policies or the accounting periods areinconsistent between the company and subsidiaries, the financial statements of subsidiaries are adjusted inaccordance with the accounting policies and accounting period of the company.
Concerning the subsidiary obtained under combination with different control, adjusted several financial statementof the subsidiary based on the fair value of recognizable net assets on purchased day while financial statementconsolidation; concerning the subsidiary obtained under combination with same control, considered current statusof being control by ultimate controller for consolidation while financial statement consolidation.
The unrealized gains and losses from the internal transactions occurred in the assets the Company sold to thesubsidiaries fully offset "the net profit attributable to the owners of the parent company". The unrealized gains andlosses from the internal transactions occurred in the assets the subsidiaries sold to the Company are distributed andoffset between "the net profit attributable to the owners of the parent company" and "minority interest" accordingto the distribution ratio of the Company to the subsidiary. The unrealized gains and losses from the internaltransactions occurred in the assets sold among the subsidiaries are distributed and offset between "the net profitattributable to the owners of the parent company" and "minority interest" according to the distribution ratio of theCompany to the subsidiary of the seller.
The share of the subsidiary’s ownership interest not attributable to the Company is listed as “minority interest”item under the ownership interest in the consolidated balance sheet. The share of the subsidiary’s current profit orloss attributable to the minority interests is listed as "minority interest" item under the net profit item in theconsolidated income statement. The share of the subsidiary’s current consolidated income attributable to theminority interests is listed as the “total consolidated income attributable to the minority shareholders” item underthe total consolidated income item in the consolidated income statement. If there are minority shareholders, addthe "minority interests" item in the consolidated statement of change in equity to reflect the changes of theminority interests. If the losses of the current period shared by a subsidiary’s minority shareholders exceed theshare that the minority shareholders hold in the subsidiary ownership interest in the beginning of the period, thebalance still charges against the minority interests.
When the control over a subsidiary is ceased due to disposal of a portion of an interest in a subsidiary, the fairvalue of the remaining equity interest is re-measured on the date when the control ceased. The difference betweenthe sum of the consideration received from disposal of equity interest and the fair value of the remaining equity
interest, less the net assets attributable to the company since the acquisition date, is recognized as the investmentincome from the loss of control. Other comprehensive income relating to original equity investment insubsidiaries shall be treated on the same basis as if the relevant assets or liabilities were disposed of by thepurchaser directly when the control is lost, namely be transferred to current investment income other than therelevant part of the movement arising from re-measuring net liabilities or net assets under defined benefit schemeby the original subsidiary. Subsequent measurement of the remaining equity interests shall be in accordance withrelevant accounting standards such as Accounting Standards for business Enterprises 2 – Long-term EquityInvestments or Accounting Standards for business Enterprises 22 – Financial Instruments Recognition andMeasurement.
The company shall determine whether loss of control arising from disposal in a series of transactions should beregarded as a bundle of transactions. When the economic effects and terms and conditions of the disposaltransactions met one or more of the following situations, the transactions shall normally be accounted for as abundle of transactions: ①The transactions are entered into after considering the mutual consequences of eachindividual transaction; ② The transactions need to be considered as a whole in order to achieve a deal incommercial sense;③The occurrence of an individual transaction depends on the occurrence of one or moreindividual transactions in the series; ④ The result of an individual transaction is not economical, but it would beeconomical after taking into account of other transactions in the series. When the transactions are not regarded asa bundle of transactions, the individual transactions shall be accounted as “disposal of a portion of an interest in asubsidiary which does not lead to loss of control” and “disposal of a portion of an interest in a subsidiary whichlead to loss of control”. When the transactions are regarded as a bundle of transactions, the transactions shall beaccounted as a single disposal transaction; however, the difference between the consideration received fromdisposal and the share of net assets disposed in each individual transactions before loss of control shall berecognized as other comprehensive income, and reclassified as profit or loss arising from the loss of control whencontrol is lost.
7. Joint arrangement classification and accounting treatment for joint operationsIn accordance with the Company’s rights and obligation under a joint arrangement, the Company classifies jointarrangements into: joint ventures and joint operations.The company confirms the following items related to the share of interests in its joint operations, and inaccordance with the provisions of the relevant accounting standards for accounting treatment:
(1) Recognize the assets held solely by the Company, and recognize assets held jointly by the Company inappropriation to the share of the Company;
(2) Recognize the obligations assumed solely by the Company, and recognize obligations assumed jointly by theCompany in appropriation to the share of the Company;
(3) Recognize revenue from disposal of the share of joint operations of the Company;
(4) Recognize fees solely occurred by Company;
(5) Recognize fees from joint operations in appropriation to the share of the Company.
8. Recognition standards for cash and cash equivalent
Cash refers to stock cash, savings available for paid at any time; cash and cash equivalent refers to the cash heldby the Company with short terms(expired within 3 months since purchased), and liquid and easy to transfer asknown amount and investment with minor variation in risks.
9. Foreign currency business and conversion
The occurred foreign currency transactions are converted into the recording currency in accordance with themiddle rate of the market exchange rate published by the People's Bank of China on the transaction date. Thereinto,the occurred foreign currency exchange or transactions involved in the foreign currency exchange are converted inaccordance with the actual exchange rate in the transactions.
At the balance sheet date, the account balance of the foreign currency monetary assets and liabilities is convertedinto the recording currency amount in accordance with the middle rate of the market exchange rate published bythe People's Bank of China on the transaction date. The balance between the recording currency amount convertedaccording to exchange rate at the balance sheet date and the original recording currency amount is disposed as theexchange gains or losses. Thereinto, the exchange gains or losses occurred in the foreign currency loans related tothe purchase and construction of fixed assets are disposed according to the principle of capitalization of borrowingcosts; the exchange gains and losses occurred during the start-up are included in the start-up costs; the rest isincluded in the current financial expenses.
At the balance sheet date, the foreign currency non-monetary items measured with the historical costs areconverted in accordance with the middle rate of the market exchange rate published by the People's Bank of Chinaon the transaction date without changing its original recording currency amount; the foreign currency non-monetaryitems measured with the fair value are converted in accordance with the middle rate of the market exchange ratepublished by the People's Bank of China on the fair value date,and the generated exchange gains and losses areincluded in the current profits and losses as the gains and losses from changes in fair value.
The following displays the methods for translating financial statements involving foreign operations into thestatements in RMB: The asset and liability items in the balance sheets for overseas operations are translated at thespot exchange rates on the balance sheet date. Among the owners’ equity items, the items other than“undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expenseitems in the income statements of overseas operations are translated at the average exchange rates of thetransaction dates.The exchange difference arising from the above mentioned translation are recognized in othercomprehensive income and is shown separately under owner’ equity in the balance sheet; such exchange
difference will be reclassified to profit or loss in current year when the foreign operation is disposed according tothe proportion of disposal.
The cash flows of overseas operations are translated at the average exchange rates on the dates of the cash flows.The effect of exchange rate changes on cash is presented separately in the cash flow statement.
10. Financial instrument
Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financialliability or equity instrument for other units.
(1) Recognition and termination of financial instrument
A financial asset or liability is recognized when the group becomes a party to a financial instrument contract.The recognition of a financial assets shall be terminated if it meets one of the following conditions:
① the contractual right to receive the cash flow of the financial assets terminates; and
② the financial assets is transferred and the company transfers substantially all the risks and rewards of ownershipof the financial asset to the transferring party;
③the financial asset was transferred and control, although the company has neither transferred nor retained almostall the risks and rewards of the ownership of a financial asset, it relinquishes control over the financial asset.
If all or part of the current obligations of a financial liability has been discharged, the financial liability or part of itis terminated for recognition. When the Company (debtor) and the creditor sign an agreement to replace the existingfinancial liabilities with new financial liabilities, and the new financial liabilities and the existing financial liabilitiesare substantially different from the contract terms, terminated the recognition of the existing financial liabilities andrecognize the new financial liabilities at the same time.
Financial assets are traded in the normal way and their accounting recognition and terminated the recognition ofproceed on a trade date basis.
(2) Classification and measurement of financial assets
At the initial recognition, according to the business model of managing financial assets and the contractual cashflow characteristics of financial assets, the Company classifies the financial assets into the financial assetsmeasured at amortized cost, the financial assets measured at fair value and whose changes are included in othercomprehensive income, and the financial assets measured at fair value and whose changes are included in currentprofit or loss. Financial assets are measured at fair value at initial recognition, but if the receivables or receivablesfinancing arising from the sale of goods or the provision of services do not include a significant financingcomponent or do not consider a financing component that does not exceed one year, it shall be initially measuredin accordance with the transaction value. For financial assets measured at fair value and whose changes areincluded in the current profit or loss, related transaction costs are directly included in the current profit and loss;
for other types of financial assets, related transaction costs are included in the initially recognized amount.
The business model for managing financial assets refers to how the Company manages financial assets to generatecash flows. The business model determines whether the cash flow of financial assets managed by the Company isbased on contract cash flow, selling financial assets or both. The Company determines the business model formanaging financial assets based on objective facts and based on the specific business objectives of financial assetsmanagement determined by key management personnel.
The Company evaluates the contractual cash flow characteristics of financial assets to determine whether thecontractual cash flows generated by the relevant financial assets on a specific date are only payments for theprincipal and the interest based on the outstanding principal amount. The principal is the fair value of the financialassets at initial recognition; the interest includes the time value of money, the credit risk associated with theoutstanding principal amount for a specific period, and other basic borrowing risks, costs and consideration of profit.In addition, the Company evaluates the contractual terms that may result in changes in the time distribution or theamount of contractual cash flows of the financial assets to determine whether they meet the requirements of theabove contractual cash flow characteristics.
Only when the Company changes its business model of managing financial assets, all affected financial assets arereclassified on the first day of the first reporting period after the business model changes, otherwise the financialassets are not allowed to be reclassified after initial recognition.
① Financial assets measured at amortized cost
The Company classifies the financial assets that meet the following conditions and haven’t been designated asfinancial assets measured at fair value and whose changes are included in current profit or loss as financial assetsmeasured at amortized cost:
A. the group's business model for managing the financial assets is to collect contractual cash flows; andB. the contractual terms of the financial assets stipulate that cash flow generated on a specific date is only paid for
the principal and interest based on the outstanding principal amount.After initial recognition, such financial assets are measured at amortized cost by using the effective interest method.Gains or losses arising from financial assets which are measured at amortized cost and are not a component of anyhedging relationship are included in current profit or loss when being terminated for recognition, amortized byeffective interest method, or impaired.
② Financial assets measured at fair value and whose changes are included in other comprehensive incomeThe Company classifies the financial assets that meet the following conditions and haven’t been designated asfinancial assets measured at fair value and whose changes are included in current profit or loss as financial assetsmeasured at fair value and whose changes are included in other comprehensive income:
A. the Group's business model for managing the financial assets is targeted at both the collection of contractualcash flows and the sale of financial assets; andB. the contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only thepayment of the principal and the interest based on the outstanding principal amount.
After initial recognition, such financial assets are subsequently measured at fair value. Interests, impairment lossesor gains and exchange gains and losses calculated by using the effective interest method are included in profit or lossfor the period, and other gains or losses are included in other comprehensive income. When being terminate forrecognition, the accumulated gains or losses previously included in other comprehensive income are transferredfrom other comprehensive income and included in current profit or loss.
③Financial assets measured at fair value and whose changes are included in current profit or lossExcept for the above financial assets measured at amortized cost and measured at fair value and whose changes areincluded in other comprehensive income, the Company classifies all other financial assets as financial assetsmeasured at fair value and whose changes are included in current profit or loss. In the initial recognition, in order toeliminate or significantly reduce accounting mismatch, the Company irreversibly designates part of the financialassets that should be measured at amortized cost or measured at fair value and whose changes are included in theother comprehensive income as the financial assets measured at fair value and whose changes are included incurrent profit or loss.
After the initial recognition, such financial assets are subsequently measured at fair value, and the gains or losses(including interests and dividend income) are included in the current profit and loss, unless the financial assets arepart of the hedging relationship.
However, for non-trading equity instrument investments, the Company irreversibly designates them as the financialassets that are measured at fair value and whose changes are included in other comprehensive income in the initialrecognition. The designation is made based on a single investment and the relevant investment is in line with thedefinition of equity instruments from the issuer's perspective. After initial recognition, such financial assets aresubsequently measured at fair value. Dividend income that meets the conditions is included in profit or loss, andother gains or losses and changes in fair value are included in other comprehensive income. When it is terminatedfor recognition, the accumulated gains or losses previously included in other comprehensive income are transferredfrom other comprehensive income and included in retained earnings.
(3) Classification and measurement of financial liabilities
The financial liabilities of the Company are classified as financial liabilities measured at fair value and whosechanges are included in current profit or loss and financial liabilities measured at amortized cost at the initialrecognition. For financial liabilities that are not classified as financial liabilities measured at fair value and whose
changes are included in current profit or loss, the related transaction expenses are included in the initial recognitionamount.
①Financial liability measured by fair value and with variation reckoned into current gains/lossesFinancial liability measured by fair value and with variation reckoned into current gains/losses including tradablefinancial liability and the financial liabilities that are designated as fair value in the initial recognition and whosechanges are included in current profit or loss. For such financial liabilities, the subsequent measurement is based onfair value, and the gains or losses arising from changes in fair value and the dividends and interest expenses relatedto these financial liabilities are included in current profit or loss.
②Financial liability measured by amortized cost
Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. Thegain or loss arising from recognition termination or amortization is included in current profit or loss.
③Distinctions between financial liabilities and equity instruments
Financial liabilities are liabilities that meet one of the following conditions:
A. Contractual obligations to deliver cash or other financial assets to other parties.B. Contractual obligations to exchange financial assets or financial liabilities with other parties under potentiallyadverse conditions.C. Non-derivative contracts that must be settled or that can be settled by the company's own equity instruments inthe future, and the enterprise will deliver a variable amount of its own equity instruments according to the contract.D. Derivative contracts that must be settled or that can be settled by the company's own equity instruments in thefuture, except for derivatives contracts that exchange a fixed amount of cash or other financial assets with a fixedamount of their own equity instruments.
An equity instrument is a contract that proves it has a residual equity in the assets of an enterprise after deducting allliabilities.
If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or otherfinancial assets, the contractual obligation is consistent with the definition of financial liability.
If a financial instrument is required to be settled or can be settled by the Company's own equity instruments, it isnecessary to consider whether the Company's own equity instruments used to settle the instrument are a substitutefor cash or other financial assets, or to make the instrument holder enjoy the residual equity in the assets of the issuerafter deducting all liabilities. In the former case, the instrument is the Company's financial liability; if it is the latter,the instrument is the Company's equity instrument.
(4) Fair value of financial instruments
The company uses valuation techniques that are applicable under current circumstances and that have sufficientavailable data and other information support to determine the fair value of related financial assets and financialliabilities. The company divides the input values used by valuation techniques into the following levels and usesthem in sequence:
① The first-level input value is the unadjusted quotation of the same assets or liabilities that can be obtained on themeasurement date in the active market;
② The second-level input value is the direct or indirect observable input value of the relevant assets or liabilitiesother than the first-level input value, including quotations of similar assets or liabilities in an active market;quotations of same or similar assets or liabilities in an active market; other observable input value other thanquotations, such as interest rate and yield curves that are observable during the normal quote interval;market-validated input value, etc.;
③ The third-level input value is the unobservable input value of the relevant assets or liabilities, including theinterest rate that cannot be directly observed or cannot be verified by observable market data, stock volatility, futurecash flow of the retirement obligation assumed in the business combination, and financial forecasting made by itsown data, etc.
(5) Impairment of financial assets
On the basis of expected credit losses, the Company performs impairment treatment on financial assets measuredat amortized cost and creditors’ investment etc. measured at fair value and whose changes are included in othercomprehensive income and recognize the provisions for loss.
①Measurement of expected credit losses
Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by the risk ofdefault. Credit loss refers to the difference between all contractual cash flows that the Company discounts at theoriginal actual interest rate and are receivable in accordance with contract and all cash flows expected to bereceived, that is, the present value of all cash shortages. Among them, for the purchase or source of financialassets that have suffered credit impairment, the Company discounts the financial assets at the actual interest rateadjusted by credit.When measuring expected credit losses, the Company individually evaluates credit risk for financial assets withsignificantly different credit risks, such as receivables involving litigation and arbitration with the other party, orreceivables having obvious indications that the debtor is likely to be unable to fulfill its repayment obligations,and so on.
Except for the financial assets that separately assess the credit risks, the Company classified the accountreceivable according to their characteristic of risks, calculated the expected credit losses on basis of portfolio.Basis for determining the portfolio as follow:
A - Note receivableNote receivable 1: bank acceptanceNote receivable 2: trade acceptance
B - Account receivableAccount receivable 1: receivable from clientsAccount receivable 2: receivable from internal related party
C- Receivables financingNote receivable financing 1: bank acceptanceNote receivable financing 2: trade acceptance
D - Other account receivablesOther account receivables 1: receivable from internal related partyOther account receivables 2: receivable from othersAs for the note receivable, account receivable, receivables financing ,and other account receivable classified inportfolio, by referring to the experience of historical credit loss, the expected credit loss is calculated bycombining the current situation and the forecast of future economic conditions.
Except for the above-mentioned financial assets adopting simplified metering method, the Company assesses ateach balance sheet date whether its credit risk has increased significantly since initial recognition. If credit risk hasnot increased significantly since initial recognition, it is in the first stage, the Company measures the lossprovisions based on the amount equivalent to the expected credit loss in the next 12 months; if the credit risk hasincreased significantly since initial recognition but no credit impairment has occurred, it is in the second stage, theCompanymeasures the loss provisions based on the amount equivalent to the expected credit loss for the entireduration; if credit impairment occurs after initial recognition, it is in the third stage, the Companymeasures theloss provisions based on the amount equivalent to the expected credit loss for the entire duration.For financialinstruments with low credit risks at the balance sheet date, the Company assumes that their credit risks have notincreased significantly since initial recognition.
The Company evaluates the expected credit losses of financial instruments based on individual items andportfolios. When assessing expected credit losses, the Company considers reasonable and evidence-basedinformation about past events, current conditions, and forecasts of future economic conditions.
When the Company no longer reasonably expects to be able to fully or partially recover the contractual cash flowof a financial asset, the Company directly writes down the book balance of the financial asset.
②Assessment of a significant increase in credit risk:
The Company determines the relative changes in default risk of the financial instrument occurred in the expectedduration and assess whether the credit risks of financial instrument has increased significantly since the initialrecognition by comparing the risk of default of the financial instrument on the balance sheet date with the risk ofdefault of financial instrument on the initial recognition date. When determining whether the credit risk hasincreased significantly since the initial recognition, the Company considers reasonable and evidence-basedinformation that can be obtained without unnecessary additional costs or effort, including forward-lookinginformation. The information considered by the Company includes:
A. The debtor fails to pay the principal and interest according to the contractual maturity date;B. Serious worsening of external or internal credit rating (if any) of the financial instruments that have occurred orare expected;C. Serious deterioration of the debtor’s operating results that have occurred or are expected;D. Changes in existing or anticipated technical, market, economic or legal circumstances that will have a materialadverse effect on the debtor's ability to repay the company.
Based on the nature of financial instruments, the Company assesses whether credit risk has increased significantlyon the basis of a single financial instrument or combination of financial instruments. When conducting anassessment based on a combination of financial instruments, the Company can classify financial instruments basedon common credit risk characteristics, such as overdue information and credit risk ratings.
The Company believes that financial assets are subject to default in the following circumstances:
The debtor is unlikely to pay the full amount to the Company, and the assessment does not consider the Company totake recourse actions such as realizing collateral (if held).
③Financial assets with credit impairment
On the balance sheet date, the Company assesses whether the credit of financial assets measured at amortized costand the credit of debt investments measured at fair value and whose changes are included in other comprehensiveincome has been impaired. When one or more events that adversely affect the expected future cash flows of a
financial asset occur, the financial asset becomes a financial asset that has suffered credit impairment. Evidence thatcredit impairment has occurred in financial assets includes the following observable information:
A. The issuer or the debtor has significant financial difficulties;B. The debtor breaches the contract, such as default or overdue repayment of interest or principal;C. The Company gives concessions to the debtor that will not be made in any other circumstances for economic orcontractual considerations relating to the financial difficulties of the debtor;D. The debtor is likely to go bankrupt or carry out other financial restructurings;E. The financial difficulties of the issuer or the debtor have caused the active market of the financial asset todisappear.
④Presentation of expected credit loss provisions
In order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Companyre-measures the expected credit losses on each balance sheet date, and the resulting increase or reversal of the lossprovisions shall be included in current profit and loss as impairment losses or gains. For financial assets measured atamortized cost, the loss provisions are written off against the book value of the financial assets listed in the balancesheet; for debt investments measured at fair value and whose changes are included in other comprehensive income,the Company recognizes the loss provisions in other comprehensive income and does not deduct the book value ofthe financial asset.
⑤Write-off
If the Company no longer reasonably expects that the financial asset contract cash flow can be fully or partiallyrecovered, directly write down the book balance of the financial asset. Such write-downs constitute the terminationof recognition for related financial assets. This usually occurs when the Company determines that the debtor has noassets or sources of income to generate sufficient cash flow to repay the amount that will be written down. However,according to the Company's procedures for recovering the due amount, the financial assets that have been writtendown may still be affected by the execution activities.
If the financial assets that have been written down are recovered afterwards, they shall be included in the profit orloss of the period being recovered as the reversal of the impairment loss
(6) Transfer of financial assets
The transfer of financial assets refers to the transfer or delivery of financial assets to the other party (the transferee)other than the issuer of the financial assets.
For financial assets that the Company has transferred almost all risks and rewards of ownership of financial assets tothe transferee, terminate the recognition of the financial assets; if almost all the risks and rewards of ownership of
financial assets have been retained, do not terminate the recognition of the financial assets.
If the Company has neither transferred nor retained almost all the risks and rewards of ownership of financial assets,dispose as following situations: If the control of the financial assets is abandoned, terminate the recognition of thefinancial assets and determine the resulting assets and liabilities. If the control of the financial assets is notabandoned, determine the relevant financial assets according to the extent to which they continue to be involved inthe transferred financial assets, and determine the related liabilities accordingly.
(7) Balance-out between the financial assets and liabilities
As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financialassets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition,the financial assets and liabilities are listed in the balance sheet without being balanced out.
11.Note receivable
Note receivable 1: bank acceptanceNote receivable 2: trade acceptanceThe Company calculates expected credit losses by referring to historical credit loss experience, taking intoaccount current conditions and forecasts of the future economic situation.
12.Account receivable
Account receivable 1: receivable from clientsAccount receivable 2: receivable from internal related partyThe Company calculates expected credit losses by referring to historical credit loss experience, taking intoaccount current conditions and forecasts of the future economic situation.
13.Receivables financing
The note receivable and account receivable which are measured at fair value and whose changes are included inother comprehensive income are classified as receivables financing within one year(including one year) from thedate of acquisition. Relevant accounting policy found more in 10. Financial Instrument in Note V.
14.Other account receivables
Determination method of expected credit loss and accounting treatmentOther account receivables 1: receivable from internal related partyOther account receivables 2: receivable from othersThe Company calculates expected credit losses by referring to historical credit loss experience, taking into
account current conditions and forecasts of the future economic situation.
15.Inventory
(1) Classification of inventories
The Company’s inventories are categorized into stock materials, product in process and stock goods etc.
(2) Pricing for delivered inventories
The cost of inventory at the time of acquisition and delivery is calculated according to the standard cost method,and the difference in cost that it should bear is carried forward at the end of the period, and the standard cost isadjusted to the actual cost.
(3) Recognition evidence for net realizable value of inventories and withdrawal method for inventory impairmentprovisionInventories as at period-end are priced at the lower of costs and net realizable values; at period end, on the basis ofoverall clearance about inventories, inventory impairment provision is withdrew for uncollectible part of costs ofinventories which result from destroy of inventories, out-of-time of all and part inventories, or sales pricelowering than cost. Inventory impairment provision for stock goods and quantity of raw materials is subject to thedifference between costs of single inventory item over its net realizable value. As for other raw materials withlarge quantity and comparatively low unit prices, inventory impairment provision is withdrawn pursuant tocategories.As for finished goods, commodities and materials available for direct sales, their net realizable values aredetermined by their estimated selling prices less estimated sales expenses and relevant taxes. For materialinventories held for purpose of production, their net realizable values are determined by the estimated sellingprices of finished products less estimated costs, estimated sales expenses and relevant taxes accumulated tillcompletion of production. As for inventories held for implementation of sales contracts or service contracts, theirnet realizable values are calculated on the basis of contract prices. In the event that inventories held by a companyexceed order amount as agreed in sales contracts, net realizable values of the surplus part are calculated on thebasis of normal sale price.
(4) Inventory system
Perpetual Inventory System is adopted by the Company and takes a physical inventory.
(5) Amortization of low-value consumables and wrappage
①Low-value consumables
The Company adopts one-off amortization method to amortize the low-value consumables.
②Wrappage
The Company adopts one-off amortization method to amortize the wrappage at the time of receipt.
16.Contract assets
Applicable from 1 Jan. 2020.The Company presents the contract assets or contract liabilities in the balance sheet based on the relationshipbetween the performance obligation and the customer’s payment.
Recognition method and standard of contract assets: contract assets refer to the right of a company to receiveconsideration after transferring goods or providing services to customers, and this right depends on other factorsbesides the passage of time. The company's unconditional (that is, only depending on the passage of time) right tocollect consideration from customers are separately listed as receivables.Method for determining expected credit losses of contract assets: the method for determining expected creditlosses of contract assets is consistent with the method for determining expected credit losses of accountsreceivable.Accounting treatment method of expected credit losses of contract assets: if the contract assets are impaired, thecompany shall debit the "asset impairment loss" subject and credit the "contract asset impairment provision"subject according to the amount that should be written down. When reversing the provision for asset impairmentthat has already been withdrawn, make opposite accounting entries.
17.Assets held for sale
The Company classifies non-current assets or disposal groups that meet all of the following conditions asheld-for-sale: according to the practice of selling this type of assets or disposal groups in a similar transaction, thenon-current assets or disposal group can be sold immediately at its current condition; The sale is likely to occur,that is, the Company has made resolution on the selling plan and obtained definite purchase commitment, theselling is estimated to be completed within one year. Those assets whose disposal is subject to approval fromrelevant authority or supervisory department under relevant requirements are subject to that approval.
Where the Company loses control over its subsidiary due to disposal of investment in the subsidiary, whether ornot the Company retains part equity investment after such disposal, investment in the subsidiary shall be classifiedin its entirety as held for sale in the separate financial statement of the parent company subject to that theinvestment in the subsidiary proposed to be disposed satisfies the conditions for being classified as held for sale,and all the assets and liabilities of the subsidiary shall be classified as held for sale in consolidated financialstatement.
The purchase commitment identified refers to the legally binding purchase agreement entered into between theCompany and other parties, which sets out certain major terms relating to transaction price, time and adequately
stringent punishment for default, which render an extremely minor possibility for material adjustment orrevocation of the agreement.
Assets held for sale are measured at the lower of heir carrying value and fair value less selling expense. If thecarrying value is higher than fair value less selling expense, the excess shall be recognized as impairment loss andrecorded in profit or loss for the period, and allowance for impairment shall be provided for in respect of theassets. In respect of impairment loss recognized for disposal group held for sale, carrying value of the goodwill inthe disposal group shall be deducted first, and then deduct the carrying value of the non-current assets within thedisposal group applicable to this measurement standard on a pro rata basis according to the proportion taken bytheir carrying value.
If the net amount of fair value of non-current assets held for sale less sales expense on subsequent balance sheetdate increases, the amount previously reduced for accounting shall be recovered and reverted from the impairmentloss recognized after the asset is classified under the category of held for sale, with the amount reverted recordedin profit or loss for the period. Impairment loss recognized before the asset is classified under the category of heldfor sale shall not be reverted.If the net amount of fair value of the disposal group held for sale on the subsequentbalance sheet date less sales expenses increases, the amount reduced for accounting in previous periods shall berestored, and shall be reverted in the impairment loss recognized in respect of the non-current assets which areapplicable to relevant measurement provisions after classification into the category of held for sale, with thereverted amount charged in profit or loss for the current period. The written-off carrying value of goodwill shallnot be reverted.
The non-current assets in the non-current assets or disposal group held for sale is not depreciated or amortized,and the debt interests and other fees in the disposal group held for sale continue to be recognized.
If the non-current assets or disposal group are no longer classified as held for sale since they no longer meet thecondition of being classified as held for sale or the non-current assets are removed from the disposal group heldfor sale, they will be measured at the lower of the following:
(i)The amount after their book value before they are classified as held for sale is adjusted based on thedepreciation, amortization or impairment that should have been recognized given they are not classified as heldfor sale;(ii) The recoverable amount.
18.Long-term equity investment
Long-term equity investments refer to long-term equity investments in which the Company has control, jointcontrol or significant influence over the invested party. Long-term equity investment without control or jointcontrol or significant influence of the Group is accounted for as available-for-sale financial assets or financial
assets measured by fair value and with variation reckoned into current gains/losses. As for other accountingpolicies found more in “10. Financial instrument” in Note V.
(1) Determination of initial investment cost
Investment costs of the long-term equity investment are recognized by the follow according to different way ofacquirement:
①For a long-term equity investment acquired through a business combination involving enterprises undercommon control, the initial investment cost of the long-term equity investment shall be the absorbing party’sshare of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimatecontrolling party on the date of combination. The difference between the initial cost of the long-term equityinvestment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by theabsorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retainedearnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initialinvestment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount ofthe owner’s equity under the consolidated financial statements of the ultimate controlling party on the date ofcombination. With the total face value of the shares issued as share capital, the difference between the initial costof the long-term equity investment and total face value of the shares issued shall be used to offset against thecapital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For businesscombination resulted in an enterprise under common control by acquiring equity of the absorbing party undercommon control through a stage-up approach with several transactions, these transactions will be judged whetherthey shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions willbe accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initialinvestment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount ofthe owner’s equity under the consolidated financial statements of the ultimate controlling party on the date ofcombination. The difference between the initial cost of the long-term equity investment and the aggregate of thecarrying amount of the long-term equity investment before merging and the carrying amount the additionalconsideration paid for further share acquisition on the date of combination shall offset against the capital reserve.If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive incomerecognized as a result of the previously held equity investment accounted for using equity method on the date ofcombination or recognized for available-for-sale financial assets will not be accounted for.
② For the long-term equity investment obtained by business combination not under the same control, the fairvalue of the assets involved, the equity instruments issued and the liabilities incurred or assumed on thetransaction date, plus the combined cost directly related to the acquisition is used as the initial investment cost ofthe long-term equity investment. The identifiable assets of the combined party and the liabilities (includingcontingent liabilities) assumed by the combined party on the combining date are all measured at fair value,regardless of the amount of minority shareholders’ equity. The amount of the combined cost exceeding the fairvalue of the identifiable net assets of the combined party obtained by the Company is recorded as goodwill, and
the amount below the fair value of the identifiable net assets of the combining party is directly recognized in theconsolidated income statement.(For business combination resulted in an enterprise not under common control byacquiring equity of the acquire under common control through a stage-up approach with several transactions,these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to“transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they arenot belong to “transactions in a basket”, the initial investment cost of the long-term equity investment accountedfor using cost method shall be the aggregate of the carrying amount of equity investment previously held by theacquire and the additional investment cost. For previously held equity accounted for using equity method, relevantother comprehensive income will not be accounted for. For previously held equity investment classified asavailable-for-sale financial asset, the difference between its fair value and carrying amount, as well as theaccumulated movement in fair value previously included in the other comprehensive income shall be transferredto profit or loss for the current period.)
③Long-term investments obtained through other ways:
A. Initial investment cost of long-term equity investment obtained through cash payment is determined accordingto actual payment for purchase;B. Initial investment cost of long-term equity investment obtained through issuance of equity securities isdetermined at fair value of such securities;C. Initial investment cost of long-term equity investment (exchanged-in) obtained through exchange withnon-monetary assets, which is of commercial nature, is determined at fair value of the assets exchanged-out;otherwise determined at carrying value of the assets exchanged-out if it is not of commercial nature;D. Initial investment cost of long-term equity investment obtained through debt reorganization is determined atfair value of such investment.
(2) Subsequent measurement on long-term equity investment
①Presented controlling ability on invested party, the investment shall use cost method for measurement.
②Long-term equity investments with joint control (excluding those constitute joint ventures) or significantinfluence on the invested party are accounted for using equity method.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds theinvestor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date, noadjustment shall be made to the initial investment cost. Where the initial investment cost is less than the investor’sinterest in the fair value of the invested party’s identifiable net assets at the acquisition date, the difference shall becharged to profit or loss for the current period, and the cost of the long term equity investment shall be adjustedaccordingly.
Under the equity method, investment gain and other comprehensive income shall be recognized based on the
Group’s share of the net profits or losses and other comprehensive income made by the invested party,respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carryingamount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividenddistributed by the invested party. In respect of the other movement of net profit or loss, other comprehensiveincome and profit distribution of invested party, the carrying value of long-term equity investment shall beadjusted and included in the capital reserves. The Group shall recognize its share of the invested party’s net profitsor losses based on the fair values of the invested party’s individual separately identifiable assets at the time ofacquisition, after making appropriate adjustments thereto. In the event of in-conformity between the accountingpolicies and accounting periods of the invested party and the Company, the financial statements of the investedparty shall be adjusted in conformity with the accounting policies and accounting periods of the Company.Investment gain and other comprehensive income shall be recognized accordingly. In respect of the transactionsbetween the Group and its associates and joint ventures in which the assets disposed of or sold are not classified asoperation, the share of unrealized gain or loss arising from inter-group transactions shall be eliminated by theportion attributable to the Company. Investment gain shall be recognized accordingly. However, any unrealizedloss arising from inter-group transactions between the Group and an invested party is not eliminated to the extentthat the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset classifiedas operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by theinvestor without obtaining control, the initial investment cost of additional long-term equity investment shall bethe fair value of disposed operation. The difference between initial investment cost and the carrying value ofdisposed operation will be fully included in profit or loss for the current period. In the event that the Group sold anasset classified as operation to its associates or joint ventures, the difference between the carrying value ofconsideration received and operation shall be fully included in profit or loss for the current period. In the eventthat the Company acquired an asset which formed an operation from its associates or joint ventures, relevanttransaction shall be accounted for in accordance with “Accounting Standards for Business Enterprises No. 20“Business combination”. All profit or loss related to the transaction shall be accounted for.
The Group’s share of net losses of the invested party shall be recognized to the extent that the carrying amount ofthe long-term equity investment together with any long-term interests that in substance form part of the investor’snet investment in the invested party are reduced to zero. If the Group has to assume additional obligations, theestimated obligation assumed shall be provided for and charged to the profit or loss as investment loss for theperiod. Where the invested party is making profits in subsequent periods, the Group shall resume recognizing itsshare of profits after setting off against the share of unrecognized losses.
③Acquisition of minority interest
Upon the preparation of the consolidated financial statements, since acquisition of minority interest increased oflong-term equity investment which was compared to fair value of identifiable net assets recognized which aremeasured based on the continuous measurement since the acquisition date (or combination date) of subsidiariesattributable to the Group calculated according to the proportion of newly acquired shares, the difference of which
recognized as adjusted capital surplus, capital surplus insufficient to set off impairment and adjusted retainedearnings.
④Disposal of long-term equity investments
In these consolidated financial statements, for disposal of a portion of the long-term equity investments in asubsidiary without loss of control, the difference between disposal cost and disposal of long-term equityinvestments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal of a portion ofthe long-term equity investments in a subsidiary by the parent company results in a change in control, it shall beaccounted for in accordance with the relevant accounting policies as described in Note V.-6 “Preparation Methodof the Consolidated Financial Statements”.
On disposal of a long-term equity investment otherwise, the difference between the carrying amount of theinvestment and the actual consideration paid is recognized through profit or loss in the current period.
In respect of long-term equity investment accounted for using equity method with the remaining equity interestafter disposal also accounted for using equity method, other comprehensive income previously under owners’equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevantasset or liability by invested party on pro rata basis at the time of disposal. The owners’ equity recognized for themovement of other owners’ equity (excluding net profit or loss, other comprehensive income and profitdistribution of invested party) shall be transferred to profit or loss for the current period on pro rata basis.
In respect of long-term equity investment accounted for using cost method with the remaining equity interest afterdisposal also accounted for cost equity method, other comprehensive income measured and reckoned under equitymethod or financial instrument before control of the invested party unit acquired shall be accounted for inaccordance with the same accounting treatment for direct disposal of relevant asset or liability by invested partyon pro rata basis at the time of disposal and shall be transferred to profit or loss for the current period on pro ratabasis; among the net assets of invested party unit recognized by equity method (excluding net profit or loss, othercomprehensive income and profit distribution of invested party) shall be transferred to profit or loss for the currentperiod on pro rata basis.
In the event of loss of control over invested party due to partial disposal of equity investment by the Group, inpreparing separate financial statements, the remaining equity interest which can apply common control or imposesignificant influence over the invested party after disposal shall be accounted for using equity method. Suchremaining equity interest shall be treated as accounting for using equity method since it is obtained andadjustment was made accordingly. For remaining equity interest which cannot apply common control or imposesignificant influence over the invested party after disposal, it shall be accounted for using the recognition andmeasurement standard of financial instruments. The difference between its fair value and carrying amount as at
the date of losing control shall be included in profit or loss for the current period. In respect of othercomprehensive income recognized using equity method or the recognition and measurement standard of financialinstruments before the Group obtained control over the invested party, it shall be accounted for in accordance withthe same accounting treatment for direct disposal of relevant asset or liability by invested party at the time whenthe control over invested party is lost. Movement of other owners’ equity (excluding net profit or loss, othercomprehensive income and profit distribution under net asset of invested party accounted for and recognizedusing equity method) shall be transferred to profit or loss for the current period at the time when the control overinvested party is lost. Of which, for the remaining equity interest after disposal accounted for using equity method,other comprehensive income and other owners’ equity shall be transferred on pro rata basis. For the remainingequity interest after disposal accounted for using the recognition and measurement standard of financialinstruments, other comprehensive income and other owners’ equity shall be fully transferred.
In the event of loss of common control or significant influence over invested party due to partial disposal of equityinvestment by the Group, the remaining equity interest after disposal shall be accounted for using the recognitionand measurement standard of financial instruments. The difference between its fair value and carrying amount asat the date of losing common control or significant influence shall be included in profit or loss for the currentperiod. In respect of other comprehensive income recognized under previous equity investment using equitymethod, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevantasset or liability by invested party at the time when equity method was ceased to be used. Movement of otherowners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset ofinvested party accounted for and recognized using equity method) shall be transferred to profit or loss for thecurrent period at the time when equity method was ceased to be used.
The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until thecontrol over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each transactionshall be accounted for as a single transaction of disposing equity investment of subsidiary and loss of control. Thedifference between the disposal consideration for each transaction and the carrying amount of the correspondinglong-term equity investment of disposed equity interest before loss of control shall initially recognized as othercomprehensive income, and subsequently transferred to profit or loss arising from loss of control for the currentperiod upon loss of control.
(3) Impairment test method and withdrawal method for impairment provision
Found more in NoteV-24.”impairment of long-term assets”
(4) Criteria of Joint control and significant influence
Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevantactivities of such arrangement must be decided by unanimously agreement from parties who share control. All the
participants or participant group whether have controlling over such arrangement as a group or not shall be judgefirstly, than judge that whether the decision-making for such arrangement are agreed unanimity by the participantsor not.
Significant influence is the power of the Company to participate in the financial and operating policy decisions ofan invested party, but to fail to control or joint control the formulation of such policies together with otherparties.While recognizing whether have significant influence by invested party, the potential factors of votingpower as current convertible bonds and current executable warrant of the invested party held by investors andother parties shall be thank over.
19.Investment real estate
Measurement model of investment real estateCost measurementDepreciation or amortizationInvestment real estate is stated at cost. During which, the cost of externally purchased propertiesheld-for-investment includes purchasing price, relevant taxes and surcharges and other expenses which aredirectly attributable to the asset. Cost of self construction of properties held for investment is composed ofnecessary expenses occurred for constructing those assets to a state expected to be available for use. Propertiesheld for investment by investors are stated at the value agreed in an investment contract or agreement, but thoseunder contract or agreement without fair value are stated at fair value.
The Company adopts cost methodology amid subsequent measurement of properties held for investment, whiledepreciation and amortization is calculated using the straight-line method according to their estimated useful lives.
The basis of provision for impairment of properties held for investment is referred to Note V-24“Impairment oflong-term assets”
20. Fixed assets
(1) Recognition conditions
Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, with aservice life excess one year and has more unit value.
(2) Depreciation methods
| Category | Depreciation method | Years of depreciation | Scrap value rate | Yearly depreciation rate |
| House and Building | Straight-line depreciation | 20~35 | 5 | 2.71~4.75 |
| Machinery equipment | Straight-line depreciation | 10 | 5 | 9.50 |
| Transportation equipment | Straight-line depreciation | 4~5 | 5 | 19.00~23.75 |
| Electronic and other equipment | Straight-line depreciation | 3～10 | 5 | 9.50～31.67 |
For the fixed assets with impairment provision, the depreciation amount shall be calculated after deducting theaccumulated amount of impairment provision for fixed assets
(3) Recognition basis, valuation and depreciation method for financial lease assetsThe Company affirms those that conform to below one or several criteria as the finance lease fixed assets:
① Agreed in the lease contract (or made a reasonable judgment according to the correlated conditions on the leasecommencement date), the ownership of lease fixed assets can be transferred to the Company after the expiry ofthe lease period;
② The Company has the option to purchase or lease the fixed assets, and the purchase price is estimated to bemuch less than the fair value of the lease of fixed assets when exercises the options, so whether the Company willexercise the option can be reasonably determined on the lease commencement date;
③ Even though the fixed asset ownership is not transferred, the lease term accounts for 75% of the service life ofthe lease fixed assets;
④ The present value of the Company’s of minimum lease payment on the lease commencement date is equivalentto 90% or more of the fair value of the lease fixed assets on the lease commencement date; the present value of theleaser’s of minimum lease payment on the lease commencement date is equivalent to 90% or more of the fairvalue of the lease fixed assets on the lease commencement date;
⑤ The leased assets with special properties can only be used by the Company without major modifications. Thefixed assets rented by finance leases is calculated as the book value according to the lower one between the fairvalue of leased assets on the lease commencement date and the present value of the minimum lease payments.
(4) The impairment test method of fixed assets and the method of provision for impairment see NoteV-24“Impairment of long-term assets”.
21.Construction in progress
From the date on which the fixed assets built by the Company come into an expected usable state, the projectsunder construction are converted into fixed assets on the basis of the estimated value of project estimates orpricing or project actual costs, etc. Depreciation is calculated from the next month. Further adjustments are madeto the difference of the original value of fixed assets after final accounting is completed upon completion ofprojects.The basis of provision for impairment of properties held for construction in processis referred to NoteV-24“Impairment of long-term assets”
22. Borrowing costs
(1) Recognition of capitalization of borrowing costs
Borrowing costs comprise interest occurred, amortization of discounts or premiums, ancillary costs and exchangedifferences in connection with foreign currency borrowings. The borrowing costs of the Company, which incurfrom the special borrowings occupied by the fixed assets that need more than one year (including one year) forconstruction, development of investment properties or inventories or from general borrowings, are capitalized andrecorded in relevant assets costs; other borrowing costs are recognized as expenses and recorded in the profit orloss in the period when they are occurred. Relevant borrowing costs start to be capitalized when all of thefollowing three conditions are met:
①Capital expenditure has been occurred;
②Borrowing costs have been occurred;
③ Acquisition or construction necessary for the assets to come into an expected usable state has been carried out.
(2) Period of capitalization of borrowing costs
Borrowing costs arising from purchasing fixed asset, investment real estate and inventory, and occurred after suchassets reached to its intended use of status or sales, than reckoned into assets costs while satisfy the abovementioned capitalization condition; capitalization of borrowing costs shall be suspended and recognized as currentexpenditure during periods in which construction of fixed assets, investment real estate and inventory areinterrupted abnormally, when the interruption is for a continuous period of more than 3 months, until theacquisition, construction or production of the qualifying asset is resumed; capitalization shall discontinue whenthe qualifying asset is ready for its intended use or sale, the borrowing costs occurred subsequently shall reckonedinto financial expenses while occurring for the current period.
(3) Measure of capitalization for borrowing cost
In respect of the special borrowings borrowed for acquisition, construction or production and development of theassets qualified for capitalization, the amount of interests expenses of the special borrowings actually occurred inthe period less interest income derived from unused borrowings deposited in banks or less investment incomederived from provisional investment, are recognized.
With respect to the general borrowings occupied for acquisition, construction or production and development ofthe assets qualified for capitalization, the capitalized interest amount for general borrowings is calculated andrecognized by multiplying a weighted average of the accumulated expenditure on the assets in excess of theexpenditure on the some assets of the special borrowings, by a capitalization rate for general borrowings. Thecapitalization rate is determined by calculation of the weighted average interest rate of the general borrowings.
23. Intangible assets
(1) Measurement, use of life and impairment testing
① Measurement of intangible assets
The intangible assets of the Company including land use rights, patented technology and non-patents technologyetc.The cost of a purchased intangible asset shall be determined by the expenditure actually occurred and other relatedcosts.The cost of an intangible asset contributed by an investor shall be determined in accordance with the valuestipulated in the investment contract or agreement, except where the value stipulated in the contract or agreementis not fair.The intangible assets acquired through exchange of non-monetary assets, which is commercial in substance, iscarried at the fair value of the assets exchanged out; for those not commercial in substance, they are carried at thecarrying amount of the assets exchanged out.The intangible assets acquired through debt reorganization, are recognized at the fair value.
② Amortization methods and time limit for intangible assets:
Land use right of the company had average amortization by the transfer years from the beginning date of transfer(date of getting land use light); Patented technology, non-patented technology and other intangible assets of theCompany are amortized by straight-line method with the shortest terms among expected useful life, benefit yearsregulated in the contract and effective age regulated by the laws. The amortization amount shall count in relevantassets costs and current gains/losses according to the benefit object.As for the intangible assets as trademark, with uncertain benefit terms, amortization shall not be carried.Impairment testing methods and accrual for depreciation reserves for the intangible assets found more in NoteV24-“Impairment of long-term assets”.
(2)Internal accounting policies relating to research and development expendituresExpenses incurred during the research phase are recognized as profit or loss in the current period; expensesincurred during the development phase that satisfy the following conditions are recognized as intangible assets(patented technology and non-patents technology):
①It is technically feasible that the intangible asset can be used or sold upon completion;
②there is intention to complete the intangible asset for use or sale;
③ The products produced using the intangible asset has a market or the intangible asset itself has a market;
④there is sufficient support in terms of technology, financial resources and other resources in order to completethe development of the intangible asset, and there is capability to use or sell the intangible asset;
⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.If the expenses incurred during the development phase did not qualify the above mentioned conditions, suchexpenses incurred are accounted for in the profit or loss for the current period.The development expenditurereckoned in gains/losses previously shall not be recognized as assets in later period. The capitalized expenses indevelopment stage listed as development expenditure in balance sheet, and shall be transfer as intangible assetssince such item reached its expected conditions for service.
24. Impairment of long-term assets
The Company will judge if there is any indication of impairment as at the balance sheet date in respect ofnon-current non-financial assets such as fixed assets, construction in progress, intangible assets with a finite usefullife, investment properties measured at cost, and long-term equity investments in subsidiaries, joint controlledentities and associates. If there is any evidence indicating that an asset may be impaired, recoverable amount shallbe estimated for impairment test. Goodwill, intangible assets with an indefinite useful life and intangible assetsbeyond working conditions will be tested for impairment annually, regardless of whether there is any indication ofimpairment.
If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, theimpairment provision will be made according to the difference and recognized as an impairment loss. Therecoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of thefuture cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in anarm’s length transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall bedetermined based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shallbe based on the best available information. Costs of disposal are expenses attributable to disposal of the asset,including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare theasset for its intended sale. The present value of the future cash flows expected to be derived from the asset overthe course of continued use and final disposal is determined as the amount discounted using an appropriatelyselected discount rate. Provisions for assets impairment shall be made and recognized for the individual asset. If itis not possible to estimate the recoverable amount of the individual asset, the Group shall determine therecoverable amount of the asset group to which the asset belongs. The asset group is the smallest group of assetscapable of generating cash flows independently.
For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financialstatements shall be allocated to the asset groups or group of assets benefiting from synergy of businesscombination. If the recoverable amount is less than the carrying amount, the Group shall recognize an impairmentloss. The amount of impairment loss shall first reduce the carrying amount of any goodwill allocated to the assetgroup or set of asset groups, and then reduce the carrying amount of other assets (other than goodwill) within theasset group or set of asset groups, pro rata on the basis of the carrying amount of each asset.
An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect ofthe part whose value can be recovered.
25.Long-term deferred expenses
Long-term expenses to be amortized of the Company the expenses that are already charged and with the beneficialterm of more than one year are evenly amortized over the beneficial term. For the long-term deferred expenseitems cannot benefit the subsequent accounting periods, the amortized value of such items is all recorded in theprofit or loss during recognition.
26.Contract liability
The Company lists the obligation to transfer goods or provide labor services to customers for the considerationreceived or receivable from customers as contract liabilities, such as the amount that the company has receivedbefore the transfer of the promissorygoods.
27. Employee compensation
(1) Accounting treatment for short-term compensation
During the accounting period when the staff providing service to the Company, the short-term remuneration actualoccurred shall recognized as liability and reckoned into current gains/losses. During the accounting period whenstaff providing service to the Company, the actual short-term compensation occurred shall recognized as liabilitiesand reckoned into current gains/losses, except for those in line with accounting standards or allow to reckonedinto capital costs; the welfare occurred shall reckoned into current gains/losses or relevant asses costs whileactually occurred. The employee compensation shall recognize as liabilities and reckoned into current gains/lossesor relevant assets costs while actually occurred. The employee benefits that belong to non-monetary benefits aremeasured in accordance with the fair value; the social insurances including the medical insurance, work-injuryinsurance and maternity insurance and the housing fund that the enterprise pays for the employees as well as thelabor union expenditure and employee education funds withdrawn by rule should be calculated and determined asthe corresponding compensation amount and determined the corresponding liabilities in accordance with thespecified withdrawing basis and proportion, and reckoned in the current profits and losses or relevant asset costsin the accounting period that the employees provide services.
(2) Accounting treatment for post-employment benefit
The post-employment benefit included the defined contribution plans and defined benefit plans. Post-employmentbenefits plan refers to the agreement about the post-employment benefits between the enterprise and employees,or the regulations or measures the enterprise established for providing post-employment benefits to employees.Thereinto, the defined contribution plan refers to the post-employment benefits plan that the enterprise doesn’t
undertake the obligation of payment after depositing the fixed charges to the independent fund; the defined benefitplans refers to post-employment benefits plans except the defined contribution plan.
(3)Accounting treatment for retirement benefits
When the Company terminates the employment relationship with employees before the end of the employmentcontracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, theCompany shall recognize employee compensation liabilities arising from compensation for staff dismissal andincluded in profit or loss for the current period, when the Company cannot revoke unilaterally compensation fordismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the Companyrecognize cost and expenses related to payment of compensation for dismissal and restructuring, whichever isearlier.The early retirement plan shall be accounted for in accordance with the accounting principles forcompensation for termination of employment. The salaries or wages and the social contributions to be paid for theemployees who retire before schedule from the date on which the employees stop rendering services to thescheduled retirement date, shall be recognized (as compensation for termination of employment) in the currentprofit or loss by the Group if the recognition principles for provisions are satisfied.
(4)Accounting treatment for other long-term employee benefits
Except for the compulsory insurance, the Company provides the supplementary retirement benefits to theemployees satisfying some conditions, the supplementary retirement benefits belong to the defined benefit plans,and the defined benefitliability confirmed on the balance sheet is the value by subtracting the fair value of planassets from the present value of defined benefit obligation. The defined benefit obligation is annually calculated inaccordance with the expected accumulated welfare unit method by the independent actuary by adopting thetreasury bond rate with similar obligation term and currency. The service charges related to the supplementaryretirement benefits (including the service costs of the current period, the previous service costs, and the settlementgains or losses) and the net interest are reckoned in the current profits and losses or other asset costs, the changesgenerated by recalculating the net liabilities of defined benefit plans or net assets should be reckoned in otherconsolidated income.
28. Accrual liabilities
(1) Recognition principle
An obligation related to a contingency, such as guarantees provided to outsiders, pending litigation or arbitration,product warranties, redundancy plans, onerous contracts, reconstructing, expected disposal of fixed assets, etc.shall be recognized as an estimated liability when all of the following conditions are satisfied:
① the obligation is a present obligation of the Company;
② it is Contingent that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Measurement method: Measure on the basis of the best estimates of the expenses necessary for paying off thecontingencies
29. Share-based payment
The Company’s share-based payment is a transaction that grants equity instruments or assumes liabilitiesdetermined on the basis of equity instruments in order to obtain services provided by employees or other parties.The Company’s share-based payment is classified as equity-settled share-based payment and cash-settledshare-based payment.
(1) Equity-settled share-based payment and equity instruments
Equity-settled share-based payment in exchange for services provided by employees shall be measured at the fairvalue of the equity instruments granted to employees. If the Company uses restricted stocks for share-basedpayment, employees contribute capital to subscribe for stocks, and the stocks shall not be listed for circulation ortransfer until the unlocking conditions are met and unlocked; if the unlocking conditions specified in the finalequity incentive plan are not met, the Company shall repurchase the stocks at the pre-agreed price. When theCompany obtains the payment for the employees to subscribe for restricted stocks, it shall confirm the sharecapital and capital reserve (share capital premium) according to the obtained subscription money, and at the sametime recognize a liability in full for the repurchase obligation and recognize treasury shares. On each balance sheetdate during the waiting period, the Company makes the best estimate of the number of vesting equity instrumentsbased on the changes in the latest obtained number of vested employees, whether they meet the specifiedperformance conditions, and other follow-up information. On this basis, the services obtained in the current periodare included in related costs or expenses based on the fair value on the grant date, and the capital reserve shall beincreased accordingly.
For share-based payments that cannot be vested in the end, costs or expenses shall not be recognized, unless thevesting conditions are market conditions or non-vesting conditions. At this time, regardless of whether the marketconditions or the non-vesting conditions are met, as long as all non-market conditions in the vesting conditions aremet, it is deemed as vesting.
If the terms of equity-settled share-based payment are modified, at least the services obtained should be confirmedin accordance with the unmodified terms. In addition, any modification that increases the fair value of the equityinstruments granted, or a change that is beneficial to employees on the modification date, is recognized as anincrease in services received.If the equity-settled share payment is cancelled, it will be treated as an accelerated vesting on the cancellation day,and the unconfirmed amount will be confirmed immediately. If an employee or other party can choose to meet thenon-vesting conditions but fails to meet within the waiting period, it shall be treated as cancellation ofequity-settled share-based payment. However, if a new equity instrument is granted and it is determined on the
date of grant of the new equity instrument that the new equity instrument granted is used to replace the cancelledequity instrument, the granted substitute equity instruments shall be treated in the same way as the modification ofthe original equity instrument terms and conditions.
(2) Cash-settled share-based payment and equity instruments
Cash-settled share-based payments are measured at the fair value of the liabilities calculated and determined onthe basis of shares or other equity instruments undertaken by the Company. If it’s vested immediately after thegrant, the fair value of the liabilities assumed on the date of the grant is included in the cost or expense, and theliability is increased accordingly. If the service within the waiting period is completed or the specifiedperformance conditions are met, the service obtained in the current period shall be included in the relevant costsor expenses based on the best estimate of the vesting situation within the waiting periodand the fair value of theliabilities assumed to increase the corresponding liabilities. On each balance sheet date and settlement date beforethe settlement of the relevant liabilities, the fair value of the liabilities is remeasured, and the changes are includedin the current profit and loss.
30. Revenue
Accounting policies used in revenue recognition and measurementAccounting policies applicable as of 1 January 2020:
(1)Accounting policies used in revenue recognition and measurement
1)Revenue recognition principle
On the starting date of the contract, the company evaluates the contract, identifies each individual performanceobligation contained in the contract, and determines whether each individual performance obligation is performedwithin a certain period of time or at a certain point in time.
When one of the following conditions is met, it belongs to the performance obligation within a certain period oftime, otherwise, it belongs to the performance obligation at a certain point in time: ① The customer obtains andconsumes the economic benefits brought by the company's performance while the company performs the contract;
②The customer can control the goods or services under construction during the company’s performance; ③Thegoods or services produced during the company’s performance have irreplaceable uses, and the company has theright to collect payment for the performance part that has been completed so far during the entire contract period.
For performance obligations performed within a certain period of time, the company recognizes revenue inaccordance with the performance progress during that period. When the performance progress cannot bereasonably determined, if the cost incurred is expected to be compensated, the revenue shall be recognizedaccording to the amount of the cost incurred until the performance progress can be reasonably determined.Forperformance obligations performed at a certain point in time, revenue is recognized at the point when thecustomer obtains control of the relevant goods or services. When judging whether the customer has obtained
control of the goods, the company considers the following signs:① The company has the current right to receivepayment for the goods, that is, the customer has the current payment obligation for the goods; ②The company hastransferred the legal ownership of the goods to the customer, that is, the customer has the legal ownership of thegoods; ③The company has transferred the goods to the customer in kind, that is, the customer has physicallytaken possession of the goods; ④ The company has transferred the main risks and rewards of the ownership of thegoods to the customer, that is, the customer has obtained the main risks and rewards of the ownership of the goods;
⑤ The customer has accepted the goods; ⑥Other signs that the customer has obtained control of the goods.
2)Revenue measurement principle
①The company measures revenue based on the transaction price allocated to each individual performanceobligation. The transaction price is the amount of consideration that the company expects to be entitled to receivedue to the transfer of goods or services to customers, and does not include payments collected on behalf of thirdparties and payments expected to be returned to customers.
②If there is variable consideration in the contract, the company shall determine the best estimate of the variableconsideration according to the expected value or the most likely amount, but the transaction price including thevariable consideration shall not exceed the amount of cumulatively recognized revenue that is unlikely to besignificantly turned back when the relevant uncertainty is eliminated.
③ If there is a significant financing component in the contract, the company shall determine the transaction pricebased on the amount payable that the customer is assumed to pay in cash when obtaining the control of the goodsor services. The difference between the transaction price and the contract consideration shall be amortized by theeffective interest method during the contract period. On the starting date of the contract, if the company expectsthat the customer pays the price within one year after obtaining control of the goods or services, the significantfinancing components in the contract shall not be considered.
④If the contract contains two or more performance obligations, the company will allocate the transaction price toeach individual performance obligation based on the relative proportion of the stand-alone selling price of thegoods promised by each individual performance obligation on the starting date of the contract.
(2) The Company's standard for the revenue recognition of the sales of goods and the specific judgment standardfor the confirmation time:
The time when the Company’s domestic sales revenue is confirmed: The company delivers the goods according tothe order. On the reconciliation date agreed with the buyer, check the goods received and inspected by the buyerduring the period from the last reconciliation date to this reconciliation date with the buyer, and the risks andrewards are transferred to the buyer after checking, the Company issues an invoice to the buyer according to thetype, quantity and amount confirmed in the reconciliation, and confirms the realization of sales revenue on thereconciliation day.
The time when the Company’s foreign sales revenue is confirmed: After the customs review is completed, theCompany will confirm the realization of the sales revenue according to the export date specified on the customsdeclaration.
Accounting policies applicable for year of 2019:
(1) Concrete judging criteria for time of recognized
The major risks and remuneration entitled to the ownership of goods are transferred to buyer; neither retain thecontinued management right generally related to ownership, nor exercise effective control over the sold products;the relevant economic benefits are probable to flow into the Company; the relevant income and costs can bemeasured reliably.Concrete judging criteria for time of recognized the income from goods sales:
The Company's domestic sales revenue recognition time: The company delivers goods as agreed, checks the goodsthat the buyers have received and inspected during the period of the last reconciliation date and this reconciliationdate with the buyers on the reconciliation date as agreed, and transfers the risks and remunerations to the buyersafter checking, the Company issues the invoices to the buyers in accordance with the recognized varieties,quantities and amounts and affirms the sales revenue realization on the reconciliation date.
The Company's overseas sales revenue recognition time: After checking by the customs, the Company affirms thesales revenue realization according to the date of departure on the customs declaration.
(2) Recognition of revenue of assets using right alienation
Revenue from use by others of enterprise assets shall be recognized only when the associated economic benefitcan flow into the Company, and the amount of revenue can be measured reliably, revenue measured by the follow:
① Interest income amount: calculated and determined in accordance with the time that others use the enterprisescash and the actual interest rate.
②Royalty revenue amount: calculated and determined in accordance with the charging time and method of therelevant contract or agreement as agreed.
The basis that the Company confirms the revenue from transferring the right to use assets.Rental income: the revenue realization is confirmed after collecting the rent on the date as agreed in the rentalcontract (or agreement). For the rent not received on the date as agreed in the contract or agreement but can bereceived, and of which the amount of revenue can be measured reliably can also be recognized as revenue.
(3) When confirming the incomes of labor services and construction contracts according to the percentage ofcompletion method, determine the basis and method of the contract completion plan.
For the service transaction results can be estimated reliably on the balance sheet date, the service revenue isdetermined and recognized by adopting the percentage of completion method. The completion progress of servicetransaction is determined by the proportion of incurred costs in the estimated total cost.
The total service revenue is determined by the received or receivable contract or agreement costs, except that thereceived or receivable contract or agreement costs are not fair. On the balance sheet date, the service revenue of thecurrent period is determined by multiplying the total service revenue by the completion progress and deductingthe amount accumulated in the previous accounting period and confirmed to render the service revenue.Meanwhile, the labor costs of the current period are carried forward by multiplying the total estimated costs oflabor services by the completion progress and deducting the amount accumulated in the previous accountingperiod with confirmed service costs.
For the service transaction results cannot be estimated reliably on the balance sheet date, respectively dispose asfollowing circumstances:
①The incurred labor costs estimated to be compensated are confirmed to render the service revenue according tothe incurred labor costs, and are carried forward by the equivalent amount.
②The incurred labor costs estimated not to be compensated are reckoned in the current profits or losses, and arenot confirmed to render the service revenue.
Differences in accounting policies for revenue recognition due to different operating models for the same type ofbusiness Nil
31. Government grants
(1) Types
Government grants are transfer of monetary assets or non-monetary assets from the government to the Group atno consideration. Government grants are classified into government grants related to assets and government grantsrelated to income.As for the assistance object not well-defined in government’s documents, the classification criteria forassets-related or income-related grants are as: whether the grants turn to long-term assets due to purchasing forconstruction or other means.
(2) Recognition and measure
The government grants shall be recognized while meet the additional conditions of the grants and amount isactually can be obtained.
If a government grant is in the form of a transfer of monetary asset, the item shall be measured at the amount
received or receivable. If a government grant is in the form of a transfer of non-monetary asset, the item shall bemeasured at fair value. If the fair value can not be reliably acquired, than measured by nominal amount.
(3) Accounting treatment
A government grant related to an asset shall be recognized as deferred income, and reckoned into currentgains/losses according to the depreciation process in use life of such assets.
A government grant related to income, if they making up relevant expenses and losses for later period, thanrecognized deferred income, and should reckoned into current gain/loss during the period while relevant expensesare recognized; if they making up relevant expenses and losses that occurred, than reckoned into currentgains/losses.A government grant related to daily operation activity of the Company should reckoned into other income; thosewithout related to daily operation activity should reckoned into non-operation income and expenses.The financial discount funds received by the Company shall write down relevant borrowing costs.
32.Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets or deferred income tax liabilities are realized based on the difference between thecarrying values of assets and liabilities and their taxation bases (as for the ones did not recognized as assets andliability and with taxation basis recognized in line with tax regulations, different between tax base and its bookvalue) at the tax rates applicable in the periods when the Company recovers such assets or settles such liabilities.
(2) Deferred income tax assets are realized to the extent that it is probable to obtain such taxable income which isused to set off the deductible temporary difference. As at the balance sheet date, if there is obvious evidenceshowing that it is probable to obtain sufficient taxable income to set off the deductible temporary difference infuture periods, deferred income tax assets not realized in previous accounting periods shall be realized.
(3) On balance sheet date, re-review shall be made in respect of the carrying value of deferred income tax assets.If it is impossible to obtain sufficient taxable income to set off the benefits of deferred income tax assets in futureperiods, then the carrying value of deferred income tax assets shall be reduced accordingly. If it is probable toobtain sufficient taxable income, then the amount reduced shall be switched back.
(4) Current income tax and deferred income tax considered as income tax expenses or incomes reckoned intocurrent gains/losses, excluding the follow income tax:
①Enterprise combination;
②Transactions or events recognized in owner’s equity directly
33. Lease
(1)Accounting for operating lease
The rental fee paid for renting the properties by the company are amortized by the straight-line method andreckoned in the current expenses throughout the lease term without deducting rent-free period. The initial directcosts related to the lease transactions paid by the company are reckoned in the current expenses.
When the lessor undertakes the expenses related to the lease that should be undertaken by the company, thecompany shall deduct the expenses from the total rental costs, share by the deducted rental costs during the leaseterm, and reckon in the current expenses.
Rental obtained from assets leasing, during the whole leasing period without rent-free period excluded, shall beamortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with leasingtransaction concerned are reckoned into current expenditure; the amount is larger is capitalized when incurred,and accounted for as profit or loss for the current period on the same basis as recognition of rental income over theentire lease period.
When the company undertakes the expenses related to the lease that should be undertaken by the lessor, thecompany shall deduct the expenses from the total rental income, and distribute by the deducted rental costs duringthe lease term.
(2) Accounting treatment for financing lease
Assets lease-in by financing: On the beginning date of the lease, the entry value of leased asset shall be at thelower of the fair value of the leased asset and the present value of minimum lease payment at the beginning dateof the lease. Minimum lease payment shall be the entry value of long-term accounts payable, with differencerecognized as unrecognized financing expenses.Unrecognized financing expenses shall be reckoned in financialexpenses and amortized and using effective interest method during the leasing period. The initial direct costsincurred by the Company shall be reckoned into value of assets lease-in.
Finance leased assets: on the lease commencement date, the company affirms the balance among the finance leasereceivables, the sum of unguaranteed residual value and its present value as the unrealized financing income, andrecognizes it as the rental income during the period of receiving the rent. For the initial direct costs related to therental transaction, the company reckons in the initial measurement of the finance lease receivables, and reducesthe amount of income confirmed in the lease term.
34.Other important accounting policy and estimation
In the process of applying the Company's accounting policies, due to the inherent uncertainty of business activities,the Company needs to judge, estimate and assume the book value of the report items cannot be accuratelymeasured. These judgments, estimates and assumptions are made on the basis of the historical experience of theCompany’s management and by considering other relevant factors, which shall impact the reported amounts ofincome, expenses, assets and liabilities and the disclosure of contingent liabilities on the balance sheet date.However, the actual results caused by the estimated uncertainties may differ from the management's currentestimates of the Company so as to carry out the significant adjustments to the book value of the assets or liabilitiesto be affected.
The Company regularly reviews the aforementioned judgments, estimates and assumptions on the basis ofcontinuing operations, the changes in accounting estimates only affect the current period, of which the impacts arerecognized in the current period; the changes in accounting estimates not only affect the current period but also thefuture periods, of which the impacts are recognized in the current and future periods.
On the balance sheet date, the important areas of the financial statements that the Company needs to judge, estimateand assume are as follows:
(1) Provision for bad debts
The Company has used the expected credit loss model to assess the impairment of financial instruments. Theapplication of the expected credit loss model requires significant judgement and estimates, and must consider allreasonable and evidence-based information, including forward-looking information.In making such judgmentsand estimates, the Company infers the expected changes in debtors’ credit risks based on historical repayment datacombined with economic policies, macroeconomic indicators, industry risks and other factors.
(2) Inventory falling price reserves
According to the inventory accounting policies, the Company measures by the comparison between the cost andthe net realizable value, if the cost is higher than the net realizable value and the old and unsalable inventories, theCompany calculates and withdraws the inventory impairment. The inventory devalues to the net realizable valueby evaluating the inventory’s vendibility and net realizable value. To identify the inventory impairment, themanagement needs to obtain the unambiguous evidences, and consider the purpose to hold the inventory, andjudge and estimate the impacts of events after the balance sheet date. The actual results and the differencesbetween the previously estimated results shall affect the book value of inventory and the provision or return of theinventory impairment during the period estimated to be changed.
(3) Preparation for the impairment of non-financial & non-current assets
The Company checks whether the non-current assets except for the financial assets may decrease in value at the
balance sheet date. For the intangible assets with indefinite service life, in addition to the annual impairment test,the impairment test is also needed when there is a sign of impairment. For the other non-current assets except forthe financial assets, the impairment test is needed when it indicates that the book amounts may not be recoverable.
When the book value of the asset or group of assets exceeds its recoverable amount, i.e. the higher between the netamount by subtracting the disposal costs from the fair value and the present value of expected future cash flows, itindicates the impairment.
As for the net amount by subtracting the disposal costs from the fair value, refer to the sales agreement pricesimilar to the assets in the fair trade or the observable market price, and subtract the incremental costsdetermination directly attributable to the disposal of the asset.
When estimating the present value of the future cash flow, the Company needs to make significant judgments tothe output, price, and related operating expenses of the asset (or asset group) and the discount rate used forcalculating the present value. When estimating the recoverable amount, the Company shall adopt all the relevantinformation can be obtained, including the prediction related to the output, price, and related operating expensesbased on the reasonable and supportable assumptions.
The Company tests whether its business reputation decreases in value every year, which requires to estimating thepresent value of the asset group allocated with goodwill or the future cash flow combined by the asset group.When estimating the present value of the future cash flow, the Company needs to estimate the future cash flowsgenerated by the asset group or the combination of asset group, and select the proper discount rate to determine thepresent value of the future cash flows.
(4) Depreciation and amortization
The Company depreciates and amortizes the investment property, fixed assets and intangible assets according tothe straight-line method in the service life after considering the residual value. The Companyregularly reviews theservice life to determine the depreciation and amortization expense amount to be reckoned in each reporting period.The service life is determined by the Company based on the past experience of similar assets and the expectedtechnological updating. If the previous estimates have significant changes, the depreciation and amortizationexpense shall be adjusted in future periods.
(5) Fair value of financial instrument
Financial instruments that do not have active markets to provide quotes need to use valuation techniques todetermine fair value.Valuation techniques include the latest transaction information, discounted cash flow methods,and option pricing models.The Company has established a set of work processes to ensure that qualified personnelare responsible for the calculation, verification and review of fair value.The valuation model used by the
Company uses the market information as much as possible and uses the Company-specific information as little aspossible.It should be noted that part of the information used in the valuation model requires management’sestimation (such as discount rate, target exchange rate volatility, etc.).The Company regularly reviews the aboveestimates and assumptions and makes adjustments if necessary.
(6) Income tax
In the Company’s normal business activities, the final tax treatment and calculation of some transactions havesome uncertainties. Whether some projects can be disbursed from the cost and expenses before taxes requiresneeds to get approval from the tax authorities. If the final affirmation of these tax matters differs from the initiallyestimated amount, the difference shall have an impact on its current and deferred income taxes during the finalidentification period.
35.Changes of important accounting policy and estimation
(1)Changes of important accounting policies
√ Applicable □ Not applicable
| Content and reasons for changes in accounting policies | Approval process | Note |
| Implementation of new revenue standard | Deliberated and approved by AGM of 2019 |
Implementation of new revenue standard:
The Ministry of Finance revised the Accounting Standards for Business Enterprise No.14- Revenue in 2017,which go into effect on 1 January 2020. The revised standard requires that the cumulative impact of the firstimplementation of the standard be adjusted by the amount of opening retained earnings and other related items inthe financial statement for the period of first-time implementation for comparable periods.Main impact on the financial statement of the Company on 1 Jan. 2020 while implementing the new revenuestandard:
Consolidated financial statement: In RMB/CNY
| Item | 2019-12-31 | Reclassify | Remeasurement | 2020-1-1 |
| Account receivable | 2,310,666,475.89 | 115,015,466.40 | -- | 2,425,681,942.29 |
| Other current liability | -- | 115,015,466.40 | -- | 115,015,466.40 |
| -- | ||||
| Account received in advance | 113,737,432.61 | -110,874,750.61 | -- | 2,862,682.00 |
| Contract liability | -- | 98,565,613.54 | -- | 98,565,613.54 |
| Other current liability | -- | 12,309,137.07 | -- | 12,309,137.07 |
Financial statement of parent company:In RMB/CNY
| Item | 2019-12-31 | Reclassify | Remeasurement | 2020-1-1 |
| Account receivable | 768,500,929.93 | 79,739,079.11 | -- | 848,240,009.04 |
| Other current liability | -- | 79,739,079.11 | -- | 79,739,079.11 |
| Account received in advance | 12,010,730.30 | -12,010,730.30 | -- | -- |
| Contract liability | -- | 10,628,964.87 | -- | 10,628,964.87 |
| Other current liability | -- | 1,381,765.43 | -- | 1,381,765.43 |
(2)Changes of important accounting estimate
□ Applicable √ Not applicable
(3) Adjustment the financial statements at the beginning of the first year of implementation of new financialinstrument standards, new revenue standards and new leasing standards since 2020ApplicableWhether need to adjust the items in balance sheet at the beginning of the year
√Yes □No
Consolidate balance sheet
In RMB
| Item | 2019-12-31 | 2020-01-01 | Adjustments |
| Current assets: | |||
| Monetary funds | 1,596,893,711.87 | 1,596,893,711.87 | |
| Settlement provisions | |||
| Capital lent | |||
| Transaction financial asset | 3,940,885,674.32 | 3,940,885,674.32 | |
| Derivative financial assets | |||
| Note receivable | 1,812,141,371.94 | 1,812,141,371.94 | |
| Account receivable | 2,310,666,475.89 | 2,425,681,942.29 | 115,015,466.40 |
| Receivables financing | 23,873,317.86 | 23,873,317.86 | |
| Account paid in advance | 139,241,917.78 | 139,241,917.78 | |
| Insurance receivable | |||
| Reinsurance receivables | |||
| Contract reserve of reinsurance receivable | |||
| Other account receivables | 43,730,023.31 | 43,730,023.31 | |
| Including: Interest receivable | 655,052.98 | 655,052.98 | |
| Dividend receivable | 1,070,000.00 | 1,070,000.00 | |
| Buying back the sale of financial assets |
| Inventory | 2,418,744,835.82 | 2,418,744,835.82 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current asset due within one year | |||
| Other current assets | 1,012,055,605.74 | 1,012,055,605.74 | |
| Total current assets | 13,298,232,934.53 | 13,413,248,400.93 | 115,015,466.40 |
| Non-current assets: | |||
| Loans and payments on behalf | |||
| Creditors’ investment | |||
| Other creditors’ investment | |||
| Long-term account receivables | |||
| Long-term equity investment | 5,322,405,953.35 | 5,322,405,953.35 | |
| Other equity instrument investment | 285,048,000.00 | 285,048,000.00 | |
| Other non-current financial assets | 1,043,589,987.43 | 1,043,589,987.43 | |
| Investment real estate | 22,410,511.87 | 22,410,511.87 | |
| Fixed assets | 2,845,176,078.20 | 2,845,176,078.20 | |
| Construction in progress | 247,857,777.25 | 247,857,777.25 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use asset | |||
| Intangible assets | 430,594,372.12 | 430,594,372.12 | |
| Development expenses | |||
| Goodwill | 1,784,086.79 | 1,784,086.79 | |
| Long-term deferred expenses | 18,536,000.25 | 18,536,000.25 | |
| Deferred income tax assets | 212,476,501.54 | 212,476,501.54 | |
| Other non-current assets | 230,235,982.45 | 230,235,982.45 | |
| Total non-current assets | 10,660,115,251.25 | 10,660,115,251.25 | |
| Total assets | 23,958,348,185.78 | 24,073,363,652.18 | 115,015,466.40 |
| Current liabilities: | |||
| Short-term borrowings | 312,153,969.81 | 312,153,969.81 | |
| Loan from central bank | |||
| Capital borrowed | |||
| Transaction financial liability | |||
| Derivative financial liability |
| Note payable | 1,745,218,439.52 | 1,745,218,439.52 | |
| Account payable | 3,312,254,229.84 | 3,312,254,229.84 | |
| Account received in advance | 113,737,432.61 | 2,862,682.00 | -110,874,750.61 |
| Contract liability | 98,565,613.54 | 98,565,613.54 | |
| Selling financial asset of repurchase | |||
| Absorbing deposit and interbank deposit | |||
| Security trading of agency | |||
| Security sales of agency | |||
| Employee compensation payable | 314,343,737.66 | 314,343,737.66 | |
| Taxes payable | 129,538,411.86 | 129,538,411.86 | |
| Other account payable | 65,266,262.39 | 65,266,262.39 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Commission charge and commission payable | |||
| Reinsurance payable | |||
| Liability held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liability | 127,324,603.47 | 127,324,603.47 | |
| Total current liabilities | 5,992,512,483.69 | 6,107,527,950.09 | 115,015,466.40 |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual capital securities | |||
| Lease liability | |||
| Long-term account payable | 35,108,263.11 | 35,108,263.11 | |
| Long-term employee compensation payable | 58,392,053.61 | 58,392,053.61 | |
| Accrual liabilities | |||
| Deferred income | 365,116,022.98 | 365,116,022.98 | |
| Deferred income tax liabilities | 22,566,051.72 | 22,566,051.72 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 481,182,391.42 | 481,182,391.42 | |
| Total liabilities | 6,473,694,875.11 | 6,588,710,341.51 | 115,015,466.40 |
| Owners’ equity: | |||
| Share capital | 1,008,950,570.00 | 1,008,950,570.00 | |
| Other equity instrument | |||
| Including: preferred stock | |||
| Perpetual capital securities | |||
| Capital reserve | 3,391,527,806.33 | 3,391,527,806.33 | |
| Less: Inventory shares | |||
| Other comprehensive income | 134,871.67 | 134,871.67 | |
| Reasonable reserve | 3,247,757.06 | 3,247,757.06 | |
| Surplus reserve | 510,100,496.00 | 510,100,496.00 | |
| Provision of general risk | |||
| Retained profit | 12,076,443,635.56 | 12,076,443,635.56 | |
| Total owners’ equity attributable to parent company | 16,990,405,136.62 | 16,990,405,136.62 | |
| Minority interests | 494,248,174.05 | 494,248,174.05 | |
| Total owners’ equity | 17,484,653,310.67 | 17,484,653,310.67 | |
| Total liabilities and owner’s equity | 23,958,348,185.78 | 24,073,363,652.18 | 115,015,466.40 |
Balance sheet of parent company
In RMB
| Item | 2019-12-31 | 2020-01-01 | Adjustments |
| Current assets: | |||
| Monetary funds | 965,770,877.82 | 965,770,877.82 | |
| Transaction financial asset | 3,758,789,072.68 | 3,758,789,072.68 | |
| Derivative financial assets | |||
| Note receivable | 202,403,993.13 | 202,403,993.13 | |
| Account receivable | 768,500,929.93 | 848,240,009.04 | 79,739,079.11 |
| Receivables financing | |||
| Account paid in advance | 89,116,730.45 | 89,116,730.45 | |
| Other account receivables | 250,014,956.74 | 250,014,956.74 | |
| Including: Interest receivable | 804,929.68 | 804,929.68 | |
| Dividend receivable | 1,070,000.00 | 1,070,000.00 | |
| Inventory | 565,144,234.49 | 565,144,234.49 | |
| Contract assets | |||
| Assets held for sale |
| Non-current asset due within one year | |||
| Other current assets | 938,616,881.51 | 938,616,881.51 | |
| Total current assets | 7,538,357,676.75 | 7,618,096,755.86 | 79,739,079.11 |
| Non-current assets: | |||
| Creditors’ investment | |||
| Other creditors’ investment | |||
| Long-term account receivables | |||
| Long-term equity investment | 6,331,363,630.04 | 6,331,363,630.04 | |
| Other equity instrument investment | 209,108,000.00 | 209,108,000.00 | |
| Other non-current financial assets | 1,043,589,987.43 | 1,043,589,987.43 | |
| Investment real estate | |||
| Fixed assets | 1,646,333,216.50 | 1,646,333,216.50 | |
| Construction in progress | 136,573,912.28 | 136,573,912.28 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use asset | |||
| Intangible assets | 203,663,423.60 | 203,663,423.60 | |
| Development expenses | |||
| Goodwill | |||
| Long-term deferred expenses | |||
| Deferred income tax assets | 105,137,877.84 | 105,137,877.84 | |
| Other non-current assets | 172,646,721.05 | 172,646,721.05 | |
| Total non-current assets | 9,848,416,768.74 | 9,848,416,768.74 | |
| Total assets | 17,386,774,445.49 | 17,466,513,524.60 | 79,739,079.11 |
| Current liabilities: | |||
| Short-term borrowings | 116,126,459.33 | 116,126,459.33 | |
| Transaction financial liability | |||
| Derivative financial liability | |||
| Note payable | 284,054,137.00 | 284,054,137.00 | |
| Account payable | 930,273,146.35 | 930,273,146.35 | |
| Account received in advance | 12,010,730.30 | -12,010,730.30 | |
| Contract liability | 10,628,964.87 | 10,628,964.87 | |
| Employee compensation payable | 213,626,754.45 | 213,626,754.45 | |
| Taxes payable | 56,540,307.59 | 56,540,307.59 |
| Other account payable | 11,976,576.21 | 11,976,576.21 | |
| Including: Interest payable | |||
| Dividend payable | |||
| Liability held for sale | |||
| Non-current liabilities due within one year | |||
| Other current liability | 81,120,844.54 | 81,120,844.54 | |
| Total current liabilities | 1,624,608,111.23 | 1,704,347,190.34 | 79,739,079.11 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: preferred stock | |||
| Perpetual capital securities | |||
| Lease liability | |||
| Long-term account payable | |||
| Long-term employee compensation payable | 50,058,386.76 | 50,058,386.76 | |
| Accrual liabilities | |||
| Deferred income | 322,971,778.82 | 322,971,778.82 | |
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 373,030,165.58 | 373,030,165.58 | |
| Total liabilities | 1,997,638,276.81 | 2,077,377,355.92 | 79,739,079.11 |
| Owners’ equity: | |||
| Share capital | 1,008,950,570.00 | 1,008,950,570.00 | |
| Other equity instrument | |||
| Including: preferred stock | |||
| Perpetual capital securities | |||
| Capital reserve | 3,488,221,286.39 | 3,488,221,286.39 | |
| Less: Inventory shares | |||
| Other comprehensive income | |||
| Reasonable reserve | |||
| Surplus reserve | 510,100,496.00 | 510,100,496.00 | |
| Retained profit | 10,381,863,816.29 | 10,381,863,816.29 | |
| Total owners’ equity | 15,389,136,168.68 | 15,389,136,168.68 | |
| Total liabilities and owner’s equity | 17,386,774,445.49 | 17,466,513,524.60 | 79,739,079.11 |
(4) Retrospective adjustment of early comparison data description when initially implemented the newfinancial instrument standards and new leasing standards since 2020
□ Applicable √ Not applicable
36. Other
VI. Taxation
1. Major taxes and tax rates
| Tax | Basis | Tax rate |
| VAT | General taxpayers of the company and domestic subsidiaries calculate output tax at the tax rates of 13%, 9%, 6%, and 5% of taxable income, and calculate and pay value-added tax based on the difference after deducting the input VAT that is allowed to be deducted in the current period. | 13%, 9%, 6%, Collection rate 5% |
| City maintaining & construction tax | Turnover tax payable | 7% |
| Corporation income tax | Taxable income | Except for overseas subsidiaries which calculate and pay the taxes according to the statutory tax rate of the country or region where they are located, the corporate income tax of domestic companies is calculated and paid at 15%、20% or 25% of the taxable income. |
| Educational surtax | Turnover tax payable | 5%, 4.5% |
Disclose reasons for different taxpaying body
| Taxpaying body | Income tax rate |
| Weifu Mashan, Weifu Chang’an, Weifu International Trade, Weifu Autocam, Weifu Schmidt, Autosmart Seating、 Weifu Leader (Nanchang), Weifu Electric Drive, Borit | 25% |
| Weifu Leader (Wuhan) | 20% |
| The Company, Weifu Jinning, Weifu Leader, Weifu Tianli , Weifu Leader (Chongqing) | 15% |
| SPV, IRD | 22% |
The Company, Weifu Jinning, Weifu Leader and Weifu Tianli are accredited as a high-tech enterprise in 2020,and enjoy a preferential income tax rate of 15% from 1 January 2020 to 31 December 2022.The State Administration of Taxation announced the first item of Announcement of the State Administration ofTaxation on the Enterprise Income Tax Issues Concerning the Implementation of the Western DevelopmentStrategy No. 12 of 2012 that from January 1, 2011 to December 31, 2020, the enterprises located in the west
region and mainly engaged in the industrial projects stipulated in the Catalogue of Encouragement Industriesinthe Western Region, and whose main business income accounting for more than 70% of the total income of theenterprise in the current year can pay the corporate income tax at the tax rate of 15%. In 2020, Weifu Leader(Chongqing) paid its corporate income tax at the tax rate of 15%.According to the provision of the State Administration of Taxation on the Announced the Cancellation of 22 TaxNon-administrative Review (No. 58 documents in 2015) dated 18 August 2015, the enterprise that benefit fromthe 15% tax incentive for western development do not need to approve only to file, and Weifu Leader (Chongqing)has passed the tax filing audit in 2020.In 2020, Weifu Leader (Wuhan) met the standards of small and low-profit enterprises, and the part of taxableincome that did not exceed 1 million Yuan was included in the taxable incomeat a reduced rate of 25%, and thecorporate income tax was paid at the tax rate of 20%; while the part of the taxable income exceeding 1 millionYuan but not exceeding 3 million Yuan was included in the taxable income at a reduced rate of 50%, and thecorporate income tax was paid at the tax rate of 20%.
VII. Notes to major items in consolidated financial statements
1. Monetary funds
In RMB/CNY
| Item | Ending balance | Opening balance |
| Cash on hand | 507.66 | 93,165.33 |
| Cash in bank | 1,905,945,511.04 | 1,531,405,488.52 |
| Other Monetary funds | 57,343,813.63 | 65,395,058.02 |
| Total | 1,963,289,832.33 | 1,596,893,711.87 |
| Including: Total amount saving aboard | 33,723,245.25 | 31,442,836.86 |
| Total amount with restriction on use for mortgage, pledge or freeze | 57,343,813.63 | 34,946,900.21 |
Other explanationThe ending balance of other monetary funds includes bank acceptance bill deposit 51,045,344.11 Yuan, Mastercard deposit215,720.00 Yuan, in-transit foreign exchange funds 2,656,627.59 Yuan, letter of credit guarantee deposit 587,241.00 Yuan, andfrozen dividends 2,838,880.93 Yuan. The in-transit foreign exchange fund of 2,656,627.59 Yuan is the final payment of theinvestment in Protean Holding Corp; as of December 31, 2020, the amount is still in the foreign exchange supervision account.Thefrozen dividend of 2,838,880.93 Yuan represents the part of dividends distributed by SDEC(stock code:600841) and MiracleAutomation (stock code:002009) from 2017 to 2020 held by the Company as financial assets available for sale. According to thenotices numbered Yue 03MC [2016]2490 and Yue 03MC [2016]2492 served by Guangdong Shenzhen Intermediate People’s Court,these dividends were frozen.
2. Transaction financial asset
In RMB/CNY
| Item | Ending balance | Opening balance |
| Financial assets measured at fair value and whose changes are included in current profit or loss | 3,518,432,939.10 | 3,940,885,674.32 |
| Including: | ||
| SDEC | 140,395,956.00 | 91,822,332.00 |
| Miracle Automation | 47,712,300.00 | 36,031,500.00 |
| Financial products | 3,330,324,683.10 | 3,813,031,842.32 |
| Including: | ||
| Total | 3,518,432,939.10 | 3,940,885,674.32 |
3. Note receivable
(1) Classification of notes receivable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Bank acceptance bill | 1,312,571,695.46 | 1,755,135,175.42 |
| Trade acceptance bill | 344,744,028.10 | 57,006,196.52 |
| Total | 1,657,315,723.56 | 1,812,141,371.94 |
In RMB/CNY
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |||||
| Amount | Ratio | Amount | Accrual ratio | Amount | Ratio | Amount | Accrual ratio | |||
| Including: | ||||||||||
| Note receivable with bad debt provision accrual on portfolio | 1,657,315,723.56 | 100.00% | 1,657,315,723.56 | 1,812,141,371.94 | 100.00% | 1,812,141,371.94 | ||||
| Including: | ||||||||||
| Portfolio 1: bank acceptance bill | 1,312,571,695.46 | 79.20% | 1,312,571,695.46 | 1,755,135,175.42 | 96.85% | 1,755,135,175.42 | ||||
| Portfolio 2: trade acceptance bill | 344,744,028.10 | 20.80% | 344,744,028.10 | 57,006,196.52 | 3.15% | 57,006,196.52 | ||||
| Total | 1,657,315,723.56 | 100.00% | 1,657,315,723.56 | 1,812,141,371.94 | 100.00% | 1,812,141,371.94 | ||||
Statement of the basis for determining the combination:
On December 31, 2020, the company accrued bad debt provisions according to the expected credit losses for the entire duration, bankacceptance bills and trade acceptance bill do not need to accrue bad debt provisions.The company believed that the bank acceptancebills held did not have significant credit risk and would not cause significant losses due to bank defaults.The trade acceptance billheld by the Company did not have significant credit risk, because these bills were mainly issued by large state-owned enterprises andlisted companies with good reputation, and based on historical experience, there had been no major defaults, so they did not accruebad debt provisions for the receivable bank acceptance bills and trade acceptance bill.
If the provision for bad debts of note receivable is made in accordance with the general model of expected credit losses, please refer tothe disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √ Not applicable
(2) Bad debt provision accrual collected or switch back
Provision for bad debts in the current period:
□ Applicable √ Not applicable
(3) Notes receivable already pledged by the Company at the end of the period
In RMB/CNY
| Item | Amount pledge at period-end |
| Bank acceptance bill | 677,962,881.14 |
| Trade acceptance bill | 203,951,495.81 |
| Total | 881,914,376.95 |
(4) Notes endorsement or discount and undue on balance sheet date
In RMB/CNY
| Item | Amount derecognition at period-end | Amount not derecognition at period-end |
| Bank acceptance bill | 883,989,936.32 | |
| Trade acceptance bill | 33,750,000.00 | |
| Total | 917,739,936.32 |
(5) Notes transfer to account receivable due for failure implementation by drawer at period-end
In RMB/CNY
| Item | Amount transfer to account receivable at period-end |
| Trade acceptance bill | 7,300,000.00 |
| Total | 7,300,000.00 |
Other explanationThe trade acceptance bill that the company transferred to the accounts receivable due to in 2018 the failure of the drawer to perform theagreementat the end of the period were the bills of the subsidiaries controlled by Baota Petrochemical Group Co., Ltd. and the billsaccepted by Baota Petrochemical Group Finance Co., Ltd. (hereinafter referred to as “BDbills”); In 2018, the amount transferred toaccount receivable was 7 million Yuan, and 1.7 million Yuan has been recovered in 2019, this year, an increase of 2 million Yuanwas added.
(6) Note receivable actually written-off in the period
Nil
4. Account receivable
(1) Classification of account receivable
In RMB/CNY
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |||||
| Amount | Ratio | Amount | Accrual ratio | Amount | Ratio | Amount | Accrual ratio | |||
| Account receivable with bad debt provision accrual on a single basis | 80,362,095.35 | 2.74% | 80,362,095.35 | 100.00% | 64,818,802.14 | 2.58% | 64,818,802.14 | 100.00% | ||
| Including: | ||||||||||
| Account receivable with bad debt provision accrual on portfolio | 2,847,529,398.11 | 97.26% | 22,749,045.70 | 0.80% | 2,824,780,352.41 | 2,448,486,812.37 | 97.42% | 22,804,870.08 | 0.93% | 2,425,681,942.29 |
| Including: | ||||||||||
| Total | 2,927,891,493.46 | 100.00% | 103,111,141.05 | 3.52% | 2,824,780,352.41 | 2,513,305,614.51 | 100.00% | 87,623,672.22 | 3.49% | 2,425,681,942.29 |
Bad debt provision accrual on single basis: RMB 80,362,095.35
In RMB/CNY
| Name | Ending balance | |||
| Book balance | Bad debt reserve | Accrual ratio | Accrual causes | |
| Hubei Meiyang Auto Industry Co., Ltd. | 20,139,669.45 | 20,139,669.45 | 100.00% | Have difficulty in collection |
| Hunan Leopaard Auto Co., Ltd. | 8,910,778.54 | 8,910,778.54 | 100.00% | Have difficulty in collection |
| BD bills | 7,300,000.00 | 7,300,000.00 | 100.00% | Have difficulty in collection |
| Jiangxi Dorcen Automobile Industry Co., Ltd. | 7,287,632.16 | 7,287,632.16 | 100.00% | Have difficulty in collection |
| Linyi Zotye Automobile components Manufacturing Co., Ltd. | 6,193,466.77 | 6,193,466.77 | 100.00% | Have difficulty in collection |
| Changchun FAW Sihuan Engine Manufacturing Co., Ltd | 5,852,415.65 | 5,852,415.65 | 100.00% | Have difficulty in collection |
| Tongling Ruineng Purchasing Co., Ltd. | 4,320,454.34 | 4,320,454.34 | 100.00% | Have difficulty in collection |
| Brilliance Automotive Group Holdings Co., Ltd. | 3,469,091.33 | 3,469,091.33 | 100.00% | Have difficulty in collection |
| Zhejiang Zotye Auto Manufacturing Co., Ltd. | 3,217,763.27 | 3,217,763.27 | 100.00% | Have difficulty in collection |
| Jiangxi Dorcen Automobile Co., Ltd. | 2,518,959.01 | 2,518,959.01 | 100.00% | Have difficulty in collection |
| Dongfeng Chaoyang Diesel Co., Ltd. | 1,953,054.31 | 1,953,054.31 | 100.00% | Have difficulty in collection |
| Jiangsu Kawei Auto Industrial Group Co., Ltd. | 1,932,476.26 | 1,932,476.26 | 100.00% | Have difficulty in collection |
| Wuxi Kipor Machinery Co., Ltd | 1,820,798.21 | 1,820,798.21 | 100.00% | Have difficulty in collection |
| Fujian Zhao’an Country Minyue Bianjie Agricultural Machinery Automobile components Co., Ltd. | 1,111,007.12 | 1,111,007.12 | 100.00% | Have difficulty in collection |
| Jiangsu Jintan Automobile Industry Co., Ltd. | 1,059,798.43 | 1,059,798.43 | 100.00% | Have difficulty in collection |
| Other custom | 3,274,730.50 | 3,274,730.50 | 100.00% | Have difficulty in collection |
| Total | 80,362,095.35 | 80,362,095.35 | -- | -- |
Bad debt provision accrual on portfolio: RMB 22,749,045.70
In RMB/CNY
| Name | Ending balance | ||
| Book balance | Bad debt reserve | Accrual ratio | |
| Within 6 months | 2,708,236,852.25 | ||
| 6 months to one year | 112,424,780.47 | 11,242,478.05 | 10.00% |
| 1-2 years | 16,733,198.33 | 3,346,639.68 | 20.00% |
| 2-3 years | 3,291,064.86 | 1,316,425.77 | 40.00% |
| Over 3 years | 6,843,502.20 | 6,843,502.20 | 100.00% |
| Total | 2,847,529,398.11 | 22,749,045.70 | -- |
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please referto the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √ Not applicable
By account age
In RMB/CNY
| Account age | Book balance |
| Within one year (One year included) | 2,822,428,153.44 |
| Including: within 6 months | 2,708,470,485.40 |
| 6 months to one year | 113,957,668.04 |
| 1-2 years | 54,617,379.30 |
| 2-3 years | 35,820,608.24 |
| Over 3 years | 15,025,352.48 |
| 3-4 years | 15,025,352.48 |
| Total | 2,927,891,493.46 |
(2) Bad debt provision accrual collected or switch back
Bad debt provision accrual in the period:
In RMB/CNY
| Category | Opening balance | Amount changed in the period | Ending balance | |||
| Accrual | Collected or reversal | Written-off | Other | |||
| Bad debt provision | 87,623,672.22 | 17,176,890.53 | 931,854.92 | 988,058.21 | 230,491.43 | 103,111,141.05 |
| Total | 87,623,672.22 | 17,176,890.53 | 931,854.92 | 988,058.21 | 230,491.43 | 103,111,141.05 |
Important bad debt provision collected or switch back:
Nil
(3) Account receivable actual charge off in the Period
In RMB/CNY
| Item | Amount charge off |
| Anhui Quanchai Power Co., Ltd. | 143,750.00 |
| Zhejiang Gonow Automobile Co., Ltd. | 138,571.90 |
| Chongqing Tuopu Diesel Engine Factory | 134,197.30 |
| Fuzhou Haominxing Automobile components Co., Ltd. | 129,739.47 |
| Shanghai Yangma Generator Co., Ltd. | 104,496.00 |
| Retail enterprise | 337,303.54 |
| Total | 988,058.21 |
Major charge-off for the major receivable: NilAccount receivable write-off explanation: the funds are not generated by connected transactions
(4) Top 5 receivables at ending balance by arrears party
In RMB/CNY
| Name | Ending balance of account receivable | Ratio in total ending balance of account receivables | Ending balance of bad debt reserve |
| Bosch Automobile Diesel System Co., Ltd. | 549,543,387.12 | 18.77 | |
| Robert Bosch Company | 205,738,695.62 | 7.03 | 84,473.87 |
| Custom 3 | 220,253,622.18 | 7.52 | 7,236.15 |
| Custom 4 | 183,940,277.82 | 6.28 | 85,495.24 |
| Custom 5 | 171,736,086.39 | 5.87 | 8,253,890.59 |
| Total | 1,331,212,069.13 | 45.47 |
(5) Account receivable derecognition due to financial assets transfer
Nil
(6) Assets and liabilities resulted by account receivable transfer and continues involvementNil
5. Receivable financing
In RMB/CNY
| Item | Ending balance | Opening balance |
| Including: bank acceptance bill | 1,005,524,477.88 | 23,873,317.86 |
| Total | 1,005,524,477.88 | 23,873,317.86 |
Increase and decrease in current period and changes in fair value of receivables financing
□ Applicable √ Not applicable
If the bad debt provision for account receivable is calculated and withdrawn according to the general model of expected credit loss,please refer to the disclosure method of other account receivables in aspect of impairment provision:
□ Applicable √ Not applicable
Other explanation:
During the management of enterprise liquidity, the company will discount or endorse transfers before the maturity of some bills, thebusiness model for managing bills receivable is to collect contractual cash flows and sell the financial asset, so it is classified asfinancial assets measured at fair value and whose changes are included in other comprehensive income, which is listed in receivablesfinancing.
Notes receivable already pledged by the Company at the end of the period
| Item | Amount pledge at period-end |
| Bank acceptance bill | 646,892,501.28 |
| Trade acceptance bill | -- |
| Total | 646,892,501.28 |
6. Account paid in advance
(1) Account age of account paid in advance
In RMB/CNY
| Account age | Ending balance | Opening balance | ||
| Amount | Ratio | Amount | Ratio | |
| Within one year | 146,877,271.37 | 96.71% | 118,030,952.47 | 84.77% |
| 1-2 years | 2,799,827.49 | 1.84% | 19,644,713.49 | 14.11% |
| 2-3 years | 1,254,109.33 | 0.83% | 683,098.16 | 0.49% |
| Over 3 years | 942,149.57 | 0.62% | 883,153.66 | 0.63% |
| Total | 151,873,357.76 | -- | 139,241,917.78 | -- |
Explanation on reasons of failure to settle on important advance payment with age over one year:
Nil
(2) Top 5 account paid in advance at ending balance by prepayment objectTotal year-end balance of top five account paid in advance by prepayment object amounted to 61,951,950.89 Yuan, takes 40.79percent of the total advance payment at year-end.
7. Other account receivables
In RMB/CNY
| Item | Ending balance | Opening balance |
| Interest receivable | 655,052.98 | |
| Dividend receivable | 49,000,000.00 | 1,070,000.00 |
| Other account receivables | 5,209,580.88 | 42,004,970.33 |
| Total | 54,209,580.88 | 43,730,023.31 |
(1) Interest receivable
1) Category of interest receivable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Interest of fund occupation | 655,052.98 | |
| Total | 655,052.98 |
2) Significant overdue interest
Nil
3) Accrual of bad debt provision
□ Applicable √ Not applicable
(2) Dividend receivable
1) Category of dividend receivable
In RMB/CNY
| Item (or invested enterprise) | Ending balance | Opening balance |
| Wuxi Weifu Environment Catalyst Co., Ltd. | 49,000,000.00 | |
| Weifu Precision Machinery Manufacturing Co., Ltd. | 1,070,000.00 | |
| Total | 49,000,000.00 | 1,070,000.00 |
2) Important dividend receivable with account age over one year
Nil
(3) Other account receivables
1) Other account receivables classification by nature
In RMB/CNY
| Nature | Ending book balance | Opening book balance |
| Intercourse funds from units | 35,441,483.88 | |
| Equity disposal fund of Protean Holdings Corp. | 10,654,092.89 | |
| Cash deposit | 5,650,143.62 | 3,625,917.96 |
| Staff loans and petty cash | 766,301.05 | 1,346,241.81 |
| Other | 1,651,737.93 | 300,206.93 |
| Total | 8,068,182.60 | 51,367,943.47 |
2) Accrual of bad debt provision
In RMB/CNY
| Bad debt reserve | Phase I | Phase II | Phase III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
| Balance on Jan. 1, 2020 | 7,848,301.94 | 1,514,671.20 | 9,362,973.14 | |
| Balance of Jan. 1, 2020 in the period | —— | —— | —— | —— |
| Current accrual | 33,302.78 | 31,823.40 | 65,126.18 |
| Current reversal | 5,056,807.33 | 68,706.86 | 5,125,514.19 | |
| Current written-off | 1,445,964.34 | 1,445,964.34 | ||
| Other change | 1,980.93 | 1,980.93 | ||
| Balance on Dec. 31, 2020 | 2,826,778.32 | 31,823.40 | 2,858,601.72 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √ Not applicable
By account age
In RMB/CNY
| Account age | Book balance |
| Within one year (One year included) | 5,306,591.79 |
| Within 6 months | 4,338,058.39 |
| 6 months to one year | 968,533.40 |
| 1-2 years | 80.00 |
| 2-3 years | 47,365.81 |
| Over 3 years | 2,714,145.00 |
| 3-4 years | 2,714,145.00 |
| Total | 8,068,182.60 |
3) Bad debt provision accrual, collected or switch back
Bad debt provision accrual in the period:
In RMB/CNY
| Category | Opening balance | Amount changed in the period | Ending balance | |||
| Accrual | Collected or reversal | Written-off | Other | |||
| Bad debt provision | 9,362,973.14 | 65,126.18 | 5,125,514.19 | 1,445,964.34 | 1,980.93 | 2,858,601.72 |
| Total | 9,362,973.14 | 65,126.18 | 5,125,514.19 | 1,445,964.34 | 1,980.93 | 2,858,601.72 |
Including the important bad debt provision switch back or collected in the period: nil
4) Other receivables actually written-off during the reporting period
In RMB/CNY
| Item | Amount charge off |
| American HESS Company | 1,445,964.34 |
Note of important other receivables of written-off:
Nil
5) Top 5 other receivables at ending balance by arrears party
In RMB/CNY
| Enterprise | Nature | Ending balance | Account age | Ratio in total ending balance of other receivables | Ending balance of bad debt reserve |
| Ningbo Jiangbei High-Tech Industry Park Development Construction Co., Ltd. | Deposit margin | 1,767,000.00 | Over 3 years | 21.90% | 1,767,000.00 |
| Wuxi China Resources Gas Co., Ltd. | Deposit margin | 1,026,000.00 | Within 6 months | 12.73% | |
| Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd. | Deposit margin | 1,000,000.00 | Within 6 months | 12.39% | |
| Chongqing Airport Group Co., Ltd. | Deposit margin | 636,710.00 | 6 months to one year | 7.89% | 63,671.00 |
| Nanjing Chimbusco City Gas Development Co., Ltd. | Deposit margin | 575,640.00 | Over 3 years | 7.13% | 575,640.00 |
| Total | -- | 5,005,350.00 | -- | 62.04% | 2,406,311.00 |
6) Other account receivables related to government grants
Nil
7) Other receivable for termination of confirmation due to the transfer of financial assetsNil
8) The amount of assets and liabilities that are transferred other receivable and continued to be involved
Nil
8. Inventory
(1) Category of inventory
In RMB/CNY
| Item | Ending balance | Opening balance |
| Book balance | Inventory depreciation reserve or Provision for impairment of contract performance costs | Book value | Book balance | Inventory depreciation reserve or Provision for impairment of contract performance costs | Book value | |
| Raw materials | 584,188,987.86 | 73,833,368.32 | 510,355,619.54 | 495,927,678.66 | 81,069,128.03 | 414,858,550.63 |
| Goods in process | 415,445,852.86 | 14,589,096.65 | 400,856,756.21 | 243,525,007.82 | 13,963,866.92 | 229,561,140.90 |
| Finished goods | 2,124,817,656.18 | 158,847,857.29 | 1,965,969,798.89 | 1,937,368,868.87 | 163,043,724.58 | 1,774,325,144.29 |
| Total | 3,124,452,496.90 | 247,270,322.26 | 2,877,182,174.64 | 2,676,821,555.35 | 258,076,719.53 | 2,418,744,835.82 |
(2) Inventory depreciation reserve
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance | ||
| Accrual | Other | Switch back or write-off | Other | |||
| Raw materials | 81,069,128.03 | 32,396,791.38 | 318,998.85 | 39,951,549.94 | 73,833,368.32 | |
| Goods in process | 13,963,866.92 | 8,567,123.76 | 7,941,894.03 | 14,589,096.65 | ||
| Finished goods | 163,043,724.58 | 101,436,883.33 | 33,853.67 | 105,666,604.29 | 158,847,857.29 | |
| Total | 258,076,719.53 | 142,400,798.47 | 352,852.52 | 153,560,048.26 | 247,270,322.26 | |
① Net realizable value of the inventory refers to: during the day-to-day activities, results of the estimated sale price less costs whichare going to happen by estimation till works completed, sales price estimated and relevant taxes.
② Accrual basis for inventory depreciation reserve:
| Cash on hand | Accrual basis for inventory impairment provision | Specific basis for recognition |
| Materials in stock | The materials sold due to finished goods manufactured, its net realizable value is lower than the book value | Results from the estimated sale price of such inventory less the cost what will happen, estimated sales expenses and relevant taxes till the goods completed |
| Goods in process | The goods in process sold due to finished goods manufactured, its net realizable value is lower than the book value | Results from the estimated sale price of such inventory less the cost what will happen, estimated sales expenses and relevant taxes till the goods completed |
| Cash on hand | Accrual basis for inventory impairment provision | Specific basis for recognition |
③ Reasons of write-off for inventory falling price reserves:
| Cash on hand | Reasons of write-off |
| Materials in stock | Used for production and the finished goods are realized sales |
| Goods in process | Goods in process completed in the Period and corresponding finished goods are realized sales in the Period |
| Finished goods | Sales in the Period |
(3) Explanation on capitalization of borrowing costs at ending balance of inventory
Nil
(4) Assets completed without settlement from construction contract at period-end
Nil
9. Other current assets
In RMB/CNY
| Item | Ending balance | Opening balance |
| Structured deposits | 1,925,000,000.00 | 965,000,000.00 |
| Receivable export tax rebates | 5,286,965.71 | 5,383,485.34 |
| VAT refund receivable | 1,648,669.86 | |
| Prepaid taxes and VAT retained | 200,524,304.70 | 36,067,254.77 |
| Input tax to be deducted and certification | 178,073.42 | 764,895.21 |
| Other | 6,931,769.78 | 3,191,300.56 |
| Total | 2,137,921,113.61 | 1,012,055,605.74 |
Other explanation:
Nil
10. Long-term equity investments
In RMB/CNY
| The invested entity | Opening balance (book value) | Current changes (+, -) | Ending balance (book value) | Ending balance of depreciation reserves | |||||||
| Additional investment | Capital reduction | Investment gain/loss recognized under equity | Other comprehensive income adjustment | Other equity change | Cash dividend or profit announced to issued | Impairment accrual | Other | ||||
| I. Joint venture | |||||||||||
| II. Associated enterprise | |||||||||||
| Wuxi Weifu Environment Catalyst Co., Ltd. | 578,366,832.27 | 147,950,344.01 | 49,000,000.00 | 677,317,176.28 | |||||||
| Bosch Automobile Diesel System Co., Ltd. | 3,417,092,136.65 | 1,185,178,731.75 | 1,801,681,159.00 | 2,800,589,709.40 | |||||||
| Zhonglian Automobile Electronic Co., Ltd. | 1,261,232,635.30 | 307,716,221.01 | 331,400,000.00 | 1,237,548,856.31 | |||||||
| Weifu Precision Machinery Manufacturing Co., Ltd. | 61,536,602.82 | 16,917,467.83 | 3,600,000.00 | 74,854,070.65 | |||||||
| Shinwell Automobile Technology (Wuxi) Co., Ltd. | 4,177,746.31 | -3,194,996.20 | 982,750.11 | ||||||||
| Changchun Xuyang Weifu Automobile components Technology Co., Ltd. | 10,200,000.00 | -4,271.78 | 10,195,728.22 | ||||||||
| Subtotal | 5,322,405,953.35 | 10,200,000.00 | 1,654,563,496.62 | 2,185,681,159.00 | 4,801,488,290.97 | ||||||
| Total | 5,322,405,953.35 | 10,200,000.00 | 1,654,563,496.62 | 2,185,681,159.00 | 4,801,488,290.97 |
11. Other equity instrument investment
In RMB/CNY
| Item | Ending balance | Opening balance |
| Wuxi Xidong Science & Technology Industrial Park | 5,000,000.00 | 5,000,000.00 |
| Beijing Zhike Industry Investment Holding Group Co., Ltd. | 75,940,000.00 | 75,940,000.00 |
| Rare earth Catalysis Innovation Research Institute (Dongying) Co., Ltd. | 4,108,000.00 | 4,108,000.00 |
| Wuxi Xichang Microchip Semi-Conductor | 200,000,000.00 | 200,000,000.00 |
| Total | 285,048,000.00 | 285,048,000.00 |
Disclosure of the non-trading equity instrument investment item by itemNil
12. Other non-current financial assets
In RMB/CNY
| Item | Ending balance | Opening balance |
| Tradable financial assets holding for over one year | 1,467,000,000.00 | 1,000,246,703.43 |
| Equity instrument investment | 338,788,421.00 | 43,343,284.00 |
| Total | 1,805,788,421.00 | 1,043,589,987.43 |
13. Investment real estate
(1) Investment real estate measured by cost
√ Applicable □ Not applicable
In RMB/CNY
| Item | House and Building | Land use right | Construction in progress | Total |
| I. original book value | ||||
| 1.Opening balance | 65,524,052.61 | 65,524,052.61 | ||
| 2.Current increased | ||||
| (1) outsourcing | ||||
| (2) Inventory\fixed assets\construction in process transfer-in | ||||
| (3) increased by combination | ||||
| 3.Current decreased | ||||
| (1) disposal | ||||
| (2) other transfer-out | ||||
| 4.Ending balance | 65,524,052.61 | 65,524,052.61 | ||
| II. Accumulated depreciation and accumulated amortization | ||||
| 1.Opening balance | 43,113,540.74 | 43,113,540.74 | ||
| 2.Current increased | 1,523,830.25 | 1,523,830.25 | ||
| (1) accrual or amortization | 1,523,830.25 | 1,523,830.25 |
| 3.Current decreased | ||||
| (1) disposal | ||||
| (2) other transfer-out | ||||
| 4.Ending balance | 44,637,370.99 | 44,637,370.99 | ||
| III. Depreciation reserves | ||||
| 1.Opening balance | ||||
| 2.Current increased | ||||
| (1) accrual | ||||
| 3. Current decreased | ||||
| (1) disposal | ||||
| (2) other transfer-out | ||||
| 4.Ending balance | ||||
| IV. Book value | ||||
| 1.Ending Book value | 20,886,681.62 | 20,886,681.62 | ||
| 2.Opening Book value | 22,410,511.87 | 22,410,511.87 |
(2) Investment real estate measured at fair value
□ Applicable √ Not applicable
(3) Investment real estate without property certification held
Nil
14. Fixed assets
In RMB/CNY
| Item | Ending balance | Opening balance |
| Fixed assets | 2,882,230,191.08 | 2,845,176,078.20 |
| Total | 2,882,230,191.08 | 2,845,176,078.20 |
(1) Fixed assets
In RMB/CNY
| Item | House and Building | Machinery equipment | Transportation equipment | Electronic and other equipment | Total |
| I. original book value: | |||||
| 1.Opening balance | 1,577,727,234.03 | 2,892,177,324.22 | 33,031,605.81 | 518,844,612.28 | 5,021,780,776.34 |
| 2.Current increased | 7,563,975.38 | 498,442,904.87 | 1,083,968.58 | 44,140,463.89 | 551,231,312.72 |
| (1) Purchase | 5,768,487.05 | 5,779,483.65 | 11,547,970.70 | ||
| (2) Construction in progress transfer-in | 7,563,975.38 | 406,156,147.42 | 1,083,968.58 | 26,833,999.90 | 441,638,091.28 |
| (3) increased by combination | 86,518,270.40 | 11,526,980.34 | 98,045,250.74 | ||
| 3.Current decreased | 696,619.88 | 32,375,566.33 | 3,834,292.89 | 31,182,407.69 | 68,088,886.79 |
| (1) disposal or scrapping | 696,619.88 | 32,375,566.33 | 3,834,292.89 | 31,182,407.69 | 68,088,886.79 |
| 4.Conversion of foreign currency financial statement | 1,445,729.23 | 209,033.22 | 1,654,762.45 | ||
| 5.Ending balance | 1,584,594,589.53 | 3,359,690,391.99 | 30,281,281.50 | 532,011,701.70 | 5,506,577,964.72 |
| II. Accumulated depreciation | |||||
| 1.Opening balance | 373,468,771.98 | 1,466,289,636.27 | 24,572,383.79 | 259,549,999.99 | 2,123,880,792.03 |
| 2.Current increased | 47,226,786.07 | 341,600,542.42 | 1,505,443.82 | 50,929,896.22 | 441,262,668.53 |
| (1) accrual | 47,226,786.07 | 295,932,176.04 | 1,505,443.82 | 44,560,750.98 | 389,225,156.91 |
| (3) increased by combination | 45,668,366.38 | 6,369,145.24 | 52,037,511.62 | ||
| 3.Current decreased | 552,514.41 | 7,100,470.77 | 3,475,517.46 | 19,546,483.92 | 30,674,986.56 |
| (1) disposal or scrapping | 552,514.41 | 7,100,470.77 | 3,475,517.46 | 19,546,483.92 | 30,674,986.56 |
| 4.Conversion of foreign currency financial statement | 833,283.96 | 135,316.83 | 968,600.79 | ||
| 5.Ending balance | 420,143,043.64 | 1,801,622,991.88 | 22,602,310.15 | 291,068,729.12 | 2,535,437,074.79 |
| III. Depreciation reserves | |||||
| 1.Opening balance | 45,370,341.62 | 73,319.90 | 7,280,244.59 | 52,723,906.11 | |
| 2.Current increased | 36,436,674.38 | 36,436,674.38 | |||
| (1) accrual | 36,436,674.38 | 36,436,674.38 | |||
| 3.Current decreased | 35,943.60 | 213,938.04 | 249,881.64 | ||
| (1) disposal or scrapping | 35,943.60 | 213,938.04 | 249,881.64 | ||
| 4.Conversion of foreign currency financial statement | |||||
| 5.Ending balance | 81,771,072.40 | 73,319.90 | 7,066,306.55 | 88,910,698.85 | |
| IV. Book value | |||||
| 1.Ending Book value | 1,164,451,545.89 | 1,476,296,327.71 | 7,605,651.45 | 233,876,666.03 | 2,882,230,191.08 |
| 2.Opening Book value | 1,204,258,462.05 | 1,380,517,346.33 | 8,385,902.12 | 252,014,367.70 | 2,845,176,078.20 |
(2) Temporarily idle fixed assets
Nil
(3) Fixed assets acquired by financing lease
In RMB/CNY
| Item | Original book value | Accumulated depreciation | Provision for impairment | Book value |
| Mechanical equipment | 28,328,331.83 | 16,449,611.12 | 11,878,720.71 |
(4) Fixed assets acquired by operating lease
Nil
(5) Fixed assets without property certification held
In RMB/CNY
| Item | Book value | Reasons for without the property certification |
| Plant and office building of Weifu Chang’an | 34,117,284.65 | Still in process of relevant property procedures |
(6) Disposal of fixed assets
Nil
15. Construction in progress
In RMB/CNY
| Item | Ending balance | Opening balance |
| Construction in progress | 243,795,493.04 | 247,857,777.25 |
| Total | 243,795,493.04 | 247,857,777.25 |
(1) Construction in progress
In RMB/CNY
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Technical transformation of parent company | 123,249,079.40 | 123,249,079.40 | 98,032,515.22 | 98,032,515.22 | ||
| Technical transformation of Weifu Autocam | 20,720,304.97 | 20,720,304.97 | 44,412,832.62 | 44,412,832.62 | ||
| Technical transformation of Weifu Leader | 27,031,547.25 | 27,031,547.25 | 25,051,156.03 | 25,051,156.03 | ||
| Other item | 72,794,561.42 | 72,794,561.42 | 80,361,273.38 | 80,361,273.38 | ||
| Total | 243,795,493.04 | 243,795,493.04 | 247,857,777.25 | 247,857,777.25 |
(2) Changes of major projects under construction
In RMB/CNY
| Item | Budget | Opening balance | Current increased | Fixed assets transfer-in in the Period | Other decreased in the Period | Ending balance | Proportion of project investment in budget | Progress | Accumulated amount of interest capitalization | including: interest capitalized amount of the year | Interest capitalization rate of the year | Source of funds |
| Technical transformation of parent company | 98,032,515.22 | 258,248,011.11 | 233,031,446.93 | 123,249,079.40 | Other | |||||||
| Technical transformation of Weifu Autocam | 44,412,832.62 | 59,344,058.68 | 83,036,586.33 | 20,720,304.97 | Other | |||||||
| Technical transformation of Weifu Leader | 25,051,156.03 | 49,714,021.24 | 47,733,630.02 | 27,031,547.25 | Other | |||||||
| Total | 167,496,503.87 | 367,306,091.03 | 363,801,663.28 | 171,000,931.62 | -- | -- | -- |
(3) The provision for impairment of construction projects
Nil
(4) Engineering materials
Nil
16. Intangible assets
(1) Intangible assets
In RMB/CNY
| Item | Land use right | Patent | Non-patent technology | Computer software | Trademark and trademark license | Total |
| I. original book value | ||||||
| 1.Opening balance | 380,986,757.11 | 105,086,673.46 | 81,823,603.48 | 41,597,126.47 | 609,494,160.52 | |
| 2.Current increased | 25,763.33 | 75,384,836.56 | 15,790,128.41 | 91,200,728.30 | ||
| (1) Purchase | 2,842,372.92 | 15,019,691.80 | 17,862,064.72 | |||
| (2) internal R&D | ||||||
| (3) increased by combination | 72,542,463.64 | 770,436.61 | 73,312,900.25 | |||
| (4) Other | 25,763.33 | 25,763.33 | ||||
| 3.Current decreased | ||||||
| (1) disposal | ||||||
| 4.Conversion of foreign currency financial statement | 4,607,818.10 | 71,130.87 | 4,678,948.97 | |||
| 5.Ending balance | 381,012,520.44 | 185,079,328.12 | 97,684,862.76 | 41,597,126.47 | 705,373,837.79 | |
| II. accumulated amortization | ||||||
| 1.Opening balance | 88,200,675.16 | 9,823,965.21 | 54,519,248.03 | 9,709,000.00 | 162,252,888.40 | |
| 2.Current increased | 7,052,263.90 | 44,226,916.11 | 19,718,966.93 | 70,998,146.94 | ||
| (1) accrual | 7,052,263.90 | 11,059,695.32 | 19,034,067.57 | 37,146,026.79 | ||
| (2) Increased by combination | 33,167,220.79 | 684,899.36 | 33,852,120.15 | |||
| 3.Current decreased | ||||||
| (1) disposal | ||||||
| 4.Conversion of foreign currency financial statement | 1,027,211.35 | 35,743.41 | 1,062,954.76 | |||
| 5.Ending balance | 95,252,939.06 | 55,078,092.67 | 74,273,958.37 | 9,709,000.00 | 234,313,990.10 | |
| III. Depreciation reserves | ||||||
| 1.Opening balance | 16,646,900.00 | 16,646,900.00 | ||||
| 2.Current increased |
| (1) accrual | ||||||
| 3.Current decreased | ||||||
| (1) disposal | ||||||
| 4.Conversion of foreign currency financial statement | ||||||
| 5.Ending balance | 16,646,900.00 | 16,646,900.00 | ||||
| IV. Book value | ||||||
| 1.Ending Book value | 285,759,581.38 | 130,001,235.45 | 23,410,904.39 | 15,241,226.47 | 454,412,947.69 | |
| 2.Opening Book value | 292,786,081.95 | 95,262,708.25 | 27,304,355.45 | 15,241,226.47 | 430,594,372.12 |
(2) Land use right without property certification held
Nil
17. Goodwill
(1) Original book value of goodwill
In RMB/CNY
| The invested entity or matters forming goodwill | Opening balance | Current increased | Current decreased | Ending balance | |
| Formed by business combination | Translation of foreign currency statements | Disposal | |||
| Merged with Weifu Tianli | 1,784,086.79 | 1,784,086.79 | |||
| Merged with Borit | 247,766,648.21 | 8,249,961.32 | 256,016,609.53 | ||
| Total | 1,784,086.79 | 247,766,648.21 | 8,249,961.32 | 257,800,696.32 | |
(2) Goodwill depreciation reserves
Nil
Other explanation
(1) Goodwill formed by the merger of Weifu Tianli:
In 2010, the Company controlling and combine Weifu Tianli by increasing the capital, the goodwill is the numberthat combination cost greater than the fair value of identical net assets of Weifu Tianli. At the end of the period, thecompany conducted an impairment test on goodwill to estimate the present value of future cash flows and therecoverable amount of the goodwill-related asset group, that is to estimate the present value of future cash flowbased on the management's financial budget for the next five years and the discount rate of 15.05%, the cash flow of
the year after the five years of financial budget has remained stable. The asset group identified during the goodwillimpairment test did not change.The key parameters determined by the goodwill impairment test are as follows: Thecurrent value of the expected future cash flow of the asset group related to goodwill is measured by using 20%~24%of gross profit margin and 4%~14% of the operating income growth rate in the forecast period as key parameters.The management determines these parameters based on historical conditions prior to the forecast period andforecasts of market development. After the above tests, the company's goodwill does not need to make provisionsfor impairment.
(2) Goodwill formed by the merger of Borit:
In this period, the company acquired 100.00% equity of Borit in the form of cash purchase, the goodwill was thepart that the cost of the merger was greater than the fair value share of the identifiable net assets ofBorit.According to the “Assets Appraisal Report” (Wanlong PBZi (2021) No. 40016) issued by Wanlong(Shanghai) Assets Appraisal Co., Ltd, appointed by the Company, the recoverable value of the assets group wherethe goodwill of the merged with Borit is 439,880,000 Yuan, higher than the carrying value of 339,170,000 Yuan,and there is no impairment loss of goodwill.
18. Long-term deferred expenses
In RMB/CNY
| Item | Opening balance | Current increased | Amortized in the Period | Other decrease | Ending balance |
| Remodeling costs etc. | 18,536,000.25 | 9,164,129.72 | 12,637,958.88 | 15,062,171.09 | |
| Total | 18,536,000.25 | 9,164,129.72 | 12,637,958.88 | 15,062,171.09 |
19. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets that are not offset
In RMB/CNY
| Item | Ending balance | Opening balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Bad debt reserve | 104,259,030.38 | 15,779,756.63 | 94,527,571.76 | 14,302,572.39 |
| Inventory depreciation reserve | 225,684,043.14 | 35,799,261.60 | 237,900,564.04 | 38,773,864.59 |
| Depreciation reserves of fixed assets | 55,397,599.68 | 8,523,566.97 | 19,197,534.00 | 3,095,824.19 |
| Depreciation reserves of intangible assets | 16,646,900.00 | 2,497,035.00 | 16,646,900.00 | 2,497,035.00 |
| Other equity instrument investment | 10,000,000.00 | 1,500,000.00 | 10,000,000.00 | 1,500,000.00 |
| Change of fair value of transaction financial asset | 16,517,403.00 | 2,477,610.45 | ||
| Deferred income | 323,924,836.18 | 48,935,725.44 | 362,993,022.12 | 54,664,953.32 |
| Internal un-realized profit | 19,551,845.38 | 3,457,610.51 | 22,481,656.04 | 4,568,190.39 |
| Payable salary, accrued expenses etc. | 981,477,549.10 | 151,813,641.23 | 622,348,855.94 | 96,720,511.00 |
| Depreciation assets, amortization difference | 89,867,140.23 | 14,608,530.41 | 49,220,776.87 | 7,779,059.56 |
| Deductible loss of subsidiary | 9,703,095.17 | 2,425,773.79 | 21,714,524.19 | 4,101,171.83 |
| Equity incentive | 6,330,515.63 | 987,908.92 | ||
| Total | 1,842,842,554.89 | 286,328,810.50 | 1,473,548,807.96 | 230,480,792.72 |
(2) Deferred income tax liabilities that are not offset
In RMB/CNY
| Item | Ending balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| The difference between the fair value and taxation basis of Weifeu Tianli assets in a merger not under the same control | 11,271,189.48 | 1,690,678.40 | 12,011,409.46 | 1,801,711.40 |
| The difference between the fair value and taxation basis of IRD assets in a merger not under the same control | 86,905,585.08 | 19,119,228.72 | 94,383,365.10 | 20,764,340.32 |
| The difference between the fair value and taxation basis of Borit assets in a merger not under the same control | 39,376,104.10 | 9,844,026.00 | ||
| Change of fair value of transaction financial asset | 366,808,362.19 | 55,023,506.38 | 18,231,842.32 | 2,734,776.35 |
| Accelerated depreciation of fixed assets | 211,571,729.76 | 32,911,802.62 | 98,019,924.32 | 15,269,514.83 |
| Total | 715,932,970.61 | 118,589,242.12 | 222,646,541.20 | 40,570,342.90 |
(3) Deferred income tax assets and deferred income tax liabilities listed after off-set
In RMB/CNY
| Item | Trade-off between the deferred income tax assets and liabilities | Ending balance of deferred income tax assets or liabilities after off-set | Trade-off between the deferred income tax assets and liabilities at period-begin | Opening balance of deferred income tax assets or liabilities after off-set |
| Deferred income tax assets | -87,935,309.00 | 198,393,501.50 | -18,004,291.18 | 212,476,501.54 |
| Deferred income tax liabilities | -87,935,309.00 | 30,653,933.12 | -18,004,291.18 | 22,566,051.72 |
(4) Details of unrecognized deferred income tax assets
In RMB/CNY
| Item | Ending balance | Opening balance |
| Bad debt reserve | 1,710,712.39 | 2,459,073.60 |
| Inventory depreciation reserve | 21,586,279.12 | 20,176,155.49 |
| Loss from subsidiary | 193,713,240.35 | 103,734,801.82 |
| Depreciation reserves of fixed assets | 33,513,099.17 | 33,526,372.11 |
| Other equity instrument investment | 46,600,000.00 | 48,633,106.95 |
| Equity incentive | 154,321.87 | |
| Total | 297,277,652.90 | 208,529,509.97 |
(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year
In RMB/CNY
| Maturity year | Ending amount | Opening amount | Note |
| 2020 | 23,567,088.89 | 44,795,747.87 | Subsidiaries have operating losses |
| 2021 | 43,218,245.04 | 46,080,956.48 | Subsidiaries have operating losses |
| 2022 | 9,901,777.74 | 10,503,882.86 | Subsidiaries have operating losses |
| 2023 | 7,882,026.39 | 12,228,941.56 | Subsidiaries have operating losses |
| 2024 | 19,165,663.76 | Subsidiaries have operating losses | |
| 2025 | Subsidiaries have operating losses | ||
| No expiration period | Overseas subsidiaries have operating losses | ||
| Total | 103,734,801.82 | 139,281,223.32 | -- |
20. Other non-current assets
In RMB/CNY
| Item | Ending balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Engineering equipment paid in advance | 195,259,441.73 | 195,259,441.73 | 230,235,982.45 | 230,235,982.45 | ||
| Total | 195,259,441.73 | 195,259,441.73 | 230,235,982.45 | 230,235,982.45 | ||
21. Short-term borrowings
(1) Category of short-term borrowings
In RMB/CNY
| Item | Ending balance | Opening balance |
| Credit loan | 301,958,184.49 | 305,835,808.28 |
| Bill financing | 5,976,347.95 | |
| Accrued interest | 280,415.56 | 341,813.58 |
| Total | 302,238,600.05 | 312,153,969.81 |
Explanation of short-term loan classification:
Nil
(2) Overdue short-term loans without payment
Nil
22. Note payable
In RMB/CNY
| Category | Ending balance | Opening balance |
| Bank acceptance bill | 2,462,592,372.82 | 1,745,218,439.52 |
| Total | 2,462,592,372.82 | 1,745,218,439.52 |
Notes expired at year-end without paid was 0.00 Yuan.
23. Account payable
(1) Account payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Within 1 year | 3,986,993,867.21 | 3,214,392,402.81 |
| 1-2 years | 87,605,077.14 | 74,021,217.00 |
| 2-3 years | 13,824,720.43 | 5,854,811.50 |
| Over three years | 12,560,575.61 | 17,985,798.53 |
| Total | 4,100,984,240.39 | 3,312,254,229.84 |
(2) Important account payable with account age over one year
Nil
24. Accounts received in advance
(1) Accounts received in advance
In RMB/CNY
| Item | Ending balance | Opening balance |
| Within 1 year | 4,071,236.87 | 2,862,682.00 |
| Total | 4,071,236.87 | 2,862,682.00 |
(2) Important accounts received in advance with account age over one yearNil
25. Contract liabilities
In RMB/CNY
| Item | Ending balance | Opening balance |
| Within 1 year | 77,554,320.04 | 96,736,917.15 |
| 1-2 years | 2,763,605.96 | 654,710.65 |
| 2-3 years | 255,602.59 | 243,585.27 |
| Over three years | 1,143,858.66 | 930,400.47 |
| Total | 81,717,387.25 | 98,565,613.54 |
26. Wage payable
(1) Wage payable
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| I. Short-term compensation | 161,202,257.62 | 1,106,707,656.84 | 1,083,683,592.15 | 184,226,322.31 |
| II. Post-employment welfare- defined contribution plans | 27,587,740.03 | 119,822,883.92 | 97,479,526.53 | 49,931,097.42 |
| III. Dismissed welfare | 2,249,529.82 | 3,660,684.94 | 4,264,943.44 | 1,645,271.32 |
| IV. Other welfare due within one year | 106,180,000.00 | 81,282,389.60 | 103,312,389.60 | 84,150,000.00 |
| V. Other short-term welfare-Housing subsidies, employee benefits and welfare funds | 17,124,210.19 | 2,525,946.49 | 7,181,035.91 | 12,469,120.77 |
| Total | 314,343,737.66 | 1,313,999,561.79 | 1,295,921,487.63 | 332,421,811.82 |
(2) Short-term compensation
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| 1. Wages, bonuses, allowances and subsidies | 141,247,196.85 | 884,495,041.97 | 870,419,048.20 | 155,323,190.62 |
| 2. Welfare for workers and staff | 76,357,049.59 | 76,356,937.24 | 112.35 | |
| 3. Social insurance | 8,701,447.13 | 58,977,737.95 | 50,181,099.40 | 17,498,085.68 |
| Including: Medical insurance | 7,575,173.65 | 49,025,390.01 | 42,349,121.51 | 14,251,442.15 |
| Work injury insurance | 541,230.02 | 3,737,106.50 | 2,616,665.94 | 1,661,670.58 |
| Maternity insurance | 585,043.46 | 6,215,241.44 | 5,215,311.95 | 1,584,972.95 |
| 4. Housing accumulation fund | 679,677.00 | 70,474,436.00 | 70,137,926.00 | 1,016,187.00 |
| 5. Labor union expenditure and personnel education expense | 10,573,936.64 | 15,610,566.19 | 15,817,413.27 | 10,367,089.56 |
| 6. Short-term paid absences | 792,825.14 | 771,168.04 | 21,657.10 | |
| Total | 161,202,257.62 | 1,106,707,656.84 | 1,083,683,592.15 | 184,226,322.31 |
(3) Defined contribution plans
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| 1. Basic endowment insurance | 9,782,749.83 | 73,994,787.03 | 53,932,701.22 | 29,844,835.64 |
| 2. Unemployment insurance | 412,974.22 | 2,215,497.53 | 1,715,942.59 | 912,529.16 |
| 3. Enterprise annuity | 17,392,015.98 | 43,612,599.36 | 41,830,882.72 | 19,173,732.62 |
| Total | 27,587,740.03 | 119,822,883.92 | 97,479,526.53 | 49,931,097.42 |
Other explanation:
Reclassification of long-term staff remuneration payable:
①An amount of RMB 223,910,852.76 in short-term remuneration is reclassified into long-term staff remunerationpayable, which represents the incentive fund of RMB 223,910,852.76 provided for in this period.
②An amount of RMB97,723,894.49 is recorded in post office benefits - defined benefit plan and incentive fundpayable within one year, which represents the difference between the incentive fund of RMB101,270,000.00expected to be paid in 2021 and the beginning balance of incentive fund payable within one year, post officebenefits-defined benefit plan and the actual amount paid in this period.
Post-employment welfare- defined contribution plans:
The Company participates in the pension insurance and unemployment insurance plans established by government
authorities by laws, a certain percentage of the social security fee regulated by the government will pay by theCompany monthly for the plans.Other than the aforesaid monthly contribution, the Company takes no furtherpayment obligation. The relevant expenditure is included in current profit or loss or cost of relevant assets whenoccurs. Found more of enterprise annuity in Note XVI-4.” Annuity plan”
(4) Dismiss welfare
The wages payable resulted from the implementation of inner retirement plan, the amount paid in the year RMB2,598,717.94 re-classified into the wage payable from long-term wages payable.
27. Taxes payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Value-added tax | 28,744,351.90 | 61,749,095.75 |
| Corporation income tax | 21,458,320.79 | 50,686,013.43 |
| Individual income tax | 7,184,934.79 | 2,689,642.51 |
| City maintaining & construction tax | 1,983,996.80 | 4,348,399.47 |
| Educational surtax | 1,417,140.56 | 3,105,999.62 |
| Other (including stamp tax and local funds) | 6,704,945.45 | 6,959,261.08 |
| Total | 67,493,690.29 | 129,538,411.86 |
28. Other account payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Interest payable | 4,862.22 | |
| Other accounts payable | 361,551,395.20 | 65,266,262.39 |
| Total | 361,556,257.42 | 65,266,262.39 |
(1) Interest payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Other | 4,862.22 | |
| Total | 4,862.22 |
Major overdue interest:
Nil
(2) Dividend payable
Nil
(3) Other account payable
1) Classification of other accounts payable according to nature of account
In RMB/CNY
| Item | Ending balance | Opening balance |
| Deposit and margin | 12,759,592.29 | 14,458,865.71 |
| Social insurance and reserves funds that withholding | 8,853,543.93 | 8,434,584.35 |
| Intercourse funds of unit | 30,982,145.98 | 37,055,997.50 |
| Restricted stock repurchase obligations | 302,479,200.00 | |
| Other | 6,476,913.00 | 5,316,814.83 |
| Total | 361,551,395.20 | 65,266,262.39 |
2) Significant other payable with over one year age
In RMB/CNY
| Item | Ending balance | Reasons for non-repayment or carry-over |
| Nanjing Jidian Industrial Group Co., Ltd. | 4,500,000.00 | Intercourse funds |
| Total | 4,500,000.00 | -- |
29. Non-current liabilities due within one year
In RMB/CNY
| Item | Ending balance | Opening balance |
| Long-term borrowings due within one year | 33,271,589.84 | |
| Finance lease payments due within one year | 3,615,985.51 | |
| Interest payable | 26,666.67 | |
| Total | 36,914,242.02 |
30. Other current liabilities
In RMB/CNY
| Item | Ending balance | Opening balance |
| Rebate payable | 213,477,951.00 | 115,015,466.40 |
| Pending sales tax | 9,393,136.33 | 12,309,137.07 |
| Total | 222,871,087.33 | 127,324,603.47 |
Changes in short-term bonds payable:
Nil
31. Long-term borrowings
(1) Category of Long-term borrowings
In RMB/CNY
| Item | Ending balance | Opening balance |
| Guaranteed loan | 3,050,640.97 | |
| Total | 3,050,640.97 |
Explanation of long-term loan classification:Nil
32. Long-term account payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Long-term account payable | 15,351,883.00 | 16,843,181.00 |
| Special accounts payable | 24,127,335.17 | 18,265,082.11 |
| Total | 39,479,218.17 | 35,108,263.11 |
(1) Long-term account payable listed by nature
In RMB/CNY
| Item | Ending balance | Opening balance |
| Hi-tech Branch of Nanjing Finance Bureau (note ①) Financial support funds (2005) | 1,140,000.00 | |
| Hi-tech Branch of Nanjing Finance Bureau (note ②) Financial support funds (2006) | 1,250,000.00 | 1,250,000.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ③) Financial support funds (2007) | 1,230,000.00 | 1,230,000.00 |
| Loan transferred from treasury bond (note ④) | 339,090.00 | 678,181.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ⑤) Financial support funds (2008) | 2,750,000.00 | 2,750,000.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ⑥) Financial support funds (2009) | 1,030,000.00 | 1,030,000.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ⑦) Financial support funds (2010) | 960,000.00 | 960,000.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ⑧) Financial support funds (2011) | 5,040,000.00 | 5,040,000.00 |
| Hi-tech Branch of Nanjing Finance Bureau (note ⑨) Financial support funds (2013) | 2,740,000.00 | 2,740,000.00 |
| Total | 15,339,090.00 | 16,818,181.00 |
Other explanation:
Note ①: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, theterm is from 20 October 2005 to 20 October 2020. Provided that the operation period in the zone is less than 15years, financial supporting capital will be reimbursed. This support fund has expired fifteen years in the currentperiod, so it is transferred to other income.Note ②: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, theterm is from 20 July 2006 to 20 July 2021. Provided that the operation period in the zone is less than 15 years,financial supporting capital will be reimbursed.Note ③: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 17 September 2007 to 17 September 2022. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.Note ④: Loan transferred from treasury bond: Weifu Jinning received RMB1.87 million Yuan of special fundsfrom budget of the central government, and RMB1.73 million Yuan of special funds from budget of the localgovernment. The non-operating income transferred in was 1.87 million Yuan in 2011 which was confirmed not toreturn, if the Company pays back special funds of 3.73 million Yuan to the local government in 11 years since2012, then the Company needs to repay the principal of 339,091.00 Yuan each year.Note ⑤: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 10 November 2008 to 10 November 2023. Provided that the operation period in the zone isless than 15 years, financial supporting capital will be reimbursed.Note ⑥: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, theterm is from 27 October 2009 to 27 October 2024. Provided that the operation period in the zone is less than 15years, financial supporting capital will be reimbursed.Note ⑦: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use,the term is from 27 December 2010 to 27 December 2025. Provided that the operation period in the zone is lessthan 15 years, financial supporting capital will be reimbursed.Note ⑧: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, theterm is from 28 December 2011 to 28 December 2026. Provided that the operation period in the zone is less than15 years, financial supporting capital will be reimbursed.Note ⑨: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone,financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, theterm is from 18 December 2013 to 18 December 2028. Provided that the operation period in the zone is less than15 years, financial supporting capital will be reimbursed.
(2) Special accounts payable
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance | Cause of formation |
| Removal compensation of subsidiary Weifu Jinning | 18,265,082.11 | 18,265,082.11 | |||
| Finance lease payments | 5,862,253.06 | 5,862,253.06 | |||
| Total | 18,265,082.11 | 5,862,253.06 | 24,127,335.17 | -- |
Other explanation:
In line with regulation of the house acquisition decision of People’s government of Xuanwu District, Nanjing City,Ning Xuan Fu Zheng Zi (2012) No.001, part of the lands and property of Weifu Jingning needs expropriation inorder to carry out the comprehensively improvement of Ming Great Wall. According to the house expropriationand compensation agreement in state-owned lands signed between Weifu Jinning and House ExpropriationManagement Office of Xuanwu District, Nanjing City, RMB 19.7067 million in total are compensate, includingoperation losses from lessee RMB 1.4416 million in total. The above compensation was received in last periodand is making up for the losses from lessee, and the above lands and property have not been collected up to 31December 2020.
33. Long-term wages payable
(1) Long-term wages payable
In RMB/CNY
| Item | Ending balance | Opening balance |
| I. Post-employment welfare-defined contribution plans net indebtedness | 0 | 0 |
| II. Dismiss welfare | 5,734,948.91 | 8,333,666.85 |
| III. Other long-term welfare | 176,245,345.03 | 50,058,386.76 |
| Total | 181,980,293.94 | 58,392,053.61 |
(2) Changes in defined benefit plans
Nil
34. Deferred income
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance | Cause of formation |
| Government grand | 365,116,022.98 | 24,216,119.46 | 61,127,665.71 | 328,204,476.73 | |
| Total | 365,116,022.98 | 24,216,119.46 | 61,127,665.71 | 328,204,476.73 | -- |
Item with government grants involved:
In RMB/CNY
| Item | Opening balance | New grants in the Period | Amount reckoned in non-operation revenue | Amount reckoned into other income in the period | Cost reduction in the period | Other changes | Ending balance | Assets related/Income related |
| Industrialization project for injection VE pump system with electronically controlled high pressure for less-emission diesel used | 2,163,000.86 | 721,000.30 | 1,442,000.56 | Assets related/Income related | ||||
| Appropriation on reforming of production line technology and R&D ability of common rail system for diesel by distributive high-voltage | 7,100,000.00 | 7,100,000.00 | Assets related | |||||
| Fund of industry upgrade (2012) | 26,657,526.17 | 26,015,356.44 | 642,169.73 | Income related | ||||
| Fund of industry upgrade (2013) | 60,520,000.00 | 60,520,000.00 | Income related | |||||
| Appropriation on central basic construction investment | 1,428,571.45 | 714,285.72 | 714,285.73 | Assets related | ||||
| R&D and industrialization of the high-pressure variable pump of the common rail system of diesel engine for automobile | 6,870,714.16 | 1,543,095.28 | 5,327,618.88 | Assets related | ||||
| Research institute of motor vehicle exhaust aftertreatment technology | 1,836,712.58 | 622,985.37 | 1,213,727.21 | Assets related | ||||
| Fund of industry upgrade (2014) | 36,831,000.00 | 36,831,000.00 | Income related |
| New-built assets compensation after the removal of parent company | 124,849,393.92 | 20,764,119.52 | 104,085,274.40 | Assets related | ||||
| Fund of industry upgrade (2016) | 40,000,000.00 | 40,000,000.00 | Income related | |||||
| Guiding capital for the technical reform from State Hi-Tech Technical Commission | 8,147,430.27 | 1,552,110.44 | 6,595,319.83 | Assets related | ||||
| Implementation of the variable cross-section turbocharger for diesel engine | 8,972,771.42 | 1,609,982.67 | 7,362,788.75 | Assets related | ||||
| Demonstration project for intelligent manufacturing | 1,148,441.34 | 299,341.74 | 849,099.60 | Assets related | ||||
| The 2nd batch of provincial special funds for industry transformation of industrial and information in 2019 | 5,000,000.00 | 5,000,000.00 | Assets related | |||||
| Municipal technological reform fund allocation in 2020 | 4,770,000.00 | 4,770,000.00 | Assets related | |||||
| Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone | 4,060,000.00 | 4,060,000.00 | Assets related | |||||
| Other | 38,590,460.81 | 9,139,181.27 | 7,285,388.23 | 1,246,938.19 | 41,691,192.04 | Assets related/Income related | ||
| Total | 365,116,022.98 | 22,969,181.27 | 61,127,665.71 | 1,246,938.19 | 328,204,476.73 |
Other explanation:
(1) Appropriation on industrialization project of electrical control and high voltage jet VE system of lowemissions diesel: in September 2009, Weifu Jinning signed “Project Contract of Technology OutcomeTransferring Special Capital in Jiangsu Province” with Nanjing Technical Bureau, according to which WeifuJinning received appropriation 6.35 million Yuan in 2009, 4.775 million Yuan received in 2010 and 0.875 millionYuan received in 2011. According to the contract, the attendance date of this project was: from October of 2009 toMarch of 2012. This contract agreed 62% of newly increased investment in project would be spent in fixed assetsinvestment which are belongs to the government grand with assets/income concerned. In 2013, accepted by thescience & technology agency of Jiangsu Province, and 4,789,997.04Yuan with income related was reckoned intocurrent operation revenue directly; the 7,210,002.96Yuan with assets related was amortized during the predictedservice period of the assets, and 721,000.30Yuan amortized in the Period.
(2) The appropriation for research and development ability of distributive high-pressure common rail system fordiesel engine use and production line technological transformation project: according to XCJ No. [2010] 59, theCompany has received special funds of 7.1 million Yuan appropriated by Finance Bureau of Wuxi New District in2011 and used for the Company’s research and development ability of distributive high-pressure common railsystem for diesel engine use and production line technological transformation project; this appropriation belongsto government subsidies related to assets, and will be amortized according to the depreciation process of theunderlying assets when the project is completed.
(3) Industry upgrading funds (2012): In accordance with the document Xi Xin Guanjing Fa [2012] No.216 andDocument Xi Xin Guancai Fa [2012] No. 85, the Company received funds of 60.4 million Yuan appropriated forindustry upgrading this year. Current write off: 26,015,356.44Yuan.
(4) Industry upgrading funds (2013): In accordance with the document Xi Xin Guan Jing Fa [2013] No.379, XiXin Guan Jing Fa [2013] No.455, Xi Xin Guan Cai Fa [2013] No.128 and Xi Xin Guan Cai Fa [2013] No.153, theCompany received funds of 60.52 million Yuan appropriated for industry upgrading in 2013.
(5) Appropriation for investment of capital construction from the central government: In accordance with thedocument Xi Caijian [2012] No.43, the Company received appropriation of 5 million Yuan for investment ofcapital construction from the central government in 2012. The project has passed the acceptance check in currentperiod, this appropriation should be amortized within the surplus service life of current assets, and amortizationamount of current period is 714,285.71 Yuan.
(6) R&D and industrialization of the high pressure variable pump of the common rail system of diesel engine forautomobile: the Company received appropriated for the project in 2013 with 8.05 million Yuan in line withdocuments of Xi Ke Ji [2013] No.186, Xi Ke Ji [2013] No.208, Xi Cai Gong Mao [2013] No.104, Xi Cai GongMao [2013] No.138, Xi Ke Ji [2014] No.125, Xi Cai Gong Mao [2014] No.58, Xi Ke Ji [2014] No. 246 and XiCai Gong Mao [2014] No.162. Received 3 million Yuan in 2014 and 0.45 million Yuan in 2015; and belongs togovernment grant with assets concerned, and shall be amortized according to the depreciation process, amount of1,543,095.28 Yuan amortizes in the year.
(7) Vehicle exhaust after-treatment technology research institute project: in 2012, the subsidiary Weifu Leader hasapplied for equipment purchase assisting funds to Wuxi Huishan Science and Technology Bureau and Wuxi
Science and Technology Bureau for the vehicle exhaust after-treatment technology research institute project. Thisdeclaration has been approved by Wuxi Huishan Science and Technology Bureau and Wuxi Science andTechnology Bureau in 2012, and the company has received appropriation of 2.4 million Yuan in 2012, andreceived appropriation of 1.6 million Yuan in 2013. This appropriation belongs to government subsidies related toassets and will be amortized according to the depreciation process, amount of 622,985.37 Yuan amortizes in theyear.
(8) Industry upgrading funds (2014): In accordance with the document Xi Xin Guan Jing Fa [2014] No.427 andXi Xin Guan Cai Fa [2014] No.143, the Company received funds of 36.831 million Yuan appropriated forindustry upgrading in 2014.
(9) New-built assets compensation after the removal of parent company: policy relocation compensation receivedby the Company, and will be amortized according to the depreciation of new-built assets, amount of20,764,119.52 Yuan amortizes in the year.
(10) Fund of industry upgrade (2016): In accordance with the document Xi Xin Guan Jing Fa [2016] No.585 andXi Xin Fa [2016] No.70, the Company received funds of 40 million Yuan appropriated for industry upgrading in2016.
(11) Guilding capital for the technical reform from State Hi-Tech Technical Commission: In accordance with thedocument Xi Jing Xin ZH [2016] No.9 and Xi Cai GM [2016] No.56, the Company received a 9.74 million Yuanfor the guiding capital of technical reform (1st batch) from Wuxi for year of 2016, and belongs to governmentgrant with assets concerned, and shall be amortized according to the depreciation process, amount of 1,552,110.44Yuan amortize in the year.
(12) Implementation of the variable cross-section turbocharger for diesel engine: In accordance with the documentYCZ Fa[2016] NO.623 and “Strong Industrial Base Project Contract for year of 2016”, subsidiary Weifu Tianlireceived a specific subsidy of 16.97 million Yuan (760,000 Yuan received in the period), the fund supportingstrong industrial base project (made-in-China 2025) of central industrial transformation and upgrading 2016 fromMinistry of Industry and Information Technology; and belongs to government grant with assets concerned, andshall be amortized according to the depreciation process, amount of 1,609,982.67 Yuan amortize in the year.
(13) Demonstration project for intelligent manufacturing: under the Notice Relating to Selection of the IntelligentManufacturing Model Project in Huishan District in 2016 (HJXF[2016]No.36), a fiscal subsidy of 3,000,000 Yuanwas granted by relevant government authority in Huishan district to our subsidiary Weifu Leader in 2017 to beutilized for transformation and upgrade of Weifu Leader’s intelligent manufacturing facilities. This subsidybelongs to government grant related to assets which shall be amortized based on the depreciation progress of theassets. Amortization for the year amounts to 299,341.74 Yuan.
(14) The 2
ndbatch of provincial special funds for industry transformation of industrial and information in 2019:
according to XCGM [2019] No. 121, the Company received a special fund of 5 million Yuan in 2020, this subsidywas related to the"Weifu High-Technology New Factory Internet Construction" projects, and belonged togovernment subsidies related to assets.
(15) Municipal technological reform fund allocation in 2020: according to XGXZH [2020] No. 16, the Companyreceived 4.77 million Yuan of municipal technological transformation fund project allocation in 2020, which wasrelated to key technological transformation projects and belonged to government subsidies related to assets.
(16) Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone:
according to XXGXF [2020] No. 61, the Company received a related grant of 4.06 million Yuan in 2020, thissubsidy was related to the intelligent transformation project and belonged to the government subsidies related toassets.
35. Share capital
In RMB
| Opening balance | Change during the year (+, -) | Ending balance | |||||
| New shares issued | Bonus share | Shares transferred from capital reserve | Other | Subtotal | |||
| Total shares | 1,008,950,570.00 | 1,008,950,570.00 | |||||
36. Capital reserve
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Capital premium (Share capital premium) | 3,346,333,817.41 | 103,565,899.63 | 3,242,767,917.78 | |
| Other Capital reserve | 45,193,988.92 | 6,280,461.58 | 51,474,450.50 | |
| Total | 3,391,527,806.33 | 6,280,461.58 | 103,565,899.63 | 3,294,242,368.28 |
Other explanation, including changes in the period and reasons for changes;
(1)Share capital premium has 103,565,899.63 Yuan declined in the Period, mainly due to the following:
①the difference between the long-term equity investment newly acquired by the company to purchase minority ofIRD and the net assets that the company should enjoy continuously calculated from the date of purchase based onthe newly increased shareholding ratio is 7,176,697.04 Yuan;
② the difference between the repurchase cost of 398,868,402.59 Yuan(19,540,000 shares repurchased for use inthe restricted share incentive plan) and the amount of subscription money 302,479,200.00 Yuan is 96,389,202.59Yuan.
(2) Other Capital reserve increase 6,280,461.58 Yuan in the period, mainly resulted by the share payment settledby equity 6,484,837.50 Yuan deducted 204,375.92 Yuan attributable to minority’s shareholder.
37. Treasury stock
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Stock repurchases | 400,017,180.33 | 398,868,402.59 | 1,148,777.74 | |
| Repurchase obligation of | 302,479,200.00 | 302,479,200.00 |
| restricted stock incentive plan | ||||
| Total | 702,496,380.33 | 398,868,402.59 | 303,627,977.74 |
Other explanations, including changes in the current period and explanations of the reasons for the changes:
(1) Stock repurchase: increased 400,017,180.33 Yuan in the Period, mainly refers to the repurchase of19,596,277.00 shares by way of centralized competitive bidding for the implementation of restricted stockincentive plan; decreased 398,868,402.59 Yuan in the Period, mainly refers to the 19,540,000.00 shares awardedto incentive object for the implementation of restricted stock incentive plan.
(2)Repurchase obligation of restricted stock incentive plan: increased 302,479,200.00 Yuan in the Period, mainlyrefers to the repurchase obligation recognized in accordance with the subscription paid by the incentive object forthe implementation of restricted stock incentive plan.
38. Other comprehensive income
In RMB/CNY
| Item | Opening balance | Current period | Ending balance | |||||
| Account before income tax in the year | Less: written in other comprehensive income in previous period and carried forward to gains and losses in current period | Less: written in other comprehensive income in previous period and carried forward to retained earnings in current period | Less: income tax expense | Belong to parent company after tax | Belong to minority shareholders after tax | |||
| II. Other comprehensive income items which will be reclassified subsequently to profit or loss | 134,871.67 | 13,839,596.07 | 13,781,747.80 | 57,848.27 | 13,916,619.47 | |||
| Conversion difference of foreign currency financial statement | 134,871.67 | 13,839,596.07 | 13,781,747.80 | 57,848.27 | 13,916,619.47 | |||
| Total other comprehensive income | 134,871.67 | 13,839,596.07 | 13,781,747.80 | 57,848.27 | 13,916,619.47 | |||
Other explanation, including the adjustment on initial recognition for arbitrage items that transfer from the effective part of cash flowhedge profit/loss:
Nil
39. Reasonable reserve
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Safety production costs | 3,247,757.06 | 21,673,368.09 | 22,587,635.12 | 2,333,490.03 |
| Total | 3,247,757.06 | 21,673,368.09 | 22,587,635.12 | 2,333,490.03 |
Other explanation, including changes and reasons for changes:
(1) Instructions for the withdrawing of special reserves (safe production cost): According to the CQ [2012] No. 16 -Administrative Measures on the Withdrawing and Use of Enterprise Safety Production Expenses jointly issued bythe Ministry of Finance and the State Administration of Work Safety, in the current period, the Company adoptedexcess retreat method for quarterly withdrawal by taking the actual operating income of the previous period as thewithdrawing basis.
(2) Among the above safety production costs, including the safety production costs accrual by the Company inline with regulations and the parts enjoy by shareholders of the Company in safety production costs accrual bysubsidiary in line with regulations.
40. Surplus reserve
In RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Statutory surplus reserves | 510,100,496.00 | 510,100,496.00 | ||
| Total | 510,100,496.00 | 510,100,496.00 |
Other explanation, including changes and reasons for changes:
Withdrawal of the statutory surplus reserves: Pursuit to the Company Law and Article of Association, theCompany extracted statutory surplus reserve on 10 percent of the net profit. No more amounts shall be withdrawalif the accumulated statutory surplus reserve takes over 50 percent of the registered capital.
41. Retained profit
In RMB/CNY
| Item | Current period | Last period |
| Retained profits at the end of last year before adjustment | 12,076,443,635.56 | 10,996,945,870.13 |
| Total retained profit at beginning of the adjustment (+ for increased, -for decreased) | 1,584,556.37 | |
| Retained profits at the beginning of the year after adjustment | 12,076,443,635.56 | 10,998,530,426.50 |
| Add: The net profits belong to owners of patent company of this period | 2,772,769,377.96 | 2,268,026,432.78 |
| Less: Common dividend payable | 1,093,241,270.00 | 1,210,740,684.00 |
| Withdraw employee rewards and welfare funds | 2,525,946.49 |
| Add: Net effect of disposal other equity instrument investment | 2,656,627.59 | 20,627,460.28 |
| Retained profit at period-end | 13,756,102,424.62 | 12,076,443,635.56 |
Details about adjusting the retained profits at the beginning of the period:
1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulationsaffect the retained profits at the beginning of the period amounting to 0 Yuan.
2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to1,584,556.37 Yuan.
3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0Yuan
4) Merge scope changes caused by the same control affect the retained profits at the beginning of the periodamounting to 0 Yuan.
5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan
42. Operating income and cost
In RMB/CNY
| Item | Current period | Last Period | ||
| Income | Cost | Income | Cost | |
| Main operating | 12,430,431,489.90 | 10,124,574,480.95 | 8,354,743,964.67 | 6,322,810,707.67 |
| Other business | 453,394,816.70 | 304,709,961.02 | 429,612,995.63 | 347,543,672.87 |
| Total | 12,883,826,306.60 | 10,429,284,441.97 | 8,784,356,960.30 | 6,670,354,380.54 |
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses is negative
□Yes √No
43. Operating tax and extras
In RMB/CNY
| Item | Current period | Last Period |
| City maintaining & construction tax | 22,768,800.74 | 24,124,239.92 |
| Educational surtax | 16,259,673.98 | 17,320,175.67 |
| Property tax | 16,993,056.48 | 16,236,869.24 |
| Land use tax | 4,516,628.41 | 5,991,933.84 |
| Vehicle use tax | 29,923.52 | 31,410.44 |
| Stamp duty | 4,508,905.03 | 2,720,462.05 |
| Other taxes | 246,793.71 | 209,545.50 |
| Total | 65,323,781.87 | 66,634,636.66 |
44. Sales expenses
In RMB/CNY
| Item | Current period | Last Period |
| Salary and fringe benefit | 58,727,035.03 | 53,193,376.14 |
| Consumption of office materials and business travel charge | 9,260,423.14 | 12,114,381.29 |
| Transportation charge | 36,110,291.16 | |
| Warehouse charge | 24,982,242.41 | 13,540,499.34 |
| Three guarantees and quality cost | 272,364,223.21 | 102,034,286.75 |
| Business entertainment fee | 25,842,735.05 | 26,297,874.14 |
| Other | 15,176,786.26 | 16,360,043.51 |
| Total | 406,353,445.10 | 259,650,752.33 |
45. Administration expenses
In RMB/CNY
| Item | Current period | Last Period |
| Salary and fringe benefit | 295,394,722.09 | 261,541,676.32 |
| Depreciation charger and long-term assets amortization | 65,638,800.42 | 55,145,177.10 |
| Consumption of office materials and business travel charge | 16,772,265.23 | 19,603,194.54 |
| Incentive fund | 187,658,444.76 | 71,880,000.00 |
| Share-based payment | 3,878,656.31 | |
| Other | 213,481,533.82 | 105,858,403.80 |
| Total | 782,824,422.63 | 514,028,451.76 |
46. R&D expenses
In RMB/CNY
| Item | Current period | Last Period |
| Technological development expenses | 532,581,209.78 | 417,924,908.28 |
| Total | 532,581,209.78 | 417,924,908.28 |
47. Financial expenses
In RMB/CNY
| Item | Current period | Last Period |
| Interest expenses | 11,466,886.33 | 21,770,516.39 |
| Note discount interest expenses | 8,075,178.10 | 1,205,789.22 |
| Less: interest income | 51,622,216.58 | 79,299,239.77 |
| Gains/losses from exchange | 5,138,503.01 | -5,453,798.20 |
| Handling charges | 3,663,347.30 | 3,884,456.24 |
| Total | -23,278,301.84 | -57,892,276.12 |
48. Other income
In RMB/CNY
| Sources of income generated | Current period | Last Period |
| Government grants with routine operation activity concerned | 80,342,497.11 | 91,170,663.57 |
| Total | 80,342,497.11 | 91,170,663.57 |
49. Investment income
In RMB/CNY
| Item | Current period | Last Period |
| Income of long-term equity investment calculated based on equity | 1,659,752,704.14 | 1,378,264,061.18 |
| Investment income from holding financial assets available for sales | 683,211.60 | 1,383,668.59 |
| Dividend income from holding other equity instrument investment | 900,000.00 | |
| Investment income of financial products | 263,460,954.90 | 236,832,172.54 |
| Other | 40,908,817.93 | -2,839,187.48 |
| Total | 1,964,805,688.57 | 1,614,540,714.83 |
50. Income from change of fair value
In RMB/CNY
| Sources | Current period | Last Period |
| Changes in the fair value of wealth management products | 8,223,219.19 | 18,231,842.32 |
| Changes in the fair value of the stocks of listed companies held-excluding the stocks of listed companies that are included in other equity instrument investments | 375,102,546.00 | 6,787,824.00 |
| Total | 383,325,765.19 | 25,019,666.32 |
51. Credit impairment loss
In RMB/CNY
| Item | Current period | Last Period |
| Bad debt loss | -11,184,647.60 | -52,825,875.25 |
| Total | -11,184,647.60 | -52,825,875.25 |
52. Assets impairment loss
In RMB/CNY
| Item | Current period | Last Period |
| I. Loss of bad debts | 0.00 | 0.00 |
| II. Loss of inventory falling price and loss of contract performance cost impairment | -142,400,798.47 | -169,460,299.73 |
| III. Long-term equity investment impairment losses | 0.00 | 0.00 |
| IV. Impairment loss of investment real estate | 0.00 | 0.00 |
| V. Impairment loss of fixed assets | -36,436,674.38 | 0.00 |
| VI. Devaluation loss of construction materials | 0.00 | 0.00 |
| VII. Impairment loss of construction in progress | 0.00 | 0.00 |
| VIII. Impairment loss of productive biological assets | 0.00 | 0.00 |
| IX. Impairment losses of oil and gas assets | 0.00 | 0.00 |
| X. Intangible assets impairment loss | 0.00 | 0.00 |
| XI. Goodwill impairment loss | 0.00 | 0.00 |
| XII. Impairment loss of contract assets | 0.00 | 0.00 |
| XIII. Other | 0.00 | 0.00 |
| Total | -178,837,472.85 | -169,460,299.73 |
53. Income from assets disposal
In RMB/CNY
| Sources | Current period | Last Period |
| Income from disposal of non-current assets | 12,962,146.98 | 34,050,815.11 |
| Losses from disposal of non-current assets | -1,507,738.38 | -1,896,354.90 |
| Total | 11,454,408.60 | 32,154,460.21 |
54. Non-operating income
In RMB/CNY
| Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
| Periodic reduction or exemption of part of social insurance premiums | 60,373,772.69 | 60,373,772.69 | |
| Periodic reduction of kinetic energy costs | 5,759,525.46 | 5,759,525.46 | |
| Other | 333,723.47 | 2,413,561.54 | 333,723.47 |
| Total | 66,467,021.62 | 2,413,561.54 | 66,467,021.62 |
Government subsidies included in the current profit and loss:
Nil
55. Non-operating expense
In RMB/CNY
| Item | Current period | Last Period | Amount reckoned into current non-recurring gains/losses |
| Donation | 3,107,003.70 | 73,332.31 | 3,107,003.70 |
| Non-current assets disposal losses | 738,248.83 | 3,161,855.50 | 738,248.83 |
| Including: loss of fixed assets scrap | 738,248.83 | 3,161,855.50 | 738,248.83 |
| Local fund | 2,734,286.52 | ||
| Other | 313,635.64 | 156,952.84 | 313,635.64 |
| Total | 4,158,888.17 | 6,126,427.17 | 4,158,888.17 |
56. Income tax expense
(1) Income tax expense
In RMB/CNY
| Item | Current period | Last Period |
| Payable tax in current period | 170,925,337.68 | 147,179,544.24 |
| Adjusted the previous income tax | -2,349,322.00 | 5,674,478.65 |
| Increase/decrease of deferred income tax assets | -54,432,577.63 | -12,918,338.05 |
| Increase/decrease of deferred income tax liability | 66,072,310.95 | 7,870,125.22 |
| Total | 180,215,749.00 | 147,805,810.06 |
(2) Adjustment on accounting profit and income tax expenses
In RMB/CNY
| Item | Current period |
| Total profit | 3,002,951,679.56 |
| Income tax measured by statutory/applicable tax rate | 450,442,751.93 |
| Impact by different tax rate applied by subsidies | 4,347,476.78 |
| Adjusted the previous income tax | -2,349,322.00 |
| Impact by non-taxable revenue | -248,721,266.24 |
| Impact on cost, expenses and losses that unable to deducted | 37,323,520.03 |
| Impact by the deductible losses of the un-recognized previous deferred income tax | -34,045,025.55 |
| The deductible temporary differences or deductible losses of the un-recognized deferred income tax assets in the Period | 11,968,364.43 |
| Impact on additional deduction | -41,288,278.77 |
| Other | 2,537,528.39 |
| Income tax expense | 180,215,749.00 |
57. Other comprehensive income
See Note VII. 38 “Other comprehensive income”
58. Items of ash flow statement
(1) Other cash received in relation to operation activities
In RMB/CNY
| Item | Current period | Last Period |
| Interest income | 52,277,269.56 | 77,690,762.13 |
| Government grants | 41,044,012.67 | 30,510,895.39 |
| Margin on operation bill | 27,804,815.03 | |
| Other | 9,252,536.29 | 7,906,425.25 |
| Total | 102,573,818.52 | 143,912,897.80 |
(2) Other cash paid in relation to operation activities
In RMB/CNY
| Item | Current period | Last Period |
| Cash cost | 840,363,837.09 | 525,923,320.71 |
| Other | 59,565,319.82 | 22,629,265.34 |
| Total | 899,929,156.91 | 548,552,586.05 |
(3) Cash received from other investment activities
In RMB/CNY
| Item | Current period | Last Period |
| Received the disposal payment | 10,654,092.89 | |
| Received investment funds in transit at the end of 2019 | 30,448,157.81 | |
| Import equipment letter of credit guarantee | 1,450,000.00 | |
| Cash from Weifu Electronic Drive merger not under the same control | 67,622,008.17 | |
| Intercourse funds of unit | 24,000,000.00 | |
| Other | 953,424.66 | |
| Total | 65,102,250.70 | 70,025,432.83 |
(4) Cash paid related with investment activities
In RMB/CNY
| Item | Current period | Last Period |
| Margin paid by L/C for purchase of equipment | 587,241.00 | |
| Trading losses on forward foreign exchange and RMB options | 1,115,357.50 | |
| Intercourse funds of unit | 13,992,067.94 | 24,000,000.00 |
| Total | 14,579,308.94 | 25,115,357.50 |
(5) Other cash received in relation to financing activities
In RMB/CNY
| Item | Current period | Last Period |
| Borrowings received by Weifu Leader | 5,470,000.00 | |
| Borrowings received by IRD | 260,135.13 | 845,291.11 |
| Total | 5,730,135.13 | 845,291.11 |
(6) Cash paid related with financing activities
In RMB/CNY
| Item | Current period | Last Period |
| Account paid for purchasing minority equity of Weifu Tianli | 132,522,000.00 | |
| Account paid for purchasing minority equity of IRD | 48,507,056.85 | |
| National debt paid transfer to loans | 351,298.00 | 339,091.00 |
| Borrowing return by Weifu Leader | 5,470,000.00 |
| Borrowing return by IRD | 7,733,845.00 | |
| Payments from finance leases | 375,886.28 | |
| Repurchase of A shares | 400,017,180.33 | |
| Total | 449,251,421.46 | 146,064,936.00 |
59. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
In RMB/CNY
| Supplementary information | Current period | Last Period |
| 1. Net profit adjusted to cash flow of operation activities: | -- | -- |
| Net profit | 2,822,735,930.56 | 2,302,736,761.11 |
| Add: Assets impairment provision | 190,022,120.45 | 222,286,174.98 |
| Depreciation of fixed assets, consumption of oil assets and depreciation of productive biology assets | 390,748,987.16 | 315,650,455.35 |
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 37,146,026.79 | 24,276,364.81 |
| Amortization of long-term deferred expenses | 12,637,958.88 | 6,293,470.69 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (gain is listed with “-”) | -11,454,408.60 | -32,154,460.21 |
| Losses on scrapping of fixed assets (gain is listed with “-”) | 738,248.83 | 3,161,855.50 |
| Gain/loss of fair value changes (gain is listed with “-”) | -383,325,765.19 | -25,019,666.32 |
| Financial expenses (gain is listed with “-”) | 17,798,991.04 | 15,026,154.36 |
| Investment loss (gain is listed with “-”) | -1,957,024,490.66 | -1,613,945,471.30 |
| Decrease of deferred income tax asset ((increase is listed with “-”) | -54,432,577.63 | -12,918,338.05 |
| Increase of deferred income tax liability (decrease is listed with “-”) | 66,072,310.95 | 7,870,125.22 |
| Decrease of inventory (increase is listed with “-”) | -591,321,045.44 | -1,130,561,363.05 |
| Decrease of operating receivable accounts (increase is listed with “-”) | -1,326,286,166.68 | -1,110,387,668.48 |
| Increase of operating payable accounts (decrease is listed with “-”) | 1,562,204,812.18 | 2,074,881,909.55 |
| Other | 5,550,301.37 | 1,473,749.07 |
| Net cash flows arising from operating activities | 781,811,234.01 | 1,048,670,053.23 |
| 2. Material investment and financing not involved in cash flow | -- | -- |
| Conversion of debt into capital | ||
| Switching Company bonds due within one year | ||
| financing lease of fixed assets |
| 3. Net change of cash and cash equivalents: | -- | -- |
| Balance of cash at period end | 944,946,018.70 | 820,498,653.85 |
| Less: Balance of cash equivalent at year-begin | 820,498,653.85 | 2,404,674,139.49 |
| Add: Balance at year-end of cash equivalents | ||
| Less: Balance at year-begin of cash equivalents | ||
| Net increase of cash and cash equivalents | 124,447,364.85 | -1,584,175,485.64 |
(2) Net cash payment for the acquisition of a subsidiary in the period
In RMB/CNY
| Amount | |
| Cash and cash equivalent paid in the period for enterprise combination occurred in the period | 318,708,001.47 |
| Including: | -- |
| Less: Cash and cash equivalent held by subsidiary on purchasing date | 21,405,243.16 |
| Including: | -- |
| Including: | -- |
| Net cash paid for subsidiary obtained | 297,302,758.31 |
Other explanation: Nil
(3) Net cash received from the disposal of subsidiaries
Nil
(4) Constitution of cash and cash equivalent
In RMB/CNY
| Item | Ending balance | Opening balance |
| I. Cash | 944,946,018.70 | 820,498,653.85 |
| Including: Cash on hand | 507.66 | 93,165.33 |
| Bank deposit available for payment at any time | 944,945,511.04 | 820,405,488.52 |
| III. Balance of cash and cash equivalents at the period-end | 944,946,018.70 | 820,498,653.85 |
Other explanation: NilThe difference between bank deposits available for payment at any time and the bank deposits in Note VII. 1 "Monetary Funds" is thecompany's fixed deposits in the bank.
60. Note of the changes of owners’ equity
Explain the items and amount at period-end adjusted for “Other” at end of the last year: Nil
61. Assets with ownership or use right restricted
In RMB/CNY
| Item | Ending Book value | Restriction reason |
| Monetary funds | 587,241.00 | Letter of Credit Margin |
| Note receivable | 881,914,376.95 | Notes pledge for bank acceptance |
| Monetary funds | 51,045,344.11 | Cash deposit paid for bank acceptance |
| Monetary funds | 2,838,880.93 | Court freeze |
| Monetary funds | 215,720.00 | Mastercard deposit |
| Receivables financing | 646,892,501.28 | Notes pledge for bank acceptance |
| Transaction financial asset | 174,611,992.62 | In accordance with the civil ruling No.(2016)Y03MC2490 and No.(2016) Y03MC2492 of Guangdong Shenzhen Intermediate People's Court (Hereinafter referred to as Shenzhen Intermediate People's Court), the property with the value of 217 million Yuan under the name of the Company and other seven respondents and the third party Shenzhen Hejun Chuangye Holdings Co., Ltd. (Hereinafter referred to as Hejun Company) was frozen. As of the end of the reporting period, 4.71 million shares of Miracle Automation and 11,739,102 shares of SDEC held by the Company were frozen. |
| Total | 1,758,106,056.89 | -- |
62. Item of foreign currency
(1) Item of foreign currency
In RMB/CNY
| Item | Closing balance of foreign currency | Rate of conversion | Ending RMB balance converted |
| Monetary funds | -- | -- | |
| Including: USD | 11,596,564.24 | 6.5249 | 75,666,419.10 |
| EUR | 3,694,505.41 | 8.025 | 29,648,405.15 |
| HKD | 11,548,347.98 | 0.84164 | 9,719,551.59 |
| DKK | 9,616,906.23 | 1.0786 | 10,372,795.06 |
| Account receivable | -- | -- | |
| Including: USD | 2,190,411.21 | 6.5249 | 14,292,214.10 |
| EUR | 1,290,945.42 | 8.025 | 10,359,837.00 |
| HKD | |||
| JPY | 12,179,808.00 | 0.063236 | 770,202.34 |
| DKK | 2,239,065.57 | 1.0786 | 2,415,056.12 |
| Long-term borrowings | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Other account receivables | -- | -- | |
| Including: EUR | 70,143.68 | 8.025 | 562,903.03 |
| DKK | 462,081.08 | 1.0786 | 498,400.65 |
| Short-term borrowings | -- | -- | |
| Including: EUR | 4,981,278.48 | 8.025 | 39,974,759.80 |
| Account payable | -- | -- | |
| Including: USD | 812,035.19 | 6.5249 | 5,298,448.41 |
| EUR | 1,031,866.82 | 8.025 | 8,280,731.24 |
| JPY | 15,780,699.00 | 0.063236 | 997,908.28 |
| CHF | 103,580.75 | 7.4006 | 766,559.70 |
| DKK | 2,865,734.26 | 1.0786 | 3,090,980.97 |
| GBP | 59,450.00 | 8.8903 | 528,528.34 |
| Other account payable | -- | -- | |
| Including: EUR | 255.00 | 8.025 | 2,046.38 |
| DKK | 402,113.23 | 1.0786 | 433,719.33 |
(2) Explanation on foreign operational entity, including as for the major foreign operational entity,disclosed main operation place, book-keeping currency and basis for selection; if the book-keepingcurrency changed, explain reasons
√ Applicable □ Not applicable
Subsidiary of the Company IRD was established in Denmark in 1996. The 66% equity of IRD were required bythe Company in cash in April 2019, and in October 2020, increasing the shareholding to 34.00% by cash purchase.After the increase in holdings, the company acquired 100.00% of the company's equity. Book-keeping currency ofIRD was Danish krone, and IRD mainly engaged in the R&D, production and sales of fuel cell components.Subsidiary Borit was established in Belgium in 2010. the Company acquired 100% equity of Borit by cashacquisition in November 2020. Borit is denominated in Euro and engaged in the R&D, production and sales offuel cell components.
63. Government grants
(1) Government grants
In RMB/CNY
| Category | Amount | Item | Amount reckoned in current gain/loss |
| The second batch of provincial-level industrial and information industry transformation special funds in 2019 | 5,000,000.00 | Deferred income | |
| Municipal technological reform fund allocation in 2020 Appropriations for Municipal Technical Reform Fund Projects in 2020 | 4,770,000.00 | Deferred income | |
| Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone Strategic cooperation agreement funds for key intelligent manufacturing enterprises in the high-tech zone | 4,060,000.00 | Deferred income | |
| 2020 Wuxi Science and Technology Development Fund 19th Batch of Science and Technology Development Plan Project Funds | 1,000,000.00 | Deferred income | |
| Intelligent transformation of Automobile components manufacturing process | 1,310,000.00 | Deferred income | |
| E-store | 1,162,700.27 | Deferred income, other income | 1,162,700.27 |
| Anione | 1,410,199.51 | Deferred income, other income | 211,192.07 |
| Annual output of 150,000 gasoline engine turbochargers | 1,095,300.00 | Deferred income, other income | 717,082.83 |
| Neptune | 918,551.27 | Deferred income | |
| Development of variable nozzle turbocharger meeting the requirements of National VI B | 800,000.00 | Deferred income | |
| Pegasus | 528,530.85 | Deferred income, other income | 528,530.85 |
| HighPem2 Gas | 356,327.63 | Deferred income, other income | 356,327.63 |
| Job stabilization subsidy | 4,125,376.68 | Other income | 4,125,376.68 |
| Intelligent transformation and technical transformation guidance funds | 3,740,000.00 | Other income | 3,740,000.00 |
| Wuxi City Intellectual Property Project Operation Service System Construction Fund | 1,050,000.00 | Other income | 1,050,000.00 |
| "Work for training" subsidy | 1,269,900.00 | Other income | 1,269,900.00 |
| Training subsidy | 1,005,934.35 | Other income | 926,294.35 |
| 2019 Wuxi Mayor Quality Award | 1,000,000.00 | Other income | 1,000,000.00 |
| Distributed photovoltaic project power generation subsidies | 968,800.00 | Other income | 968,800.00 |
| Service charge for three agencies | 682,632.28 | Other income | 682,632.28 |
| The second batch of supporting project funds (manufacturing taxation top 30) | 350,000.00 | Other income | 350,000.00 |
| 2019 Quality Special Award | 350,000.00 | Other income | 350,000.00 |
| Huishan District Support Fund | 340,000.00 | Other income | 340,000.00 |
| Special subsidies for enterprise vocational education in Binhu District in the third quarter of 2019 | 324,300.00 | Other income | 324,300.00 |
| Vocational Appraisal Guidance Center Collection | 303,600.00 | Other income | 303,600.00 |
| Technology plan subsidy | 300,000.00 | Other income | 300,000.00 |
| 2020 Wuxi Smart Manufacturing Project Support Fund | 300,000.00 | Other income | 300,000.00 |
| Subsidies for manufacturing individual champion enterprises | 200,000.00 | Other income | 200,000.00 |
| Intellectual property reward | 114,670.00 | Other income | 114,670.00 |
| In 2019, the integration of industrialization and industrialization, and the provincial-level segmentation project reward for enterprise cloud | 180,000.00 | Other income | 180,000.00 |
| 2019 Huishan District "Pioneer Talent Program" Talent Award | 150,000.00 | Other income | 150,000.00 |
| 2019 corporate postdoctoral subsidy funds | 120,000.00 | Other income | 120,000.00 |
| 2019 tax contribution incentives for key enterprises | 100,000.00 | Other income | 100,000.00 |
| Supporting funding for key talent programs above the provincial level | 100,000.00 | Other income | 100,000.00 |
| Other | 1,557,189.83 | Deferred income, other income | 998,816.62 |
| Total | 41,044,012.67 |
(2) Government grants rebate
□ Applicable√ Not applicable
Other explanation:
64. Other
Nil
VIII. Changes of consolidation scope
1. Enterprise combine not under the same control
(1) Enterprise combines not under the same control occurred in the period
In RMB/CNY
| Purchaser | Time point for equity obtained | Cost of equity obtained | Ratio of equity obtained | Acquired way Equity obtained way | Purchasing date | Standard to determine the purchasing date | Income of purchaser from purchasing date to period-end | Net profit of purchaser from purchasing date to period-end |
| Borit | November 30, 2020 | 318,708,001.47 | 100.00% | Cash purchase | November 30, 2020 | 100% | 9,143,241.73 | -5,166,510.61 |
Other explanation:
(2) Combination cost and goodwill
In RMB/CNY
| Combination cost | Borit |
| --Cash | 318,708,001.47 |
| Total combination cost | 318,708,001.47 |
| Less: shares of fair value of identifiable net assets acquired | 70,941,353.26 |
| Goodwill/merger cost is less than the shares of fair value of identifiable net assets acquired | 247,766,648.21 |
The main reasons for the formation of large amounts of goodwill:
In this period, the company acquired 100.00% equity of Borit in the form of cash purchase, the goodwill was thepart that the cost of the merger was greater than the fair value share of the identifiable net assets ofBorit.According to the “Assets Appraisal Report” (Wanlong PBZi (2021) No. 40016) issued by Wanlong(Shanghai) Assets Appraisal Co., Ltd, appointed by the Company, the recoverable value of the assets group wherethe goodwill of the merged with Borit is 439,880,000 Yuan, higher than the carrying value of 339,170,000 Yuan,and there is no impairment loss of goodwill.
(3) Identifiable assets and liability on purchasing date under the purchaser
In RMB/CNY
| Borit | ||
| Fair value on purchasing date | Book value on purchasing date | |
| Monetary funds | 21,405,243.16 | 21,405,243.16 |
| Account receivable | 2,306,622.48 | 2,306,622.48 |
| Inventory | 12,692,549.70 | 11,925,135.80 |
| Fixed assets | 46,007,739.12 | 28,314,172.77 |
| Intangible assets | 39,460,780.10 | 13,349,057.73 |
| Account paid in advance | 478,370.09 | 478,370.09 |
| Other account receivables | 748,859.12 | 748,859.12 |
| Construction in progress | 950,331.98 | 950,331.98 |
| Deferred tax assets | 1,388,436.59 | 1,388,436.59 |
| Accounts payable | 7,894,432.49 | 7,894,432.49 |
| Deferred income tax liabilities | 11,143,175.66 | |
| Contract liabilities | 3,067,697.93 | 3,067,697.93 |
| Employee compensation payable | 2,805,072.70 | 2,805,072.70 |
| Taxes payable | 273,570.08 | 273,570.08 |
| Other payable | 13,935,900.17 | 13,935,900.17 |
| Non-current liabilities due within one year | 872,471.02 | 872,471.02 |
| Long term loan | 6,201,616.25 | 6,201,616.25 |
| Long-term payable | 7,106,533.43 | 7,106,533.43 |
| Deferred income | 1,197,109.35 | 1,197,109.35 |
| Net assets | 70,941,353.26 | 37,511,826.30 |
| Net assets acquired | 70,941,353.26 | 37,511,826.30 |
Other explanation: Nil
(4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date
Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights inthe Period or not
□ Yes √ No
(5)Notes relating to the purchase date or the end of the period in which the merger consideration or the fairvalue of the purchasee’s identifiable assets and liabilities cannot be reasonable determined
Nil
(6)Other explanations
Nil
2. Enterprise combine under the same control
Nil
3. Reverse purchase
Nil
4. Disposal of subsidiaries
Whether there is a single disposal of an investment in a subsidiary that resulted in a loss of control
□ Yes √ No
Whether there is a step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control during theperiod
□ Yes √ No
5. Other reasons for consolidation range changed
Explain the reasons on consolidate scope changes (i.e. subsidiary newly established, subsidiary liquidation etc.)and relevant information:
In the reporting period, Weifu Leader- subsidiary of the company established the Autosmart Seating jointly withQiqiong Automobile Technology (Shanghai) Co., Ltd. According to the Article of Association under the name ofAutosmart Seating, Weifu Leader holds 66.00% equity of Autosmart Seating while 34.00% held by QiqiongAutomobile Technology (Shanghai) Co., Ltd.
6. Other
Nil
IX. Equity in other entity
1. Equity in subsidiary
(1) Constitute of enterprise group
| Subsidiary | Main operation place | Registered place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| Weifu Jinning | Nanjing | Nanjing | Spare parts of internal-combustion engine | 80.00% | Enterprise combines under the same control | |
| Weifu Leader | Wuxi | Wuxi | Automobile exhaust purifier, muffler | 94.81% | Enterprise combines under the same control | |
| Weifu Mashan | Wuxi | Wuxi | Spare parts of internal-combustion engine | 100.00% | Investment | |
| Weifu Chang’an | Wuxi | Wuxi | Spare parts of internal-combustion engine | 100.00% | Investment | |
| Weifu International Trade | Wuxi | Wuxi | Trading | 100.00% | Enterprise combines under the same control | |
| Weifu Schmidt | Wuxi | Wuxi | Spare parts of | 66.00% | Investment | |
| internal-combustion engine | ||||||
| Weifu Tianli | Ningbo | Ningbo | Spare parts of internal-combustion engine | 98.83% | 1.17% | Enterprise combines not under the same control |
| Weifu Autocam | Wuxi | Wuxi | Spare parts of internal-combustion engine | 51.00% | Enterprise combines not under the same control | |
| Weifu Leader (Wuhan) | Wuhan | Wuhan | Automobile exhaust purifier, muffler | 60.00% | Investment | |
| Weifu Leader (Chongqing) | Chongqing | Chongqing | Automobile exhaust purifier, muffler | 100.00% | Investment | |
| Weifu Leader (Nanchang) | Nanchang | Nanchang | Automobile exhaust purifier, muffler | 100.00% | Investment | |
| Autosmart Seating | Wuxi | Wuxi | Smart car equipment | 66.00% | Investment | |
| Weifu Electric Drive | Wuxi | Wuxi | Hub Motor | 80.00% | Enterprise combines not under the same control | |
| SPV | Denmark | Denmark | Investment | 100.00% | Investment | |
| IRD | Denmark | Denmark | Fuel cell components | 100.00% | Enterprise combines not under the same control | |
| IRD America | America | America | Fuel cell components | 100.00% | Enterprise combines not under the same control | |
| Borit | Belgium | Belgium | Fuel cell components | 100.00% | Enterprise combines not under the same control | |
| Borit Inc. | America | America | Fuel cell components | 100.00% | Enterprise combines not under the same control |
Explanation on share-holding ratio in subsidiary different from ratio of voting right:
NilBasis for holding half or less of the voting rights but still controlling the investee, and holding more than half of the voting rights butnot controlling the investee:
Nil
(2) Important non-wholly-owned subsidiary
In RMB/CNY
| Subsidiary | Share-holding ratio of minority | Gains/losses attributable to minority in the Period | Dividend announced to distribute for minority in the Period | Ending equity of minority |
| Weifu Jinning | 20.00% | 21,848,100.90 | 15,748,768.80 | 199,246,408.99 |
| Weifu Schmidt | 34.00% | 4,996,898.99 | 16,239,171.33 | |
| Weifu Leader | 5.19% | 11,252,872.88 | 107,011,846.40 |
| Weifu Autocam | 49.00% | 22,118,036.30 | 177,267,298.23 | |
| Total | 60,215,909.07 | 15,748,768.80 | 499,764,724.95 |
Explanation on holding ratio different from the voting right ratio for minority shareholders:
Nil
(3) Main finance of the important non-wholly-owned subsidiary
In RMB/CNY
| Subsidiary | Ending balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Weifu Jinning | 1,182,876,680.02 | 293,436,809.97 | 1,476,313,489.99 | 433,667,329.34 | 42,293,914.58 | 475,961,243.92 |
| Weifu Schmidt | 213,435,154.59 | 47,533,838.59 | 260,968,993.18 | 212,812,487.33 | 212,812,487.33 | |
| Weifu Leader | 4,942,039,786.72 | 1,200,764,541.57 | 6,142,804,328.29 | 4,204,615,377.36 | 20,388,995.29 | 4,225,004,372.65 |
| Weifu Autocam | 323,378,083.30 | 360,083,668.37 | 683,461,751.67 | 321,531,075.82 | 321,531,075.82 | |
| Total | 6,661,729,704.63 | 1,901,818,858.50 | 8,563,548,563.13 | 5,172,626,269.85 | 62,682,909.87 | 5,235,309,179.72 |
In RMB/CNY
| Subsidiary | Opening balance | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Weifu Jinning | 999,097,495.08 | 334,721,775.17 | 1,333,819,270.25 | 318,915,621.86 | 47,104,930.82 | 366,020,552.68 |
| Weifu Schmidt | 141,991,506.20 | 49,208,881.93 | 191,200,388.13 | 157,822,785.29 | 157,822,785.29 | |
| Weifu Leader | 3,941,739,116.15 | 1,095,110,196.65 | 5,036,849,312.80 | 3,351,853,614.37 | 22,204,377.06 | 3,374,057,991.43 |
| Weifu Autocam | 245,057,798.53 | 323,114,477.06 | 568,172,275.59 | 254,234,583.00 | 254,234,583.00 | |
| Total | 5,327,885,915.96 | 1,802,155,330.81 | 7,130,041,246.77 | 4,082,826,604.52 | 69,309,307.88 | 4,152,135,912.40 |
In RMB/CNY
| Subsidiary | Current period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Weifu Jinning | 685,608,389.43 | 110,875,256.44 | 110,875,256.44 | 42,395,588.51 |
| Weifu Schmidt | 252,434,907.65 | 14,694,274.89 | 14,694,274.89 | -2,270,586.10 |
| Weifu Leader | 6,427,844,701.00 | 245,276,849.88 | 245,276,849.88 | 41,415,937.03 |
| Weifu Autocam | 485,081,038.09 | 50,518,929.75 | 50,518,929.75 | 86,836,060.40 |
| Total | 7,850,969,036.17 | 421,365,310.96 | 421,365,310.96 | 168,376,999.84 |
In RMB/CNY
| Subsidiary | Last Period | |||
| Operation Income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Weifu Jinning | 591,679,134.25 | 124,990,228.55 | 124,990,228.55 | 73,403,344.49 |
| Weifu Schmidt | 221,352,114.68 | 5,093,231.61 | 5,093,231.61 | 19,622,886.37 |
| Weifu Leader | 3,020,424,650.65 | 33,406,696.55 | 33,406,696.55 | 112,342,744.56 |
| Weifu Autocam | 417,638,897.85 | 23,573,670.87 | 23,573,670.87 | 125,547,456.63 |
| Total | 4,251,094,797.43 | 187,063,827.58 | 187,063,827.58 | 330,916,432.05 |
(4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group
Nil
(5) Financial or other supporting offers to the structured entity included in consolidated financial statementrangeNil
2. Transaction that has owners’ equity shares changed in subsidiary but still with controlling rights
(1) Owners’ equity shares changed in subsidiary
In October 2020, the company purchased the equity held by minority shareholders of IRD with 48,507,056.85Yuan in cash. After this transaction, the company's shareholding in IRD was changed from 66.00% to 100.00%.
(2) Impact on minority’s interest and owners’ equity attributable to parent company
In RMB/CNY
| --Cash | 48,507,056.85 |
| Less: Net assets share of the subsidiary calculated according to the equity ratio obtained/disposed | 41,330,359.81 |
| Balance | 7,176,697.04 |
| Including: Capital reserve adjustment | 7,176,697.04 |
3. Equity in joint venture and associated enterprise
(1) Important joint venture and associated enterprise
| Joint venture or associated enterprise | Main operation place | Registered place | Business nature | Share-holding ratio | Accounting treatment on investment for joint venture and associated enterprise | |
| Directly | Indirectly | |||||
| Wuxi Weifu Environment Catalyst Co., Ltd. | Wuxi | Wuxi | Catalyst | 49.00% | Equity method | |
| Bosch Automobile Diesel System Co., Ltd. | Wuxi | Wuxi | Internal-combustion engine accessories | 32.50% | 1.50% | Equity method |
| Zhonglian Automobile Electronic Co., Ltd. | Shanghai | Shanghai | Internal-combustion engine accessories | 20.00% | Equity method | |
| Weifu Precision Machinery Manufacturing Co., Ltd. | Wuxi | Wuxi | Internal-combustion engine accessories | 20.00% | Equity method | |
| Shinwell Automobile Technology (Wuxi) Co., Ltd. | Wuxi | Wuxi | Automobile components | 45.00% | Equity method | |
| Changchun Xuyang Weifu Automobile components Technology Co., Ltd. | Changchun | Changchun | Automobile components | 34.00% | Equity method | |
Holding shares ratio different from the voting right ratio:
Has major influence with less 20% voting rights hold, or has minor influence with over 20% (20% included) voting rights hold:
(2) Main financial information of the important joint venture
Nil
(3) Main financial information of the important associated enterprise
In RMB/CNY
| Ending balance/Current period | Opening balance/Last Period | |||||
| Weifu Environment | Bosch Diesel System | Zhonglian Automobile | Weifu Environment | Bosch Diesel System | Zhonglian Automobile | |
| Current assets | 4,446,438,334.10 | 11,965,249,225.12 | 201,344,601.39 | 3,285,078,665.28 | 10,878,760,988.82 | 175,292,101.34 |
| Non -current assets | 363,513,166.84 | 2,995,027,302.84 | 5,985,689,857.38 | 323,188,749.54 | 3,059,116,036.23 | 6,129,564,645.28 |
| Total assets | 4,809,951,500.94 | 14,960,276,527.96 | 6,187,034,458.77 | 3,608,267,414.82 | 13,937,877,025.05 | 6,304,856,746.62 |
| Current | 3,251,776,146.44 | 7,423,648,562.76 | 3,687,897.36 | 2,401,381,614.27 | 4,613,514,567.69 | 3,030,820.85 |
| liabilities | ||||||
| Non-current liabilities | 175,895,402.90 | 2,638,609.61 | 26,545,326.53 | 2,699,079.03 | ||
| Total liabilities | 3,427,671,549.34 | 7,423,648,562.76 | 6,326,506.97 | 2,427,926,940.80 | 4,613,514,567.69 | 5,729,899.88 |
| Attributable to parent company shareholders’ equity | 1,382,279,951.60 | 7,536,627,965.20 | 6,180,707,951.80 | 1,180,340,474.02 | 9,324,362,457.36 | 6,299,126,846.74 |
| Share of net assets calculated by shareholding ratio | 677,317,176.28 | 2,562,453,508.17 | 1,236,141,590.36 | 578,366,832.27 | 3,170,283,235.50 | 1,259,825,369.35 |
| --Goodwill | 267,788,761.35 | 1,407,265.96 | 267,788,761.35 | 1,407,265.96 | ||
| --Unrealized profit of internal trading | -29,652,559.84 | -20,979,859.92 | ||||
| --Other | -0.28 | -0.01 | -0.28 | |||
| Book value of equity investment in associated enterprise | 677,317,176.28 | 2,800,589,709.40 | 1,237,548,856.31 | 578,366,832.27 | 3,417,092,136.65 | 1,261,232,635.31 |
| Operation income | 7,458,886,474.12 | 15,742,669,081.61 | 23,790,158.00 | 3,729,583,492.29 | 14,224,084,504.12 | 23,049,985.98 |
| Net profit | 296,484,991.05 | 3,511,327,740.19 | 1,538,581,105.06 | 26,414,017.30 | 3,152,063,841.44 | 1,399,783,397.92 |
| Total comprehensive income | 296,484,991.05 | 3,511,327,740.19 | 1,538,581,105.06 | 26,414,017.30 | 3,152,063,841.44 | 1,399,783,397.92 |
| Dividends received from associated enterprise in the year | 1,801,681,159.00 | 331,400,000.00 | 858,896,776.94 | 105,200,000.00 |
Other explanationAdjustment item for other “-0.28”: the differential tail;
(4) Financial summary for non-important Joint venture and associated enterprise
In RMB/CNY
| Ending balance/Current period | Opening balance/Last Period | |
| Joint venture: | -- | -- |
| Amount based on share-holding ratio | -- | -- |
| --Net profit | -910,094.79 | |
| --Total comprehensive income | -910,094.79 | |
| Associated enterprise: | -- | -- |
| Total book value of investment | 86,032,548.98 | 65,714,349.12 |
| Amount based on share-holding ratio | -- | -- |
| --Net profit | 13,773,166.19 | 6,501,430.20 |
| --Total comprehensive income | 13,773,166.19 | 6,501,430.20 |
(5) Major limitation on capital transfer ability to the Company from joint venture or associated enterprise
Nil
(6) Excess loss occurred in joint venture or associated enterprise
Nil
(7) Unconfirmed commitment with joint venture investment concerned
Nil
(8) Intangible liability with joint venture or associated enterprise investment concernedNil
4. Major conduct joint operation
Nil
5. Structured body excluding in consolidate financial statement
Relevant explanations for structured entities not included in the scope of the consolidated financial statements: NilX. Risk related with financial instrumentMain financial instrument of the Company including monetary funds, structured deposits, account receivable,equity instrument investment, financial products, loans, and account payable etc., more details of the financialinstrument can be found in relevant items of Note V. Risks concerned with the above-mentioned financialinstrument, and the risk management policy takes for lower the risks are as follow:
Aims of engaging in the risk management is to achieve equilibrium between the risk and benefit, lower the
adverse impact on performance of the Company to minimum standards, and maximized the benefit forshareholders and other investors. Base on the risk management targets, the basic tactics of the risk management isto recognized and analyzed the vary risks that the Company counted, established an appropriate risk exposurebaseline and caring risk management, supervise the vary risks timely and reliably in order to control the risk in alimited range.
In business process, the risks with financial instrument concerned happen in front of the Company mainlyincluding credit exposure, market risk and liquidity risk. BOD of the Company takes full charge of the riskmanagement target and policy-making, and takes ultimate responsibility for the target of risk management andpolicy. Compliance department and financial control department manager and monitor those risk exposures toensuring the risks are control in a limited range.
1. Credit Risk
Credit risk refers to the risk that one party of a financial instrument fails to perform its obligations, and resultingin the financial loss of other party. The company's credit risk mainly comes from monetary funds, structureddeposits, note receivable, account receivable, other account receivables. The management has established anappropriate credit policy and continuously monitors the exposure to these credit risks.
The monetary funds and structured deposits held by the Company are mainly deposited in financial institutionssuch as commercial banks, the management believes that these commercial banks have higher credit and assetstatus, and have lower credit risks.The Company adopts quota policies to avoid credit risks to any financialinstitutions.For accounts receivable, other receivables and bills receivable, the Company sets relevant policies to control thecredit risk exposure. To prevent the risks, the company has formulated a new customer credit evaluation systemand an existing customer credit sales balance analysis system. The new customer credit evaluation system aims atnew customers, the company will investigate a customer’s background according to the established process todetermine whether to give the customer a credit line and the credit line size and credit period. Accordingly, thecompany has set a credit limit and a credit period for each customer, which is the maximum amount that does notrequire additional approval. The analysis system for credit sales balance of existing customers means that afterreceiving a purchase order from an existing customer, the company will check the order amount and the balanceof the accounts owed by the customer so far,if the total of the two exceeds the credit limit of the customer, thecompany can only sell to the customer on the premise of additional approval, otherwise the customer must berequired to pay the corresponding amount in advance. In addition, for the credit sales that have occurred, thecompany analyzes and audits the monthly statements for risk warning of accounts receivable to ensure that thecompany’s overall credit risk is within a controllable range.The maximum credit risk exposure of the Company is the carrying amount of each financial asset on the balancesheet.
2. Market risk
Market risk of the financial instrument refers to the fair value of financial instrument or future cash flow due to
fluctuations in the market price changes and produce, mainly includes the IRR, FX risk and other price risk.
(1) Interest rate risk (IRR)
IRR refers to the fluctuate risks on Company’s financial status and cash flow arising from rates changes in market.IRR of the Company mainly related with the bank loans. In order to lower the fluctuate of IRR, the Company, inline with the anticipative change orientation, choose floating rate or fixed rate, that is the rate in future period willgoes up prospectively, than choose fixed rate; if the rate in future period will decline prospectively, than choosethe floating rate. In order to minor the bad impact from difference between the expectation and real condition,loans for liquid funds of the Company are choose the short-term period, and agreed the terms of prepayment inparticular.
(2) Foreign exchange (FX) risk
FX risks refer to the losses arising from exchange rate movement. The FX risk sustain by the Company mainlyrelated with the USD, EUR, SF, JPY, HKD, DKK except for the USD, EUR, SF, JPY, HKD and DKK carried outfor the equipment purchasing of parent company and Autocam, material purchasing of parent company, technicalservice and trademark usage costs of parent company, the import and export of Weifu International Trade,operation of IRD and operation of Borit, other main business of the Company are pricing and settle with RMB(Yuan). In consequence of the foreign financial assets and liabilities takes minor ratio in total assets, the Companyhas small FX risk of the financial instrument, considered by management of the Company.End as 31st December 2020, except for the follow assets or liabilities listed with foreign currency, assets andliabilities of the Company are carried with RMB
① Foreign currency assets of the Company till end of 31st December 2020:
| Cash on hand | Ending foreign currency balance | Convert rate | Ending RMB balance converted | Ratio in assets (%) |
| Monetary funds | ||||
| Including: USD | 11,596,564.24 | 6.5249 | 75,666,419.10 | 0.28 |
| EUR | 3,694,505.41 | 8.025 | 29,648,405.15 | 0.11 |
| HKD | 11,548,347.98 | 0.84164 | 9,719,551.59 | 0.04 |
| DKK | 9,616,906.23 | 1.0786 | 10,372,795.06 | 0.04 |
| Account receivable | ||||
| Including: USD | 2,190,411.21 | 6.5249 | 14,292,214.10 | 0.05 |
| EUR | 1,290,945.42 | 8.025 | 10,359,837.00 | 0.04 |
| JPY | 12,179,808.00 | 0.063236 | 770,202.34 | 0.00 |
| DKK | 2,239,065.57 | 1.0786 | 2,415,056.12 | 0.01 |
| Other account receivables |
| Including: USD | 70,143.68 | 8.025 | 562,903.03 | 0.00 |
| DKK | 462,081.08 | 1.0786 | 498,400.65 | 0.00 |
| Total ratio in assets | 0.57 |
② Foreign currency liability of the Company till end of 31st December 2020:
| Cash on hand | Ending foreign currency balance | Convert rate | Ending RMB balance converted | Ratio in assets(%) |
| Short-term borrowings | ||||
| Including: EUR | 4,981,278.48 | 8.025 | 39,974,759.80 | 0.47 |
| Account payable |
| Including: USD | 812,035.19 | 6.5249 | 5,298,448.41 | 0.06 |
| EUR | 1,031,866.82 | 8.025 | 8,280,731.24 | 0.10 |
| JPY | 15,780,699.00 | 0.063236 | 997,908.28 | 0.01 |
| CHF | 103,580.75 | 7.4006 | 766,559.70 | 0.01 |
| DKK | 2,865,734.26 | 1.0786 | 3,090,980.97 | 0.04 |
| GBP | 59,450.00 | 8.8903 | 528,528.34 | 0.01 |
| Interest payable | ||||
| Including: EUR | 2,065.46 | 8.025 | 16,575.32 | 0.00 |
| Other account payable |
| Including: EUR | 255.00 | 8.025 | 2,046.38 | 0.00 |
| DKK | 402,113.23 | 1.0786 | 433,719.33 | 0.01 |
| Total ratio in liabilities | 0.71 |
③ Other pricing risk 1
The equity instrument investment held by the Company with classification as transaction financial asset and othernon-current financial assets are measured on fair value of the balance sheet date. The fluctuation of expected pricefor these investments will affect the gains/losses of fair value changes for the Company.
Furthermore, on the premise of deliberated and approved in 10
th session of 8
thBOD, the Company exercise entrustfinancing with the self-owned idle capital; therefore, the Company has the risks of collecting no principal due toentrust financial products default. Aims at such risk, the Company formulated a “Management Mechanism ofCapital Financing”, and well-defined the authority approval, investment decision-making, calculationmanagement and risk controls for the entrust financing in order to guarantee a security funds and preventinvestment risk efficiently. In order to lower the adverse impact from unpredictable factors, the Company chooseshort-term and medium period for investment and investment product’s term is up to 3 years in principle; invariety of investment, the Company did not invest for the stocks, derivative products, security investment fundand the entrust financial products aims at security investment as well as other investment with securitiesconcerned.
3. Liquidity risk
Liquidity risk refers to the capital shortage risk occurred during the clearing obligation implemented by theenterprise in way of cash paid or other financial assets. The Company aims at guarantee the Company has richcapital to pay the due debts, therefore, a financial control department is established for collectively controlling
such risks. On the one hand, the financial control department monitoring the cash balance, the marketablesecurities which can be converted into cash at any time and the rolling forecast on cash flow in future 12 months,ensuring the Company, on condition of reasonable prediction, owes rich capital to paid the debts; on the otherhand, building a favorable relationship with the banks, rationally design the line of credit, credit products andcredit terms, guarantee a sufficient limit for bank credits in order to satisfy vary short-term financingrequirements.XI. Disclosure of fair value
1. Ending fair value of the assets and liabilities measured by fair value
In RMB/CNY
| Item | Ending fair value | |||
| First-order | Second-order | Third-order | Total | |
| I. Sustaining measured by fair value | -- | -- | -- | -- |
| (I) Transaction financial asset | 188,108,256.00 | 326,848,122.00 | 4,809,264,982.10 | 5,324,221,360.10 |
| 1.Financial assets measured at fair value and whose changes are included in current profit or loss | 188,108,256.00 | 326,848,122.00 | 4,809,264,982.10 | 5,324,221,360.10 |
| (1) Investment in debt instruments | 4,797,324,683.10 | 4,797,324,683.10 | ||
| (2) Investment in equity instruments | 188,108,256.00 | 326,848,122.00 | 11,940,299.00 | 526,896,677.00 |
| (3) Derivative financial assets | 334,488,446.37 | |||
| (2) Investment in equity instruments | 334,488,446.37 | |||
| (III) Other equity instrument investment | 285,048,000.00 | 285,048,000.00 | ||
| （IV）Financing of accounts receivable | 1,005,524,477.88 | 1,005,524,477.88 | ||
| Total liability sustaining measured by fair value | 188,108,256.00 | 326,848,122.00 | 6,099,837,459.98 | 6,614,793,837.98 |
| II. Non-persistent measure | -- | -- | -- | -- |
2. Recognized basis for the market price sustaining and non-persistent measured by fair value onfirst-orderOn 31 December 2020, the financial assets available for sale-equity instrument investment held by the Companyrefers to the SDEC (stock code: 600841) and Miracle Automation (Stock code: 002009), determining basis of themarket price at period-end refers to the closing price of 31 December 2020.
3. The qualitative and quantitative information for the valuation technique and critical parameter thatsustaining and non-persistent measured by fair value on second-orderOn 31 December 2020, other non-current financial assets-equity instrument investment held by the Companyrefers to the Guolian Securities (stock code: 601456), determining basis of the market price at period-end refers tothe closing price and liquidity discounts of 31 December 2020.
4. The qualitative and quantitative information for the valuation technique and critical parameter thatsustaining and non-persistent measured by fair value on third-order
(1) Fair value of wealth management products
The fair value of wealth management products is determined by the Company using discounted cash flowvaluation techniques.Among them, the important unobservable input values are mainly the expected annualizedrate of return and the risk factor of wealth management products.
(2) Financing of accounts receivable
For this part of financial assets, the Company uses discounted cash flow valuation techniques to determine its fairvalue. Among them, important unobservable input values mainly include discount rate and contractual cash flowmaturity period. The cash flow with a contract expiration period of 12 months (inclusive) shall not be discounted,and the cost shall be regarded as its fair value.
(3) Fair value of equity instrument investment and other equity instrument investmentDue to the lack of market liquidity for this part of financial assets, the Company uses the replacement cost methodto determine its fair value.Among them, the important unobservable input values mainly include the financial dataof the invested company, etc.
5. Continuous third-level fair value measurement items, adjustment information between the opening andclosing book value and sensitivity analysis of unobservable parametersNil
6. Continuous fair value measurement items, if there is a conversion between various levels in the currentperiod, the reasons for the conversion and the policy for determining the timing of the conversionNil
7. Changes in valuation technology during the current period and reasons for the changes
Nil
8. The fair value of financial assets and financial liabilities not measured by fair valueNil
9. Other
Nil
XII. Related party and related party transactions
1. Parent company of the enterprise
| Parent company | Registration place | Business nature | Registered capital | Share-holding ratio on the enterprise for parent company | Voting right ratio on the enterprise |
| Wuxi Industry Group | Wuxi | Operation of state-owned assets | 5172.6571 million Yuan | 20.22% | 20.22% |
Explanation on parent company of the enterpriseWuxi Industry Group is an enterprise controlled by the State-owned Assets Management Committee of WuxiMunicipal People’s Government. Its business scope includes foreign investment by using its own assets, houseleasing services, self-operating and acting as an agent for the import and export business of various commoditiesand technologies (Except for goods and technologies that are restricted by the state or prohibited for import andexport), domestic trade (excluding national restricted and prohibited items). (Projects that are subject to approvalin accordance with the law can be operated only after being approved by relevant departments).
Ultimate controller of the Company is State-owned Assets Supervision & Administration Commission of Wuxi Municipality ofJiangsu Province.Other explanation: Nil
2. Subsidiary of the Enterprise
Found more in Note IX. 1.” Equity in subsidiary”
3. Joint venture and associated enterprise
Found more in Note IX.3. “Equity in joint venture and associated enterprise”Other associated enterprise or joint ventures which has related transaction with the Company in the period or occurred previous:
Nil
4. Other Related party
| Other Related party | Relationship with the Enterprise |
| Robert Bosch Company | Second largest shareholder of the Company |
| Key executive | Director, supervisor and senior executive of the Company |
5. Related transaction
(1) Goods purchasing, labor service providing and receiving
Goods purchasing/labor service receiving
In RMB/CNY
| Related party | Content of related transaction | Current period | Approved transaction limit | Whether more than the transaction limit (Y/N) | Last Period |
| Weifu Precision Machinery | Goods and labor | 34,570,825.03 | 30,000,000.00 | Y | 37,649,400.25 |
| Bosch Diesel System | Goods and labor | 29,740,591.61 | 25,000,000.00 | Y | 42,492,806.04 |
| Weifu Environment | Goods | 3,051,418,777.65 | 3,200,000,000.00 | N | 1,663,362,526.18 |
| Robert Bosch Company | Goods and labor | 150,855,622.37 | 153,000,000.00 | N | 173,854,905.98 |
| Shinwell Automobile Tech. (Wuxi) Co., Ltd. | Goods | 1,733,572.01 | 5,000,000.00 | N | 11,195,174.16 |
Goods sold/labor service providing
In RMB/CNY
| Related party | Content of related transaction | Current period | Last Period |
| Weifu Precision Machinery | Goods and labor | 6,092,391.01 | 1,428,332.05 |
| Bosch Diesel System | Goods and labor | 2,961,684,269.09 | 2,670,139,591.68 |
| Weifu Environment | Goods and labor | 29,663,885.81 | 29,810,340.60 |
| Robert Bosch Company | Goods and labor | 860,611,502.90 | 730,599,270.85 |
| Shinwell Automobile Tech. (Wuxi) Co., Ltd. | Goods | 103,329.66 | 1,241,682.55 |
Description of related transactions in the purchase and sale of goods, provision and acceptance of labor services Nil
(2) Related trusteeship management/contract & entrust management/ outsourcingNil
(3) Related lease
As a lessor for the Company:
In RMB/CNY
| Lessee | Assets type | Lease income recognized in the Period | Lease income recognized at last Period |
| Weifu Environment | Workshop | 2,508,057.00 | 2,508,057.00 |
Explanation on related leaseWeifu Leader entered into the house leasing contract with Weifu Environment, as for the plant locates at No.9Linjiang Road, Wuxi new district, owed by Weifu Leader, rent-out to Weifu Environment, agreements are madeas: Rental from 1 January 2020 to 31 December 2020 was 2,508,057.00 Yuan
(4) Related guarantee
Nil
(5) Related party’s borrowed/lending funds
| Related party | Loan amount | Start date | Maturity | Note |
| Borrowing | ||||
| Wuxi Industry Group | 5,470,000.00 | This year, Weifu Leader received borrowed funds from Wuxi Industry Group. | ||
| Lending | ||||
(6) Related party’s assets transfer and debt reorganization
Nil
(7) Remuneration of key manager
In RMB/CNY
| Item | Current period | Last Period |
| Remuneration of key manager | 16,986,000.00 | 5,370,000.00 |
(8) Other related transactions
| Related party | Name | Current period | Last Period |
| Weifu Precision Machinery | Payable for technical services | 54,783.81 | -- |
| Weifu Precision Machinery | Purchase of fixed assets | 145,200.00 | -- |
| Bosch Diesel System | Technology royalties paid etc. | 184,740.27 | 337,369.76 |
| Bosch Diesel System | Purchase of fixed assets | 447,692.06 | 5,720,900.23 |
| Bosch Diesel System | Technology royalties paid etc. | 295,419.00 | |
| Robert Bosch Company | Technology royalties paid etc. | 5,072,260.23 | 3,489,339.19 |
| Robert Bosch Company | Payable for technical services | -- | 702,303.80 |
| Robert Bosch Company | Purchase of fixed assets | 22,927,889.53 | 6,150,100.00 |
| Weifu Environment | House rental fee payable | -- | 214,285.71 |
| Weifu Environment | Purchase of fixed assets | 30,000.00 | 148,668.39 |
| Weifu Environment | Payable for technical services | 64,433.96 | -- |
| Weifu Environment | Sales of fixed assets | 9,426.00 | -- |
| Wuxi Industry Group | Interest paying | 89,564.40 |
6. Receivable/payable items of related parties
(1) Receivable item
In RMB/CNY
| Item | Related party | Ending balance | Opening balance | ||
| Book balance | Bad debt reserve | Book balance | Bad debt reserve | ||
| Account receivable | Weifu Precision Machinery | 160,565.87 | 243,544.57 | ||
| Other account receivables | Weifu Precision Machinery | 1,070,000.00 | |||
| Account receivable | Bosch Diesel System | 549,543,387.12 | 547,423,047.70 | ||
| Account receivable | Robert Bosch Company | 205,738,695.62 | 84,473.87 | 155,195,576.42 | 135,534.13 |
| Other account receivables | Robert Bosch Company | 7,600,000.00 | 1,520,000.00 | ||
| Account receivable | Weifu Environment | 642,390.75 | 3,925,564.95 | ||
| Other account receivables | Weifu Environment | 49,000,000.00 | |||
| Other non-current assets | Weifu Precision Machinery | 53,788.00 | |||
| Other non-current assets | Bosch Diesel System | 183,842.03 | |||
| Account paid in advance | Robert Bosch Company | 2,970,930.93 | 5,954,823.56 | ||
| Other non-current assets | Robert Bosch Company | 6,600,000.00 | |||
(2) Payable item
In RMB/CNY
| Item | Related party | Ending book balance | Opening book balance |
| Account payable | Weifu Precision Machinery | 12,959,303.46 | 10,556,782.28 |
| Other account payable | Weifu Precision Machinery | 29,000.00 | 29,000.00 |
| Account payable | Weifu Environment | 850,384,640.88 | 553,049,630.17 |
| Account payable | Bosch Diesel System | 7,178,387.17 | 5,664,266.10 |
| Account payable | Robert Bosch Company | 5,370,249.46 | 12,297,410.48 |
| Account payable | Shinwell Automobile Tech. (Wuxi) Co., Ltd. | 19,320.30 | 2,212,768.26 |
| Other current liabilities | Bosch Diesel System | 169,620,804.78 | 69,164,600.47 |
| Other current liabilities | Weifu Precision Machinery | 74,778.76 | |
| Other account payable | Wuxi Industry Group | 5,474,862.22 | |
| Contract liabilities | Weifu Precision Machinery | 619,469.03 | |
| Contract liabilities | Bosch Diesel System | 0.36 | |
| Contract liabilities | Robert Bosch Company | 18,094.85 | 854,162.51 |
| Contract liabilities | Weifu Environment | 5,812,521.86 |
7. Undertakings of related party
Nil
8. Other
NilXIII. Share-based payment
1. Overall situation of share-based payment
√ Applicable □ Not applicable
In RMB/CNY
| Total amount of various equity instruments granted by the company in the current period | 509,994,000.00 |
| Total amount of various equity instruments exercised by the company in the current period | 0.00 |
| Total amount of various equity instruments invalidated by the company in the current period | 0.00 |
| The scope of the exercise price of the stock options issued by the company at the end of the period and the remaining period of the contract | The grant price is 15.48 Yuan per share; the exercise time is from the first trading day 24 months after the completion of the registration of the restricted stocks granted in the first tranche to the last trading day within 60 months from the date of completion of the registration of the restricted stock granted in the first tranche, so the remaining period of the contract is 4 years and 11 months. |
| The scope of the exercise price of other equity instruments issued by the company at the end of the period and the remaining period of the contract | N/A |
2. Share-based payment settled by equity
√ Applicable □ Not applicable
In RMB/CNY
| Method for determining the fair value of equity instruments on the grant date | Determine based on the closing price of the restricted stock on the grant date |
| Basis for determining the number of vesting equity instruments | Unlocking conditions |
| Reasons for the significant difference between estimate in the current period and estimate in the prior period | Not Applicable |
| Cumulative amount of equity-settled share-based payments included in the capital reserve | 6,484,837.50 |
| Total amount of expenses confirmed by equity-settled share-based payments in the current period | 6,484,837.50 |
Other explanations:
This restricted stock incentive plan has been reviewed and approved by the company's second extraordinarygeneral meeting of shareholders in 2020. The overview of this restricted stock incentive plan is as follows:
(1) Stock source: the company's A-share common stock repurchased from the secondary market.
(2) Grant date: November 12, 2020.
(3) Grant objects and number of grants: 19,540,000 restricted stocks were granted to 601 incentive objects of thecompany and its subsidiaries.
(4) Grant price: 15.48 Yuan/share.
(5) Grant registration completion date: December 4, 2020.
(6) Lifting the restrictions on sales:
| Unlock period | Unlock time | Ratio of unlocked quantity to granted quantity |
| Phase I unlocked | Starting from the first trading day 24 months after the completion of the registration of the first grant and ending on the last trading day within 36 months | 4/10 |
| Phase II unlocked | Starting from the first trading day 36 months after the completion of the registration of the first grant and ending on the last trading day within 48 months | 3/10 |
| Phase III unlocked | Starting from the first trading day 48 months after the completion of the registration of the first grant and ending on the last trading day within 60 months | 3/10 |
(7) Performance appraisal requirements at the company level:
| Unlock conditions | Performance appraisal requirements |
| The first batch of unlock conditions | 1. the weighted average ROE for year of 2021 is not less than 10%; 2. the growth rate of self-operating profit in 2021 will not be less than 6% compared with the year of 2019, the absolute amount will not be less than 845 million Yuan; |
3. the cash dividends for year of 2021 shall be no less than 50% of the profit available for distribution of thecurrent year.The second batch ofunlocking conditions
| The second batch of unlocking conditions | 1. the weighted average ROE for year of 2022 is not less than 10%; 2. the growth rate of self-operating profit in 2022 will not be less than 12% compared with the year of 2019, the absolute amount will not be less than 892 million Yuan; 3. the cash dividends for year of 2022 shall be no less than 50% of the profit available for distribution of the current year. |
| The third batch of unlocking conditions | 1. the weighted average ROE for year of 2023 is not less than 10%; 2. the growth rate of self-operating profit in 2023 will not be less than 20% compared with the year of 2019, the absolute amount will not be less than 958 million Yuan; 3. the cash dividends for year of 2023 shall be no less than 50% of the profit available for distribution of the current year. |
Other explanation:self-operating profit refers to the net profit attributable to the owners of the parent company after deductingnon-recurring gains and losses, and deducting the investment income from Bosch Diesel System and CNEMS.
3. Share-based payment settled by cash
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
Nil
5. Other
NilXIV. Undertakings or contingency
1. Important undertakings
Important undertakings on balance sheet dateNil
2. Contingency
(1) Contingency on balance sheet date
Nil
(2) For the important contingency not necessary to disclosed by the Company, explained reasons
The Company has no important contingency that need to disclosed
(3) Other information required by the Guidelines for Information Disclosure of Automobile ManufacturingRelated IndustriesMortgage sales, financial leasing and other models of sales accounted for more than 10% of operating income
□ Applicable √ Not applicable
The company's guarantee to the dealer
□ Applicable √ Not applicable
3. Other
NilXV. Events after balance sheet date
1. Important non adjustment matters
Nil
2. Profit distribution
In RMB/CNY
| Profit or dividend plans to distributed | 1,513,341,439.50 |
| Profit or dividend declare to distributed which have been approved | 1,513,341,439.50 |
3. Sales return
Nil
4. Other events after balance sheet date
(1)The Proposal on External Investment was deliberated and approved by the 22
nd session of 9
thBOD dated 26Feb. 2021. the Company intends to invest in Qingdao Shangqi HuiZhu Zhanxing Industry Investment Fund(Limited Partnership) with its own funds of 150 million Yuan.
(2) According to the resolution of the 23
rdsession of the 9
thboard of directors of the company held on April 16,2021, the company plans to use its own idle funds for entrusted financial management in 2021, with the totalinvestment amount not exceeding 9.5 billion Yuan, and the above amount can be rolledXVI. Other important events
1. Previous accounting errors collection
Nil
2. Debt restructuring
Nil
3. Assets replacement
Nil
4. Pension plan
The Enterprise Annuity Plan under the name of WFHT has deliberated and approved by 8
th session of 7
th
BOD: inorder to mobilize the initiative and creativity of the employees, established a talent long-term incentivemechanism, enhance the cohesive force and competitiveness in enterprise, the Company carried out the abovementioned annuity plan since the date of reply of plans reporting received from labor security administrationdepartment. Annuity plans are: the annuity fund are paid by the enterprise and employees together; theenterprise’s contribution shall not exceed 8% of the gross salary of the employees of the enterprise per year, thecombined contribution of the enterprise and the individual employee shall not exceed 12% of the total salary ofthe employees of the enterprise. In accordance with the State’s annuity policy, the Company will adjusted theeconomic benefits in due time, in principle of responding to the economic strength of the enterprise, the amountpaid by the enterprise at current period control in the 8 percent of the total salary of last year, the maximum annualallocation to employees shall not exceed five times the average allocation to employees and the excess shall not becounted towards the allocation. The individual contribution is limited to 1% of one’s total salary for the previousyear. Specific paying ratio later shall be adjusted correspondingly in line with the operation condition of theCompany.In December 2012, the Company received the Reply on annuity plans reporting under the name of WFHT fromlabor security administration department, later, the Company entered into the Entrusted Management Contract ofthe Annuity Plan of WFHT with PICC.
5. Termination of operation
Not applicable
6. Segment
(1) Recognition basis and accounting policy for reportable segment
Determine the operating segments in line with the internal organization structure, management requirement andinternal reporting system. Operating segment of the Company refers to the followed components that have beensatisfied at the same time:
① The component is able to generate revenues and expenses in routine activities;
② Management of the Company is able to assess the operation results regularly, and determine resources
allocation and performance evaluation for the component;
③ Being analyzed, financial status, operation results and cash flow of the components are able to require by theCompanyThe Company mainly engaged in the manufacture of fuel system of internal combustion engine and fuel cellcomponents products, auto components, muffler and purifier etc., based on the product segment, the Companydetermine three reporting segments as auto fuel injection system and fuel cell components, air managementsystem and automotive post processing system. Accounting policy for the three reporting segments are shares thesame policy state in Note VSegment assets exclude transaction financial asset, other account receivables-dividend receivable, othernon-current financial assets, other equity instrument investment, long term equity investment and otherundistributed assets, since these assets are not related to products operation.
(2) Financial information for reportable segment
In RMB/CNY
| Item | Automotive fuel injection system and fuel cell parts product division | Product segment of automotive post processing system | Product segment of air management system | Add: investment/income measured by equity, income of financial products or possession and disposal income, the retained assets or gains/losses as the financial assets available for sale or possession and disposal income | Offset of segment | Total |
| Operating revenue | 5,993,310,683.00 | 6,427,844,701.00 | 697,872,646.74 | 235,201,724.14 | 12,883,826,306.60 | |
| Operating cost | 4,448,683,801.55 | 5,731,947,799.03 | 446,496,408.80 | 197,843,567.41 | 10,429,284,441.97 | |
| Total Profit | 524,729,824.97 | 96,006,636.11 | 71,788,594.68 | 2,309,901,783.97 | -524,839.83 | 3,002,951,679.56 |
| Net profit | 452,179,859.49 | 101,778,469.69 | 55,671,416.42 | 2,212,713,056.22 | -393,128.74 | 2,822,735,930.56 |
| Total assets | 11,471,288,383.40 | 5,342,888,369.35 | 1,013,319,278.74 | 10,404,823,830.96 | 881,624,474.24 | 27,350,695,388.21 |
| Total liabilities | 3,923,773,971.66 | 4,225,004,372.65 | 592,960,211.88 | 1,235,734.93 | 186,744,801.93 | 8,556,229,489.19 |
(3)If the company has no reportable segments or is unable to disclose the total assets and liabilities of eachreportable segment, it should state the reasonsNot applicable
(4)Other explanations
Nil
7. Major transaction and events makes influence on investor’s decision
Nil
8. Other
NilXVII. Principal notes of financial statements of parent company
1. Account receivable
(1) Classification of account receivable
In RMB/CNY
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt reserve | Book value | Book balance | Bad debt reserve | Book value | |||||
| Amount | Ratio | Amount | Accrual ratio | Amount | Ratio | Amount | Accrual ratio | |||
| Account receivable with bad debt provision accrual on a single basis | 11,107,123.51 | 1.11% | 11,107,123.51 | 100.00% | 9,107,123.51 | 1.06% | 9,107,123.51 | 100.00% | ||
| Including: | ||||||||||
| Account receivable with bad debt provision accrual on portfolio | 985,882,139.36 | 98.89% | 3,099,860.14 | 0.31% | 982,782,279.22 | 851,956,578.91 | 98.94% | 3,716,569.87 | 0.44% | 848,240,009.04 |
| Including: | ||||||||||
| Including: receivables from customers | 836,329,626.26 | 83.89% | 3,099,860.14 | 0.37% | 833,229,766.12 | 715,722,790.25 | 83.12% | 3,716,569.87 | 0.52% | 712,006,220.38 |
| Receivables from internal related parties | 149,552,513.10 | 15.00% | 149,552,513.10 | 136,233,788.66 | 15.82% | 136,233,788.66 | ||||
| Total | 996,989,262.87 | 100.00% | 14,206,983.65 | 1.42% | 982,782,279.22 | 861,063,702.42 | 100.00% | 12,823,693.38 | 1.49% | 848,240,009.04 |
Bad debt provision accrual on single basis: RMB 11,107,123.51
In RMB/CNY
| Name | Ending balance | |||
| Book balance | Bad debt reserve | Accrual ratio | Accrual causes | |
| BD bills | 7,300,000.00 | 7,300,000.00 | 100.00% | Have difficulty in collection |
| Changchun FAW Sihuan Engine Manufacturing Co., Ltd | 1,475,731.65 | 1,475,731.65 | 100.00% | Have difficulty in collection |
| Wuxi Kipor Machinery Co., Ltd | 1,220,384.74 | 1,220,384.74 | 100.00% | Have difficulty in collection |
| Fujian Zhao’an Country Minyue Bianjie Agricultural Machinery Automobile components Co., Ltd. | 1,111,007.12 | 1,111,007.12 | 100.00% | Have difficulty in collection |
| Total | 11,107,123.51 | 11,107,123.51 | -- | -- |
Bad debt provision accrual on portfolio: RMB 3,099,860.14
In RMB/CNY
| Name | Ending balance | ||
| Book balance | Bad debt reserve | Accrual ratio | |
| Within 6 months | 822,921,167.68 | ||
| 6 months to one year | 8,783,211.93 | 878,321.19 | 10.00% |
| 1-2 years | 2,434,208.25 | 486,841.65 | 20.00% |
| 2-3 years | 760,568.50 | 304,227.40 | 40.00% |
| Over 3 years | 1,430,469.90 | 1,430,469.90 | 100.00% |
| Total | 836,329,626.26 | 3,099,860.14 | -- |
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please referto the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √ Not applicable
By account age
In RMB/CNY
| Account age | Book balance |
| Within one year (One year included) | 976,000,464.78 |
| Including: within 6 months | 965,950,994.85 |
| 6 months to one year | 10,049,469.93 |
| 1-2 years | 7,690,636.18 |
| 2-3 years | 10,292,548.30 |
| Over 3 years | 3,005,613.61 |
| 3-4 years | 3,005,613.61 |
| Total | 996,989,262.87 |
(2) Bad debt provision accrual collected or switch back
Bad debt provision accrual in the period:
In RMB/CNY
| Category | Opening balance | Amount changed in the period | Ending balance | |||
| Accrual | Collected or reversal | Written-off | Other | |||
| Bad debt provision | 12,823,693.38 | 1,336,214.96 | 210,660.88 | 257,736.19 | 14,206,983.65 | |
| Total | 12,823,693.38 | 1,336,214.96 | 210,660.88 | 257,736.19 | 14,206,983.65 | |
Important bad debt provision collected or switch back: nil
(3) Account receivable actual charge off in the Period
In RMB/CNY
| Item | Amount charge off |
| Fuzhou Haominxing Automobile components Co., Ltd. | 129,739.47 |
| Kunming Yunnei Power Co., Ltd. | 47,449.10 |
| Xinxiang Xincheng Machinery Equipment Co., Ltd. | 28,895.81 |
| Other customers | 4,576.50 |
| Total | 210,660.88 |
Major charge-off for the major receivable: nilAccount receivable write-off explanation: the funds are not generated by connected transactions
(4) Top 5 receivables at ending balance by arrears party
In RMB/CNY
| Name | Ending balance of account receivable | Ratio in total ending balance of account receivables | Ending balance of bad debt reserve |
| Bosch Diesel System | 548,842,896.72 | 55.05% | |
| Weifu ITM | 68,976,711.20 | 6.92% | |
| Weifu Leader | 55,481,232.29 | 5.56% | |
| Custom 4 | 49,207,860.47 | 4.94% | 703,826.23 |
| Custom 5 | 45,023,657.85 | 4.52% | 102,723.13 |
| Total | 767,532,358.53 | 76.99% |
(5) Account receivable derecognition due to financial assets transfer
Nil
(6) Assets and liabilities resulted by account receivable transfer and continues involvementNil
2. Other account receivables
In RMB/CNY
| Item | Ending balance | Opening balance |
| Interest receivable | 897,777.78 | 804,929.68 |
| Dividend receivable | 1,070,000.00 | |
| Other account receivables | 196,437,936.85 | 248,140,027.06 |
| Total | 197,335,714.63 | 250,014,956.74 |
(1) Interest receivable
1) Category of interest receivable
In RMB/CNY
| Item | Ending balance | Opening balance |
| Interest receivable of unified-borrowing & unified-lending | 897,777.78 | 149,876.70 |
| Interest of fund occupation | 655,052.98 | |
| Total | 897,777.78 | 804,929.68 |
2) Significant overdue interest
Nil
3) Accrual of bad debt provision
□ Applicable √ Not applicable
(2) Dividend receivable
1) Category of dividend receivable
In RMB/CNY
| Item (or invested enterprise) | Ending balance | Opening balance |
| Weifu Precision Machinery | 1,070,000.00 | |
| Total | 1,070,000.00 |
2) Important dividend receivable with account age over one year
Nil
3) Accrual of bad debt provision
□ Applicable √ Not applicable
(3) Other account receivables
1) Other account receivables classification by nature
In RMB/CNY
| Nature | Ending book balance | Opening book balance |
| Staff loans and petty cash | 483,650.21 | 462,664.16 |
| Balance of related party in the consolidate scope | 194,745,396.72 | 216,403,060.04 |
| Margin | 1,030,340.00 | |
| Intercourse funds of unit | 24,000,000.00 | |
| Protean Holdings Corp. equity disposal fund | 10,654,092.89 | |
| Other | 263,534.00 | 117,939.00 |
| Total | 196,522,920.93 | 251,637,756.09 |
2) Accrual of bad debt provision
In RMB/CNY
| Bad debt reserve | Phase I | Phase II | Phase III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
| Balance of Jan. 1, 2020 | 3,497,729.03 | 3,497,729.03 | ||
| Balance of Jan. 1, 2020 in the period | —— | —— | —— | —— |
| Current accrual | 52,664.34 | 52,664.34 |
| Current reversal | 3,465,409.29 | 3,465,409.29 | ||
| Balance on Dec. 31, 2020 | 84,984.08 | 84,984.08 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √ Not applicable
By account age
In RMB/CNY
| Account age | Book balance |
| Within one year (One year included) | 160,889,115.00 |
| Within 6 months | 71,626,274.30 |
| 6 months to one year | 89,262,840.70 |
| 1-2 years | 35,552,695.72 |
| 2-3 years | 43,570.21 |
| Over 3 years | 37,540.00 |
| 3-4 years | 37,540.00 |
| Total | 196,522,920.93 |
3) Bad debt provision accrual, collected or switch back
Bad debt provision accrual in the period:
In RMB/CNY
| Category | Opening balance | Amount changed in the period | Ending balance | |||
| Accrual | Collected or reversal | Written-off | Other | |||
| Bad debt provision | 3,497,729.03 | 52,664.34 | 3,465,409.29 | 84,984.08 | ||
| Total | 3,497,729.03 | 52,664.34 | 3,465,409.29 | 84,984.08 | ||
Including the important bad debt provision switch back or collected in the period: nil
4) Other receivables actually written-off during the reporting period
Nil
5) Top 5 other receivables at ending balance by arrears party
In RMB/CNY
| Enterprise | Nature | Ending balance | Account age | Ratio in total ending balance of other receivables | Ending balance of bad debt reserve |
| Weifu Leader | Balance of related party in the consolidate scope | 100,000,000.00 | Within 1 year | 50.88% | |
| Weifu Chang’an | Balance of related party in the consolidate scope | 54,192,781.00 | Within 1 year | 27.58% | |
| Weifu Schmidt | Balance of related party in the consolidate scope | 21,000,000.00 | 1-2 years | 10.68% | |
| Weifu Mashan | Balance of related party in the consolidate scope | 19,552,615.72 | Within 2 years | 9.95% | |
| Zhenkunxing Industrial Supermarket (Shanghai) Co., Ltd. | Margin | 1,000,000.00 | Within 6 months | 0.51% | |
| Total | -- | 195,745,396.72 | -- | 99.60% |
6) Other account receivables related to government grants
Nil
7) Other receivable for termination of confirmation due to the transfer of financial assetsNil
8) The amount of assets and liabilities that are transferred other receivable and continued to be involvedNil
3. Long-term equity investments
In RMB/CNY
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Investment for subsidiary | 1,978,302,303.40 | 1,978,302,303.40 | 1,731,814,008.11 | 1,731,814,008.11 | ||
| Investment for associates and joint venture | 3,999,826,000.48 | 3,999,826,000.48 | 4,599,549,621.93 | 4,599,549,621.93 | ||
| Total | 5,978,128,303.88 | 5,978,128,303.88 | 6,331,363,630.04 | 6,331,363,630.04 | ||
(1) Investment for subsidiary
In RMB/CNY
| The invested entity | Opening balance (book value) | Changes in Current Period | Ending balance (book value) | Ending balance of depreciation reserves | |||
| Additional Investment | Negative Investment | Provision for impairment loss | Other | ||||
| Weifu Jinning | 178,639,593.52 | 569,165.62 | 179,208,759.14 | ||||
| Weifu Leader | 460,113,855.00 | 731,784.39 | 460,845,639.39 | ||||
| Weifu Mashan | 168,693,380.51 | 154,321.87 | 168,847,702.38 | ||||
| Weifu Chang’an | 220,902,037.30 | 144,365.63 | 221,046,402.93 | ||||
| Weifu International Trade | 32,849,254.85 | 59,737.50 | 32,908,992.35 | ||||
| Weifu ITM | 167,000,000.00 | 167,000,000.00 | |||||
| Weifu Schmidt | 50,160,000.00 | 84,628.12 | 50,244,628.12 | ||||
| Weifu Tianli | 234,941,100.00 | 243,928.12 | 235,185,028.12 | ||||
| Weifu Autocam | 82,454,467.99 | 82,454,467.99 | |||||
| Weifu Electronic Drive | 53,832,280.23 | 54,759.38 | 53,887,039.61 | ||||
| SPV | 82,228,038.71 | 411,445,604.66 | 493,673,643.37 | ||||
| Total | 1,731,814,008.11 | 413,488,295.29 | 167,000,000.00 | 1,978,302,303.40 | |||
(2) Investment for associates and joint venture
In RMB/CNY
| Enterprise | Opening balance (book value) | Current changes (+, -) | Ending balance (book value) | Ending balance of depreciation reserves | |||||||
| Additional investment | Capital reduction | Investment gain/loss recognized under equity | Other comprehensive income adjustment | Other equity change | Cash dividend or profit announced to issued | Impairment accrual | Other | ||||
| I. Joint venture | |||||||||||
| II. Associated enterprise | |||||||||||
| Bosch Diesel System | 3,276,853,986.35 | 1,132,865,918.69 | -1,722,195,225.51 | 2,687,524,679.53 | |||||||
| Zhonglian Automobile | 1,261,232,635.30 | 307,716,221.01 | -331,400,000.00 | 1,237,548,856.31 | |||||||
| Weifu Precision Machinery | 61,463,000.28 | 16,889,464.36 | -3,600,000.00 | 74,752,464.64 | |||||||
| Subtotal | 4,599,549,621.93 | 1,457,471,604.06 | -2,057,195,225.51 | 3,999,826,000.48 | |||||||
| Total | 4,599,549,621.93 | 1,457,471,604.06 | -2,057,195,225.51 | 3,999,826,000.48 | |||||||
(3)Other explanations
Nil
4. Operating income and cost
In RMB/CNY
| Item | Current period | Last Period | ||
| Income | Cost | Income | Cost | |
| Main business | 4,164,444,997.29 | 2,955,881,019.87 | 3,470,103,915.90 | 2,330,022,370.30 |
| Other business | 371,972,806.50 | 280,430,592.86 | 362,821,444.52 | 311,590,544.97 |
| Total | 4,536,417,803.79 | 3,236,311,612.73 | 3,832,925,360.42 | 2,641,612,915.27 |
5. Investment income
In RMB/CNY
| Item | Current period | Last Period |
| Investment income from holding transaction financial asset | 683,211.60 | 1,383,668.59 |
| Dividend income from holding other equity instrument investment | 900,000.00 | |
| Investment income in subsidiaries | 62,995,075.18 | 105,086,820.44 |
| Investment income in joint ventures and associated enterprises | 1,457,471,604.06 | 1,310,687,436.86 |
| Investment income of financial products | 258,702,394.98 | 228,151,138.50 |
| Other | 36,907,117.60 | |
| Total | 1,816,759,403.42 | 1,646,209,064.39 |
6. Other
Nil
XVIII. Supplementary Information
1. Current non-recurring gains/losses
√ Applicable □ Not applicable
In RMB/CNY
| Item | Amount | Note |
| Gains/losses from the disposal of non-current asset | 10,719,959.77 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 146,475,795.26 | |
| Profit and loss of assets delegation on others’ investment or management | 271,684,174.09 | |
| Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial asset, transaction financial liabilities and financial asset available for sales, exclude the effective hedging business relevant with normal operations of the Company | 375,102,546.00 | |
| Switch back of provision for depreciation of account receivable which was singly taken depreciation test | 3,078,424.43 | |
| Other non-operating income and expenditure except for the aforementioned items | -3,090,715.87 | |
| Less: Impact on income tax | 116,175,046.47 | |
| Impact on minority shareholders’ equity | 5,011,845.35 | |
| Total | 682,783,291.86 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
2. ROE and earnings per share
| Profits during report period | Weighted average ROE | Earnings per share | |
| Basic earnings per share (RMB/Share) | Diluted earnings per share (RMB/Share) | ||
| Net profits belong to common stock stockholders of the Company | 15.78 | 2.79 | 2.79 |
| Net profits belong to common stock stockholders of the Company after deducting nonrecurring gains and losses | 11.90 | 2.10 | 2.10 |
3. Difference of the accounting data under accounting rules in and out of China
(1) Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
(2) Difference of the net profit and net assets disclosed in financial report, under both foreign accountingrules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
(3) Explanation on data differences under the accounting standards in and out of China; as for thedifferences adjustment audited by foreign auditing institute, listed name of the institute
4. Other
For details, please refer to the description in Note 5,35 "Changes in Important Accounting Policies and Accounting Estimates".
Section XIII. Documents available for referenceI. Financial statement carrying the signatures and seals of person in charge of the company, principal of theaccounting works and person in charge of accounting organ (accounting Supervisor);II. Original audit report seal with accounting firms and signature and seal with CPA;III. Original documents of the Company and manuscripts of public notices that disclosed in Juchaowebsite(http://www.cninfo.com.cn) designated by CSRC in the report period;IV. Annual report published on China Securities Journal, Securities Times and Hong Kong Commercial Dailyduring the Period.
BOD of Weifu High-Technology Group Co., Ltd.
Chairman:
Wang Xiaodong20 April 2021