Shenzhen Textile (Holdings) Co., Ltd.
2019 Annual Report
March 2020
I. Important Notice, Table of Contents and DefinitionsThe Board of Directors , Supervisory Committee, All Directors, Supervisors and Senior executives of theCompany hereby guarantees that there are no misstatement, misleading representation or important omissions inthis report and shall assume joint and several liability for the authenticity, accuracy and completeness of thecontents hereof.Mr.Zhu Jun, The Company leader, Mr. He Fei, Person in charge of accounting works, Ms. Mu Linying,the personin charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticityand completeness of the financial report enclosed in this annual report.
All the directors attended the board meeting for the review of this Report.I. Concerning the forward-looking statements with future planning involved in the Report, they do not constitute asubstantial commitment for investors, investors should be cautious with investment risks .II. The company has the macroeconomic risks, market competition risks and raw material risks. Investors areadvised to pay attention to investment risks. For details, please refer to the possible risk factors that the companymay face in the “IX Prospects for the future development of the company" in the “Section IV Discussion andAnalysis of Business Operation”.III. The company to remind the majority of investors，Securities Time, China Securities Journal, Securities Daily,Shanghai Securities News , Hongkong Commercial Daily and Juchao Website（http://www.cninfo.com.cn） are themedia for information disclosure appointed by the Company, all information under the name of the Companydisclosed on the above said media shall prevail, and investors are advised to exercise caution of investment risks.This Report has been prepared in both Chinese and English. In case of any discrepancy, the Chinese version shallprevail.The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either.
Table of Contents
I.Important Notice, Table of contents and DefinitionsII. Basic Information of the Company and Financial indexIII. Outline of Company BusinessIV. Management’s Discussion and AnalysisV. Important EventsVI. Change of share capital and shareholding of Principal ShareholdersVII. Situation of the Preferred SharesVIII. Information about convertible corporate bondsIX. Information about Directors, Supervisors and Senior ExecutivesX. Administrative structureXI. Corporate BondXII. Financial ReportXIII. Documents available for inspection
Definition
| Terms to be defined | Refers to | Definition |
| Company/The Company/ Shen Textile | Refers to | Shenzhen Textile (Holdings) Co., Ltd |
| Articles of Association | Refers to | Articles of Association of Shenzhen Textile (Holdings) Co., Ltd |
| Actual controller / National Assets Regulatory Commission of Shenzhen Municipal People's Government | Refers to | National Assets Regulatory Commission of Shenzhen Municipal People's Government |
| The Controlling shareholder/ Shenzhen Investment Holding Co., Ltd. | Refers to | Shenzhen Investment Holding Co., Ltd. |
| Shenchao Technology | Refers to | Shenzhen Shenchao Technology Investment Co., Ltd. |
| SAPO Photoelectric | Refers to | Shenzhen SAPO Photoelectric Co., Ltd. |
| Jinjiang Group | Refers to | Hangzhou Jinjiang Group Co., Ltd. |
| Jinhang Investment | Refers to | Hangzhou Jinhang Equity Investment Fund Partnership (LP) |
| Shenzhen City Consturction Group | Refers to | Shenzhen City Construction Development (Group) Co., Ltd. |
| Nitto Denko | Refers to | Nitto Denko Corporation |
| Kunshan Zhiqimei | Refers to | Kunshan Zhiqimei Material Technology Co., Ltd. |
| Haohao Property Company | Refers to | Shenzhen Haohao Property Leasing Co., Ltd. |
| Guanhua Company | Refers to | Shenzhen Guanhua Printing & Dyeing Co., Ltd. |
| Line 6 | Refers to | TFT-LCD polarizer II phase Line 6 project |
| Line 7 | Refers to | Industrialization project of polaroid for super large size TV |
| “CSRC” | Refers to | China Securities Regulatory Commission |
| Company Law | Refers to | Company Law of the People’s Republic of China |
| Securities Law | Refers to | Securities Law of the People’s Republic of China |
| The Report | Refers to | 2019 Annual Report |
II. Basic Information of the Company and Financial index
Ⅰ.Company Information
| Stock abbreviation | Shen Textile A ,Shen Textile B | Stock code | 000045,200045 |
| Stock exchange for listing | Shenzhen Stock Exchange | ||
| Name in Chinese | 深圳市纺织(集团)股份有限公司 | ||
| Chinese abbreviation (If any) | 深纺织 | ||
| English name (If any) | SHENZHEN TEXTILE （HOLDINGS） CO.,LTD | ||
| English abbreviation (If any) | STHC | ||
| Legal Representative | Zhu Jun | ||
| Registered address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | ||
| Postal code of the Registered Address | 518031 | ||
| Office Address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | ||
| Postal code of the office address | 518031 | ||
| Internet Web Site | http://www.chinasthc.com | ||
| szfzjt@chinasthc.com | |||
| Board secretary | Securities affairs Representative | |
| Name | Jiang Peng | Li Zhenyu |
| Contact address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen |
| Tel | 0755-83776043 | 0755-83776043 |
| Fax | 0755-83776139 | 0755-83776139 |
| jiangp@chinasthc.com | lizy@chinasthc.com |
| Newspapers selected by the Company for information disclosure | Securities Times, China Securities, Shanghai Securities Daily ,Securities Daily and Hongkong Commercial Daily. |
| Internet website designated by CSRC for publishing the Annual report of the Company | http://www.cninfo.com.cn |
| The place where the Annual report is prepared and placed | Secretarial office of the Board |
| Organization Code | 19217374-9 |
| Changes in principal business activities since listing (if any) | In July 2012, The business scope of the company is changed to "production, textiles processing, knitwear, clothing, upholstery fabrics, belts, trademark bands, handicrafts (without restrictions); general merchandise, the special equipment of the textile industry, textile equipment and accessories, instruments, standard parts, raw textile materials, dyes, electronic products, chemical products, mechanical and electrical equipment, light industrial products, office supplies and domestic trade (excluding the franchise, the control and the monopoly of goods) ; operation of import and export business." after approval of Shenzhen Market Supervisory Authority . |
| Changes is the controlling shareholder in the past (is any) | In October 2004,In accordance with the Decision on Establishing Shenzhen Investment Holdings Co., Ltd. issued by State-owned Assets Administration Committee of Shenzhen Municipal People's Government (Shen Guo Zi Wei (2004) No. 223 Document), Shenzhen Investment Management Co., Ltd., the controlling shareholder of the Company, and Shenzhen Construction Holding Company and Shenzhen Commerce and Trade Holding Company merged into Shenzhen Investment Holdings Co., Ltd. |
| Name of the CPAs | Peking Certified Public Accountants（Special Geneaal Partnership） |
| Office address： | 11/F, Zhongtang Building , No.110, Xihimen Street , Beijing |
| Names of the Certified Public Accountants as the signatories | Long Zhe, Liu Ru |
| 2019 | 2018 | Changed over last year（％） | 2017 | |
| Operating income（RMB） | 2,158,184,855.71 | 1,272,356,771.34 | 69.62% | 1,475,545,719.72 |
| Net profit attributable to the shareholders of the listed company（RMB） | 19,679,910.43 | -22,980,624.93 | 185.64% | 52,776,101.46 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company（RMB） | -41,179,849.56 | -65,404,429.81 | 37.04% | 3,140,446.26 |
| Cash flow generated by business operation, net（RMB） | 383,145,788.50 | -460,494,321.15 | 183.20% | -28,518,702.31 |
| Basic earning per share(RMB/Share) | 0.04 | -0.04 | 200.00% | 0.10 |
| Diluted gains per share(RMB/Share)(RMB/Share) | 0.04 | -0.04 | 200.00% | 0.10 |
| Weighted average ROE(%) | 0.75% | -0.96% | 1.71% | 2.23% |
| End of 2019 | End of 2018 | Changed over last year（％） | End of 2017 | |
| Gross assets（RMB） | 4,531,399,885.99 | 4,619,203,416.79 | -1.90% | 4,195,746,507.56 |
| Net assets attributable to shareholders of the listed company（RMB） | 2,727,764,144.36 | 2,373,329,991.86 | 14.93% | 2,397,474,603.79 |
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating income | 592,839,958.12 | 416,023,337.38 | 631,655,475.88 | 517,666,084.33 |
| Net profit attributable to the shareholders of the listed company | 10,381,938.06 | -2,549,650.08 | 9,061,067.98 | 2,786,554.47 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company | 7,034,190.76 | -17,582,772.96 | -1,542,112.46 | -29,089,154.90 |
| Net Cash flow generated by business operation | 23,567,172.13 | 259,190.22 | 262,706,321.30 | 96,613,104.85 |
| Items | Amount (2019) | Amount (2018) | Amount (2017) | Notes |
| Non-current asset disposal gain/loss(including the write-off part for which assets impairment provision is made) | 54,895,878.65 | -97,477.14 | -52,131.44 | Mainly due to the disposal of long-term equity investments. |
| Govemment subsidy recognized in current gain and loss(excluding those closely related to the Company’s business and granted under the state’s policies) | 27,547,902.92 | 17,228,202.21 | 12,567,426.98 | Mainly due to recognize other income from government subsidies related to the main business. |
| Gain/loss on entrusting others with investment or asset management | 52,271,862.25 | 49,885,730.58 | ||
| Gain/loss from change of fair value of transactional financial asset and liabilities, and investment gains from disposal of transactional financial assets and liabilities and sellable financial assets other than valid period value instruments related to the Company’s common businesses. |
| Switch back of provision for depreciation of account receivable which was singly taken depreciation test. | 469,470.61 | 332,073.93 | ||
| Net amount of non-operating income and expense except the aforesaid items | 4,582,973.27 | 1,143,552.02 | -1,175,757.59 | Mainly due to the return ofnew material |
| Other non-recurring Gains/loss items | 23,068,858.53 | |||
| Less :Influenced amount of income tax | 13,886,055.96 | 48,007.18 | 1,828,395.90 | |
| Influenced amount of minor shareholders’ equity (after tax) | 12,750,409.50 | 28,074,327.28 | 33,162,149.89 | |
| Total | 60,859,759.99 | 42,423,804.88 | 49,635,655.20 | -- |
III. Business Profile
Ⅰ.Main Business the Company is Engaged in During the Report Period
1. Main Business the Company
The company's main business covered such the high and new technology industry as represented by LCDpolarizer, its own property management business and the retained business of high-end textile and garment.
In the report period, no significant change happened to the main business of the Company. Firstly, driven byinnovation, the company has continuously improved the production capacity and product quality of polarizerthrough a series of measures such as reforming the production line equipment, increasing the speed of theproduction line, optimizing the process by taking advantage of the production line, and prolonging the service lifeof liquid medicine. Secondly, it took multiple measures to reduce costs and speed up the introduction of newcustomers. It has effectively reduced the comprehensive loss rate, completed the introduction and replacement ofvarious protective films and chemical materials, and controlled the production cost by optimizing the process ofliquid replenishment concentration; Under the severe market environment and the situation that customerproduction reduction and inventory control, it has actively developed high margin orders and new panel customerssuch as LGD, SDP and HKC, which effectively improved the sales profit of products and the stability of customerstructure. Thirdly, the Company has actively promoted the construction of Line 7 project: it has furtherstrengthened the monitoring and management of budget, progress, quality and other aspects, and activelypromoted the technical exchange with Nitto Denko and Kunshan Zhiqimei. The civil engineering construction ofLine 7 started on April 18, 2019, and the main factory building has been capped on December 30, 2019 as planned.Fourthly, the property companies have strengthened its management services and improved their efficiency.Although the downturn in the real economy has caused some pressure to property leasing, all property companieshave increased their management efforts to improve service quality, and the rental situation is stable with a rentalrate up to 100%. Fifthly, due to the impact of Sino-US trade friction, orders have decreased sharply. The textileindustry has stepped up its innovation efforts, actively explored new customers, exploited its potential in depth,and achieved sustained profits for two years. Sixthly, it has strengthened safety and environmental protection,maintained the harmony and stability of enterprises, always put safety and environmental protection production ina prominent position, implemented the responsibility system of work safety, pursued safe and green production,and actively fulfilled social responsibilities.
As a type of upstream raw materials of LCD panels and one of essential and fundamental materials in thepanel display industry, polarizers are widespread used in a variety of areas, LCD panels and OLED panels forsmart phones, tablet PCs and TV sets, instruments, apparatuses, sunglasses, and light filters of camera equipment,to name a few. At the moment, the Company has 6 mass polarizer production lines for making products that coversuch areas as TN, STN, TFT, OLED, 3D, dye films, and optical films for touch screens and are primarily used inTV, NB, navigators, Monitor, vehicle-mounted, industrial control, instruments, apparatuses, smart phones,wearable equipment, 3D glasses, sunglasses and other products, based on which, the Company has become aqualified supplier to China Star Optoelectronics Technology (CSOT), BOE, Infovision Optoelectronics (IVO),Shenchao Optoelectronic, LGD, Tianma and other major panel enterprises through constant extension of itsmarketing channels and building of its own brand.
The Company's main products made in each polarizer production line and their application are as follows:
| Line | Place | Product breadth | Planned capacity | Main products |
| Line 1 | Pingshan | 500mm | 600,000 m2 | TN/STN/ dye film |
| Line 2 | Pingshan | 500mm | 1.2 million m2 | TN/STN/CSTN |
| Line 3 | Pingshan | 650mm | 1 million m2 | TN/STN/CSTN/TFT |
| Line 4 | Pingshan | 1490mm | 6 million m2 | TN/STN/CSTN/TFT |
| Line 5 | Pingshan | 650mm | 2 million m2 | TFT |
| Line 6 | Pingshan | 1490mm | 10 million m2 | TFT/OLED |
| Line 7 (Under construction) | Pingshan | 2500mm | 32 million m2 | TFT/OLED |
| Main assets | Major changes |
| Equity assets | No major changes |
| Fixed assets | No major changes |
| Intangible assets | No major changes |
| Construction in process | Construction in progress increased by 824.245 million yuan year on year, with an increase of 5276.42%, mainly due to the increase in construction investment in progress of the polarizer industrialization project for ultra-large television (Line 7). |
| Monetary funds | Monetary funds decreased by 732,194,500 yuan year on year,with a decrease of 64.13%, mainly due to: firstly, the investment in the construction of Line 7 of the polarizer industrialization project for ultra-large TV; Secondly, the repayment of loan and interest, and thirdly, the purchase of financial products. |
| Notes receivable | Notes receivable increased by 39,538,200 yuan year on year ,with an increase of 4460.37%, mainly due to the substantial increase in sales acceptance and settlement of customers this year. |
| Account receivable | Accounts receivable decreased by 163.129 million yuan year on year,with a decrease of 30.87%, mainly due to the recovery of trade receivables in the previous year. |
| Prepayment | repayments decreased by 210,582,900 yuan year on year, with a decrease of 91.95%,mainly due to the 207.74 million yuan of trade repayments carried forward from the previous year. |
| Other account receivable | Other current assets decreased by 498,976,300 yuan year on year, with an Increase of 77.99%,mainly due to the reclassification of other current assets to transactional financial assets under the new financial instrument standards for the first time. |
| Long-term equity investment | Long-term equity investment increased by 119,257,800 yuan year on year, with an increase of 361.91%,mainly due to the change of the effect on Guanhua company, converting it from a non-tradable equity instrument to a long-term equity investment, and the increase in capital of the company with investment real estate |
| Real estate Investment | Investment real estate decreased by 55,267,600 yuan year on year,with a decrease of 32.90%, mainly due to the capital increase of Shenzhen Guanhua Printing and Dyeing Co., Ltd. by the Company's investment real estate. |
| Other non-current assets | Other non-current assets decreased by 326,373,300 yuan year on year, with a decrease of 99.07%,mainly due to the transfer of prepayments from other non-current assets to projects under construction in the current year before the main body of Line 7 project has not been constructed. |
reporting period, the company applied for 99 invention patents and was authorized with 75 items, among which:
30 domestic invention patents(11 patents got authorized); 62 domestic utility model patents(60 patents gotauthorized); 1 overseas invention patent(0 patents got authorized); 6 overseas utility model patents(4 patents gotauthorized). There were 4 national standards and 2 industrial standards that were developed by the company areapproved and then will be implemented. The company, possessing the two technology platforms “Shenzhenpolarizing materials and engineering laboratory" and "Municipal research and development center", focused onthe R&D and the industrialization of the core production technology of LCD polarizer, the developing andindustrialization of the new products of OLED polarizer and the “domestication” research on the productionmaterials of polarizer. Through the introduction of various types of sophisticated testing equipments to perfect thetest means of small-scale test and medium-scale test, further by improving the incentive system of research anddevelopment and building the collaborative innovation platform of “Industry-Study-Research-Utilization” and soforth means, the company comprehensively enhanced the level of research and development.
（2）Talents advantages. The Company has a polarizer management team and a team of senior technicianswith strong technical ability, long-term cooperation, rich experience and international vision. Through openmarket selection, the Company has hired professional senior management personnel, built a team of professionalmanagers, cultivated a professional manager culture and enhanced the core competitiveness of the enterprise. TheCompany has established a technical cooperation relationship with Nitto Denko Corporation, a world-classpolarizer manufacturer, to learn advanced polarizer production management concepts. Meanwhile, the Companyhas accumulated technical experience through independent innovation, improved its core competitiveness, andgradually accumulated its own advantages in brand, technology, operation and management. Through improvingthe salary assessment management system, enriching the connotation of learning-based organizations, andimplementing institutional and cultural construction such as medium-term and long-term incentive and restraintmechanisms, the Company has deeply bound the interests of employees with the Company, and fully stimulatedthe subjective initiative of talents.In 2019, in order to improve the operating conditions of SSAPO Photoelectric, a subsidiary of the Company,further promote the implementation of specialization, professionalization and marketization of managementpersonnel and optimize the management team, SAPO Photoelectric openly organized market-oriented selection ofmanagement teams for talents of the whole society in accordance with the relevant spirit of Shenzhen MunicipalState-owned Assets Supervision and Administration Commission regarding the promotion of professionalmanager team construction and in combination with the management situation of SAPO Photoelectric. As of theend of this reporting period, SAPO Photoelectric has completed the organization registration, qualificationexamination and interview selection of the marketing selection management team. The 3 professional managersselected in the market have been deployed for post in January 2020.
（3）Market advantages. The company has good customer groups not only in domestic market but in foreignmarket, compared with foreign advanced counterparts, the biggest advantage lies in the localization for supporting,close to the panel market, as well as the strong support of the national policy. In terms of market demand, with themass production of the 10.5/11-generation TFT-LCD panel production lines under construction and planned forthe next few years, the production capacity of high-generation TFT-LCD panels in mainland China will increasesignificantly in the next few years, the corresponding domestic polaroid film market demand has also increased,and the domestic market is the most important market for polaroid manufacturers, especially in the large-sizepolarizer market. Mainland polarizer manufacturers will usher in important industry opportunities; in terms ofmarket development, the company takes production material control as the core, technology services as the guide,customer needs as the focus, organically combines production and sales, establishes a rapid response mechanism,fully exploits localization advantages, and uses its own accumulated technology and talents, does a good job of
peer-to-peer professional services, forms a stable supply chain and increases market share.
(4) Quality advantages. The company always adhered to the quality policy of "Satisfying customer demands andpursuing excellent quality" and focused on product quality control. The company strictly controls productperformance indicators, standardizes inspection standards for incoming materials, starts with quality improvementand consumption reduction, and achieves simultaneous increase in output and quality; through the introduction ofa modern quality management system, the products have passed ISO9001 Quality Management System andISO14001 Environmental Management System, OHSAS18000 Occupational Health and Safety ManagementSystem, QCO80000 System Certification; the product is tested by SGS and meets the environmentalprotection ,The company had increased the automatic detecting and marking equipments in the beginning sectionand the ending section, strictly controlled the product quality and improved the product utilization rate andproduct management efficiency.
（5）Management advantages. SAPO Photoelectric has accumulated rich management experiences in more than20 years in the manufacturing of polarizer, possessing the home most advanced control technology of theproduction management process of the polarizer and quality management technology and the stable raw materialprocurement channel so forth management systems. The company had carried out comprehensive benchmarkingwork, organized the management personnel to learn advanced experiences from customers and peers to force theelevation of management ability, and drew on the foreign company’s management experiences of polarizer,optimized the company's organizational structure, reduced the managerial hierarchy and further enhanced thecompany's management efficiency. After the introduction of the strategic investor, Through close cooperation withJinjiang Group, we complement each other's strengths, absorb the vitality of private enterprises, continue toimplement advanced management systems, reasonable incentive mechanisms, etc., improve the efficiency ofdecision-making, enhance the speed of market response, improve the research and development incentive system,and also realize the deep integration of the value of the company and its employees and stimulates the new vitalityof the business.
（6）Policy advantages. Polarizer is seen as an essential part of the panel display industry and SAPOPhotoelectric in its development has promoted the supply capacity of national polarizers, greatly lowered thedependence of national panel enterprises on imported polarizers, and safeguarded the national panel industry,which serves as a good facilitator to enhancing the overall competitiveness of China's panel industry chain andcoordinated development of the whole industry chain of the panel display industry cluster in Shenzhen.Recognized as a national high-tech enterprise, the Company is entitled to the preferential policy for duty-freeimport of own productive raw materials that cannot be produced at home and frequently gained national,provincial and municipal policy and financial support in its polarizer projects. Meanwhile, the Company tightenedsupplier management, improved its overall purchasing strategy, and downsized suppliers while introducing acompetitive mechanism, wherein focus was given to introduction of new materials at a competitive price, tofurther lower its production cost and improve its product competitiveness.
IV. Management’s Discussion and AnalysisⅠ.GeneralIn 2019, facing the challenges and tests of repeated Sino-US trade frictions and increasingly severe polarizerbusiness situation, the Company took reducing losses and increasing profits of the main polarizer business as itswork focus, led all employees to overcome difficulties, and did solid work to improve business. While fullypushing forward the construction of ultra-wide polarizer project and improving the main polarizer business, theCompany revitalized its stock assets, stimulated business vitality, ensured the continuous growth of propertyleasing's revenue and maintained a steady and orderly development trend.In 2019, the Company realized the operating income of 2.158 billion yuan, an increase of 69.62% over thesame period of the previous year; the total profit of 9.5324million yuan, an increase of 117.84% over the sameperiod of the previous year; the net profit attributable to owners of the parent company of RMB 19.6799 million, aan increase of 185.84% over the same period of the previous year. Phase II Line 6 in the second half of 2018, therelease of production capacity in the current year, and the year-on-year increase in sales; Imports of equipmentthat had been prepaid in 2018 were completed during the reporting period, and commodity trade revenueincreased year on year. The net profit attributable to shareholders of listed companies increased significantly yearon year, mainly due to the increase in non-recurring profits and losses, with an impact amount of 78,913,700 yuan,mainly including non-current asset disposal income, investment and wealth management income and governmentsubsidy income, among which, the Company transferred 50% of the equity of Haohao Property to realize anafter-tax net profit of 41,611,400 yuan; The selling price of polarizer products has been low since the sharp drop in2018. The order structure adjustment of major products has not met expectations, plus the selling price of TN/STNproducts fallen sharply due to the shrinking sales in the end product market, and the increase in purchasing costand exchange loss caused by the devaluation of RMB exchange rate have offset the contribution of the salesincrease to net profit.Review of the company's key works carried out in 2019 as follows:
(I) Polarizer's operating capability has been improvedIn 2019, firstly the Company, oriented by the market, optimized the product structure, and further releasedthe production capacity, with a great increase in polarizer sales area; Secondly, it has actively explored the market,strengthened communication with key customers and sped up the certification of new products. In 2019, it hasexplored new panel customers such as LGD, SDP and HKC. While effectively improving the sales profit of Line4/6 products, it has further expanded the customer base and maintained the stability of the customer structure;Thirdly, it has taken innovation as the motive force to improve the product quality and reduce the production costby continuously optimizing the production process; Fourthly, it has actively striven for support funds for scientificresearch policies, with a total of 68.27 million yuan.
Meanwhile, the Company continued to explore R&D innovation and intensify the development ofindependent intellectual property rights. Its research and development were combined with the actual marketconditions to carry out product development and market promotion and import, so as to improve productperformance. In 2019, 8 coating materials and 4 protective films were successfully introduced through newproduct development; A total of 8 patents have been applied, including 7 invention patents and 1 utility modelpatent; A total of 9 patents have been authorized, including 3 patents for inventions and 6 patents for utility
models.(II) Turned losses into profits for textile business, while property enterprises rose steadily.In 2019, under the circumstance that the Sino-US trade friction led to a sharp drop in domestic demand andexport orders for textile and clothing, the Company, on the one hand, stabilized its existing customers and activelyexploited the market; On the other hand, optimized internal management, intensified R&D and innovation efforts,developed high-margin products, enhanced income-generating capacity, and realized the profitability of textilebusiness for two consecutive years.In 2019, the Company further strengthened various management and service concepts of property enterprises,scientifically coped with the adverse effects of the economic downturn and the downturn in the market on therental and management of various properties, and made every effort to well ensure rental management. It strove toincrease rental income through vigorously improving service quality, implementing standardized management,strengthening rectification of potential safety hazards, refining management processes, saving expenses andincreasing efficiency. The leasing situation of all property enterprises is stable, with a rental rate up to 100%.(III) Facilitated construction of jumbo TV polarizer industrialization project with effortIn 2019, the Company actively promoted the construction of the polarizer industrialization project forultra-large TV (Line 7). Firstly, the main factory building of the Line 7 project was capped, and the factoryacceptance, customs declaration and import of equipment, transportation to the factory and other related workwere carried out simultaneously; Secondly, the Company further strengthened the monitoring and management ofbudget, schedule, quality and other aspects in the process of project construction; Thirdly, it actively promoted theresearch and development of some raw materials, basically determined the supply of main raw materialscorresponding to the 2,500mm width production line, and solved the supply problem of raw materials matchingthe 2,500mm ultra-wide polarizer production in 2020.(IV) Revitalized the existing assets, optimized the allocation of resources, and concentrated resources ondeveloping the main business of polarizerIn order to further revitalize the Company's existing assets, concentrate resources on its main business andfully support the development of main business of polarizer, the Company has listed and transferred its 50%equity in Haohao Property through Shenzhen United Property and Share Rights after deliberation and approval bythe 22nd meeting of the 7th Board of Directors and the 2nd Extraordinary General Meeting in 2019. The 50%equity of Haohao Property has been publicly listed on Shenzhen United Property and Share Rights fromNovember 14, 2019 to December 18, 2019 and as of the expiration of the listing announcement, an intendedtransferee, Urban Construction Group emerged. Both parties have signed the Property Rights Transaction Contracton December 19, 2019. This transaction realized an investment income of 55,481,800 yuan, which had a positiveimpact on the company's annual performance in 2019.(V) Strengthened safety awareness and earnestly well ensured safety and environmental protectionFirstly, it has attached great importance to the work safety, implemented the main responsibility system forwork safety, and implemented the responsibility for work safety to each individual, so that the responsibility isspecific and the division of labor is clear. Secondly, by centralized rectification and focused investigation, it haseliminated potential safety hazards, and carried out on-site surprise inspections for 7 times in all affiliatedenterprises. 196 potential safety hazards and problems were found in the inspections, and rectification has beencompleted. Thirdly, it has actively promoted the construction of safety standardization and dual preventionmechanisms, and implemented cross-checking and rectification. Fourthly, it has focused on supervising theconstruction of Line 7 project and prevented safety accidents; It has standardized the safety management ofhazardous chemicals in enterprises, actively carried out fire emergency drills, and established and improved safety
management files for special equipment. In 2019, it has continued to well ensure environment-friendly treatmentin waste water and waste gas, discharged them according to standards and achieved zero complaints.（VI) Constant reinforcement of foundation and strengthening of primary Party building workThe Company has fully implemented Xi Jinping's new era characteristic socialism thought and the spirit ofthe 19th National Congress of the Communist Party of China, insisted on strengthening Party self-discipline anddeveloping democracy, continuously strengthened the party organization's political guidance to the enterprise,strengthened the ideological & political and organizational construction, continuously tamped the partyconstruction foundation, and earnestly performed the main responsibility; The superior and bottom levels workedtogether to carry out in-depth education activities on the theme of "Stay true to the mission" and continuouslystrengthened the "four consciousnesses", firmly established the "four self-confidence" and achieved the "twomaintenance".Ⅱ.Main business analysis
1. General
Refer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”.
2. Revenue and cost
(1)Component of Business Income
In RMB
| 2019 | 2018 | Increase /decrease | |||
| Amount | Proportion | Amount | Proportion | ||
| Total operating revenue | 2,158,184,855.71 | 100% | 1,272,356,771.34 | 100% | 69.62% |
| On Industry | |||||
| Manufacturing | 1,475,804,647.66 | 68.38% | 879,409,830.28 | 69.12% | 67.82% |
| Lease and Management of Property | 106,372,055.25 | 4.93% | 98,327,018.46 | 7.73% | 8.18% |
| Domestic and foreign trade | 517,020,991.54 | 23.96% | 288,744,806.35 | 22.69% | 79.06% |
| Other | 58,987,161.26 | 2.73% | 5,875,116.25 | 0.46% | 904.02% |
| On Products | |||||
| Lease and Management of Property | 106,372,055.25 | 4.93% | 98,327,018.46 | 7.73% | 8.18% |
| Textile | 46,047,351.10 | 2.13% | 47,188,632.17 | 3.71% | -2.42% |
| Polarizer sheet | 1,429,757,296.56 | 66.25% | 832,221,198.11 | 65.41% | 71.80% |
| Trade | 517,020,991.54 | 23.96% | 288,744,806.35 | 22.69% | 79.06% |
| Other | 58,987,161.26 | 2.73% | 5,875,116.25 | 0.46% | 904.02% |
| Area | |||||
| Domestic | 1,981,314,469.39 | 91.80% | 944,994,550.59 | 74.27% | 109.66% |
| Overseas | 176,870,386.32 | 8.20% | 327,362,220.75 | 25.73% | -45.97% |
| Turnover | Operation cost | Gross profit rate(%) | Increase/decrease of revenue in the same period of the previous year(%) | Increase/decrease of business cost over the same period of previous year (%) | Increase/decrease of gross profit rate over the same period of the previous year (%) | |
| On Industry | ||||||
| Manufacturing | 1,475,804,647.66 | 1,408,148,827.10 | 4.58% | 67.82% | 67.75% | 0.04% |
| Domestic and foreign trade | 517,020,991.54 | 483,603,729.67 | 6.46% | 79.06% | 78.11% | 0.50% |
| Lease and Management of Property | 106,372,055.25 | 24,128,173.53 | 77.32% | 8.18% | -6.62% | 3.60% |
| On Products | ||||||
| Polarizer sheet | 1,429,757,296.56 | 1,368,981,862.95 | 4.25% | 71.80% | 71.48% | 0.18% |
| Trade | 517,020,991.54 | 483,603,729.67 | 6.46% | 79.06% | 78.11% | 0.50% |
| Lease and Management of Property | 106,372,055.25 | 24,128,173.53 | 77.32% | 8.18% | -6.62% | 3.60% |
| Textile | 46,047,351.10 | 39,166,964.15 | 14.94% | -2.42% | -4.69% | 2.02% |
| Area | ||||||
| Domestic | 1,981,314,469.39 | 1,751,836,922.09 | 11.58% | 109.66% | 112.36% | -1.12% |
| Overseas | 176,870,386.32 | 164,043,808.21 | 7.25% | -45.97% | -48.30% | 4.18% |
(3)Whether the Company’s Physical Sales Income Exceeded Service Income
√ Yes □ No
| Classification | Items | Unit | 2019 | 2018 | Changes |
| Polarizer sheet | Sales | (0000’ square meters) | 1,797.1 | 1,079.2 | 66.52% |
| Production | (0000’ square meters) | 1,806.66 | 1,110.26 | 62.73% | |
| Stock | (0000’ square meters) | 128.01 | 118.45 | 8.07% | |
| Knitted clothing | Sales | 0000’ pieces | 257 | 295 | -12.88% |
| Production | 0000’ pieces | 261 | 296 | 11.82% | |
| Stock | 0000’ pieces | 53 | 49 | 8.16% |
| Industry | Items | 2019 | 2018 | Increase/Decrease (%) | ||
| Amount | Proportion in the operating costs (%) | Amount | Proportion in the operating costs (%) | |||
| Domestic and foreign trade | Polarizer sheet, Textile | 483,603,729.67 | 24.50% | 271,514,631.70 | 23.77% | 78.11% |
| Manufacturing | Polarizer sheet, Knitted clothing | 1,408,148,827.10 | 71.35% | 839,415,041.00 | 73.49% | 67.75% |
| Lease and Management of Property | Rental， Accommodation | 24,128,173.53 | 1.22% | 25,838,344.67 | 2.26% | -6.62% |
| Other | Other | 57,614,878.05 | 2.92% | 5,482,267.30 | 0.48% | 950.93% |
| Classification of products | Items | 2019 | 2018 | Increase/Decrease(%) | ||
| Amount | Proportion in operation costs(%) | Amount | Proportion in operation costs(%) | |||
| Polarizer sheet | Direct materials | 1,094,486,243.59 | 55.46% | 633,828,818.77 | 55.49% | 72.68% |
| Polarizer sheet | Direct labor | 46,306,446.19 | 2.35% | 31,895,556.85 | 2.79% | 45.18% |
| Polarizer sheet | Power costs | 46,800,313.93 | 2.37% | 23,825,672.61 | 2.09% | 96.43% |
| Polarizer sheet | Manufacturing costs | 181,388,859.24 | 9.19% | 108,772,108.14 | 9.52% | 66.76% |
| Knitted clothing | Direct materials | 20,014,843.33 | 1.01% | 21,024,776.26 | 1.84% | -4.76% |
| Knitted clothing | Direct labor | 9,480,251.60 | 0.48% | 9,321,761.79 | 0.82% | 1.70% |
| Knitted clothing | Power costs | 1,370,323.40 | 0.07% | 1,851,454.61 | 0.16% | -25.99% |
| Knitted clothing | Manufacturing costs | 8,301,545.82 | 0.42% | 8,903,943.69 | 0.78% | -6.77% |
| Total sales amount to top 5 customers (RMB) | 1,320,649,873.11 |
| Proportion of sales to top 5 customers in the annual sales(%) | 61.20% |
| Proportion of the sales volume to the top five customers in the total sales to the related parties in the year | 6.54% |
| No | Name | Amount(RMB) | Proportion(%) |
| 1 | Customer 1 | 725,983,985.65 | 33.64% |
| 2 | Customer 2 | 256,086,053.64 | 11.87% |
| 3 | Customer 3 | 141,106,466.92 | 6.54% |
| 4 | Customer 4 | 129,050,621.86 | 5.98% |
| 5 | Customer 5 | 68,422,745.04 | 3.17% |
| Total | -- | 1,320,649,873.11 | 61.20% |
| Total purchase of top 5 Suppliers（RMB） | 567,207,701.48 |
| Percentage of total purchase of top 5 suppliers In total annual purchase(%) | 42.38% |
| Proportion of purchase amount from the top 5 suppliers in the total purchase amount from the related parties in the year | 10.75% |
| No | Name | Amount（RMB） | Proportion |
| 1 | Supplier 1 | 159,308,563.81 | 11.90% |
| 2 | Supplier 2 | 143,888,209.10 | 10.75% |
| 3 | Supplier 3 | 120,450,278.57 | 9.00% |
| 4 | Supplier 4 | 72,692,651.77 | 5.43% |
| 5 | Supplier 5 | 70,867,998.23 | 5.29% |
| Total | -- | 567,207,701.48 | 42.38% |
| 2019 | 2018 | Increase/Decrease(%) | Notes |
| Sale expenses | 20,785,078.66 | 9,636,559.05 | 115.69% | Mainly due to the increase in new material insurance premiums year-on-year, the expansion of new customers through channel dealers, channel dealer service commissions increased year-on-year, and sales revenue increased due to increased transportation costs. |
| Administration expenses | 96,870,842.37 | 88,590,439.30 | 9.35% | |
| Financial expenses | 15,862,799.64 | -971,661.37 | -1,735.54% | Mainly due to the exchange loss increased year-on-year. |
| R & D cost | 53,178,714.33 | 41,951,786.15 | 26.76% |
| 2019 | 2018 | Increase/Decrease(%) | |
| Number of Research and Development persons (persons) | 117 | 107 | 9.35% |
| Proportion of Research and Development persons | 10.89% | 10.18% | 0.71% |
| Amount of Research and Development Investment ( RMB) | 53,178,714.33 | 41,951,786.15 | 26.76% |
| Proportion of Research and Development Investment of Operation Revenue | 2.46% | 3.30% | -0.84% |
| Amount of Research and Development Investment Capitalization ( RMB) | 0.00 | 0.00 | 0.00% |
| Proportion of Capitalization Research and Development Investment of Research and Development Investment | 0.00% | 0.00% | 0.00% |
| Items | 2019 | 2018 | Increase/Decrease(%) |
| Subtotal of cash inflow received from operation activities | 2,339,186,620.64 | 1,573,802,884.38 | 48.63% |
| Subtotal of cash outflow received from operation activities | 1,956,040,832.14 | 2,034,297,205.53 | -3.85% |
| Net cash flow arising from operating activities | 383,145,788.50 | -460,494,321.15 | 183.20% |
| Subtotal of cash inflow received from investing activities | 4,231,006,091.64 | 4,176,293,175.68 | 1.31% |
| Subtotal of cash outflow for investment activities | 5,175,229,656.48 | 4,006,115,720.59 | 29.18% |
| Net cash flow arising from investment activities | -944,223,564.84 | 170,177,455.09 | -654.85% |
| Subtotal cash inflow received from financing activities | 289,808,607.92 | 630,493,275.82 | -54.03% |
| Subtotal cash outflow for financing activities | 593,817,393.81 | 367,419,548.31 | 61.62% |
| Net cash flow arising from financing activities | -304,008,785.89 | 263,073,727.51 | -215.56% |
| Net increase in cash and cash equivalents | -864,927,647.04 | -27,665,904.11 | 3,026.33% |
√Applicable □Not applicable
1. The net cash flow from operating activities increased by RMB 843,640,109.65 compared with the previousperiod, a decrease of183.2%, It was mainly due to the recovery of trade receivables in the previous year.
2. The net cash flow from investment activities decreased by RMB-1,114,401,019.93 from the previous period, adecrease of 654.85%, It was mainly due to the investment in the construction of Line 7 project and the purchaseand financing of idle funds.
3. The net cash flow from financing activities decreased byRMB -567,082,513.40 from the previous period, adecrease of 215.56%, It was mainly due to repayment of loans and interest.Notes to the big difference between cash flow from operating activities and net profit in the reporting year
√Applicable □Not applicable
During the reporting period, the net cash flow from the Company's operating activities was 383,145,788.5 yuan,The net profit in the consolidated statement of the company was -18,526,678.63 yuan, with significant differencebetween the two, mainly because the increase in the net cash flow from operating activities in the current year wasmainly affected by the "recovery of trade receivables in the previous year" and the recovery of trade receivables inthe current year was 495 million yuan.Ⅲ.Analysis of Non-core Business
√ Applicable □Not applicable
In RMB
| Amount | Proportion in total profit | Explanation of cause | Sustainable (yes or no) | |
| Investment income | 78,038,530.25 | 818.67% | The dividends, contract fees and interest on structured deposits from participating enterprises were obtained; Investment income from disposal of long-term equity investment was obtained. Mainly non-current assets damaged and scrapped losses. |
| Impairment of assets | -97,172,532.71 | -1,019.39% | Loss of inventory price falling, | Have the sustainability |
| Non-operating income | 5,003,548.34 | 52.49% | Mainly due to the insurance claims | Not sustainable. |
| Non-operating expenses | 420,575.07 | 4.41% | Mainly non-current assets damage and scrap losses | Not sustainable. |
| Other income | 27,547,902.92 | 288.99% | Mainly government subsidies | Have the sustainability |
Ⅳ.Condition of Asset and Liabilities
1.Condition of Asset Causing Significant Change
In RMB
| End of 2019 | End of 2018 | Proportion increase/decrease | Notes to the significant change | |||
| Amount | Proportion in the total assets(%) | Amount | Proportion in the total assets(%) | |||
| Monetary fund | 409,564,847.52 | 9.04% | 1,141,759,374.60 | 23.31% | -14.27% | Mainly due to the construction investment of large-size TV polarizer industrialization project (line 7), repayment of short-term loans and interest, and purchase of wealth management products. |
| Accounts receivable | 365,325,029.38 | 8.06% | 528,454,015.59 | 10.79% | -2.73% | Mainly due to the repayment of trade business. |
| Inventories | 391,717,935.12 | 8.64% | 439,752,718.77 | 8.98% | -0.34% | |
| Investment real estate | 112,730,320.90 | 2.49% | 167,997,941.98 | 3.43% | -0.94% | Mainly due to the investment in real estate in Shenzhen Guanhua Printing & Dyeing Co., Ltd. |
| Long-term equity investment | 152,209,929.72 | 3.36% | 32,952,085.66 | 0.67% | 2.69% | Mainly due to the changes in the ability of Shenzhen Guanhua Printing and Dyeing Co., Ltd., the conversion of non-trading equity instruments into long-term equity investment, and investment in real estate to increase the capital of Shenzhen Guanhua Printing & Dyeing Co., Ltd. |
| Fixed assets | 903,229,077.83 | 19.93% | 987,876,247.55 | 20.17% | -0.24% | |
| Construction in process | 839,866,275.92 | 18.53% | 15,621,286.64 | 0.32% | 18.21% | Mainly due to the construction investment of Line 7 projects. |
| Short-term loans | 0.00% | 411,522,111.40 | 8.40% | -8.40% | Mainly due to repayment of working capital loans and foreign exchange | |
| Long-term loans | 0.00% | 0.00 | ||||
| Non-current liabilities due within 1 year | 40,000,000.00 | 0.82% | -0.82% | Mainly due to the repayment of Shenzhen Chaochao's long-term loans, as of the end of the reporting period | ||
2.Asset and Liabilities Measured by Fair Value
√ Applicable □Not applicable
In RMB
| Item | Amount at year beginning | Gain/loss on fair value change in the reporting period | Cumulative fair value change recorded into equity | Impairment provisions in the reporting period | Purchased amount in the reporting period | Sold amount in the reporting period | Other change | Amount at year end |
| Financial assets | ||||||||
| 1. Financial assets measured at fair value through profit or loss (excluding derivative financial assets) | 540,000,000.00 | 290,000,000.00 | 830,000,000.00 | |||||
| 4．Other equity Instrument Investment | 324,561,120.30 | 7,364,036.51 | 83,143,210.08 | 248,781,946.73 | ||||
| Subtotal of financial assets | 864,561,120.30 | 7,364,036.51 | 290,000,000.00 | 83,143,210.08 | 1,078,781,946.73 | |||
| Total | 864,561,120.30 | 7,364,036.51 | 290,000,000.00 | 83,143,210.08 | 1,078,781,946.73 | |||
| Financial Liability | 0.00 | 0.00 | ||||||
amortized cost, reclassified as financial assets measured at fair value and recorded in current profits and losses onor after January 1, 2019, and reported as transactional financial assets, reducing other current assets by 540million yuan and increasing transactional financial assets by 540 million yuan.
2. Non-tradable equity investments held by the Company, originally classified as available-for-sale financial assets,are reclassified as financial assets measured at fair value and included in other comprehensive income on or afterJanuary 1, 2019, and are reported as investments in other equity instruments, resulting in a decrease of45,373,784.87 yuan in available-for-sale financial assets, an increase of 324,561,120.30 yuan in investments inother equity instruments, a decrease of 66,663.75 yuan in deferred income tax assets and an increase of279,120,671.68 yuan in total assets.
3. Restricted asset rights as of the end of this Reporting Period
Not applicableⅤ.Investment situation
1. General
□Applicable √Not applicable
2.Condition of Acquiring Significant Share Right Investment during the Report Period
□Applicable √Not applicable
3.Situation of the Significant Non-equity Investment Undergoing in the Report Period
□ Applicable √ Not applicable
4.Investment of Financial Asset
（1）Securities investment
□ Applicable √ Not applicable
Nil
（2）Investment in Derivatives
□ Applicable √ Not applicable
Nil
5.Application of the raised capital
√ Applicable □ Not applicable
（1）General application of the raised funds
√ Applicable □ Not applicable
In RMB10,000
| Year of Raising | Way of Raising | Total raised capital | Total Amount of the Raised Fund Used at the | Total amount of Raised Funds | Amount of raised capital of which the purpose was changed in the report period | Accumulative amount of raised capital of which the purpose has been changed | Proportion of raised capital of which the purpose has been changed (%) | Total Amount of the Unused Raised Fund at the Current Period | Use and Whereabouts of the Unused Raised Fund | Amount of the Raised Fund with over 2 Years’ Idling |
| 2013 | Non-public issue | 96,175.1 | 29,303.51 | 75,970.5 | 0 | 30,927.22 | 32.16% | 1,496.52 | All deposited in the special account for the raised funds. | 0 |
| Total | -- | 96,175.1 | 29,303.51 | 75,970.5 | 0 | 30,927.22 | 32.16% | 1,496.52 | -- | 0 |
| Note to use of raised capital | ||||||||||
| During the reporting period, the Company actually used the raised funds of 293.0351 million yuan, and the accumulated use of raised funds was 759.705 million yuan, of which 34.2356 million yuan of raised funds was actually used for the second phase of the line 6 project of TFT-LCD polarizer-and the accumulated use of raised funds for it was 349.9369 million yuan; the actual use of the raised funds for the 7th line project was 258.8025 million yuan, with the accumulated use of raised funds for it was 409.7681 million yuan. | ||||||||||
| Committed investment projects and investment | Project changed(including partial change) | Total raised capital invested as committed | Total investment after adjustment (1) | Amount invested in the reporting period | Accumulated amount invested at the end of the reporting period(2) | Investment progress ended the reporting period(%)(3)=(2)(1) | Date when the project has reached the predicted applicable status | Benefit realized in the reporting period | Has the predicted result be realized | Has any material change taken place in feasibility |
| Committed investment projects | ||||||||||
| Phase-II project of polarizer sheet for TFT-LCD (Line 6) | Yes | 96,175.1 | 70,034 | 3,423.26 | 34,993.69 | 49.97% | June 7,2018 | -5,867.21 | No | Yes |
| The utilization of the surplus raised funds（Line 7 project） | No | 25,880.25 | 40,976.81 | Not applicable | No | |||||
| Subtotal of committed investment projects | -- | 96,175.1 | 70,034 | 29,303.51 | 75,970.5 | -- | -- | -5,867.21 | -- | -- |
| Subtotal of committed investment projects | ||||||||||
| No | ||||||||||
| Total | -- | 96,175.1 | 70,034 | 29,303.51 | 75,970.5 | -- | -- | -5,867.21 | -- | -- |
| Situation about not coming up to schemed progress or expected revenue and the reason ( in specific project) | Not applicable | |||||||||
| Notes to significant change in feasibility of the project | According to the latest situation of the industry development, the original second phase construction scheme of the TFT-LCD polarizer was optimized, and then according to the results concluded by the experts, the company decided to continue to promote the construction of the No.6 line project. At the same time, in the light of there was a large funds gap between the actual raised capital and the planned raised capital for the second phase project, then by comprehensive considerations of the company’s production line scale and the operation pressure, the company decided to terminate the project of No.7 line, and the corresponding amount of funds of 309.2722 million yuan(including interests) for No.7 line project shall be changed for permanently supplementing the liquidity. The Proposal on Alteration of the Use of Part of the Raised Capital for the Second Phase Project of TFT-LCD Polarizer was examined and approved in the 2015 annual shareholder meeting on April 21, 2016.. | |||||||||
| Amount, application and application progress of the unbooked proceeds | Not applicable | |||||||||
| About the change of the implementation site of the projects invested with the proceeds | Not applicable | |||||||||
| Adjustment of the implementation way of investment funded by raised capital | Not applicable | |||||||||
| About the initial | Not applicable | |||||||||
| investment in the projects planned to be invested with the proceeds and the replacement | |
| Using the idle proceeds to supplement the working capital on temporary basis | Not applicable |
| Balance of the proceeds in process of project implementation and the cause | Applicable |
| On August 31, 2018, in the company's second extraordinary shareholders’ meeting of 2018, the “Proposal on the Use of Surplus Raised Funds to Invest in the Large-scale TV Polarizer Industrialization Project (Line 7)” was reviewed and approved, agreeing to continue to deposit 134.7172 million yuan in the original special account of raised funds for the follow-up expenditure of line 6 project and the remaining surplus raised funds shall be used for the investment of line 7 project, with the amount shall be subject to the interest settlement of the bank on the day the funds are transferred out. According to the use arrangement for the surplus raised funds, on November 12, 2018, the Company transferred the surplus raised funds for the No. 6 line project by 405.8311 million yuan to the newly opened special account of raised funds for project of Line 7, which will be used for the ultra-large-size TV polarizer industrialization project (Line 7), and as of November 12, 2018, the balance of the special account for raised funds of line 6 was 80.3569 million yuan. The reasons for the surplus of the raised funds were as follows: 1. the interest income and the investment income of the bank wealth management products were generated during the deposit of the raised funds; 2.to grasp the opportunity of the rapid development of the domestic polarizer industry and accelerate the construction of the No. 6 line project, the Company had in advance invested some funds in the second phase of the polarizer project of Line 6, and in view of the fact that the funds raised at the time were in place, as there was a large funding gap between the actual raised funds and the planned and the original investment project needed to be re-demonstrated, the Company did not replace the advance investment in time after the raised funds were received; 3. the second phase of the polarizer project was subsidized by the National Development and Reform Commission and the Shenzhen Municipal Government after the project was established ,which had been all put into the project construction according to the requirements, thereby reduced the investment of the raised funds accordingly; 4. to ensure the original investment project to have a good market prospect and profitability, the Company optimized the construction plan of the original raised-funds investment project of No. 6 line, and it adopted the cost control, optimized the production process and took other measures to achieve reasonable savings under the premise of ensuring the original design and technical conditions of the project. | |
| About application and status of the proceeds unused | As of December 31, 2019, the balance of the raised funds was 14.9652 million yuan, of which 14.7799 million yuan was deposited in the special account of raised funds for project of the line 6, and the special account of raised funds for project of the line 7 had 185,300 yuan. |
| Problems existing in application of the proceeds and the information disclosure or other issues | As of December 31, 2019, the accumulated investment for the second phase of Line 6 project was 699.5442 million yuan, accounting for 99.89% of the total investment of 700.34 million yuan after the change, of which the actual investment payment was 686.7019 million yuan (using the raised funds of 349.9369 million yuan, using its own funds and government funds of 336.7650 million yuan). As of December 31, 2019, the cumulative investment to the Line 7 project was1,321.7555 million yuan, of which the actual investment payment was 923.6872 million yuan (using the raised funds of 409.7681 million yuan, using its own funds and government funds of513.9191 million yuan). |
| Counter party | Sold equities | Sold date | Transaction price(RMB 10,000) | Net profits contributed by the equities to the listed companies from the period-begin to the sold date (RMB 10,000) | Influence of the selling of the Company | Proportion on of the net profits of the contributed amount of the equities selling to the listed companies to the total amo9unt of the net profits | Pricing principles of the equities selling | Whether was the related transaction | Relation ship with the center party | Whether the involved equities all complete ed the ownership transfer | Whether execute as scheduled and if failed, should state the reasons and the adopted measure ments of the company | Disclosure date | Disclosure Index |
| Shenzhen City Construction Development (Group) Co., Ltd. | 50% equity of Shenzhen Haohao Property Leasing Co., Ltd. | December 19,2019 | 6,055.41 | 4,161.14 | This transaction is based on the company's purpose of concentrating resources to develop the main business of polarizers and to promote the company's strategic layout. The completion of the transaction will have a positive impact on the company's 2019 annual results. | 211.44% | Market Principle | Yes | Shenzhen Investment Holdings Co., Ltd., the sole shareholder of the Urban Construction Group, is the controlling shareholder of the company | Yes | Implemented as scheduled | December 21,2019 | （http://www.cninfo.com.cn）on December 21, 2019,Announcement No.:2019-70 |
In RMB
| Company Name | Company type | Sectors engaged in | Registered capital | Total assets | Net assets | Turnover | Operating profit | Net Profit |
| Shenzhen Lisi Industrial Development Co., Ltd. | Subsidiary | Domestic trade, Lease | 2,360,000.00 | 37,905,725.48 | 31,606,145.18 | 8,444,486.72 | 3,778,948.49 | 3,546,590.92 |
| Shenzhen Huaqiang Hotel | Subsidiary | Accommodation, business center; | 10,005,300.0 | 33,127,173.66 | 26,774,498.82 | 12,169,563.25 | 5,127,931.15 | 3,860,999.02 |
| Shenfang Property Management Co., Ltd. | Subsidiary | Property management | 1,600,400.00 | 10,950,617.02 | 3,934,546.90 | 18,123,677.11 | 481,655.68 | 451,324.87 |
| Shenzhen Beauty Century Garment Co., Ltd. | Subsidiary | Production of fully electronic jacquard knitting whole shape | 13,000,000.0 | 36,020,394.08 | 16,327,291.75 | 48,879,762.97 | 2,866,904.51 | 2,866,904.51 |
| SAPO Photoelectric Co., Ltd. | Subsidiary | Production and sales of polarizer | 583,333,333. 00 | 3,233,730,220.23 | 2,801,536,038.10 | 1,840,279,083.06 | -92,982,192.22 | -89,030,335.68 |
| Shenzhen Shenfang Import & export Co., Ltd. | Subsidiary | Operating import and export business | 5,000,000.00 | 38,834,438.24 | 9,660,856.07 | 112,741,877.80 | 3,272,716.24 | 2,445,665.57 |
| Shengtou（HK）Co., Ltd. | Subsidiary | Sales of polarizer | HKD10,000 | 7,968,871.14 | 6,306,112.31 | 40,429,303.65 | 358,171.79 | 800,885.41 |
VIII.Special purpose vehicle controlled by the Company
□ Applicable √ Not applicable
Ⅸ.Prospect for future development of the Company
1. The Development Trend of the Industry
In recent years, the new production capacity of Chinese panel manufacturers has been continuously released,and the production capacity has gathered in mainland China. The global competition pattern of LCD TV panelproduction capacity has changed dramatically. In 2019, the area of LCD TV panel production capacity in China'spanel factories has reached nearly 50%, which is expected to exceed 50% in 2020.In 2019, due to the escalation of trade tensions between China and the United States and the slowdown ofglobal economic growth, the demand for flat panel displays failed to meet the expectations of the consumermarket, and the area demand for flat panel displays increased by only 1.5% compared with 2018. Considering thatpanel prices hit a record low in 2019 and the impact of various sports events held in even-numbered years (such asthe 2020 Tokyo Olympics), the demand for flat panel displays is expected to increase, and the global demand forflat panel displays is expected to grow by 9.1%, up to 245 million square meters in 2020, which is higher than 224million square meters in 2019. It is expected that the weighted average size of LCD TVs will increase from 45.1inches in 2019 to 47.6 inches in 2020. The gradual mass production of 10.5 generation lines will drive the supplycapacity of large-size panels to steadily increase and accelerate the popularization of large-size TVs.Polarizer is one of the key raw materials for flat panel displays. The development of polarizer industry isaccompanied by the development of flat panel display industry, which shows a certain periodicity. Most paneldisplay terminal products are consumables in a stable annual demand but as electronic products, they are to besubstituted by new techniques in 2-3 years in average in the long run. As a result, the polarizer industry willbasically keep pace with such products in upgrading. Currently, China has become the development focus of theglobal panel industry. With the gradual production of several 10.5 generation liquid crystal panel production linesin China in recent years, the demand for polarizers has increased dramatically, which has also driven thedevelopment of the polarizer industry.At the moment, the global polarizer industry mainly comprises three echelons: major manufacturers in Japanand South Korea stand in the first echelon; some famous Japanese and Korean enterprises and enterprises inTaiwan, P. R. China stand in the second echelon; the Company stands in the third echelon and serves as thepredominant enterprise of polarizer research & development, production and sales in China.
2.The company's development strategy
In 2019, the Company took reducing losses and increasing profits of polarizer, its main business as its workfocus, continuously improved its management capability and production technology, fully promoted theconstruction of polaroid Line 7 project, optimized the allocation of resources, stimulated business vitality andimproved the overall operation capability of the company's assets.
In the period of the "13
thFive-Year Plan", the Company will keep quickly driving the polarizer industry to goprofessional, mass and efficient, seize the good opportunity of great development in the industry, make full use ofpolicies of the state and Shenzhen in favor of development of the polarizer industry, further deepen themixed-ownership reform, boost industrial integration, accelerate ultra-wide production line construction, raise theproduction technology and business management standards with effort, enhance talent team building, give fullplay to effects of the long-term incentive mechanism and inspire its vitality to boost a constant growth of its main
business--polarizers.
3.Possible risks
1. Macroeconomic Risks
In 2020, China will maintain economic stability and focus on regulating and controlling domestic demand.Firstly, it will expand consumption and stabilize manufacturing investment; Secondly, it will adhere to themonetary policy of "moderate tightening" and "maintaining reasonable and abundant liquidity"; Thirdly, fiscalpolicy will implement measures of reducing taxes and fees to ease the burden of enterprises; Fourthly, it will makeclear the direction of investment in infrastructure and maintain overall economic stability. Under the backgroundof the introduction of science and technology innovation board and the long-term game of Sino-US trade frictions,the state proposes to implement the strategy of "manufacturing power", encourages core technology to beautonomous and controllable and to realize import substitution. As an important part of the electronic informationindustry, the industry where the Company lies in will be strongly supported by national policies, but it can not beruled out that unpredictable macroeconomic fluctuations may cause risks to the Company's performance.
2. Market risks
Polarizer industry is an important part of China's future manufacturing industry and the demand for displaypanels and the development of relevant technologies are changing with each passing day. The process of domesticsubstitution of polarizer industry is in progress. With the gradual mass production of Generation 10.5 Line, themarket for super-large size will encounter with new changes. If the Company's technology and products fail torespond to the demand of application field, wide polarizer products and applications are not developed asexpected, or the intensification of market competition leads to the price decline of display products and thepressure of price reduction in the polarizer market, negative impacts will be caused inevitably on the Company.
3. Raw-material risks
The core patents of polarizer terminal materials have high technical barriers and are basically monopolizedby foreign manufacturers. Thus, patents are the main reason for limiting the localization of luminescent materials.Currently, the key raw materials for manufacturing polarizers, PVA film and TAC film, are basically monopolizedby Japanese companies and the production line and production technology of upstream supporting raw materialsare constrained by the Japanese side. Compared with the international manufacturer's complete industrial chainmodel from upstream raw materials to polarizers to display panels, the Company does not have the correspondingcomplete industrial support to play the role in industrial integration while the price of major membrane materialsis affected by the supplier's production capacity, market demand and the yen exchange rate, which influences theunit cost of the Company's products.
4.The key work in 2020
1. Multiple measures to improve the current situation of main business operation
Firstly, it gave full play to the role of multiple special research teams, explored management optimization,AOI improvement, foreign cooperation for Line 7, progress of Line 7 project, market development, research anddevelopment, and studied the solution measures for key and difficult problems that affect the loss reduction andprofit increase in main business so as to promote business improvement; Secondly, it controlled the ratio ofproduction to sales and actively eliminated inventory. Thirdly, it opened up the market for valid orders. Fourthly, itintensified R&D and innovation, sped up the import of domestic materials, reduced costs and ensured the supplyof raw materials. Fifthly, it continued to train talents in a targeted way and formed a technical support centered byits own team. Sixthly, it strengthened overall risk management, improved risk control and response capabilities,and further ensured a safe, sound and sustainable development.
2.Push forward the construction of Line 7 to ensure its timely completion
Work has been carried out in strict accordance with the requirements of the project implementation schedule,equipment installation has been completed as soon as possible, all links have been connected well, and technicalreserve and talent planning have been well ensured in advance. With the cooperation of the cooperating partyJinjiang Group, it actively promoted the technical cooperation with Kunshan Zhiqimei Material Technology Co.,Ltd., earnestly learned from the technical team the experience in equipment installation, production operation,operation management, etc., strengthened the production and manufacturing technology exchange with JapanNitto Denko Corporation, and made full preparations for smooth trial production. Moreover, it was necessary tostrengthen the organizational guidance, quality management and fund management of the project, to build theproject into an efficient and clean project, and to make every effort to ensure that the project's development goalsare completed on schedule.
3. Ensure the stable growth of property business and provide effective support for the development of thecompany
Property companies will continue to tap potential and increase efficiency, overcome adverse effects, stabilizethe rental rate of Shenfang Building and peripheral factories, further improve service quality and realize steadygrowth of rental income based on the rental rate and capital recovery rate.
4. Continue to explore ways to deepen reform and development and optimize the system and mechanism
The cooperation period between the Company and Jinjiang Group has reached three years. Based on theoriginal intention of win-win cooperation, the Company should continue to insist on deepening reform anddevelopment, further explore the market-oriented mechanism under the mixed ownership mode, and realize thereform goal of "mix and change". It will continue to promote the improvement of SAPO Photoelectric's operation,management optimization and the establishment of a market-oriented mechanism. It will optimize the corporategovernance structure, sort out the list of authorities, improve the basic process system, optimize inventorymanagement, establish and improve the system of checks and balances on rights and responsibilities, effectivelyplay a supervisory role, and strengthen the ability to prevent risks.
5. Enhance talent echelon building and reinforce core competitiveness of company
Currently, the Company is in a critical period of deepening reform and development, with fast businessdevelopment and insufficient existing talent reserve. It should continuously improve the quality of the existingtalent team, continuously optimize and improve the evaluation and appointment system and incentive system ofprofessional and technical ranks of the company according to the company's future development strategy, increasethe incentive and training of key reserve talents through various forms of training, improve the stability andenthusiasm of key reserve talents, and gradually establish reserve talent echelons for key positions of theCompany, thus continuously improving the core competitiveness and sustainable development capability of theenterprise.
6. Well ensure work safety and maintain the harmony and stability of enterprise
The construction of polarizer Line 7 project of the Company has entered the final critical period. TheCompany's work safety task is very arduous, and it must pay constant attention to work safety, so as to ensure bothproject construction and work safety. The Company will regularly carry out large-scale inspections of work safety,comprehensively inspect the implementation of the responsibility system for work safety, the implementation oflaws and regulations on work safety, standard procedures, potential hazard investigation and rectification, andemergency management, and formulate and implement effective rectification measures to eliminate potentialsafety hazards.
7. Strengthen party building and innovating enterprise culture
The Company's Party Committee will continue to carry out in-depth special education activities of "TwoStudies and One Activity", strictly implement the "Three Meetings and One Lesson" system, and strengthen theconstruction of the Party building system and the Party member team. Conscientiously implement the "tworesponsibilities" and pay close attention to the construction of a clean and honest party. The Commission forDiscipline Inspection of the Company should conscientiously perform its duties of supervision, discipline andaccountability, strengthen the clean construction of enterprises, strengthen the supervision and inspection of theconstruction of Line 7 project, and well ensure the project construction.Ⅹ.Particulars about researches, visits and interviews received in this reporting period
1.Particulars about researches, visits and interviews received in this reporting periodApplicable √ □ Not applicableThe company did not receive researches, visits and interviews received in this reporting period.
V. Important EventsⅠSpecification of profit distribution of common shares and capitalizing of common reservesFormulation, implementation and adjustment of profit distribution policy of common shares especially cashdividend policy during the reporting period
□ Applicable √ Not applicable
The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve intoshare capital in the past three years(with the reporting period inclusive):
Based on the needs of the construction of Polarizer for oversized TV project and the company businessdevelopment, there were no cash dividends and there were no capital reserves converted into share capital in thelast three years.Dividend distribution of the latest three years
In RMB
| Year for bonus shares | Amount for cash bonus(tax included) | Net profit attributable to common stock shareholders of listed company in consolidation statement for bonus year | Ratio of the cash bonus in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Proportion for cash bonus by other ways(i.e. share buy-backs) | Ratio of the cash bonus by other ways in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Total cash bonus(other ways included) | Ratio of the total cash bonus (other ways included) in net profit attributable to common stock shareholders of listed company contained in consolidation statement |
| 2019 | 0.00 | 19,679,910.43 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2018 | 0.00 | -22,980,624.93 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2017 | 0.00 | 52,776,101.46 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
III. Commitments to fulfill the situation
1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of thereporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, seniormanagement personnel and other related parities.
√ Applicable □ Not applicable
| Commitment | Commitment maker | Type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| Commitment on share reform | Shenzhen Investment Holdings Co., Ltd. | Share reduction commitment | As Shenzhen Investment Holdings Co., Ltd., the controlling shareholder of the company, committed when the restricted-for-sale shares from the shares restructuring were listed for circulation in the market: i. if they plan to sell the shares through the securities exchange system in the future, and the decrease of the shares they hold reaches 5% within 6 months after the first decrease, they will disclose an announcement indicating the sale through the company within two trading days before the first decrease; ii. They shall strictly observe the “Guidelines on Transfer of Restricted-for-sale Original Shares of Listed Companies” and the provisions of the relevant business principles of Shenzhen Stock Exchange. | August 4, 2006 | Sustained and effective | Under Fulfillment |
| Commitment in the acquisition report or the report on equity changes | ||||||
| Commitment made upon the assets replacement | ||||||
| Commitments made upon issuance | Shenzhen Investment Holdings Co., Ltd. | Commitments on horizontal competition, related transaction and capital occupation | Shenzhen Investment Holdings Co., Ltd. signed a “Letter of Commitment and Statement on Horizontal Competition Avoidance” when the company issued non-public stocks in 2009. Pursuant to the Letter of Commitment and Statement, Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiary, subsidiaries under control or any other companies that have actual control of it shall not be involved in the business the same as or similar to those Shenzhen | October 9, 2009 | Sustained and effective | Under Fulfillment |
| Textile currently or will run in the future, or any businesses or activities that may constitute direct or indirect competition with Shenzhen Textile; if the operations of Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it compete with Shenzhen Textile in the same industry or contradict the interest of the issuer in the future, Shenzhen Investment Holdings Co., Ltd. shall urge such companies to sell the equity, assets or business to Shenzhen Textile or a third party; when the horizontal competition may occur due to the business expansion concurrently necessary for Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it and Shenzhen Textile, Shenzhen Textile shall have priority. | |||||
| Shenzhen Investment Holdings Co., Ltd. | Commitments on horizontal competition, related transaction and capital occupation | The commitments during the period non-public issuance in 2012: 1. Shenzhen Investment Holdings, as the controlling shareholder of Shenzhen Textile, currently hasn't the production and business activities of inter-industry competition with Shenzhen Textile or its share-holding subsidiary. 2. Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights can't be directly and indirectly on behalf of any person, company or unit to engage in the same or similar business in any districts in the future by the form of share-holding, equity participation, joint venture, cooperation, partnership, contract, lease, etc., and ensure not to use the controlling shareholder's status to damage the legitimate rights and interests of Shenzhen Textile and other shareholders, or to gain the additional benefits. 3. If there will be the situation of inter-industry competition with Shenzhen Textile for Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights in the future, Shenzhen Investment Holdings will promote the related enterprises to avoid the inter-industry competition through the transfer of equity, assets, business and other ways. 4. Above commitments will be continuously effective and irrevocable during Shenzhen Investment Holdings as the controlling | July 14, 2012 | Sustained and effective | Under Fulfillment |
| shareholder of Shenzhen Textile or indirectly controlling Shenzhen Textile. | ||||||
| Equity incentive commitment | Shenzhen Textile(Holdings) Co., Ltd. | Other commitment | 1.The company undertakes not to provide loans, loan guarantees, and any other forms of financial assistance to the incentive objects for obtaining the restricted stocks in the incentive plan; 2. The company undertakes that there is no circumstance that the stock incentive shall be prohibited as stipulated in the provisions of Article 7 of the “Measures for the Management of Stock Incentives of Listed Companies”. | November 27,2017 | December 27,2021 | Under Fulfillment |
| Other commitments made to minority shareholders | ||||||
| Executed timely or not? | Yes | |||||
| If the commitments failed to complete the execution when expired, should specifically explain the reasons of unfulfillment and the net stage of the working plan | Not applicable | |||||
| Asset or Project Name of Earnings Forecast | Start date of the forecasting period | End date of the forecasting period | Forecast earnings(RMB 10,000) | Actual earnings(RMB 10,000) | Reason for less than forecast | Disclosure date of the Forecast | Reference for the Forecast |
| Subsidiary- SAPO Photoelectric Introduces strategic investors | January 1,2019 | December 31,2019 | 15,000 | -9,478.38 | See on http://www.cninfo.com.cn | December 31,2019 | See on http://www.cninfo.com.cn announcement (Announcement No.:2016-67) |
exploration of research and development innovation and other measures.Audited by Zhongqin Wanxin Accounting Firm (Special General Partnership), SAPO Photoelectric realizedbusiness income of 1.953 billion yuan in 2019, net profit of - 90.78 million yuan, and sales revenue of polarizersand related optical film products accounted for 73.21% of the total revenue.IV. Reasons for why the business performance commitment was not fully realizedAlthough operating income increased significantly compared with the same period last year, the selling priceof polarizer products has been low since the sharp decline in 2018. The order structure adjustment of majorproducts was not as expected, plus the selling price of TN/STN products decreased significantly due to theshrinking market sales, and the increase in purchasing cost and exchange loss caused by the devaluation of RMBoffset the contribution of the sales increase to the performance. The difference between the percentages of actualsales revenue, net profit and the sales revenue of polarizer and related optical film products in the total revenue inthis year and the target is 547 million yuan, 244,783,800 yuan and 6.79% respectively. According to theCooperation Agreement, Jinjiang Group is required to make up the difference in net profit in cash.IV.The follow-up solution measures to the not fully achieved in the business performance commitment
1. In view of the fact that the Jinjiang Group has filed an arbitration with the Shenzhen International ArbitrationCourt on January 14th, 2020, in accordance with the dispute settlement method agreed in the CooperationAgreement signed with the company, regarding the performance commitments of 2019, the company received The"Arbitration Notice" served by Shenzhen International Arbitration Court and the "Application for Arbitration"submitted by Jinjiang Group as the applicant are detailed on the Juchao Information Network on March 11th,2020 (http://www.cninfo.com.cn) "Announcement on Companies Involved in Arbitration" (No. 2020-07). Atpresent, the company is preparing a written reply and relevant supporting materials.
2. In accordance with the principles of objectivity, fairness, and respect for facts, the company will activelyresolve the issue of performance commitment compensation on the premise that it is beneficial to both parties'cooperation. At the same time, in order to effectively protect the interests of the company and all shareholders, thecompany will hire special lawyers to represent the arbitration.Fulfillment of performance commitment and impact on goodwill impairment testNot applicableIV. Particulars about the non-operating occupation of funds by the controlling shareholder
□ Applicable √ Not applicable
No non-operating occupation from controlling shareholders and its related party in the period.V. Explanation of the Supervisory Committee and Independent Directors (If applicable)on the QualifiedAuditor’s Report Issued by the CPAs.
□ Applicable √ Not applicable
VI. Explain change of the accounting policy, accounting estimate and measurement methods as comparedwith the financial reporting of last year.
√ Applicable □Not applicable
I. Changes in accounting policies(I) Accounting policy changes caused by implementation of new financial instrument standardsIn 2017, the Ministry of Finance revised and promulgated the Accounting Standards for Business EnterprisesNo.22-Recognition and Measurement of Financial Instruments, Accounting Standards for Business EnterprisesNo.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No.24-Hedge Accounting andAccounting Standards for Business Enterprises No.37-Presentation of Financial Instruments (the above fourstandards are collectively referred to as "New Financial Instrument Standards"), which are required to come intoforce on January 1, 2019 for domestic listed enterprises. According to the regulations, the Company willimplement the new financial instrument standards from January 1, 2019 and adjust the relevant contents ofaccounting policies. The Company began to implement the new financial instrument standards at the time requiredby the Ministry of Finance after adopting a proposal at the 18th meeting of the 7th board of directors of theCompany on April 25, 2019.The Company retrospectively applies the new financial instrument standards, but for classification andmeasurement (including impairment) involving the inconsistency between the previous comparative financialstatement data and the new financial instrument standards, the Company chooses not to repeat. Therefore, for thecumulative impact of the first implementation of this standard, the Company adjusted the retained earnings orother comprehensive earnings at the beginning of 2019 and the amount of other related items in the financialstatements, which were not restated in the financial statements of 2018.The main changes and impacts of the implementation of the new financial instrument guidelines on ourCompany are as follows:
- The structural deposits held by the Company were originally classified as other current assets, reclassifiedby the Company as financial assets measured at fair value and recorded in current profits and losses on or afterJanuary 1, 2019, and reported as transactional financial assets;- On January 1, 2019 and beyond, the Company designated non-tradable equity investments held as financialassets measured at fair value and included their changes in other comprehensive income, and reported them asinvestments in other equity instruments;-In its daily fund management, the Company endorsed or discounted some bank acceptance bills, aiming atboth receiving the contract cash flow and selling financial assets. Therefore, the Company reclassified these billsreceivable into financial asset categories measured at fair value with changes included in other comprehensiveincome and reported them as receivables financing on or after January 1, 2019.(II) Other accounting policy changes
1. The Company prepared 2019 annual financial statements in accordance with the requirements of theMinistry of Finance's Notice on Revising and Issuing the Format of General Enterprise Financial Statements for2019 (CK [2019] No.6), Notice on Revising and Issuing the Format of Consolidated Financial Statements (2019Edition) (CK [2019] No.16) and the Accounting Standards for Enterprises. Retroactive adjustment method isadopted for such accounting policy changes.
2. The Company will implement the revised Accounting Standards for Business Enterprises No.7-Exchangeof Non-monetary Assets from June 10, 2019 and the revised Accounting Standards for Business EnterprisesNo.12-Debt Restructuring from June 17, 2019. The accounting policy change shall be handled by the futureapplicable method. ?
II. Changes in accounting estimates
No significant changes in accounting estimates have occurred in the current period.
VII. Explain retrospective restatement due to correction of significant accounting errors in the reportingperiod
□Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in theperiod.VIII. Explain change of the consolidation scope as compared with the financial reporting of last year.
□Applicable √ Not applicable
No changes in consolidation statement’s scope for the Company in the period.IX. Engagement/Disengagement of CPAsCPAs currently engaged
| Name of the domestic CPAs | Peking Certified Public Accountants（Special General Partnership） |
| Remuneration for domestic accounting firm (RMB10,000) | 65 |
| Continuous life of auditing service for domestic accounting firm | 9 |
| Name of domestic CPA | Long Zhe, Liu Rlu |
| Continuous fixed number of year for the auditing service provided by CPA in domestic CPA Firms | 2 |
XIII. Situation of Punishment and Rectification
□Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.XIV. Credit Condition of the Company and its Controlling Shareholders and Actual Controllers
√Applicable □ Not applicable
During reporting period, there was no effective judgment of a court and large amount of debt maturity that thecompany, its controlling shareholders and actual controller failed to perform or pay off.XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan orOther Employee Incentive Measures
√Applicable □ Not applicable
(I) Formulation of Restricted Stock Incentive PlanOn November 27, 2017, the Proposal on the Company's Implementation Measures of Evaluation for the 2017Restricted Stock Incentive Plan (Draft) and summary and the Proposal on the Company's ImplementationMeasures of Evaluation for the 2017 Restricted Stock Incentive Plan was examined and approved in the 7
thboardmeeting of the company’s 7
thsession board of directors, and related proposals agreed to fulfill the relevantprocedures and related proposals agreed to fulfill the relevant procedures
On December 11, 2017, the SASAC agreed in principle to implement the restricted stock incentive plan.On December 14, 2017, the company held the third extraordinary shareholders' general meeting in 2017,which reviewed and approved the Proposal on the Company's Implementation Measures of Evaluation for the2017 Restricted Stock Incentive Plan (Draft) and summary and Proposal on the Company's ImplementationMeasures of Evaluation for the 2017 Restricted Stock Incentive Plan and other issues.(II) Information on granting the restricted stockOn December 14, 2017, the company held the 8th meeting of the 7th Board of Directors, which reviewed andapproved the “Proposal on Adjusting the List of Incentive Objects and Granting Quantity of the 2017 RestrictedStock Incentive Plan” and the “Proposal on Granting the Restricted Stocks to Incentive Objects”. The restrictedshares actually granted by this stock incentive plan totaled 4,752,300 shares, and 119 incentive objects were granted,with the granting price was 5.73 yuan per share.On December 27, 2017, the company’s restricted stock completed the grant registration formalities at ChinaSecurities Depository and Clearing Corporation Shenzhen Branch.(III) Progress of restricted stock
1. Regarding the repurchase and cancellation of some restricted stocks, i.e. the repurchase and cancellation of
restricted stocks in Phase II and held by 3 original incentive objectsOn June 4, 2019, the Company convened the 19th meeting of the 7th board of directors and the 13th meetingof the 7th board of supervisors to consider and pass the Proposal on Repurchase and Cancellation of SomeRestricted Share, agreeing to repurchase and cancel the 1,877,720 restricted shares held by the Company for 116incentive objects at a repurchase price of 5.92 yuan/share, which did not meet the conditions for lifting therestriction on sale in phase I. The buyback price of 5.73 yuan per share was used to cancel 58,000 restricted sharesheld by 3 original incentive subjects who left the company for personal reasons, and a total of 1,935,720 restrictedshares were repurchased and canceled.
On June 26, 2019, the Company held its 2018 annual shareholders' meeting to consider and pass the Proposalon Repurchase and Cancellation of Some Restricted Shares, agreeing to repurchase and cancel the 1,877,720restricted shares held by 116 incentive objects at a repurchase price of 5.92 yuan per share in phase I and 58,000restricted shares held by 3 original incentive objects who left the company for personal reasons at a repurchaseprice of 5.73 yuan per share, and a total of 1,935,720 restricted shares were repurchased and canceled.On September 12, 2019, the above-mentioned restricted stock companies completed the repurchase andcancellation procedures in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.
On September 12, 2019, the above-mentioned restricted stock companies completed the repurchase andcancellation procedures in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited.
2. Regarding the repurchase and cancellation of some restricted stocks, i.e. the repurchase and cancellation ofrestricted stocks held by 3 original incentive objects
On December 30, 2019, the Company held the 25th meeting of the 7th board of directors and the 17thmeeting of the 7th board of supervisors to consider and pass the Proposal on Repurchase and Cancellation ofSome Restricted Shares, agreeing that the company will repurchase and cancel 69,900 restricted shares held by 3original incentive objects who left the company for personal reasons at a repurchase price of 5.73 yuan per share.
On January 16, 2020, the Company convened the first extraordinary shareholders' meeting in 2020 toconsider and pass the Proposal on Repurchase and Cancellation of Some Restricted Shares and agreed torepurchase and cancel 69,900 shares of restricted shares held by 3 original incentive objects who left the companyfor personal reasons at a repurchase price of 5.73 yuan per share.
On January 17, 2020, the Company's registered capital will be reduced due to the repurchase and cancellationof some restricted stocks. According to the Company Law and other relevant laws and regulations, the Companydiscloses the Announcement on Reduction of Capital for Repurchase and Cancellation of Some Restricted Stocks(No 2020-02), and creditors are hereby notified that they have the right to require the Company to repay debts orprovide corresponding guarantees within 45 days from the date of this announcement. If the creditor fails toexercise the above rights within the prescribed time limit, the repurchase and cancellation will continue to beimplemented according to legal procedures.XVI. Material related transactions
1. Related transactions in connection with daily operation
√Applicable □ Not applicable
| Related parties | Relationship | Type of trade | Subjects of the related transactions | Principle of pricing the related transactions | Price of trade | Amount of trade RMB10,000) | Ratio in similar trades | Trading limit approved（RMB’0000） | Whether over the approved limited or not (Y/N) | Way of payment | Market price of similar trade available | Date of disclosure | Index of information disclosure |
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Purchase of products from related parties | Purchase of optical film products and relevant materials | Market Principle | Agreement price | 14,388.82 | 11.75% | 20,880 | No | Transfer | 14,388.82 | April 27,2019 | http://www.cninfo.com.cnOn April 27,2019(Announcement No.2019-19) |
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Sale of goods to related parties | Purchase of optical film products and relevant materials | Market Principle | Agreement price | 14,110.65 | 11.01% | 21,996 | No | Transfer | 14,110.65 | April 27,2019 | http://www.cninfo.com.cnOn April 27,2019(Announcement No.2019-19) |
| Total | -- | -- | 28,499.47 | -- | 42,876 | -- | -- | -- | -- | -- | |||
| Details of any sales return of a large amount | Not applicable | ||||||||||||
| Give the actual situation in the report period where a forecast had been made for the total amounts of routine related-party transactions by type to occur in the current period(if any) | Normal performance | ||||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | Not applicable | ||||||||||||
| Related parties | Relationship | Type of trade | Subjects of the related transactions | Principle of pricing the related transactions | Book value of assets transferred（RMB 10,000) | Valuation of transferred assets（RMB 10,000) | Transfer price（RMB 10,000) | Way of payment | Transaction gain or loss（RMB 10,000) | Date of disclosure | Index of information disclosure |
| Shenzhen City Construction Development (Group) Co., Ltd. | Shenzhen Investment Holdings Co., Ltd., the sole shareholder of the Urban Construction Group, is the controlling shareholder of the company | Equity transfer | 50% equity of Shenzhen Haohao Property Leasing Co., Ltd. | Market principle | 435.55 | 6,055.41 | 6,055.41 | Transfer | 5,548.18 | December 21,2019 | http://www.cninfo.com.cnOn December 21,2019(Announcement No.2019-70) |
| Reasons for the difference between the transfer price and the book value or valuation value（If any） | The transfer price is consistent with the assessed value. | ||||||||||
| Impact on the company's operating results and financial status | Have a positive impact on the company's 2019 annual results. | ||||||||||
| If the relevant transaction involves performance agreement, the performance of the report during the reporting period | Not applicable | ||||||||||
Due from related parties
| Related parties | Relationship | Causes of formation | Does there exist non-operation capital occupancy? | Opening balance (RMB 10,000) | Newly increased amount in the reporting period（RMB 10,000) | Amount recovered in the reporting period(RMB10,000) | Interest rate | Interest in the reporting period(RMB10,000) | Ending balance (RMB10,000) |
| Shenzhen Dailishi Underwear Co., Ltd. | Sharing company | Investment dividend | No | 41.64 | 98.84 | 100 | 40.48 | ||
| Anhui Huapeng Textile Co., Ltd. | Joint venture | Investment dividend | No | 180 | 180 | ||||
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Sale products | No | 8,406.26 | 14,110.65 | 17,127.53 | 5,389.38 | ||
| Shenzhen Tianma Microelectronics Co., Ltd. | The Chairman of the Company was Vice Chairman of the company | Sale products | No | 89.44 | 144.43 | 160.57 | 73.3 | ||
| Influence of the related rights of credit and liabilities upon the company’s operation results and financial position | During the reporting period, the creditor's rights of related parties were formed by normal production, operation and investment activities. There was no financial risk caused by the occupation of funds by related parties, nor was there any damage to the company's interests caused by unfair prices of related transactions. | ||||||||
| Related parties | Relationship | Causes of formation | Opening balance(RMB10,000) | Amount newly increased in the reporting period(RMB10,000) | Amount repaid in the reporting period(RMB10,000) | Interest rate | Interest in the reporting period(RMB10,000) | Ending balance (RMB10,000) |
| Kunshan Zhiqimei Materials Technology Co., Ltd. | Jingjiang Group's shareholding company | Purchase | 1,740.57 | 14,388.82 | 10,504.89 | 5,624.5 | ||
| Shenzhen Xinfang Knitting Co., Ltd. | Sharing company | Current amount | 24.48 | 24.48 | ||||
| Shenzhen Changlianfa Printing & dyeing Co., Ltd. | Sharing company | Current amount | 117.84 | 40.25 | 158.09 | |||
| Shenzhen Haohao Property Leasing Co., Ltd | Sharing company | Current amount | 445.45 | 104.69 | 340.76 | |||
| Yehui International Co., Ltd. | Sharing company | Current amount | 119.01 | 2.66 | 121.67 | |||
| SAPO （HK）Co., Ltd. | Sharing company | Current amount | 31.5 | 31.5 | ||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | Controlled by the same party | Interest payable | 3,722.07 | 53.47 | 3,774.54 | 0 | ||
| Shenzhen Guanhua Pringing & Dyeing Co., Ltd. | Sharing company | Current amount | 381.11 | 381.11 | ||||
| Influence of the related rights of credit and liabilities upon the company’s operation results and financial position | During the reporting period, the debts of related party was caused by normal production and operation activities, and there was no act damaging the interests of the Company and its shareholders. | |||||||
XVII.Particulars about significant contracts and their fulfillment
1. Particulars about trusteeship, contract and lease
(1) Trusteeship
□Applicable √ Not applicable
No trusteeship, contract or leasing for the Company in reporting period.
(2) Contract
□ Applicable √ Not applicable
No any contract for the Company in the reporting period.
(3) Lease
□Applicable √ Not applicable
No any lease for the Company in the reporting period..
2.Guarantees
□Applicable √ Not applicable
No any guarantees for the Company in the reporting period..
3.Situation of Entrusting Others for Managing Spot Asset
(1)Situation of Entrusted Finance
√ Applicable □Not applicable
Overview of entrusted wealth-management during the reporting period
In RMB 10,000
| Specific type | Source of funds for entrusted financial management | The Occurred Amount of Entrusted Wealth-management | Undue balance | Un-recovered of overdue amount |
| Bank financial products | Self fund | 383,000 | 5,000 | 0 |
| Bank financial products | Raise fund | 95,000 | 0 | 0 |
| Total | 478,000 | 5,000 | 0 | |
| Name of Trustee Organization (or Trustee Name) | Type of Trustee Organization(or Trustee) | Product Type | Amount | Capital Source | Start Date | Expiry Date | Funds Allocation | Method of Reward Determination | Reference Annualized Rate of Return | Expected Income (if any) | Actual profit and loss during the reporting period | The actual recovery of profit and loss during the reporting period | Amount of provision for impairment (if any) | Whether passed the statutory procedure | Whether there is any entrusted financial plan in the future | Summary of events and related search index (if any) |
| China Merchants Bank Co., Ltd.Shenzhen Shenfang Building Branch | Bank | Structure Deposit | 16,000 | Raise fund | May 8,2019 | June 10,2019 | Bank financial products | Due payment at a time | 3.50% | 50.63 | 50.63 | The principal of 160 million yuan and interest of 506,300.00yuan have been recovered on the maturity date. | Yes | Not applicable | http://www.cninfo.com.cn(Announcement No.2019-22,2019-29) |
| China Merchants Bank Co., Ltd.Shenzhen Shenfang Building Branch | Bank | Structure Deposit | 12,000 | Raise fund | June 19,2019 | July 19,2019 | Bank financial products | Due payment at a time | 3.45% | 34.03 | 34.03 | The principal of 120 million yuan and interest of 340,300 yuan have been recovered on the maturity date. | Yes | Not applicable | http://www.cninfo.com.cn(Announcement No.2019-29,2019-33) | |
| SPD Bank Co., Ltd. Shenzhen Pingshan Branch | Bank | Structure Deposit | 12,000 | Self Fund | May 23,2019 | June 24,2019 | Bank financial products | Due payment at a time | 3.65% | 38.4 | 37.72 | The principal of 120 million yuan and interest of 377,200 yuan have been recovered on the maturity date. | Yes | Not applicable |
| China Merchants Bank Co., Ltd.Shenzhen Shenfang Building Branch | Bank | Structure Deposit | 22,000 | Self Fund | October 9,2018 | January 7,2019 | Bank financial products | Due payment at a time | 3.93% | 213.19 | 213.19 | The principal of 220 million yuan and interest of 2.1319 million yuan have been recovered on the maturity date. | Yes | Not applicable | ||
| China Merchants Bank Co., Ltd.Shenzhen Shenfang Building Branch | Bank | Structure Deposit | 22,000 | Self Fund | January 29,2019 | July 29,2019 | Bank financial products | Due payment at a time | 3.86% | 421.11 | 421.11 | The principal of 220 million yuan and interest of 4.2111 million yuan have been recovered on the maturity date. | Yes | Not applicable |
| SPD Bank Co., ltd. Fenghuang Building Branch | Bank | Structure Deposit | 22,000 | Self Fund | July 30,2019 | January 31,2020 | Bank financial products | Due payment at a time | 4.05% | 457.88 | 455.4 | The principal of 220 million yuan and interest of 4.554 million yuan have been recovered on the maturity date. | Yes | Not applicable | ||
| Total | 106,000 | -- | -- | -- | -- | -- | -- | 1,215.24 | 1,212.08 | -- | -- | -- | -- | |||
| Company Name of the Party Making the contract | Company Name of the Other Party of the Contract | Contract Object | Contract Signing Date | Book Value of the Assets Involved by the Contract (RMB10,000) (If Any) | Assessed Value of the Assets Involved by the Contract (RMB10,000) | Appraisal Agency Name (If Any) | Base Date of Assessment (if any) | Pricing Principle | Transaction Price (RMB10,000) | Whether A Related Traction | Connection Relation | Execution Condition As Of The End Of The Reporting Period | Date of Disclosure | Disclosure Index |
| SAPO Photoelectric | Hangzhou Jinjiang Group Co., Ltd., Kunshan Zhiqimei Material Technology Co., Ltd., Japan Nitto Denko Corporation | Nitto Denko provides polarizer manufacturing technology and related corporation. | November 6, 2017 | No | Considering the formulation of market price and technical service period, the final transaction price is based on the commercial negotiation results of both parties. | 86,900 | No | With no association relationship with the company | In normal performance | November 7, 2017 | Http://www.cninfo.com.cn: (Announcement No. :2017-53)on November 7, 2017 |
accurately, completely, timely, and fairly discloses information that has a significant impact on investmentdecisions, the disclosure content is concise and easy to understand, and fully reveals risks, facilitates access for allshareholders. And according to regulatory requirements, the company further sort out and improve relevantsystems and improve the quality of information disclosure.During the reporting period, the company further improved information disclosure and information transparency,strictly fulfilled the obligation of information disclosure in accordance with regulatory requirements,communicated and communicated with investors through multiple channels, answered questions raised byinvestors in a timely manner, improved information transparency, and cooperated with regulatory authorities andat the same time, cooperated with the regulatory authorities to purify the market space, safeguard the interests ofinvestors, especially small and medium-sized investors, and achieve positive interaction and harmonious (2) Theprotection of legal right of staff
(2) The protection of legal right of staff
Subject to the enterprise development strategy, the Company worked out a compliance, legitimate, scientificand reasonable human resources management system. The Company established a labor relation with eachemployee by concluding an employment contract and made necessary management on employees pursuant toLabor Law and relevant management regulations in the Company. The Company formulated assessmentmanagement systems separately geared to senior executives, middle management and regular employees andestablished a systematic and standardized performance assessment and evaluation system for a comprehensive,objective, fair and accurate assessment on all the employees regarding performance of duties and completion oftasks, results of which were seen as the basis for determination of the employee compensation, reward orpunishment and appointment.In 2019, according to the principle of "strategic guidance, performance oriented, fairness and justice", thecompany revised the Measures for Annual Performance Appraisal and Salary Management of Senior ManagementPersonnel of Shenzhen Textile, and revised and improved the Performance Appraisal Management System ofEmployees of Shenzhen Textile and the Salary Management System of Shenzhen Textile. A performance-basedsalary assessment and distribution mechanism has been established, which "priorities efficiency, considers fairness,rewards excellence and punishes inferiority, maintain flexibility, and combines incentives and constraints". Thesalary structure and level have been reasonably determined and an incentive and constraint mechanism in whichvalue creation determines value distribution has been formed. The Leave Management System Shenzhen Textilefor Going Abroad and Leaving Shenzhen has been revised and improved, in which the managementresponsibilities, management principles and examination and approval authority for going abroad have beenclarified, and the management process for leaders' leaving Shenzhen has been improved. In addition, the Measuresfor the Administration of Enterprise Annuity of Shenzhen Textile has been revised, and subordinate enterpriseshave been instructed to revise and improve the measures for the administration of enterprise annuities. Thecompany's human resources-related work such as personnel training, performance appraisal and recruitmentmanagement has been optimized and improved, thus improving the level of human resources management andfurther mobilizing the enthusiasm of employees.
(3) The protection of environment
Building a modern "green enterprise" with effort is a permanent responsibility which the Company keepstaking. For that end, the Company holds firm to building a green and recycled industry chain throughout the entireprocess to realize green and recycling economy in real means and improves quality of environment surroundingthe Company to facilitate its production. In the report period, the Company's out-of-boundary noise, industrialwaste water and gas emission passed the surveillance of the environmental protection administration and metstandard requirements in relevant laws and regulations. In the report period, through a rotary RTO treatment
process, more than 99% of VOCs were removed from the Company's organic waste gas and on the ground ofup-to-standard emission, the Company further reduced emission of pollutants to practically fulfill the socialresponsibility as a listed company and inflicted no major environmental protection accident. Furthermore, theCompany advocated for green office with effort and carried out environmental protection publicity and educationactivities in a variety of forms to enhance the energy-saving and emission reduction awareness among employeesand coordinate production & operation and environmental protection in production to fulfill its socialresponsibility literally.
(4) The protection of consumer rights and interests
The company always sticks to the core values of "honesty, responsibility first". As the responsibility to thecustomer is the source of enterprise value, the company committed to provide customers with professional,personalized, full range of products and services.Sustainable customer-oriented service and impeccable productquality motive our performance and sustainable development and guarantee long-term customers. And ourlong-term partnership is established on the basis of initiative attention, quick responding and sincere care tocustomers.
2. Execution of social responsibility of targeted poverty alleviation
(1) Precision poverty alleviation program
The company has no precise social responsibility for poverty alleviation in theperiodand bas no follow-up planeither.
(2) Annual precision poverty alleviation
(3) Accuracy of poverty alleviation
| Index | Measurement unit | Quantity / Status |
| I. General situation | —— | —— |
| II. Breakdown Input | —— | —— |
| 1. Poverty alleviation by industrial development | —— | —— |
| 2. Poverty alleviation by transfer employment | —— | —— |
| 3. Poverty alleviation by relocation | —— | —— |
| 4. Educational poverty alleviation | —— | —— |
| 5. Health poverty alleviation | —— | —— |
| 6. Ecological protection poverty alleviation | —— | —— |
| 7. Guarantee of all the details | —— | —— |
| 8. Social poverty alleviation | —— | —— |
| 9. Other projects | —— | —— |
| III. Awards (Content and level) | —— | —— |
（4）Subsequent targeted poverty alleviation program
3. Information on environmental protection
The Listed Company and its subsidiary whether belongs to the key sewage units released from environmentalprotection departmentYes
| Company or subsidiary name | Main pollutant and specific pollutant name | Emission way | Emission port number | Emission port distribution condition | Emission concentration | Implemented pollutant emission standards | Total emission | Verified total emission | Excessive emission condition |
| SAPO Photoelectric | Exhaust gas:non-methane total hydrocarbons | Altitude emission | 2 | The discharge port is located on the east side of the roof of Building No. 1 | <100mg/m3 | 120mg/m3 | 840kg/d | 1728kg/d | No |
| SAPO Photoelectric | Waste water：COD | Open channel discharge after treatment | 1 | Southeast side of plant area | <60mg/L | 70mg/L | 37.5804t/a | 43.8438t/a | No |
others.Emergency Plan for Emergency Environmental IncidentsAccording to the actual situation of the company, the preparation of the emergency plan for emergencyenvironmental incidents was completed, and an emergency environmental emergency plan filing applicationEnvironmental Self-Monitoring ProgramSurveillance done subject to surveillance requirements made by the surveillance station and operation needs of allsystems of SAPO，the specific monitoring programs are as follows: organic exhaust gas is 8 times per year (2 perquarter), wastewater discharge is 4 times per year (once per quarter), boiler exhaust gas is 2 times per year (onceevery six months), and canteen fume is 2 times per year (once every six months), the noise at the plant boundaryis 2 times per year (once every six months).Other Environmental Information That Should Be DisclosedNilOther Environmental Related InformationNilXIX. Other material events
√ Applicable □ Not applicable
(I) Progress of polarizer industrialization project for ultra-large TV (Line 7)The construction of Line 7 project has been delayed for about 3 months due to changes in the planned landuse of Pingshan Government and other factors. The Company's Line 7 project construction team rescheduled theconstruction to ensure that all work is completed on schedule with good quality. In the process of projectconstruction, the Company further strengthened the monitoring and management of budget, schedule and quality,actively promoted the technical exchange with Nitto Denko and Kunshan Zhiqimei, and promoted the researchand development of raw materials for Line 7 project to cope with the demand of large-scale products. Throughfield investigation and negotiation with major Japanese raw material manufacturers, the Company basicallydetermined the supply of main raw materials for 2,500mm wide production line, and solved the problem of rawmaterials supply for matching 2,500mm ultra-wide polarizer production by 2020.
The Company pushed forward the construction of Line 7 project as planned, started the construction of civilengineering on April 18, 2019, and completed the capping of the main factory building on December 30, 2019.The project is expected to be completed and accepted in July 2020, and the arrival acceptance, storage, installation,commissioning and trial production of extension machines, coaters, AGV and other equipment are expected to becompleted in 2020.As of December 31, 2019, the total investment contract amount of the Line 7 project was 1,321,755,500 yuan,and the actual paid-in investment was 923,687,200 yuan (with raised funds of 409,768,100 yuan, and its ownfunds and government funds of 513,919,100 yuan used).
（II）Progress of Renting of Guanhua Building
In order to improve the capital contribution obligations of the Guanhua shareholders, on February 28, 2019,the Company and Qiaohui respectively increased the capital of Guanhua in the same proportion with the buildingsof Guanhua Mansion according to the proportion of 50.16% and 49.84% of their equity in the buildings ofGuanhua Mansion. After the capital increase is completed, Guanhua is an enterprise jointly controlled by theCompany and Qiaohui.
On February 14, 2019, Guanhua obtained the Real Estate Rights Registration Certificate of GuanhuaMansion, and has completed the industrial and commercial registration formalities for equity change and increaseof registered capital. Due to the fact that the winning bidder determined by Guanhua Mansion through invitationfor lease has given up the lease qualification, and in view of the characteristics of Guanhua Mansion's blankwithout decoration and short lease period, the Company has actively sought potential customers and made greatefforts to promote it. In May 2019, Guanhua Mansion issued another public notice of public listing for lease atShenzhen United Property and Share Rights and confirmed the lessee in the same month, thus obtaining highrental returns, successfully solving the historical problems of Guanhua Mansion and completely activating thestate-owned assets.In order to further revitalize the Company's existing assets, concentrate resources on its main business andstimulate the vitality of the enterprise, the Proposal on Transfer of 50.16% Equity of Shenzhen Guanhua Printingand Dyeing Co., Ltd. was deliberated and passed at the 22nd meeting of the 7th Board of Directors and the 2ndExtraordinary General Meeting in 2019. It was agreed that the Company would transfer 50.16% of Guanhuaequity held by the Company through public listing at a price of not less than 340,468,300 yuan in ShenzhenUnited Property and Share Rights, which was approved by the state-owned assets management department forfiling. However, due to market reasons and changes in relevant conditions, after comprehensive consideration bythe Company, the shares of Guanhua are not listed on Shenzhen United Property and Share Rights, and theCompany will choose a suitable time to list within the validity period of the underlying equity evaluation report(August 30, 2020) according to market conditions and in combination with the actual operation of the Company.For details, please refer to the Announcement of 2019-55,2019-63 and 2019-71 on the website ofhttp://www.cninfo.com.cn.XX. Material events of subsidiaries
√ Applicable □Not applicable
(I) Progress of cooperation with strategic investorsIn 2019, the Company actively promoted the business cooperation with Jinjiang Group and properly solved therunning-in problem in the cooperation. After auditing by Peking, SAPO Photoelectric realized a net profit of-97,268,700 yuan in 2018. The proportion of net profit, operating income, sales income of polarizer and relatedoptical film products to total income did not reach the set performance commitment. Jinjiang Group should makeup the difference of 197,268,700 yuan in SAPO Photoelectric net profit in 2018 in cash. Based on the principles ofobjectivity, impartiality and truth, and in order to protect the interests of listed companies and all shareholders, theCompany held several rounds of communication and negotiations with Jinjiang Group, and the two parties finallysigned the Payment Agreement for the Performance Commitment Compensation for 2018, agreeing that JinjiangGroup would pay the performance commitment compensation in three phases by November 30, 2019, totaling197,268,700 yuan. During the reporting period, Jinjiang Group has fulfilled its 2018 performance commitmentcompensation obligation in accordance with the Payment Agreement. For details, please refer to theAnnouncement of 2019-21,2019-41 2019-45,2019-47,2019-51,2019-52,2019-62 and 2019-68 on the website ofhttp://www.cninfo.com.cn.The Company has reached a preliminary consensus with Jinjiang Group on follow-up cooperation. The twoparties will focus on the construction of Line 7 project, the operation improvement and management optimizationof SAPO Photoelectric. On the basis of the above two tasks, the two parties will carry out follow-up cooperationand negotiation of cooperation paths according to the actual situation.(III) Progress in subsidiaries participating in the establishment of industrial funds
On November 16, 2017, the company's controlling subsidiary SAPO Photoelectric signed the Changxing JunyingEquity Investment Partnership (Limited Partnership) Agreement with the fund manager Huizhi InvestmentManagement Co., Ltd, general partner Jinxin Investment Co., Ltd and other limited partners, and co-sponsored theestablishment of an industrial fund, focusing on the optical film industry chain related projects related to thecompany's main business, with a fund size of 50 million yuan. SAPO Photoelectric, as one of the limited partnersof the industrial fund, subscribed for a capital contribution of 28.5 million yuan.For details Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2017--55).On February 10, 2018, Changxing Junying Equity Investment Partnership completed the industrial andcommercial registration and completed the private equity investment fund registration on February 8, 2018. Fordetails Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2018--05).As of December 31, 2019, Changxing Junying had accumulated 3 investment projects with a total investment of42 million yuan. The profit during the reporting period was 2,150,900 yuan.
| No | Name | Investment | Fund contribution （RMB 10,000） |
| 1 | Shenzhen Kaichuang Shijia Technology Co., Ltd. | Optical Film | 1,400 |
| 2 | Shenzhen Shenfuyu Electronic Technology Co., Ltd. | Optical Film | 1,300 |
| 3 | Shenzhen Hengbaoshun Technology Development Co., Ltd. | Optical Film | 1,500 |
VI. Change of share capital and shareholding of Principal Shareholders
Ⅰ.Changes in share capital
1. Changes in share capital
In Shares
| Before the change | Increase/decrease（+，-） | After the Change | |||||||
| Amount | Proportion | Share allotment | Bonus shares | Capitalization of common reserve fund | Other | Subtotal | Quantity | Proportion | |
| 1.Shares with conditional subscription | 4,829,550 | 0.94% | -1,935,720 | -1,935,720 | 2,893,830 | 0.57% | |||
| 1.State -owned shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 2. State-owned legal person shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 3.Other domestic shares | 4,829,550 | 0.94% | -1,935,720 | -1,935,720 | 2,893,830 | 0.57% | |||
| Incl：Domestic legal person shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Domestic Natural Person shares | 4,829,550 | 0.94% | -1,935,720 | -1,935,720 | 2,893,830 | 0.57% | |||
| 4.Foreign share | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Incl：Foreign legal person share | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| Foreign Natural Person shares | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| II.Shares with unconditional subscription | 506,444,599 | 99.06% | 0 | 0 | 506,444,599 | 99.43% | |||
| 1.Common shares in RMB | 457,016,599 | 89.39% | 0 | 0 | 457,016,599 | 89.73% | |||
| 2.Foreign shares in domestic market | 49,428,000 | 9.67% | 0 | 0 | 49,428,000 | 9.70% | |||
| 3. Foreign shares in foreignc market | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 4.Other | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| III. Total of capital shares | 511,274,149 | 100.00% | -1,935,720 | -1,935,720 | 509,338,429 | 100.00% |
changed from 511,274,149 shares to 509,338,429 shares. The impact of this share change on the Company'sfinancial indicators such as basic earnings per share and diluted earnings per share, net assets per shareattributable to the company's common shareholders in the latest year and period is as follows:
| Items | Year 2018 | Year 2019 | |
| According to the original capital | According to the new capital | According to the new capital | |
| Basic earnings per share (yuan/share) | -0.04 | -0.05 | 0.04 |
| Diluted earnings per share | -0.04 | -0.05 | 0.04 |
| Net assets per share | 4.64 | 4.66 | 5.36 |
| Total number of common shareholders at the end of the reporting period | 31,622 | Total shareholders at the end of the month from the date of disclosing the annual report | 32,552 | The total number of preferred shareholders voting rights restored at period-end(if any)(See Notes 8) | 0 | Total preferred shareholders at the end of the month from the date of disclosing the annual report(if any)(See Notes 8) | 0 | |||||||
| Particulars about shares held above 5% by shareholders or top ten shareholders | ||||||||||||||
| Shareholders | Nature of shareholder | Proportion of shares held（%） | Number of shares held at period -end | Changes in reporting period | Amount of restricted shares held | Amount of un-restricted shares held | Number of share pledged/frozen | |||||||
| State of share | Amount | |||||||||||||
| Shenzhen Investment Holdings Co., Ltd. | State-owned legal person | 45.96% | 234,069,436 | 0 | 234,069,436 | |||||||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | State-owned Legal person | 3.17% | 16,129,032 | 0 | 16,129,032 | |||||||||
| Lu Yunlong | Domestic Nature person | 0.67% | 3,400,450 | 3,400,450 | 3,400,450 | |||||||||
| Sun Huiming | Domestic Nature person | 0.63% | 3,224,767 | 32,000 | 3,224,767 | |||||||||
| Li Songqiang | Domestic Nature person | 0.56% | 2,873,078 | 0 | 2,873,078 | |||||||||
| Kuang Guowei | Domestic Nature person | 0.29% | 1,452,800 | -4,200 | 1,452,800 | |||||||||
| Zhang Ling | Domestic Nature person | 0.27% | 1,400,000 | 1,400,000 | 1,400,000 | |||||||||
| Zhu Ye | Domestic Nature person | 0.27% | 1,360,545 | 228,600 | 1,360,545 | |||||||||
| Hong Fan | Domestic Nature person | 0.26% | 1,338,900 | 310,000 | 1,338,900 | |||||||||
| Jiang Zilan | Domestic Nature person | 0.23% | 1,187,500 | 1,187,500 | 1,187,500 | |||||||||
| Strategy investors or general legal person becomes top 10 shareholders due to rights issued (if applicable)（See Notes 3） | No | ||
| Explanation on shareholders participating in the margin trading business | Shenzhen Shenchao Technology Investment Co., Ltd. is a wholly-owned subsidiary of Shenzhen Investment Holdings Co., Ltd., According to the decision of the State-owned Assets Supervision and Administration Commission of Shenzhen Municipal People's Government, Shenzhen Shenchao Technology Investment Co., Ltd was transferred to Shenzhen Major Industrial Investment Group Co., Ltd in June 2019. Shenzhen Investment Holdings Co., Ltd and Shenzhen Shenchao Technology Investment Co., Ltd are both controlled by the State-owned Assets Supervision and Administration Commission of the Shenzhen Municipal People's Government, so they are persons acting in concert. Except this, the Company did not whether there is relationship between the top ten shareholders holding non-restricted negotiable shares and between the top ten shareholders holding non-restricted negotiable shares and the top 10 shareholders or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Companies. | ||
| Shareholding of top 10 shareholders of unrestricted shares | |||
| Name of the shareholder | Quantity of unrestricted shares held at the end of the reporting period | Share type | |
| Share type | Quantity | ||
| Shenzhen Investment Holdings Co., Ltd. | 234,069,436 | Common shares in RMB | 234,069,436 |
| Shenzhen Shenchao Technology Investment Co., Ltd. | 16,129,032 | Common shares in RMB | 16,129,032 |
| Lu Yunlong | 3,400,450 | Common shares in RMB | 3,400,450 |
| Sun Huiming | 3,224,767 | Foreign shares in domestic market | 3,224,767 |
| Li Songqiang | 2,873,078 | Common shares in RMB | 2,873,078 |
| Kuang Guowei | 1,452,800 | Common shares in RMB | 1,452,800 |
| Zhang Ling | 1,400,000 | Common shares in RMB | 1,400,000 |
| Zhu Ye | 1,360,545 | Common shares in RMB | 1,360,545 |
| Hong Fan | 1,338,900 | Common shares in RMB | 1,338,900 |
| Jiang Zilan | 1,187,500 | Common shares in RMB | 1,187,500 |
| Explanation on associated relationship or consistent action among the top 10 shareholders of non-restricted negotiable shares and that between the top 10 shareholders of non-restricted negotiable shares and top 10 shareholders | Shenzhen Shenchao Technology Investment Co., Ltd. is a wholly-owned subsidiary of Shenzhen Investment Holdings Co., Ltd., According to the decision of the State-owned Assets Supervision and Administration Commission of Shenzhen Municipal People's Government, Shenzhen Shenchao Technology Investment Co., Ltd was transferred to Shenzhen Major Industrial Investment Group Co., Ltd in June 2019. Shenzhen Investment Holdings Co., Ltd and Shenzhen Shenchao Technology Investment Co., Ltd are both controlled by the State-owned Assets Supervision and Administration Commission of the Shenzhen Municipal People's Government, so they are persons acting in concert. Except this, the Company did not whether there is relationship between the top ten shareholders holding non-restricted negotiable shares and between the top ten shareholders holding non-restricted negotiable shares and the top 10 shareholders or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Companies. |
| Explanation on shareholders participating in the margin trading business(if any )(See Notes 4) | The Company Shareholder Li Songqiang holds 2,872,653 shares of the Company through stock account with credit transaction ; The Company Shareholder Zhu Ye holds 1,182,045 shares of the Company through stock account with credit transaction; The Company Shareholder Jiang Zilan holds 1,187,500 shares of the Company through stock account with credit transaction. |
| Name of the Controlling shareholder | Legal representative/Leader | Date of incorporation | Organization code | Principal business activities |
| Shenzhen Investment Holdings Co., Ltd. | Wang Yongjian | October 13,2004 | 76756642-1 | Investment and acquisition of financial and similar financial stock rights such as bank, security, insurance, fund and guarantee; Engage in real estate development and management business within the limit of legally-acquired land use right; Carry out investment and service in the field of strategic emerging industry; Carry out investment, operation and management of state-owned stocks of wholly-owned, holding and joint-stock company by reorganization & integration, capital operation and asset disposal; Other businesses undertaken by authorization of municipal SASAC(State Asset Supervision and Administration Commission) (If the above business scope needs to be approved according to national regulations, the business can only be operated after the approval is obtained). |
Equity of otherdomestic/foreign listedcompany with sharecontrolling and shareparticipation bycontrolling shareholder inreporting period
Shen Property A（000011），Quantity of shares 380.38 million，Shareholding ratio：63.82%；SPGA（000029），Quantity of shares 642.88 million，Shareholding ratio：63.55%；Shen Universe A（000023），Quantity of shares 12.27 million，shareholding ratio：8.85%；Pingan（601318），Quantity of shares 962.72 million，shareholding ratio：5.27%；Guosen Seurities（002736），Quantityof shares 2749.53 million，shareholding ratio：33.53%；Guotai Junan（601211），Quantity of shares
609.24 million，H shareholding ratio：103.37%,Total shareholding ratio :8.00%；Telling holding（000829），Quantity of shares 195.03 million，shareholding ratio：18.8%；Shenzhen International（00152），Quantity of shares：952.01 million，shareholding ratio：44.04%；Beauty Star（002243），Quantity of shares：604082 million，shareholding ratio：51.93%； Hopewell Highway (00737），Quantity of shares：2213.45 million，shareholding ratio：71.83%; Infinova（002528），Quantity ofshares：315.83 million，shareholding ratio：26.35%; Eternal Asia（002183），Quantity of shares：
388.45 million，shareholding ratio：18.3%；Shen Enerty（000027)，Quantity of shares：5.64 million，
shareholding ratio：0.14%;Bank Communication（601328）Quantity of shares：9.52 million，shareholding ratio：0.01%；Tehan Ecological （300197）Quantity of shares：113.98 million，shareholding ratio：4.86%and CHINA VANKE（02202）Quantity of shares：77.278 million，shareholding ratio：0.68%.
Change of the actual controller in the reporting period
□Applicable √Not applicable
Nil
3．Information about the controlling shareholder of the CompanyActual controller nature：Local state owned assets managementActual controller type：Legal person
| Name of the controlling shareholder | Legal representative/person in charge | Date of establishment | Organization code | Principal business activities |
| State-owned Assets Regulatory Commission of Shenzhen Municipal People's Government | Yu Gang | July 31,2004 | K3172806-7 | Performing the responsibilities of investors on behalf of the state and supervising and managing state-owned assets according to authorization and law. |
Except for Shenzhen Holdings Co., Ltd., the holding shareholder of the company, other domesticand foreign listed companies of the equity held by the actual controller haven’t been shown in thelist of the top ten shareholders of the company.
Changes of the actual controller in the reporting period
□Applicable √Not applicable
No Changes of the actual controller in the reporting periodBlock Diagram of the ownership and control relations between the company and the actual controller
The actual controller controls the company by means of trust or managing the assets in other way
□Applicable √Not applicable
4.Particulars about other legal person shareholders with over 10% share held
□Applicable √Not applicable
5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Partyand Other Commitment Subjects
□Applicable √Not applicable
VII. Situation of the Preferred Shares
□ Applicable √Not applicable
The Company had no preferred shares in the reporting period.
VIII Information about convertible corporate bonds
□ Applicable √Not applicable
During the reporting period, the company did not have convertible corporate bonds.
IX. Information about Directors, Supervisors and Senior ExecutivesI. Change in shares held by directors, supervisors and senior executives
| Name | Positions | Office status | Sex | Age | Starting date of tenure | Expiry date of tenure | Shares held at the year-begin(share) | Amount of shares increased at the reporting period(share) | Amount of shares decreased at the reporting period(share) | Other changes increase/decrease | Shares held at the year-gegin(share) |
| Zhu Jun | Board chairman | In office | Male | 56 | January 16,2015 | July 18,2020 | 137,000 | 54,800 | 82,200 | ||
| Zhu Meizhu | Director,General Manager | In office | Male | 55 | July 19,2017 | July 18,2020 | 228,000 | 54,000 | 174,000 | ||
| Ning Maozai | Director, Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | In office | Male | 44 | December 14,2017 | July 18,2020 | 122,000 | 48,800 | 73,200 | ||
| Huang Yu | Director | In office | Male | 45 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | ||
| He Fei | Director | In office | Male | 41 | January 16,2020 | July 18,2020 | 0 | 0 | 0 | ||
| He Fei | CFO | In office | Male | 41 | December 2,2019 | July 18,2020 | 0 | 0 | 0 | ||
| Wang Chuan | Director | In office | Male | 47 | September 1,2018 | July 18,2020 | 0 | 0 | 0 |
| He Zhuowen | Independent Director | In office | Male | 57 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | ||
| Cai Yuanqing | Independent Director | In office | Male | 50 | July 19,2017 | July 18,2020 | 0 | 0 | 0 | ||
| Wang Kai | Independent Director | In office | Male | 36 | January 16,2020 | July 18,2020 | 0 | 0 | 0 | ||
| Ma Yi | Chairman of the supervisory committee | In office | Male | 53 | January 16,2020 | July 17,2020 | 0 | 0 | 0 | ||
| Yan Shuwen | Shareholders' Supervisors | In office | Male | 39 | January 16,2020 | July 18,2020 | 0 | 0 | 0 | ||
| Zhang Xiaodong | Employee supervisor | In office | Male | 44 | August 9,2013 | July 18,2020 | 7,000 | 1,700 | 5,300 | ||
| Le Kunjui | Deputy GM | In office | Male | 56 | April 28,2017 | July 18,2020 | 122,000 | 48,800 | 73,200 | ||
| Liu Honglei | Deputy GM | In office | Male | 55 | July 19,2017 | July 18,2020 | 125,000 | 48,800 | 76,200 | ||
| Jiang Peng | Secretary to the board of directors | In office | Female | 49 | January 16,2015 | July 18,2020 | 100,000 | 40,000 | 60,000 | ||
| Di Yan | Director,CFO | Dimission | Female | 49 | April 28,2017 | November 27,2019 | 0 | 0 | 0 | ||
| He Qiang | Independent Director | Dimission | Male | 67 | August 16,2013 | January 16,2020 | 0 | 0 | 0 | ||
| Wang Weixing | Chairman of the supervisory committee | Dimission | Male | 51 | May 20,2015 | January 16,2020 | 0 | 0 | 0 |
| Zou Zhiwei | Shareholders' Supervisors | Dimission | Male | 37 | December 14,2017 | June 26,2019 | 0 | 0 | 0 | ||
| Li Lei | Shareholders' Supervisors | Dimission | Male | 44 | June 26,2019 | January 16,2020 | 0 | 0 | 0 | ||
| Total | -- | -- | -- | -- | -- | -- | 841,000 | 0 | 296,900 | 544,100 |
| Name | Positions | Types | Date | Reason |
| Di Yan | Director,CFO | Dimission | November 27,2019 | Job change |
| He Qiang | Independent Director | Dimission | January 16,2020 | The term of office expires. |
| Wang Weixing | Chairman of the supervisory committee | Dimission | January 16,2020 | Job change |
| Li Lei | Shareholders' Supervisors | Dimission | January 16,2020 | Job change |
| Zou Zhiwei | Shareholders' Supervisors | Dimission | June 26,2019 | Job change |
Manager and Deputy General Manager, He serves as director and General Manager of the Company, and BoardChairman of SAPO Photoelectric Co., Ltd.Ning Maozai, male, born in 1975, bachelor degree, senior administration engineer, Chinese Communist Partymember; he has served successively as the office clerk of Shenzhen Guomao Automobile Industry Co., Ltd, theclerk, principal staff member, associate director and director of party-mass office of Shenzhen PropertyDevelopment (Group) Corp. and hold a concurrent post of deputy human resource Deputy manager and manager;At present he holds the position of company director, deputy party secretary and secretary of Discipline InspectionCommittee, and supervisor of SAPO Photoelectric Co., Ltd.Huang Yu, male, born in 1974, postgraduate, senior accountant, Chinese Communist Party member; he hasserved successively as the manger of audit department Ⅱ of Shenzhen Hengdaxin Accounting Firm and assistantdirector, senior staff member of the audit department of Shenzhen Commerce Trading Invest-holding Company,senior staff member and principal staff member of the social undertaking division of Shenzhen SASAC, principalstaff member of the business division Ⅱ of Shenzhen SASAC, vice minister and minister of the financial budgetdepartment of Shenzhen Investment Holdings Co., Ltd, office director of Shenzhen Investment Holdings Co., Ltd;At present he holds the position of chief accountant and director of Shenzhen Investment Holdings Co., Ltd.anddirector of the Company.He Fei, male, born in February 1978, master's degree, member of Communist Party of China, Chinesecertified public accountant, accountant. He successively served as accountant of the Planning and FinanceDepartment of Shenzhen Gas Group Co., Ltd., accountant of the Finance Department of Shenzhen Gas InvestmentCo., Ltd., which is affiliated to Shenzhen Gas Group Co., Ltd., and manager of the Finance Department of HubeiShengjie Clean Energy Co., Ltd., which is affiliated to Shenzhen Gas Investment Co., Ltd.; Director of GeneralFinance Department of Shenzhen Convention & Exhibition Center Management Co., Ltd.; Vice Director ofFinance Department (Settlement Center) of Shenzhen Investment Holding Co., Ltd. Currently, he is the companydirector and chief financial officer of the company and is the company's financial chief.Mr. Wang Chuan, male, was born in 1972 with a master's degree, economist, engineer, CCP. He had servedsuccessively as deputy minister, minister and assistant director to the cooperation and development department ofShenzhen National High-tech Industry Innovation Center, served as chairman and general manager of ShenzhenInnovation Start Technology Co., Ltd., and served as deputy general manager of Shenzhen Tongchan Group Co.,Ltd. He is currently the Minister of Industry Management Department of Shenzhen Investment Holdings Co., Ltdand director of the Company.He Zuowen, male, born in 1962, MBA, associate professor in accountancy, charted certified accountant andcertified tax agent in securities and futures industry. At present he acts as a partner of Da Hua Certified PublicAccountants(Special General Partnership) and secretary of Party General Branch of Shenzhen Branch, meanwhilehe holds the position of chairman of Shenzhen Tianye Certified Tax Agents Limited Corporation, consultancyexpert of Internal Control Standard Committee of the Ministry of Treasury, judge of Guangdong SeniorAccountant Evaluation Committee, member of CPC Shenzhen Social Organization Disciplinary ExaminationCommittee, deputy secretary & secretary of Discipline Inspection Commission of CPC Shenzhen CPA IndustryBoard, director of Shenzhen Certified Tax Agents Association and independent director of Shenzhen JPTOPTO-ELECTRONICS Co., Ltd., Independent director of Shenzhen Yirui Biology Co., Ltd., the Company'sindependent directors.Cai Yuanqing, born in 1969, Doctor of Laws of Hiroshima University, professor of Law School of ShenzhenUniversity, director of Company Law Research Center and GSI(Graduate Student Instructor); Meanwhile, he actsas an arbitrator of Shenzhen Arbitration Commission ,independent director of Shenzhen Rongda Photosensitive
Science & Technology Co., Ltd., Independent director of Shenzhen Oufei Technology Co., Ltd., Independentdirector ofOgilvy Medical Supplies Co., ltd.and independent directors of the Company.Wang Kai, male, born in 1983, Ph.D. of Huazhong University of Science and Technology, Member of theCommunist Party of China, associate professor and researcher of Southern University of Science and TechnologyDepartment of Electronic and Electrical Engineering. He served as a member of the National TechnicalCommittee for Standardization of Flat Panel Display Devices, deputy director of Shenzhen Quantum DotAdvanced Display and Lighting Key Laboratory, director of the 9th Council of Shenzhen Young Science andTechnology Talents Association, science and technology expert of Shenzhen Science and Technology InnovationCommittee, member of Guangdong Branch of IEEE Photonics Association, and founding member of InternationalEnergy Photonics Association. He was an independent director of the Company.
（2）Supervisor
Ma Yi, male, born in 1966, bachelor's degree, member of Communist Party of China, assistant economist.He has successively served as a cadre of the automobile manufacturing and distribution plant of Hainanautomobile transportation corporation, director of the Business Department, assistant to the general manager andmanager of the Transportation Department of Shenzhen Shenjiu International Logistics Co., Ltd. GuangzhouBranch, operation director of Cosco Logistics Guangzhou Antaida Logistics Co., Ltd., general manager ofShenzhen Shenjiu International Logistics Co., Ltd. Guangzhou Branch, director of Planning and DevelopmentDepartment, director assistant, chief of Futian station, deputy secretary of the Party Committee, director andgeneral manager of Shenzhen highway passenger and freight transportation service center. He is the currentchairman of the board of supervisors of the company.
Yuan Shuwen, male, born in 1980, master's degree. He has successively served as chief of Shigumanagement station of Hengshan county rural management bureau, financial director of Shenzhen FengchengIron Wire Products Co., Ltd., project manager of Shenzhen branch of BDO Accounting Firm Co., Ltd., generalledger accountant of Shenzhen Zhenye (Group) Co., Ltd., director of Financial Budget Department and seniordirector of Assessment and Distribution Department of Shenzhen Investment Holding Co., Ltd. Currently, he isvice director of Assessment and Distribution Department of Shenzhen Investment Holding Co., Ltd. andsupervisor of the Company.
Zhang Xiaodong, male, born in 1975, postgraduate degree and CPC member. He began to work for thiscompany in August 1999 and had served successively as the assistant manager and manager of subsidiary of thiscompany, manager of business management department of this company and manager of Shenzhen MeibainianGarment Co., Ltd; At present he acts as the employee supervisor of this company and the head of businessmanagement department. He is the current secretary of the party branch , Deputy Manager and employeesupervisor of the company.
（3）Senior Executives
Le Kunjiu, male, born in 1963, bachelor degree economist professional title and CPC member; he has servedsuccessively as the loan officer of the finance department of Zhejiang Ningbo International Trust and InvestmentCorporation, deputy director and director of the finance department of CITIC Group Corporation, Ningbo Branch,manager of the research department of Hainan Fudao Asset Management Co., Ltd, assistant manager of ShenzhenLeaguer Venture Capital Co., Ltd, vice president & chief financial officer of Shenzhen Leaguer Digital TelevisionCo., Ltd, chairman & general manager of Shenzhen Oriscape Electronic Co., Ltd, vice president of ShenzhenInternational Technology Transfer Center, Tsinghua University, associate director of the industrial fundspreparatory office of Shenzhen Investment Holdings Co., Ltd and Deputy general manager of Shentou Education;At present he acts as Deputy General Manager of the Company, and Director of SAPO Photoelectric Co., Ltd.
Liu Honglei, male, born in 1964, bachelor degree and CPC member, Senior engineer, He has servedTechnician , Work director, Deputy director of office of First film factory of Ministry of ChemicalEngineering,Director of personnel Education Dept of Education Department of China Lekai Film Group, he hasserved as the deputy general manager and general manager of SAPO Photoelectric Co., Ltd from June 2012 toMay 2013 and the head of the party-mass work department and the manager of the business managementdepartment of Shenzhen Textile (Holdings) Co., Ltd; At present he holds the position of deputy general managerof the company. He is also the secretary and director of the party branch of Shenzhen SAPO PhotoelectricTechnology Co., Ltd.Jiang Peng, Female, born in 1970, Bachelor Degree, member of communist party, She served as officer of theSecretary Office of Shandong Fishery Group Co.,Ltd., Deputy Director of the Secretary office and Securitiesaffairs Representative of Shandong Zhonglu Oceanic Fisheries Co., Ltd., Securities Representative of HuafuHolding Co., Ltd., Securities affairs representative and Officer of the Secretariat of the Board of the Company,now serves as the secretary of the Board of the Company.Office taking in shareholder companies
√Applicable □Not applicable
| Names of the persons in office | Names of the shareholders | Titles engaged in the shareholders | Sharing date of office term | Expiry date of office term | Does he /she receive remuneration or allowance from the shareholder |
| Huang Yu | Shenzhen Investment Holdings Co., Ltd. | Chief accountant | March 4,2017 | Yes | |
| Wang Chuan | Shenzhen Investment Holdings Co., Ltd. | Minister of Industry Management Department | May 23,2018 | Yes | |
| Yuan Shuwen | Shenzhen Investment Holdings Co., Ltd. | Deputy Director of discipline Inspection & Supervision Office | September 18,2017 | Yes |
| Name of the persons in office | Name of other organizations | Titles engaged in the other organizations | Starting date of office term | Expiry date of office term | Does he/she receive remuneration or allowance from other organization |
| Zhu Jun | Tianma Microelectronic Co., Ltd. | Vice Chairman | February 28,2013 | July 7,2022 | No |
| Zhu Jun | Tianma Microelectronic Co., Ltd. | Director | February 19,2013 | July 7,2022 | No |
| Huang Yu | Shenzhen General Institute of Architectural Design and Research Co. ,Ltd. | Director | October 12,2009 | No | |
| Huang Yu | Shenzhen Kunpeng Equity Investment Management Co., Ltd. | Director | December 23,2016 | No | |
| Huang Yu | Shenzhen City Construction Development(Group) Co., Ltd. | Director | April 7,2017 | No | |
| Huang Yu | SIHC International Capital Ltd | Director | August 20,2018 | No | |
| Huang Yu | Shenzhen Investment Control East China Sea Investment Co., Ltd. | Board Chairman | December 18,2019 | No | |
| Wang Chuan | Shenzhen Shenfubao(Group) Co., Ltd. | Director | June 21,2018 | No | |
| Wang Chuan | Shenzhen Shentou Environment Technology Co., Ltd. | Director | June 27,2018 | No | |
| Wang Chuan | Shenzhen Shentou Education Co., Ltd. | Director | July 27,2018 | No | |
| Wang Chuan | Shenzhen International Tendering Co., Ltd. | Director | July 27,2018 | No | |
| Wang Chuan | ULTRARICH INTERNATIONAL LIMITED | Director | June 27,2018 | No | |
| He Zuowen | Dahua certified public accountants (special general partnership) Shenzhen branch | Partner | December 1,2002 | Yes | |
| He Zuowen | Shenzhen Certified Tax Agents Association | GM, Chairman | December 1,2008 | Yes | |
| He Zuowen | Shenzhen Tongyi Industry Co., Ltd. | Independent director | October 11,2018 | Yes | |
| He Zuowen | Shenzhen JPT OPTO-ELECTRONICS Co., Ltd. | Independent director | June 1,2017 | Yes | |
| He Zuowen | Shenzhen Yirui Biology Co., Ltd., | Independent director | October 1,2017 | Yes | |
| Cai Yuanqing | Shenzhen University, | Law professor | April 1,2001 | Yes | |
| Cai Yuanqing | Shenzhen arbitration commission | Arbitrator | April 1,2007 | Yes | |
| Cai Yuanqing | China Merchants Shekou Industrial Zone Holdings Co., Ltd. | Independent director | September 12,2018 | September 11,2021 | Yes |
| Cai Yuanqing | Shenzhen Rongda Photosensitive & Technology Co.,Ltd. | Independent director | December 31,2014 | August 30,2020 | Yes |
| Cai Yuanqing | Shenzhen Oufei Technology Co., Ltd. | Independent director | July 28,2017 | November 24,2020 | Yes |
| Cai Yuanqing | Ogilvy Medical Supplies Co., ltd. | Independent director | September 20,2016 | September 18,2022 | Yes |
| Wang Kai | South University of Science and Technology | Associate professor, Researcher | December 1,2018 | Yes | |
| Wang Kai | Shenzhen Planck Innovation Technology Co., ltd. | Director | October 1,2016 | Yes | |
| Yuan Shuwen | Shenzhen International Tendering Co., Ltd. | Supervisor | October 22,2017 | No | |
| Le Kunjiu | Shenzhen Guanhua Printing & Dyeing Co.,Ltd. | Board Chairman | June 6,2017 | No |
| Name | Positions | Sex | Age | Office status | Total remuneration received from the shareholder | Remuneration actually receives at the end of the reporting period |
| Zhu Jun | Board Chairman | Male | 56 | In Office | 74.57 | No |
| Zhu Meizhu | Director , GM | Male | 55 | In office | 72.25 | No |
| Ning Maozai | Director, Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | Male | 44 | In Office | 59.75 | No |
| Huang Yu | Director | Male | 45 | In office | 0 | Yes |
| He Fei | Director, CFO | Male | 41 | In office | 3.21 | Yes |
| Wang Chuan | Director | Male | 47 | In office | 0 | Yes |
| He Zhuowen | Independent Director | Male | 57 | In office | 11.03 | No |
| Cai Yuanqing | Independent Director | Male | 50 | In office | 11.03 | No |
| Wang Kai | Independent Director | Male | 36 | In office | 0 | No |
| Ma Yi | Chairman of the supervisory committee | Male | 53 | In office | 0 | No |
| Yuan Shuwen | Shareholder's supervisor | Male | 39 | In office | 0 | Yes |
| Zhang Xiaodong | Employee supervisor | Male | 44 | In office | 37.86 | Yes |
| Le Kunjiu | Deputy GM | Male | 56 | In office | 61.06 | No |
| Liu Honglei | Deputy GM | Male | 55 | In office | 55.24 | No |
| Jiang Peng | Secretary to the board of directors | Female | 49 | In office | 57.72 | No |
| Di Yan | Director, CFO | Female | 49 | Dimission | 75.96 | No |
| He Qiang | Independent Director | Male | 67 | Dimission | 11.03 | No |
| Wang Weixing | Chairman of the supervisory committee | Male | 51 | Dimission | 85.68 | No |
| Zou Zhiwei | Shareholder's supervisor | Male | 37 | Dimission | 0 | Yes |
| Li Lei | Shareholder's supervisor | Male | 44 | Dimission | 0 | Yes |
| Total | -- | -- | -- | -- | 616.39 | -- |
| Name | Position | Number of vested shares during the report period | Number of exercise stocks during the report period | Exercise price of the exercise stock during the report period (Yuan per share) | Market price at the end of report period (Yuan per share) | Number of restrictive stock hold at the beginning of the report period | Number of shares unlocked in the current period | Number of newly-awarded restrictive stock during the report period | Granting price of restrictive stock (Yuan per share) | Number of restrictive stock hold at the end of the report period |
| Zhu Jun | Board Chairman | 0 | 0 | 7.45 | 137,000 | 54,800 | 0 | 5.73 | 82,200 | |
| Zhu Meizhu | Director , GM | 0 | 0 | 7.45 | 135,000 | 54,000 | 0 | 5.73 | 81,000 | |
| Ning Maozai | Director, Deputy Secretary of the Party committee and Secretary of the Commission for Discipline | 0 | 0 | 7.45 | 122,000 | 48,800 | 0 | 5.73 | 73,200 | |
| Le Kunjiu | Deputy GM | 0 | 0 | 7.45 | 122,000 | 48,800 | 0 | 5.73 | 73,200 | |
| Liu Honglei | Deputy GM | 0 | 0 | 7.45 | 122,000 | 48,800 | 0 | 5.73 | 73,200 | |
| Jiang Peng | Secretary to the board of directors | 0 | 0 | 7.45 | 100,000 | 40,000 | 0 | 5.73 | 60,000 | |
| Total | -- | 0 | 0 | -- | -- | 738,000 | 295,200 | 0 | -- | 442,800 |
| Remark（if any） | The reasons for the decrease in restricted stock holdings by directors and senior managers during the reporting period are as follows: Firstly, the Company's 2018 annual performance failed to meet the conditions for lifting the restriction on sale for the first time stipulated in the Incentive Plan for Restricted Stock in 2017 (Draft). According to Chapter VIII of the Incentive Plan for Restricted Stock in 2017 (Draft), the conditions for granting restricted stock and the conditions for lifting the restriction on sale that "if the conditions for lifting the restriction on sale in the current period are not met, the Company will repurchase and cancel the restricted stocks that can be released in the current year in accordance with the provisions of this plan", the Company repurchased and canceled the restricted stocks held by the incentive objects of the 2017 restricted stock incentive plan that do not meet the conditions for releasing the restricted stocks in phase I. For details Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2019--27,2019-31 and 2019-42). |
| Number of in-service staff of the parent company（person） | 47 |
| Number of in-service staff of the main subsidiaries（person） | 1,291 |
| Total number of the in-service staff（person） | 1,338 |
| Total number of staff receiving remuneration in the current period（person） | 1,338 |
| The number of the parent company and the main subsidiary’s retired staffs who need to bear the cost（person） | 0 |
| Professional | |
| Classified according by Professions | Number of persons（person） |
| Production | 937 |
| Sales | 34 |
| Technical | 194 |
| Financial | 49 |
| Administrative | 124 |
| Total | 1,338 |
| Education | |
| Classified according by education background | Number of persons（person） |
| Postgraduate or above | 33 |
| Universities | 222 |
| Colleges | 113 |
| Mid-school or below | 970 |
| Total | 1,338 |
X. Administrative structure
I. Basic state of corporate governanceIn the reporting period, the company regulated operations and strengthen risk control in strict accordance withSecurities Law, Corporation Law, the Shenzhen Stock Exchange Standard Operation Instructions for Main-BoardListed Companies, Corporate Governance Standards for Listed Companies and other related laws and regulations,to ensure a healthy and stable development. At present, the basically sound governance system, normativebusiness operation and impeccable corporate governance structure meet the requirements of the normativedocuments for regarding corporate governance of listed companies issued by the China Securities RegulatoryCommission.
In 2018, company held a total of 3 general meetings, convened general meetings, standardized voting procedures
to safeguard the effectiveness and legality in strict accordance with the regulations and requirements ofCorporation Law, Articles of Corporation and Rule of Procedure of Shareholders' Meeting. Companies activelyprotected the voting rights of minority investors, and general meetings were convened in the form of live networkto adequately assure small investors of their rights to exercise.In 2019, the board of directors held 10 general meetings, and the convening and voting procedures were allconducted in strict accordance with the Articles of Corporation and Rule of Procedure of Shareholders' Meeting.All the directors performed directors ' duties, exercise directors’ rights, attended related meetings and activelyparticipated in the training and became familiar with relevant laws and regulations with serious, diligent andhonest attitudes. Independent directors independently performed their duties in strict accordance with Articles ofCorporation, The independent director system and other relevant laws and regulations, expressed fully theirindependent opinions on corporate operation, decision-making, and important matters, etc. Strategy, audit,remuneration, evaluation, nomination committees were established under board of directors, all committeesfunctioned properly, and performed duties such as internal audits, compensation assessment, nomination of seniormanagement personnel, and provided scientific and professional advisory opinions for board of directors’decision-making.In 2019, the board of supervisors held 6 meetings. The board of supervisors strictly followed the
requirements of Articles of Corporation and Rules of procedure of the board of supervisors and other relevantlaws and regulations, supervised the legal compliance of the duties performed by company's financial personneland directors, managers and other senior management personnel in the aim of maintaining the legitimate rightsand interests of the company and its shareholders. All the supervisors fulfilled their obligations, exercised theirrights according to the laws. The convening and voting procedures of the board of supervisors were legal, and theresolutions were legal and valid. The establishment and implementation of board of supervisors played an activerole in improving corporate governance structure and regulating corporate operations.In 2019, we further increased information transparency, accomplished investors’ protection andpropaganda work. In the reporting period, except disclosing information in a real accurate, timely, fair andcomplete manner in accordance with the regulatory requirements,Moreover, the Company carried out the special work Blue Sky Action according to Notification onImplementing Special Work where Investors Protect Blue Sky Action published by Shenzhen Securities Bureau to
enhance the quality of information disclosure as the key point, to continuously perfect the communicationmechanism and to promote the normative development of the Company. Meanwhile, the Company continued toperfect the voting mechanism for minority investors. In 2018, the minority investors’ voting was countedseparately at each of the two shareholder’s meetings, and whose result was disclosed at the decisionannouncement at the shareholder’s meeting, which fully guaranteed the execution of power of the minorityinvestors.
Moreover, the Company carried out the special work Blue Sky Action according to Notification onImplementing Special Work where Investors Protect Blue Sky Action published by Shenzhen Securities Bureau toenhance the quality of information disclosure as the key point, to continuously perfect the communicationmechanism and to promote the normative development of the Company. various platforms were made full use of,such as telephone, e-mail, website, especially the interactive platform of investors in Shenzhen Stock Exchange,solved questions brought by investors, and communicated with medium and small investors interactively, andensure all the investors obtained equal opportunities for informal access. Meanwhile, in the aim of improving thetransparency of listed companies, company accepted investors’ on-site investigation to have comprehensiveunderstandings of the company's business situation through face-to-face communication with management, alsourged the company established a responsibility to return on investors, improved and enhanced the corporategovernance standards. Meanwhile, the Company continued to perfect the voting mechanism forminority investors. In 2018, the minority investors’ voting was counted separately at each of the 3 shareholder’s meetings, and whose result was disclosed at the decision announcement at the shareholder’s meeting, whichfully guaranteed the execution of power of the minority investors.
Does there exist any difference in compliance with the corporate governance , the PRC Company Law and therelevant provisions of CSRC,
√ Yes □No
There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevantprovisions of CSRC.Shenzhen Investment Holdings Co., Ltd., the holding shareholder of the company, is a Shenzhen SASACenterprise. The company has complied with the relevant provisions on the state-owned asset management ofholding shareholders to report non-public information to holding shareholders, mainly including:Letters submittedmonthly index table; fee schedule during the reporting, financial assets table, summary quarterly deposits andborrowings and financing.In order to strengthen the management of non-public information, the company hasstrictly controlled the scope of learners, standardized the process of information delivery and strictly implementedas per the “Management System on Learner of Insider Information”, took practical measures to prevent insideinformation leaks and insider trading.In addition, there is no difference among the governance of the company, “Company Law” and the relevantprovisions of China Securities Regulatory Commission.II. Independence and Completeness in business, personnel , assets, organization and financeThe code of conduct of the controlling shareholders of the company did not go beyond the general meetingsdirectly or indirectly to interfere with the decision-making and business activities, the company had independentand complete business and autonomous operation capacity , achieved “five point separation” in respect ofpersonnel, financial, asset, agencies, business.
III. Competition situations of the industry
□ Applicable √ Not Applicable
IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period
1.Annual General Meeting
| Sessions | Type | Investor participation ratio | Meeting Date | Disclosure date | Disclosure index |
| Annual General Meeting of 2018 | Shareholders’ General Meeting | 49.00% | June 26,2019 | June 27,2019 | （http://www.cninfo.com.cn）Announcement No.:2019-30 |
| The first provisional shareholders’ General meeting in 2019 | Provisional shareholders’ General Meeting | 49.19% | October 9,2019 | October 10,2019 | （http://www.cninfo.com.cn）Announcement No.:2019-51 |
| The second provisional shareholders’ General meeting in 2019 | Provisional shareholders’ General Meeting | 49.15% | November 4,2019 | November 5,2019 | （http://www.cninfo.com.cn）Announcement No.:2019-64 |
| The attending of independent directors | |||||||
| Independent Directors | Number of Board meetings necessary to be attended in the reporting period | Number of spot attendances | Number of meetings attended by Communication | Number of attendances by representative | Number of absence | Failure to personally attend board meetings successively twice (Yes/No) | Number of attendance at general meetings of shareholders |
| He Qiang | 10 | 2 | 8 | 0 | 0 | No | 0 |
| He Zuowen | 10 | 2 | 8 | 0 | 0 | No | 3 |
| Cai Yuanqing | 10 | 2 | 8 | 0 | 0 | No | 3 |
VI. Duty Performance of Special Committees under the Board of Directors in the Reporting PeriodThe independent directors of the company are the key members of all professional committees of the Board ofDirectors, and are in the majority and the conveners of Audit Committee, Remuneration and Appraisal Committeeand Nomination Committee. Also, all the three independent directors can attend the daily meeting held by everyspecial committee on time.
(1) Audit Committee: during the reporting period, the Audit Committee has held 2 meetings, carefully examinedthe regular reports of the company and effectively implemented the work schedule of annual reports. Also, theAudit Committee has reviewed the internal control of the company, supervised the effective implementation ofinternal control, the self-assessment of internal control. It listened to the report maded by the Company'smanagement team on the production, operation and the financial situation. Before the meeting of the board ofdirectors is held to review the annual report, it met with the annual accountant to communicate the audit opinionsand understand the audit situation, and made a comprehensive and objective evaluation on the auditor'scompletion of this year's work and the quality of his practice; During the reporting period, it held meetings andmade resolutions on financial final accounts report, profit distribution plan, proposal to hire an audit institution,fund raising report, internal control self-evaluation report, financial final accounts report, proposal to hire an auditinstitution and revision of the internal audit system. The Audit Committee also specially deliberated the work planof the internal audit department, listened to reports on the implementation of the internal audit plan and problemsfound in the internal audit work, and guided and supervised the internal audit work of the Company.(II) Remuneration and Assessment Committee: During the reporting period, the Remuneration and AssessmentCommittee held 3 meetings to discuss the repurchase and cancellation of some restricted stocks of the Companyand the remuneration assessment of the Company's senior management in 2018 and to formed a resolution.(III) Nomination Committee: During the reporting period, the Nomination Committee held 2 meetings to holdmeetings and formulate resolutions on the nomination of independent director candidates, nomination ofnon-independent director candidates, and appointment of senior management personnel.VII. Work of the supervisory CommitteeDid the supervisory Committee find any risk existing in performing the supervision activities in the reportingperiod
□Yes √No
The supervisory Committee has no objection opinion any matters under supervision in the reporting periodVIII. Assessment and incentive Mechanism for Senior executivesThe company complies with “Executive Compensation Management and Evaluation System” to conduct theevaluation for the accomplishment of annual work of the senior executives. The salaries of the senior executivesare determined according to the duty scope, post value, individual ability, wages level on the market, economicprofits of the company and operation goal accomplishment of senior executives with adhering to the principle ofmarket orientation, responsibility with unified right, and incentive and equal restriction. According to the actualsituation of the Company, the 2019 annual senior management assessment plan will be implemented from Marchto June 2020.
IX. Internal control situations
1.Specific situations on major defects of internal control discovered during report period
√ Yes □No
| About the significant Defects of the internal control found in the internal control self-assessment report in the reporting period |
| The identification and rectification of deficiency of the internal control: 1. The identification and rectification of deficiency of the internal control in the financial statement In accordance with above identification standard of deficiency of the internal control in the financial statement, there is no the serious and important deficiency of internal control in the financial statement during the reporting period. 2.The identification and rectification of deficiency of the internal control except for that of the financial statement in accordance with above identification standard of deficiency of the internal control except for that of the financial statement, there is no the serious and important deficiency of internal control except for that of the financial statement during the reporting period. |
| Disclosure date of appraisal report on internal control | March 14,2020 | |
| Disclosure index of appraisal report on internal control | Juchao Website:（http://www.cninfo.com.cn）, Self-evaluation report of internal control | |
| Proportion of total unit assets covered by appraisal in the total assets of the consolidated financial statements of the company | 100.00% | |
| Proportion of total unit incomes covered by appraisal in the total business incomes of the consolidated financial statements of the company | 100.00% | |
| Standards of Defects Evaluation | ||
| Category | Financial Report | Non-financial Report |
| Qualitative standard | The defects related to financial reports were divided into general defects, important defects and significant defects according to their severity. Significant defects referred to one or multiple combinations of controlling defects, which may lead to serious deviation from the controlling objectives. Important defects referred to one or multiple combinations of controlling defects, and their severity and economic consequences were below significant defects, but they could still lead to serious deviation from the controlling objectives. General defects referred to other internal controlling defects which couldn't constitute significant defects or important defects. | In the following circumstances, the company was identified as existing non-financial –reporting related significant defects of internal controlling defects: The business activities of the company seriously violated national laws and regulations; (2) The decision-making process of "Three-Importance& One-Large" were unscientific, leading to major decision errors, and causing major property loses to the company; (3) Massive loss of key posts or technology talents; (4) The controlling system involving important business fields of the company failed; (5) It Caused serious negative effects on business of the company, and the effects couldn’t be eliminated; (6) The evaluation results of internal control were significant defects, and couldn’t get effective rectification. Important defects referred to one or multiple combinations of controlling defects, and their severity and economic consequences were below significant defects, but they could still lead to serious deviation from the controlling objectives. General defects referred to other internal controlling defects which couldn't constitute significant defects or important defects. |
| Quantitative criteria | Misstatement amount of financial statement fell into the following intervals: significant defects: Misstatement amount ≥ 1.5% of total revenue; Misstatement amount ≥ 10% of gross profit; Misstatement amount ≥ 1% of total asset; Misstatement amount ≥ 5% of net asset. significant defects: 0.5% of Total revenue ≤Misstatement amount ＜ 1.5% of total revenue; 5% of gross profit ≤Misstatement amount ＜ 10% of gross profit; 0.5% of Total asset ≤Misstatement amount ＜ 1% of total revenue; 3% of Net assets ≤Misstatement amount ＜ 5% of net assets. General defects:0% of total revenue ＜Misstatement amount＜0.5% of Total revenue; 2% of gross profitt ＜Misstatement amount＜5% of total profit; 0% of total assets ＜Misstatement amount＜0.5 of total assets; 0% of net assets ＜Misstatement amount＜3% of net assets. | Not applicable |
| Number of major defects in financial reporting（a） | 0 | |
| Number of major defects in non financial reporting (a) | 0 | |
| Number of important defects in financial reporting（a） | 0 | |
| Number of important defects in non financial reporting（a） | 0 | |
| To all shareholders of Shenzhen Textile (Holdings) Co., Ltd.： According to the relevant requirements of the “Audit Guideline of Enterprise Internal Control” and the Chinese CPA criteria, the company has audited the effectiveness of internal control of the financial statement of Shenzhen Textile (Holdings) Co., Ltd. (Shenzhen Textile) at the date of December 31, 2019. 1. The responsibility of enterprise for the internal control. According to the provisions of “Fundamental Norms for Enterprise Internal Control”, “Operation Guideline of Enterprise Internal Control” and “Evaluation Guideline of Enterprise Internal Control”, the company has established, perfected and effectively implemented the internal control, and made an evaluation for its effectiveness, which are the responsibilities of the Board of Directors of Shenzhen Textile. 2. The responsibility of CPA. The company shall be responsible for the expression of audit opinions on the effectiveness of internal control in the financial statement and the disclosure of serious deficiency of internal control except for the financial statement on the basis of the implementation of audit. 3. The inherent limitation of internal control. There is the possibility of unpreventable errors. In addition, due to the change of situation, the inappropriate internal control is maybe shown, or the control policy and the abidance of procedure can be reduced. Based on the audit results of internal control, the future internal control is expected to have a certain risk. 4. The audit opinions of internal control in the financial statement. The company believes that Shenzhen Textile has maintained the effective internal control of the financial statement in all the major aspects according to “Fundamental Norms for Enterprise Internal Control” and the relevant provisions on December 31, 2019. Peking Certified Public Accountants(Special General Partnership) Chinese C.P.A. (Project partner) Long Zhei Yong Chinese C.P.A. Liu Ru March 12, 2020 | |
| Disclosure date of audit report of internal control (full-text) | Disclosure |
| Index of audit report of internal control (full-text) | March 14,2020 |
| Internal audit report’s opinion | |
| Type of audit report on internal control | Unqualified auditor’s report |
| Whether there is significant defection non-financial report | No |
√Yes □No
XI. Corporation bondsWhether or not the Company public offering corporation bonds in stock exchange, which undue or withoutpayment in full at maturity on the approval date for annual report disclosedNo
XII. Financial ReportI. Audit report
| Type of audit opinion | Standard Unqualified opinion |
| Type of audit opinion | March 12,2020 |
| Name of audit firm | Peking Certified Public Accountants(Special General Partnership) |
| The audit report number | Qin Xin Zi【2020】No.0124 |
| Name of the certified accountants | Long Zhe, Liu Ru |
Textile (Holdings) Co., Ltd is 2,158,184,855.71 yuan, which are mainly sourced from sales revenue ofdiffuser and textiles, rental income and trade income. As the revenue is one KPI of Shenzhen Textile(Holdings) Co., Ltd, appropriate recognition of the revenue will have an effect on the company’s operatingresults and shall be confirmed as one key audit item.
2. Response to the audit
The audit process implemented for revenue recognition includes mainly: Test and evaluate theeffectiveness of internal control in relation to revenue recognition; re-check on the basis of product andbusiness type the consistency of accounting policy used for various revenue recognition with AccountingStandard for Business Enterprises; perform analytical procedure on the revenue and evaluate therationality of revenue recognition; sample the recognized revenue and check sales contract, shipping order,sales invoice and other supportive documents to evaluate if the revenue has been recognized according torevenue recognition policy; Sample the revenue recognized before or after the balance sheet date andcheck relevant supportive documents to evaluate if the revenue has been recognized in an appropriateperiod; Sample the recognized accounts receivable and revenue, perform confirmation procedure toevaluate the veracity of the revenue.
(Ⅱ) Inventory falling price reserves
1. Description of matters
As indicated in Remark Ⅴ(8) of the financial statement, the balance of inventory falling pricereserves of Shenzhen Textile (Holdings) Co., Ltd at the end of the report period is 124,724,169.76 yuan; asthe inventory falling price reserves and any variation will play a great influence on the financial statementand the process of confirming net realizable value of inventory will involve major judgment and estimateof the management, we shall confirm inventory falling price reserves as one key item of audit.
2. Response to the audit
The audit process implemented for inventory falling price reserves includes mainly: Test and evaluatethe effectiveness of internal control in relation to inventory falling price reserves; Supervise inventorytaking and check the quantity, condition of inventory; get a year-end inventory list and conduct analyticalreview on the conditions of various inventories; get the calculating table for inventory falling pricereserves and check it; Check any changes of the accrual of inventory falling price reserves in this period.IV. Other informationThe management of the Company is responsible for the other information. The other informationcomprises information of the Company's annual report in 2019, but excludes the financial statements andour auditor's report.Our opinion on the financial statements does not cover the other information and we do not and will notexpress any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other informationidentified above and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit, or otherwise appears to be materiallymisstated.
If, based on the work we have performed on the other information that we obtained prior to the dateof this auditor's report, we conclude that there is a material misstatement of this other information, we arerequired to report that fact. We have nothing to report in this regard
V. Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's management is responsible for preparing the financial statements in accordance with therequirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and fordesigning, implementing and maintaining internal control that is necessary to ensure that the financialstatements are free from material misstatements, whether due to frauds or errors.In preparing the financial statements, management of the Company is responsible for assessing theCompany's ability to continue as a going concern, disclosing matters related to going concern and usingthe going concern basis of accounting unless management either intends to liquidate the Company or tocease operations, or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company's financial reportingprocess.VI. Auditor's Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with the audit standards will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.As part of an audit in accordance with ISAs, we exercise professional judgment and maintainprofessional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management of the Company.
(4) Conclude on the appropriateness of using the going concern assumption by the management of theCompany, and conclude, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company's ability to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate,to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Company to cease to continue as agoing concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements and bear allliability for the opinion.We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit matters, including any significant deficiencies in internal
control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are therefore thekey audit matters. We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.Peking Certified Public Accountants(Special General Partnership)
Chinese C.P.A. Long Zhe（Project Partner)
Chinese C.P.A. Liu Ru
March 12,2020II. Financial StatementsStatement in Financial Notes are carried in RMB/CNY
1. Consolidated balance sheet
Prepared by: Shenzhen Textile (Holdings) Co., Ltd.
December 31,2019
In RMB
| Items | December 31,2019 | December 31,2018 |
| Current asset： | ||
| Monetary fund | 409,564,847.52 | 1,141,759,374.60 |
| Settlement provision | ||
| Outgoing call loan | ||
| Transactional financial assets | 830,000,000.00 | |
| Financial assets measured at fair value with variations accounted into current income account | ||
| Derivative financial assets | ||
| Notes receivable | 40,424,601.97 | 886,432.06 |
| Account receivable | 365,325,029.38 | 528,454,015.59 |
| Financing of receivables | 17,933,597.98 |
| Prepayments | 18,445,857.53 | 229,028,791.15 |
| Insurance receivable | ||
| Reinsurance receivable | ||
| Provisions of Reinsurance contracts receivable | ||
| Other account receivable | 12,440,761.13 | 14,846,896.50 |
| Including：Interest receivable | 7,610,043.19 | 5,589,704.44 |
| Dividend receivable | ||
| Repurchasing of financial assets | ||
| Inventories | 391,717,935.12 | 439,752,718.77 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current asset due within 1 year | ||
| Other current asset | 140,821,609.72 | 639,797,959.30 |
| Total of current assets | 2,226,674,240.35 | 2,994,526,187.97 |
| Non-current assets： | ||
| Debt investment | ||
| Available for sale of financial assets | 45,373,784.87 | |
| Other investment on bonds | ||
| Expired investment in possess | ||
| Long-term receivable | ||
| Long term share equity investment | 152,209,929.72 | 32,952,085.66 |
| Other equity instruments investment | 248,781,946.73 | |
| Other non-current financial assets | ||
| Property investment | 112,730,320.90 | 167,997,941.98 |
| Fixed assets | 903,229,077.83 | 987,876,247.55 |
| Construction in progress | 839,866,275.92 | 15,621,286.64 |
| Production physical assets | ||
| Oil & gas assets | ||
| Use right assets | ||
| Intangible assets | 36,517,996.34 | 37,880,815.85 |
| Development expenses | ||
| Goodwill | ||
| Long-term expenses to be amortized | 2,692,750.67 | 1,486,209.03 |
| Deferred income tax asset | 5,618,026.43 | 6,036,198.23 |
| Other non-current asset | 3,079,321.10 | 329,452,659.01 |
| Total of non-current assets | 2,304,725,645.64 | 1,624,677,228.82 |
| Total of assets | 4,531,399,885.99 | 4,619,203,416.79 |
| Current liabilities | ||
| Short-term loans | 411,522,111.40 | |
| Loan from Central Bank | ||
| Borrowing funds | ||
| Transactional financial liabilities | ||
| Financial liabilities measured at fair value with variations accounted into current income account | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Account payable | 241,297,770.64 | 180,239,452.90 |
| Advance receipts | 30,530,117.62 | 120,702,951.37 |
| Contract liabilities | ||
| Selling of repurchased financial assets | ||
| Deposit taking and interbank deposit | ||
| Entrusted trading of securities | ||
| Entrusted selling of securities | ||
| Employees’ wage payable | 38,556,180.20 | 32,506,267.08 |
| Tax payable | 22,545,550.33 | 7,745,128.99 |
| Other account payable | 152,645,780.14 | 229,015,279.98 |
| Including：Interest payable | 39,044,044.39 | |
| Dividend payable | ||
| Fees and commissions payable | ||
| Reinsurance fee payable | ||
| Contract Liabilities | ||
| Liabilities held for sales | ||
| Non-current liability due within 1 year | 40,000,000.00 | |
| Other current liability | ||
| Total of current liability | 485,575,398.93 | 1,021,731,191.72 |
| Non-current liabilities： | ||
| Reserve fund for insurance contracts | ||
| Long-term loan |
| Bond payable | ||
| Including：preferred stock | ||
| Sustainable debt | ||
| Lease liability | ||
| Long-term payable | ||
| Long-term remuneration payable to staff | ||
| Expected liabilities | ||
| Deferred income | 121,264,571.22 | 137,991,698.33 |
| Deferred income tax liability | 69,944,345.66 | |
| Other non-current liabilities | ||
| Total non-current liabilities | 191,208,916.88 | 137,991,698.33 |
| Total of liability | 676,784,315.81 | 1,159,722,890.05 |
| Owners’ equity | ||
| Share capital | 509,338,429.00 | 511,274,149.00 |
| Other equity instruments | ||
| Including：preferred stock | ||
| Sustainable debt | ||
| Capital reserves | 1,974,922,248.03 | 1,865,716,983.63 |
| Less：Shares in stock | 16,139,003.40 | 27,230,679.00 |
| Other comprehensive income | 119,737,783.31 | 1,339,208.41 |
| Special reserve | ||
| Surplus reserves | 90,596,923.39 | 80,004,803.23 |
| Common risk provision | ||
| Retained profit | 49,307,764.03 | -57,774,473.41 |
| Total of owner’s equity belong to the parent company | 2,727,764,144.36 | 2,373,329,991.86 |
| Minority shareholders’ equity | 1,126,851,425.82 | 1,086,150,534.88 |
| Total of owners’ equity | 3,854,615,570.18 | 3,459,480,526.74 |
| Total of liabilities and owners’ equity | 4,531,399,885.99 | 4,619,203,416.79 |
2. Balance sheet of Parent Company
I n RMB
| Items | December 31,2019 | December 31,2018 |
| Current asset： | ||
| Monetary fund | 27,979,338.37 | 85,416,567.74 |
| Transactional financial assets | 650,000,000.00 | |
| Financial assets measured at fair value with variations accounted into current income account | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Account receivable | 522,931.04 | 541,948.21 |
| Financing of receivables | ||
| Prepayments | 768,099.94 | 17,436.00 |
| Other account receivable | 17,039,506.00 | 13,856,382.02 |
| Including：Interest receivable | ||
| Dividend receivable | ||
| Inventories | ||
| Contract assets | ||
| Assets held for sales | ||
| Non-current asset due within 1 year | ||
| Other current asset | 500,000,000.00 | |
| Total of current assets | 696,309,875.35 | 599,832,333.97 |
| Non-current assets： | ||
| Debt investment | ||
| Available for sale of financial assets | 15,373,784.87 | |
| Other investment on bonds | ||
| Expired investment in possess | ||
| Long-term receivable | ||
| Long term share equity investment | 2,102,430,511.88 | 1,997,175,852.27 |
| Other equity instruments investment | 206,816,952.64 | |
| Other non-current financial assets | ||
| Property investment | 107,199,622.80 | 161,053,628.71 |
| Fixed assets | 25,500,695.77 | 26,565,399.91 |
| Construction in progress | 19,552.00 | |
| Production physical assets |
| Oil & gas assets | ||
| Use right assets | ||
| Intangible assets | 659,937.75 | 1,012,374.75 |
| Development expenses | ||
| Goodwill | ||
| Long-term expenses to be amortized | 800,858.17 | |
| Deferred income tax asset | 5,466,478.06 | 5,818,069.48 |
| Other non-current asset | ||
| Total of non-current assets | 2,448,894,609.07 | 2,206,999,109.99 |
| Total of assets | 3,145,204,484.42 | 2,806,831,443.96 |
| Current liabilities | ||
| Short-term loans | ||
| Transactional financial liabilities | ||
| Financial liabilities measured at fair value with variations accounted into current income account | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Account payable | 411,743.57 | 411,743.57 |
| Advance receipts | 2,878,936.58 | 639,024.58 |
| Contract Liabilities | ||
| Employees’ wage payable | 11,910,175.11 | 9,760,306.51 |
| Tax payable | 20,801,961.18 | 5,494,627.33 |
| Other account payable | 119,984,209.60 | 141,746,352.67 |
| Including：Interest payable | ||
| Dividend payable | ||
| Liabilities held for sales | ||
| Non-current liability due within 1 year | ||
| Other current liability | ||
| Total of current liability | 155,987,026.04 | 158,052,054.66 |
| Non-current liabilities： | ||
| Long-term loan | ||
| Bond payable | ||
| Including：preferred stock | ||
| Sustainable debt | ||
| Lease liability |
| Long-term payable | ||
| Long-term remuneration payable to staff | ||
| Expected liabilities | ||
| Deferred income | 600,000.00 | 700,000.00 |
| Deferred income tax liability | 66,953,097.14 | |
| Other non-current liabilities | ||
| Total non-current liabilities | 67,553,097.14 | 700,000.00 |
| Total of liability | 223,540,123.18 | 158,752,054.66 |
| Owners’ equity | ||
| Share capital | 509,338,429.00 | 511,274,149.00 |
| Other equity instruments | ||
| Including：preferred stock | ||
| Sustainable debt | ||
| Capital reserves | 1,589,869,499.36 | 1,599,025,454.96 |
| Less：Shares in stock | 16,139,003.40 | 27,230,679.00 |
| Other comprehensive income | 110,764,037.74 | 1,339,208.41 |
| Special reserve | ||
| Surplus reserves | 90,596,923.39 | 80,004,803.23 |
| Retained profit | 637,234,475.15 | 483,666,452.70 |
| Total of owners’ equity | 2,921,664,361.24 | 2,648,079,389.30 |
| Total of liabilities and owners’ equity | 3,145,204,484.42 | 2,806,831,443.96 |
| Items | Year 2019 | Year 2018 |
| I. Income from the key business | 2,158,184,855.71 | 1,272,356,771.34 |
| Incl：Business income | 2,158,184,855.71 | 1,272,356,771.34 |
| Interest income | ||
| Insurance fee earned | ||
| Fee and commission received | ||
| II. Total business cost | 2,168,659,186.75 | 1,289,499,545.42 |
| Incl：Business cost | 1,973,495,608.35 | 1,142,250,284.67 |
| Interest expense | ||
| Fee and commission paid | ||
| Insurance discharge payment |
| Net claim amount paid | ||
| Insurance policy dividend paid | ||
| Insurance policy dividend paid | ||
| Reinsurance expenses | ||
| Business tax and surcharge | 8,466,143.40 | 8,042,137.62 |
| Sales expense | 20,785,078.66 | 9,636,559.05 |
| Administrative expense | 96,870,842.37 | 88,590,439.30 |
| R & D expense | 53,178,714.33 | 41,951,786.15 |
| Financial expenses | 15,862,799.64 | -971,661.37 |
| Including：Interest expense | 4,893,018.58 | 14,179,121.73 |
| Interest income | 8,593,894.58 | 27,438,299.41 |
| Add：Other income | 27,547,902.92 | 17,228,202.21 |
| Investment gain（“-”for loss） | 78,038,530.25 | 51,793,705.47 |
| Including: investment gains from affiliates | -7,404,083.27 | 1,260,154.95 |
| Financial assets measured at amortized cost cease to be recognized as income | ||
| Gains from currency exchange | ||
| Net exposure hedging income | ||
| Changing income of fair value | ||
| Credit impairment loss | 7,005,890.93 | |
| Impairment loss of assets | -97,172,532.71 | -106,348,320.75 |
| Assets disposal income | 3,967.97 | |
| III. Operational profit（“-”for loss） | 4,949,428.32 | -54,469,187.15 |
| Add ：Non-operational income | 5,003,548.34 | 1,265,178.66 |
| Less: Non-operating expense | 420,575.07 | 219,103.78 |
| IV. Total profit(“-”for loss) | 9,532,401.59 | -53,423,112.27 |
| Less：Income tax expenses | 28,059,080.22 | 8,879,595.11 |
| V. Net profit | -18,526,678.63 | -62,302,707.38 |
| (I) Classification by business continuity | ||
| 1.Net continuing operating profit | -18,526,678.63 | -62,302,707.38 |
| 2.Termination of operating net profit | ||
| (II) Classification by ownership | ||
| 1.Net profit attributable to the owners of parent company | 19,679,910.43 | -22,980,624.93 |
| 2.Minority shareholders’ equity | -38,206,589.06 | -39,322,082.45 |
| VI. Net after-tax of other comprehensive income | -52,500,997.28 | -879,495.46 |
| Net of profit of other comprehensive income attributable to owners of the parent company. | -52,500,997.28 | -879,495.46 |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | -52,715,913.64 | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | ||
| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | ||
| 3. Changes in the fair value of investments in other equity instruments | -52,715,913.64 | |
| 4. Changes in the fair value of the company’s credit risks | ||
| 5.Other | ||
| （II） Other comprehensive income that will be reclassified into profit or loss. | 214,916.36 | -879,495.46 |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | ||
| 2. Changes in the fair value of investments in other debt obligations | ||
| 3.Gains and losses from changes in fair value available for sale financial assets | -1,500,778.50 | |
| 4. Other comprehensive income arising from the reclassification of financial assets | ||
| 5.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets | ||
| 6. Allowance for credit impairments in investments in other debt obligations | ||
| 7. Reserve for cash flow hedges | ||
| 8.Translation differences in currency financial statements | 214,916.36 | 621,283.04 |
| 9.Other | ||
| Net of profit of other comprehensive income attributable to Minority shareholders’ equity | ||
| VII. Total comprehensive income | -71,027,675.91 | -63,182,202.84 |
| Total comprehensive income attributable to the owner of the parent company | -32,821,086.85 | -23,860,120.39 |
| Total comprehensive income attributable minority shareholders | -38,206,589.06 | -39,322,082.45 |
| VIII. Earnings per share | ||
| （I）Basic earnings per share | 0.04 | -0.04 |
| (II)Diluted earnings per share | 0.04 | -0.04 |
| Items | Year 2019 | Year 2018 |
| I. Income from the key business | 123,585,753.10 | 68,327,680.40 |
| Incl：Business cost | 60,654,551.98 | 14,479,527.62 |
| Business tax and surcharge | 3,088,345.17 | 2,907,383.37 |
| Sales expense | ||
| Administrative expense | 38,275,813.43 | 31,726,924.70 |
| R & D expense | ||
| Financial expenses | -2,114,743.82 | -16,480,997.63 |
| Including：Interest expenses | 476,191.57 | 571,844.26 |
| Interest income | 2,611,348.37 | 17,084,555.65 |
| Add：Other income | 106,720.83 | 107,858.68 |
| Investment gain（“-”for loss） | 68,053,467.35 | -3,527,451.56 |
| Including: investment gains from affiliates | -7,404,083.27 | 1,260,154.95 |
| Financial assets measured at amortized cost cease to be recognized as income | ||
| Net exposure hedging income | ||
| Changing income of fair value | ||
| Credit impairment loss | -194,490.83 | |
| Impairment loss of assets | -1,488,429.82 | |
| Assets disposal income | 280.00 | |
| II. Operational profit（“-”for loss） | 91,647,763.69 | 30,786,819.64 |
| Add ：Non-operational income | 146,868.07 | 24,597.81 |
| Less：Non -operational expenses | 5,061.99 | |
| III. Total profit(“-”for loss) | 91,794,631.76 | 30,806,355.46 |
| Less：Income tax expenses | 25,628,936.32 | 5,528,745.08 |
| IV. Net profit | 66,165,695.44 | 25,277,610.38 |
| 1.Net continuing operating profit | ||
| 2.Termination of operating net profit | ||
| V. Net after-tax of other comprehensive income | -52,500,997.28 | -879,495.46 |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | -52,715,913.64 | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | ||
| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | ||
| 3. Changes in the fair value of investments in other equity instruments | -52,715,913.64 | |
| 4. Changes in the fair value of the company’s credit risks | ||
| 5.Other | ||
| (II)Other comprehensive income that will be reclassified into profit or loss. | 214,916.36 | -879,495.46 |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | ||
| 2. Changes in the fair value of investments in other debt obligations |
| 3.Gains and losses from changes in fair value available for sale financial assets | -1,500,778.50 | |
| 4. Other comprehensive income arising from the reclassification of financial assets | ||
| 5.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets | ||
| 6. Allowance for credit impairments in investments in other debt obligations | ||
| 7. Reserve for cash flow hedges | ||
| 8.Translation differences in currency financial statements | 214,916.36 | 621,283.04 |
| 9.Other | ||
| VI. Total comprehensive income | 13,664,698.16 | 24,398,114.92 |
| VII. Earnings per share | ||
| （I）Basic earnings per share | ||
| (II)Diluted earnings per share |
| Items | Year 2019 | Year 2018 |
| I.Cash flows from operating activities | ||
| Cash received from sales of goods or rending of services | 2,239,603,149.40 | 1,178,134,497.59 |
| Net increase of customer deposits and capital kept for brother company | ||
| Net increase of loans from central bank | ||
| Net increase of inter-bank loans from other financial bodies | ||
| Cash received against original insurance contract | ||
| Net cash received from reinsurance business | ||
| Net increase of client deposit and investment | ||
| Cash received from interest, commission charge and commission | ||
| Net increase of inter-bank fund received |
| Net increase of repurchasing business | ||
| Net cash received by agent in securities trading | ||
| Tax returned | 37,887,179.50 | 96,325,044.45 |
| Other cash received from business operation | 61,696,291.74 | 299,343,342.34 |
| Sub-total of cash inflow | 2,339,186,620.64 | 1,573,802,884.38 |
| Cash paid for purchasing of merchandise and services | 1,664,396,359.07 | 1,459,074,751.17 |
| Net increase of client trade and advance | ||
| Net increase of savings in central bank and brother company | ||
| Cash paid for original contract claim | ||
| Net increase in financial assets held for trading purposes | ||
| Net increase for Outgoing call loan | ||
| Cash paid for interest, processing fee and commission | ||
| Cash paid to staffs or paid for staffs | 163,768,856.39 | 146,910,083.29 |
| Taxes paid | 31,514,698.29 | 45,580,651.00 |
| Other cash paid for business activities | 96,360,918.39 | 382,731,720.07 |
| Sub-total of cash outflow from business activities | 1,956,040,832.14 | 2,034,297,205.53 |
| Net cash generated from /used in operating activities | 383,145,788.50 | -460,494,321.15 |
| II. Cash flow generated by investing | ||
| Cash received from investment retrieving | 60,428,769.00 | |
| Cash received as investment gains | 5,821,323.94 | 5,359,325.16 |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | 298,580.00 | 13,045.98 |
| Net cash received from disposal of subsidiaries or other operational units | ||
| Other investment-related cash received | 4,164,457,418.70 | 4,170,920,804.54 |
| Sub-total of cash inflow due to investment activities | 4,231,006,091.64 | 4,176,293,175.68 |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 618,799,656.48 | 380,415,720.59 |
| Cash paid as investment | ||
| Net increase of loan against pledge | ||
| Net cash received from subsidiaries and other operational units | ||
| Other cash paid for investment activities | 4,556,430,000.00 | 3,625,700,000.00 |
| Sub-total of cash outflow due to investment activities | 5,175,229,656.48 | 4,006,115,720.59 |
| Net cash flow generated by investment | -944,223,564.84 | 170,177,455.09 |
| III.Cash flow generated by financing | ||
| Cash received as investment | ||
| Including: Cash received as investment from minor shareholders | ||
| Cash received as loans | 86,033,453.75 | 630,493,275.82 |
| Other financing –related cash received | 203,775,154.17 | |
| Sub-total of cash inflow from financing activities | 289,808,607.92 | 630,493,275.82 |
| Cash to repay debts | 536,552,100.76 | 347,609,345.87 |
| Cash paid as dividend, profit, or interests | 43,473,617.45 | 19,810,202.44 |
| Including: Dividend and profit paid by subsidiaries to minor shareholders | ||
| Other cash paid for financing activities | 13,791,675.60 | |
| Sub-total of cash outflow due to financing activities | 593,817,393.81 | 367,419,548.31 |
| Net cash flow generated by financing | -304,008,785.89 | 263,073,727.51 |
| IV. Influence of exchange rate alternation on cash and cash equivalents | 158,915.19 | -422,765.56 |
| V.Net increase of cash and cash equivalents | -864,927,647.04 | -27,665,904.11 |
| Add: balance of cash and cash equivalents at the beginning of term | 1,133,574,235.22 | 1,161,240,139.33 |
| VI ..Balance of cash and cash equivalents at the end of term | 268,646,588.18 | 1,133,574,235.22 |
| Items | Year 2019 | Year 2018 |
| I.Cash flows from operating activities | ||
| Cash received from sales of goods or rending of services | 76,051,827.26 | 70,428,184.75 |
| Tax returned | ||
| Other cash received from business operation | 16,144,244.57 | 22,064,255.92 |
| Sub-total of cash inflow | 92,196,071.83 | 92,492,440.67 |
| Cash paid for purchasing of merchandise and services | 5,479,277.51 | 5,684,253.84 |
| Cash paid to staffs or paid for staffs | 22,463,068.76 | 19,166,726.43 |
| Taxes paid | 20,712,126.49 | 15,493,316.47 |
| Other cash paid for business activities | 25,827,850.33 | 6,553,493.05 |
| Sub-total of cash outflow from business activities | 74,482,323.09 | 46,897,789.79 |
| Net cash generated from /used in operating activities | 17,713,748.74 | 45,594,650.88 |
| II. Cash flow generated by investing | ||
| Cash received from investment retrieving | 72,428,769.00 | |
| Cash received as investment gains | 2,715,003.90 | 2,310,030.38 |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | 34,500.00 | |
| Net cash received from disposal of subsidiaries or other operational units | ||
| Other investment-related cash received | 1,448,303,833.93 | 566,305,459.40 |
| Sub-total of cash inflow due to investment activities | 1,523,482,106.83 | 568,615,489.78 |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 10,991,096.71 | 2,493,900.87 |
| Cash paid as investment | ||
| Net cash received from subsidiaries and other operational units | ||
| Other cash paid for investment activities | 1,580,000,000.00 | 940,000,000.00 |
| Sub-total of cash outflow due to investment activities | 1,590,991,096.71 | 942,493,900.87 |
| Net cash flow generated by investment | -67,508,989.88 | -373,878,411.09 |
| III. Cash flow generated by financing |
| Cash received as investment | ||
| Cash received as loans | ||
| Other financing –related ash received | 3,806,454.17 | |
| Sub-total of cash inflow from financing activities | 3,806,454.17 | |
| Cash to repay debts | ||
| Cash paid as dividend, profit, or interests | 356,766.80 | |
| Other cash paid for financing activities | 11,091,675.60 | |
| Sub-total of cash outflow due to financing activities | 11,448,442.40 | |
| Net cash flow generated by financing | -7,641,988.23 | |
| IV. Influence of exchange rate alternation on cash and cash equivalents | ||
| V.Net increase of cash and cash equivalents | -57,437,229.37 | -328,283,760.21 |
| Add: balance of cash and cash equivalents at the beginning of term | 85,416,567.74 | 413,700,327.95 |
| VI ..Balance of cash and cash equivalents at the end of term | 27,979,338.37 | 85,416,567.74 |
| Items | Year 2019 | ||||||||||||||
| Owner’s equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||||||||||
| share Capita | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Common risk provision | Retained profit | Other | Subtotal | |||||
| preferred stock | Sustainable debt | Other | |||||||||||||
| I.Balance at the end of last year | 511,274,149.00 | 1,865,716,983.63 | 27,230,679.00 | 1,339,208.41 | 80,004,803.23 | -57,774,473.41 | 2,373,329,991.86 | 1,086,150,534.88 | 3,459,480,526.74 | ||||||
| Add: Change of accounting policy | 170,899,572.18 | 3,975,550.61 | 35,779,955.53 | 210,655,078.32 | 210,655,078.32 | ||||||||||
| Correcting of previous errors | |||||||||||||||
| Merger of entities under common control | |||||||||||||||
| Other | |||||||||||||||
| II.Balance at the beginning of current year | 511,274,149.00 | 1,865,716,983.63 | 27,230,679.00 | 172,238,780.59 | 83,980,353.84 | -21,994,517.88 | 2,583,985,070.18 | 1,086,150,534.88 | 3,670,135,605.06 | ||||||
| III.Changed in the current year | -1,935,720.00 | 109,205,264.40 | -11,091,675.60 | -52,500,997.28 | 6,616,569.55 | 71,302,281.91 | 143,779,074.18 | 40,700,890.94 | 184,479,965.12 | ||||||
| （1）Total comprehensive income | 5,737,943.75 | 19,679,910.43 | 25,417,854.18 | -38,206,589.06 | -12,788,734.88 | ||||||||||
| （II）Investment or decreasing of capital by owners | -1,935,720.00 | -9,155,955.60 | -11,091,675.60 | ||||||||||||
| 1．Ordinary Shares invested by shareholders | |||||||||||||||
| 2．Holders of other equity instruments invested capital | |||||||||||||||
| 3．Amount of shares paid and accounted as owners’ equity | |||||||||||||||
| 4．Other | -1,935,720.00 | -9,155,955.60 | -11,091,675.60 | ||||||||||||
| （III）Profit allotment | 6,616,569.55 | -6,616,569.55 | |||||||||||||
| 1.Providing of surplus reserves | 6,616,569.55 | -6,616,569.55 | |||||||||||||
| 2.Providing of common risk provisions | |||||||||||||||
| 3．Allotment to the owners (or shareholders) | |||||||||||||||
| 4．Other |
| (IV) Internal transferring of owners’ equity | -58,238,941.03 | 58,238,941.03 | |||||||||||||
| 1. Capitalizing of capital reserves (or to capital shares) | |||||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | |||||||||||||||
| 3．Making up losses by surplus reserves. | |||||||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | |||||||||||||||
| 5．Other comprehensive income carry-over retained earnings | -58,238,941.03 | 58,238,941.03 | |||||||||||||
| 6．Other | |||||||||||||||
| (V) Special reserves | |||||||||||||||
| 1. Provided this year | |||||||||||||||
| 2．Used this term | |||||||||||||||
| （VI）Other | 118,361,220.00 | 118,361,220.00 | 78,907,480.00 | 197,268,700.00 | |||||||||||
| IV. Balance at the end of this term | 509,338,429.00 | 1,974,922,248.03 | 16,139,003.40 | 119,737,783.31 | 90,596,923.39 | 49,307,764.03 | 2,727,764,144.36 | 1,126,851,425.82 | 3,854,615,570.18 |
| Items | Year 2018 | ||||||||||||||
| Owner’s equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||||||||||
| share Capita | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Common risk provision | Retained profit | Other | Subtotal | |||||
| preferred stock | Sustainable debt | Other | |||||||||||||
| I.Balance at the end of last year | 511,274,149.00 | 1,866,001,475.17 | 27,230,679.00 | 2,218,703.87 | 77,477,042.19 | -32,266,087.44 | 2,397,474,603.79 | 1,125,544,525.79 | 3,523,019,129.58 | ||||||
| Add: Change of accounting policy | |||||||||||||||
| Correcting of previous errors | |||||||||||||||
| Merger of entities under common control | |||||||||||||||
| Other | |||||||||||||||
| II.Balance at the beginning of current year | 511,274,149.00 | 1,866,001,475.17 | 27,230,679.00 | 2,218,703.87 | 77,477,042.19 | -32,266,087.44 | 2,397,474,603.79 | 1,125,544,525.79 | 3,523,019,129.58 | ||||||
| III.Changed in the current year | -284,491.54 | -879,495.46 | 2,527,761.04 | -25,508,385.97 | -24,144,611.93 | -39,393,990.91 | -63,538,602.84 | ||||||||
| （1）Total comprehensive income | -879,495.46 | -22,980,624.93 | -23,860,120.39 | -39,322,082.45 | -63,182,202.84 | ||||||||||
| （II）Investment or decreasing of capital by owners | -284,491.54 | -284,491.54 | -284,491.54 | ||||||||||||
| 1．Ordinary Shares invested by shareholders | |||||||||||||||
| 2．Holders of other equity instruments invested capital | |||||||||||||||
| 3．Amount of shares paid and accounted as owners’ equity | -284,491.54 | -284,491.54 | -284,491.54 | ||||||||||||
| 4．Other | |||||||||||||||
| （III）Profit allotment | 2,527,761.04 | -2,527,761.04 | |||||||||||||
| 1.Providing of surplus reserves | 2,527,761.04 | -2,527,761.04 | |||||||||||||
| 2.Providing of common risk provisions | |||||||||||||||
| 3．Allotment to the owners (or shareholders) | |||||||||||||||
| 4．Other | |||||||||||||||
| (IV) Internal transferring of owners’ equity | |||||||||||||||
| 1. Capitalizing of capital reserves (or to capital shares) | |||||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | |||||||||||||||
| 3．Making up losses by surplus reserves. | |||||||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | |||||||||||||||
| 5．Other comprehensive income carry-over retained earnings |
| 6．Other | |||||||||||||||
| (V). Special reserves | |||||||||||||||
| 1. Provided this year | |||||||||||||||
| 2．Used this term | |||||||||||||||
| （VI）Other | -71,908.46 | -71,908.46 | |||||||||||||
| IV. Balance at the end of this term | 511,274,149.00 | 1,865,716,983.63 | 27,230,679.00 | 1,339,208.41 | 80,004,803.23 | -57,774,473.41 | 2,373,329,991.86 | 1,086,150,534.88 | 3,459,480,526.74 |
| Items | Year 2019 | |||||||||||
| Share capital | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Retained profit | Other | Total of owners’ equity | |||
| preferred stock | Sustainable debt | Other | ||||||||||
| I.Balance at the end of last year | 511,274,149.00 | 1,599,025,454.96 | 27,230,679.00 | 1,339,208.41 | 80,004,803.23 | 483,666,452.70 | 2,648,079,389.30 | |||||
| Add: Change of accounting policy | 161,925,826.61 | 3,975,550.61 | 35,779,955.53 | 201,681,332.75 | ||||||||
| Correcting of previous errors | ||||||||||||
| Other | ||||||||||||
| II.Balance at the beginning of current year | 511,274,149.00 | 1,599,025,454.96 | 27,230,679.00 | 163,265,035.02 | 83,980,353.84 | 519,446,408.23 | 2,849,760,722.05 | |||||
| III.Changed in the current year | -1,935,720.00 | -9,155,955.60 | -11,091,675.60 | -52,500,997.28 | 6,616,569.55 | 117,788,066.92 | 71,903,639.19 | |||||
| （I）Total comprehensive income | 5,737,943.75 | 66,165,695.44 | 71,903,639.19 | |||||||||
| (II) Investment or decreasing of capital by owners | -1,935,720.00 | -9,155,955.60 | -11,091,675.60 | |||||||||
| 1．Ordinary Shares invested by shareholders | ||||||||||||
| 2．Holders of other equity instruments invested capital | ||||||||||||
| 3.Amount of shares paid and accounted as owners’ equity | ||||||||||||
| 4．Other | -1,935,720.00 | -9,155,955.60 | -11,091,675.60 | |||||||||
| （III）Profit allotment | 6,616,569.55 | -6,616,569.55 | ||||||||||
| 1.Providing of surplus reserves | 6,616,569.55 | -6,616,569.55 | ||||||||||
| 2．Allotment to the owners (or shareholders) | ||||||||||||
| 3．Other | ||||||||||||
| (IV) Internal transferring of owners’ equity | -58,238,941.03 | 58,238,941.03 | ||||||||||
| 1. Capitalizing of capital reserves (or to capital shares) | ||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) | ||||||||||||
| 3．Making up losses by surplus reserves. |
| 4.Change amount of defined benefit plans that carry forward Retained earnings | ||||||||||||
| 5．Other comprehensive income carry-over retained earnings | -58,238,941.03 | 58,238,941.03 | ||||||||||
| 6．Other | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Provided this year | ||||||||||||
| 2．Used this term | ||||||||||||
| （VI）Other | ||||||||||||
| IV. Balance at the end of this term | 509,338,429.00 | 1,589,869,499.36 | 16,139,003.40 | 110,764,037.74 | 90,596,923.39 | 637,234,475.15 | 2,921,664,361.24 |
| Items | Year 2018 | |||||||||||
| Share Capital | Other Equity instrument | Capital reserves | Less: Shares in stock | Other Comprehensive Income | Specialized reserve | Surplus reserves | Retained profit | Other | Total of owners’ equity | |||
| preferred stock | Sustainable debt | Other | ||||||||||
| I.Balance at the end of last year | 511,274,149.00 | 1,599,381,854.96 | 27,230,679.00 | 2,218,703.87 | 77,477,042.19 | 460,916,603.36 | 2,624,037,674.38 | |||||
| Add: Change of accounting policy | ||||||||||||
| Correcting of previous errors | ||||||||||||
| Other | ||||||||||||
| II.Balance at the beginning of current year | 511,274,149.00 | 1,599,381,854.96 | 27,230,679.00 | 2,218,703.87 | 77,477,042.19 | 460,916,603.36 | 2,624,037,674.38 | |||||
| III.Changed in the current year | -356,400.00 | -879,495.46 | 2,527,761.04 | 22,749,849.34 | 24,041,714.92 | |||||||
| （I）Total comprehensive income | -879,495.46 | 25,277,610.38 | 24,398,114.92 | |||||||||
| (II) Investment or decreasing of capital by owners | -356,400.00 | -356,400.00 | ||||||||||
| 1．Ordinary Shares invested by shareholders | ||||||||||||
| 2．Holders of other equity instruments invested capital | ||||||||||||
| 3.Amount of shares paid and accounted as owners’ equity | -356,400.00 | -356,400.00 | ||||||||||
| 4．Other | ||||||||||||
| （III）Profit allotment | 2,527,761.04 | -2,527,761.04 | ||||||||||
| 1.Providing of surplus reserves | 2,527,761.04 | -2,527,761.04 | ||||||||||
| 2．Allotment to the owners (or shareholders) | ||||||||||||
| 3．Other | ||||||||||||
| (IV) Internal transferring of owners’ equity | ||||||||||||
| 1. Capitalizing of capital reserves (or to capital shares) | ||||||||||||
| 2. Capitalizing of surplus reserves (or to capital shares) |
| 3．Making up losses by surplus reserves. | ||||||||||||
| 4.Change amount of defined benefit plans that carry forward Retained earnings | ||||||||||||
| 5．Other comprehensive income carry-over retained earnings | ||||||||||||
| 6．Other | ||||||||||||
| (V) Special reserves | ||||||||||||
| 1. Provided this year | ||||||||||||
| 2．Used this term | ||||||||||||
| （VI）Other | ||||||||||||
| IV. Balance at the end of this term | 511,274,149.00 | 1,599,025,454.96 | 27,230,679.00 | 1,339,208.41 | 80,004,803.23 | 483,666,452.70 | 2,648,079,389.30 |
3. Approval of the financial statements reported
The financial statements have been authorized for issuance by the Board of Directors of the Group onMarch12,2020.
(2)Scope of consolidated financial statements
1.As of the end of the reporting period, there are 7 subsidiaries companies included in the consolidated financial statements: SAPO Photoelectric Co., Ltd., Shenzhen Lisi Industrial Development Co.,Ltd.,Shenzhen Huaqiang Hotel, Shenzhen Shenfang Property Management Co., Ltd. Shenzhen BeaufityGarments Co., Ltd.,Shzhen Shenfang Import & Export Co., Ltd., and Shengtou (Hongkong) Co., Ltd.2．The scope of consolidated financial statements this period did not change.IV.Basis for the preparation of financial statements
（1）Basis for the preparation
This company’s financial statements is based on going-concern assumption and worked outaccording to actual transactions and matters, Accounting Standard for Business Enterprises--BasicStandard(issued by No.33 Decree of the Ministry of Finance and revised by No.76 Decree of the Ministryof Finance) issued by the Ministry of Finance, 42 special accounting standards enacted and revised on andafter Feb 15, 2006, guideline for application of accounting standard for business enterprises, ASBEinterpretations and other relevant regulations(hereinafter collectively referred to as “Accounting Standardfor Business Enterprises”) and No.15 of Compilation Rules for Information Disclosure by CompaniesOffering Securities to the Public-- General Provisions of Financial Reports (revised in 2014) issued byChina Securities Regulatory Commission.
(2)Continuation
There will be no such events or situations in the 12 months from the end of the reporting period that willcause material doubts as to the continuation capability of the Company.V. Important accounting policies and estimations
1. Statement on complying with corporate accounting standards
The financial statements prepared by the Company comply with the requirements of corporate accountingstandards. They truly and completely reflect the financial situations, operating results, equity changes andcash flow, and other relevant information of the company.
2.Fiscal Year
The Company adopts the Gregorian calendar year commencing on January 1 and ending on December 31as the fiscal year.
3. Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assetsform processing until. Less than 1 year is for the normal operating cycle in the company.With regard to less than 1 year for the normal operating cycle, the assets realized or the liabilities repaid atmaturity within one year as of the balance sheet date shall be classified into the current assets or thecurrent liabilities.
4. Accounting standard money
The Company takes RMB as the standard currency for bookkeeping.
5. Accounting process method of enterprise consolidation under same and different controlling.
（1）Enterprise merger under same control：
For a business combination involving enterprises under common control, the party that, on thecombination date, obtains control of another enterprise participating in the combination is the absorbingparty, while that other enterprise participating in the combination is a party being absorbed. Combinationdate is the date on which the absorbing party effectively obtains control of the party being absorbed.The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprisebeing combined at the combination date. The difference between the carrying amount of the net assetsobtained and the carrying amount of consideration paid for the combination (or the total face value ofshares issued) is adjusted to the capital premium in the capital reserve. If the balance of the capitalpremium is insufficient, any excess is adjusted to retained earnings.The cost of a combination incurred by the absorbing party includes any costs directly attributable to thecombination shall be recognized as an expense through profit or loss for the current period when incurred.Accounting Treatment of the Consolidated Financial Statements:
The long-term equity investment held by the combining party before the combination will change if therelevant profit and loss, other comprehensive income and other owner equity are confirmed between theultimate control date and the combining date for the combining party and the combined party on theacquirement date, and shall respectively offset the initial retained incomes or the profits and losses of thecurrent period during the comparative statement.
(2) Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination inwhich all of the combining enterprises are not ultimately controlled by the same party or parties bothbefore and after the business combination. For a business combination not involving enterprises undercommon control, the party that, on the acquisition date, obtains control of another enterprise participatingin the combination is the acquirer, while that other enterprise participating in the combination is theacquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.The difference of the merger cost minus the fair value shares of identifiable net assets obtained by theacquiree during the merger on the acquisition date, is recognized as the business reputation. While themerger cost is less than the fair value shares of identifiable net assets obtained by the acquiree during themerger, all the measurement on the identifiable assets, the liabilities, the fair value of liabilities and themerger cost obtained by the acquiree should firstly be rechecked, and the difference shall be recorded intothe current profits and costs if the merger cost is still less than the fair value shares of identifiable netassets obtained by the acquiree during the merger after rechecking.Where the temporary difference obtained by the acquirer was not recognized due to inconformity withthe conditions applied for recognition of deferred income tax, if, within the 12 months after acquisition,additional information can prove the existence of related information at acquisition date and the expectedeconomic benefits on the acquisition date arose from deductible temporary difference by the acquiree canbe achieved, relevant income tax assets can be recognized, and goodwill offset. If the goodwill is notsufficient, the difference shall be recognized as profit of the current period.For a business combination not involving enterprise under common control, which achieved in stages thatinvolves multiple exchange transactions, according to “The notice of the Ministry of Finance on theissuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and Article51 of“Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the
“package deal” criterion, to judge the multiple exchange transitions whether they are the"package deal".If it belong to the “package deal” in reference to the preceding paragraphs of this section and “long-terminvestment” accounting treatment, if it does not belong to the “package deal” to distinguish theindividual financial statements and the consolidated financial statements related to the accountingtreatment:
In the individual financial statements, the total value of the book value of the acquiree's equity investmentbefore the acquisition date and the cost of new investment at the acquisition date, as the initial cost of theinvestment, the acquiree's equity investment before the acquisition date involved in other comprehensiveincome, in the disposal of the investment will be in other comprehensive income associated with the use ofinfrastructure and the acquiree directly related to the disposal of assets or liabilities of the same accountingtreatment (that is, except in accordance with the equity method of accounting in the defined benefit planacquiree is remeasured net changes in net assets or liabilities other than in the corresponding share of thelead, and the rest into the current investment income).In the combination financial statements, the equity interest in the acquiree previously held before theacquisition date re-assessed at the fair value at the acquisition date, with any difference between its fairvalue and its carrying amount is recorded as investment income.The previously-held equity interest in theacquiree involved in other comprehensive income and other comprehensive income associated with thepurchase of the foundation should be used party directly related to the disposal of assets or liabilities of thesame accounting treatment (that is, except in accordance with the equity method of accounting in theacquiree is remeasured defined benefit plans other than changes in net liabilities or net assets due to acorresponding share of the rest of the acquisition date into current investment income).
6.Preparation of the consolidated financial statements
(1)The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control.Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefitsfrom its operating activities. The relevant events refer to the activities that have significant influence onthe return to the invested party. In accordance with the specific conditions, the relevant events of theinvested party should conclude the sale and purchase of goods and services, the management of thefinancial assets, the purchase and disposal of the assets, the research and development activities, thefinancing activities and so on.The scope of consolidation includes the Company and all of the subsidiaries. Subsidiary is anenterprise or entity under the control of the Company.Once the change in the relevant facts and circumstances leading to the definition of the relevant elementsinvolved in the control of the change, the company will be re-evaluated.( 2)Preparation of the consolidated financial statements.The Company based on its own and its subsidiaries financial statements, in accordance with other relevantinformation, to prepare the consolidated financial statements.For a subsidiary acquired through a business combination not under common control, the operating resultsand cash flows from the acquisition (the date when the control is obtained) are included in the consolidatedincome statement and consolidated statement of cash flows, as appropriated; no adjustment is made to theopening balance and comparative figures in the consolidated financial statements. Where a subsidiary anda party being absorbed in a merger by absorption was acquired during the reporting period, through abusiness combination involving enterprises under common control, the financial statements of thesubsidiary are included in the consolidated financial statements. The results of operations and cash flow
are included in the consolidated balance sheet and the consolidated income statement, respectively, basedon their carrying amounts, from the date that common control was established, and the opening balancesand the comparative figures of the consolidated financial statements are restated.When the accounting period or accounting policies of a subsidiary are different from those of theCompany, the Company makes necessary adjustments to the financial statements of the subsidiary basedon the Company’s own accounting period or accounting policies. Where a subsidiary was acquired duringthe reporting period through a business combination not under common control, the financial statementswas reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition.Intra-Group balances and transactions, and any unrealized profit or loss arising from intra-Grouptransactions, are eliminated in preparing the consolidated financial statements.Minority interest and the portion in the net profit or loss not attributable to the Company are presentedseparately in the consolidated balance sheet within shareholders’/ owners’ equity and net profit. Net profitor loss attributable to minority shareholders in the subsidiaries is presented separately as minority interestin the consolidated income statement below the net profit line item.When the amount of loss for the current period attributable to the minority shareholders of a subsidiaryexceeds the minority shareholders’ portion of the opening balance of shareholders’/equity of thesubsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment orother reasons, the remaining equity investment is re-measured at its fair value at the date when control islost. The difference between 1) the total amount of consideration received from the transaction thatresulted in the loss of control and the fair value of the remaining equity investment and 2) the carryingamounts of the interest in the former subsidiary’s net assets immediately before the loss of the control isrecognized as investment income for the current period when control is lost. Other comprehensive incomerelated to the former subsidiary's equity investment, using the foundation and the acquiree directly relatedto the disposal of the same assets or liabilities are accounted when the control is lost(ie, in addition to theformer subsidiary is remeasured at the net defined benefit plan or changes in net assets and liabilitiesresulting from, the rest are transferred to the current investment income). The retained interest issubsequently measured according to the rules stipulated in the - “Chinese Accounting Standards forBusiness Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards forBusiness Enterprises No.22 - Determination and measurement of financial instruments”.The company through multiple transactions step deal with disposal of the subsidiary's equity investmentuntil the loss of control, need to distinguish between equity until the disposal of a subsidiary's loss ofcontrol over whether the transaction is package deal. Terms of the transaction disposition of equityinvestment in a subsidiary, subject to the following conditions and the economic impact of one or more ofcases, usually indicates that several transactions should be accounted for as a package deal:①thesetransactions are considered。simultaneously, or in the case of mutual influence made, ②these transactionsas a whole in order to achieve a complete business results; ③the occurrence of a transaction depends onoccurs at least one other transaction; ④a transaction look alone is not economical, but when consideredtogether with other transaction is economical.If they does not belong to the package deal, each of them separately, as the case of a transaction inaccordance with “without losing control over the disposal of a subsidiary part of a long-term equityinvestments“principles applicable accounting treatment. Until the disposal of the equity investment loss of
control of a subsidiary of the transactions belonging to the package deal, the transaction will be used as adisposal of a subsidiary and the loss of control of the transaction. However, before losing control of theprice of each disposal entitled to share in the net assets of the subsidiary 's investment corresponding to thedifference between the disposal, recognized in the consolidated financial statements as othercomprehensive income, loss of control over the transferred together with the loss of control or loss in theperiod.
7.Joint venture arrangements classification and Co-operation accounting treatment
(1)Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control，depending of therights and obligation of the Company in the joint arrangement. A joint operation is a joint arrangementwhereby the Company has rights to the assets, and obligations for the liabilities, relating to thearrangement. A joint venture is a joint arrangement whereby the Company has rights to the net assets ofthe arrangement.
(2)Co-operation accounting treatment
When the joint venture company for joint operations, confirm the following items and share common business interests related to:
（1）Confirm individual assets and common assets held based on shareholdings;
（2）Confirm individual liabilities and shared liabilities held based on shareholdings;
（3）Confirm the income from the sales revenue of co-operate business output
（4）Confirm the income from the sales of the co-operate business output based on shareholdings;
（5）Confirm the individual expenditure and co-operate business cost based on shareholdings.
(3)When a company is a joint ventures, joint venture investment will be recognized as long-term equity investments .
8.Recognition Standard of Cash & Cash Equivalents
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investmentshaving short holding term (normally will be due within three months from the day of purchase), withstrong liquidity and easy to be exchanged into certain amount of cash that can be measured reliably andhave low risks of change.
9.Foreign Currency Transaction
（1）Foreign Currency Transaction
The approximate shot exchange rate on the transaction date is adopted and translated as RMB amountwhen the foreign currency transaction is initially recognized. On the balance sheet date, the monetaryitems of foreign currency are translated as per the shot exchange rate on the balance sheet date, the foreignexchange conversion gap due to the exchange rate, except for the balance of exchange conversion arisingfrom special foreign currency borrowings capitals and interests for the purchase and construction ofqualified capitalization assets, shall be recorded into the profits and losses of the current period. Thenon-monetary items of foreign currency measured at the historical cost shall still be translated at the spotexchange rate on the transaction date, of which the RMB amount shall not be changed. The non-monetaryitems of foreign currency measured at the fair value shall be translated at the spot exchange rate on the fairvalue recognized date, the gap shall be recorded into the current profits and losses or other comprehensive
incomes.
(2) Translation Method of Foreign Currency Financial Statement
For the assets and liabilities in the balance sheet, the shot exchange rate on the balance sheet date isadopted as the translation exchange rate. For the owner’s equity, the shot exchange rate on the transactiondate is adopted as the translation exchange rate, with the exception of “undistributed profits”. Theincomes and expenses in the income statement shall be translated at the spot exchange rate or theapproximate exchange rate on the transaction date. The translation gap of financial statement of foreigncurrency converted above shall be listed in other comprehensive incomes under the owner’s equity in theconsolidated balance sheet.
10.Financial instruments
When the company becomes a party to the financial instrument contract, the relevant financial assets orfinancial liabilities are confirmed.
（1） Classification, recognition and measurement of financial assets
In accordance with the characteristics of business model for managing financial assets and the contractualcash flow of financial assets, the Company classifies financial assets into: financial assets measured inamortized cost; financial assets measured at fair value and their's changes are included in othercomprehensive income; financial assets measured at fair value and their's changes are included in currentprofits and losses.Financial assets are measured at fair value upon initial recognition. For financial assets measured at fairvalue, whose changes are included in current profits and losses, relevant transaction costs are directlyincluded in current profits and losses; For other types of financial assets, relevant transaction costs areincluded in the initial recognition amount. Accounts receivable or notes receivable arising from the sale ofproducts or the provision of labor services that do not include or take into account significant financingcomponents are initially recognized by the Company in accordance with the amount of consideration thatthe Company is expected to be entitled to receive.
①Financial assets measured at amortized cost
The business model of the Company's management of financial assets measured by amortized cost isaimed at collecting the contractual cash flow, and the contractual cash flow characteristics of suchfinancial assets are consistent with the basic lending arrangements, that is, the cash flow generated on aspecific date is only the payment of principal and interest based on the amount of outstanding principal.For such financial assets, the Company adopts the method of real interest rate and makes subsequentmeasurement according to the cost of amortization. The profits or losses resulting from amortization orimpairment are included in current profits and losses.
②Financial assets measured at fair value and changes included in other comprehensive income
The Company's business model for managing such financial assets is to collect the contractual cashflow, and the contractual cash flow characteristics of such financial assets are consistent with the basiclending arrangements. The Company measures such financial assets at fair value and their changes areincluded in other comprehensive gains, but impairment losses or gains, exchange gains and losses andinterest income calculated according to the actual interest rate method are included in current profits andlosses.
In addition, the Company designated some non-trading equity instrument investments as financialassets measured at fair value with changes included in other comprehensive income. The Companyincludes the relevant dividend income of such financial assets in current profits and losses, and thechanges in fair value in other comprehensive gains. When the financial asset ceases to be recognized, theaccumulated gains or losses previously included in other comprehensive gains shall be transferred intoretained income from other comprehensive income, and not be included in current profit and loss.
③Financial assets measured at fair value and changes included in current profits and losses
The Company includes the above-mentioned financial assets measured at amortized cost and thosemeasured at fair value and their's changes in financial assets other than financial assets of comprehensiveincome and classifies them as financial assets measured at fair value and their's changes that are includedin current profits and losses. In addition, the Company designates some financial assets as financial assetsmeasured at fair value and includes their changes in current profits and losses in order to eliminate orsignificantly reduce accounting mismatches during initial recognition. In regard with such financial assets,the Company adopts fair value for subsequent measurement, and includes changes in fair value intocurrent profits and losses.
2. Classification and measurement of financial liabilities
Financial liabilities are classified as financial liabilities and other financial liabilities measured at fairvalue at the time of initial recognition and their changes are included in the current profits and losses. Forfinancial liabilities measured at fair value and whose changes are included in current profits and losses,relevant transaction costs are directly included in current profits and losses, and relevant transaction costsfor other financial liabilities are included in their initial recognition amount.
① Financial liabilities measured at fair value, whose changes are included in current profits andlosses
Financial liabilities measured at fair value and whose changes are included in current profits andlosses include transactional financial liabilities (including derivatives which are financial liabilities) andfinancial liabilities designated at fair value at initial recognition and whose changes are included in currentprofits and losses.
Transactional financial liabilities (including derivatives belonging to financial liabilities) are
subsequently measured according to fair value. Except for hedging accounting, changes in fair value areincluded in current profits and losses.Financial liabilities designated as financial liabilities that are measured at fair value and their'schanges are included in current profits and losses. The liabilities are included in other comprehensive gainsdue to changes in fair value caused by changes in the Company's own credit risk, and when the liabilitiesare terminated, the changes in fair value caused by changes in its own credit risk of other comprehensivegains are included in the cumulative changes in its fair value caused by changes in its own credit risk ofother comprehensive gains. The amount is transferred to retained earnings. The remaining changes in fairvalue are included in current profits and losses. If the above-mentioned way of dealing with the impact ofthe changes in the credit risk of such financial liabilities will result in or expand the accounting mismatchin the profits and losses, the Company shall include all the profits or losses of such financial liabilities(including the amount of the impact of the changes in the credit risk of the enterprise itself) into the currentprofits and losses.
② Other financial liabilities
In addition to the transfer of a financial asset is not in conformity with the conditions to stop therecognition or formed by its continuous involvement in the transferred financial asset, financial liabilitiesand financial guarantee contract of other financial liabilities classified as financial liabilities measured atthe amortized cost, measured at the amortized cost for subsequent measurement, recognition has beenstopped or amortization of the profit or loss is included in the current profits and losses.
3. Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under apass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either has transferredsubstantially all the risks and rewards of the asset, or has neither transferred norretained substantially allthe risks and rewards of the asset, but has transferred control of the asset.If the enterprise has neither retained all the risks and rewards from the financial asset nor control over theasset, the asset is recognized according to the extent it exists as financial asset, and correspondent liabilityis recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise isfacing.For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the carrying amountof the financial asset transferred; and the sum of the consideration received from the transfer and anycumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit orloss.If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred
financial asset is allocated between the part that continues to be recognized and the part that isderecognized, based on the relative fair value of those parts. The difference between (a) the carryingamount allocated to the part derecognized; and (b) the sum of the consideration received for the partderecognized and any cumulative gain or loss allocated to the part derecognized which has beenpreviously recognized in other comprehensive income, is recognized in profit or loss.The Company uses recourse sale financial assets, or financial assets held endorser, determine almost all ofthe risks and rewards of ownership of the financial assets have been transferred if. Has transferred theownership of the financial assets of almost all the risks and rewards to the transferee, the derecognition ofthe financial asset; retains ownership of the financial assets of almost all of the risks and rewards offinancial assets that are not derecognised; neither transfers nor retains ownership of the financial assets ofalmost all of the risks and rewards, then continue to determine whether the enterprise retains control of theassets and the accounting treatment in accordance with the principles described in the precedingparagraphs.
4.Termination confirmation of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, the Company shallterminate the recognition of the financial liability (or part thereof). If the Company (the debtor) signs anagreement with the lender to replace the original financial liabilities by assuming new financial liabilities,and the contract terms of the new financial liabilities are substantially different from those of the originalfinancial liabilities, it shall terminate the recognition of the original financial liabilities and at the sametime confirm a new financial liabilities. If the Company substantially amends the contract terms of theoriginal financial liabilities (or part thereof), it shall terminate the confirmation of the original financialliabilities and at the same time confirm a new financial liabilities in accordance with the revised terms.If the financial liabilities (or part thereof) are terminated, the difference between their book value and theconsideration paid (including the transferred non-cash assets or liabilities assumed) shall be included in theprofits and losses of the current period.
5.Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assetsand financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settlethe financial liability simultaneously, a financial asset and a financial liability shall be offset and the netamount is presented in the balance sheet. Except for the above circumstances, financial assets and financialliabilities shall be presented separately in the balance sheet and shall not be offset.
6.Method for determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant must pay to sell or transfer a liability in an orderlytransaction that occurs on the measurement date. If there is an active market for financial instruments, theCompany will determine their fair value by quoting prices in the active market. Quotes in active marketsrefer to prices that are easily obtained from exchanges, brokers, trade associations, pricing service agencies,etc. on a regular basis, and represent the prices of market transactions that actually occur in fairtransactions. For financial instruments with active market, the Company adopts valuation technology to
determine their fair values. Valuation techniques include reference to prices used in recent markettransactions by parties familiar with the situation and willing to trade, and reference to current fair valuesof other financial instruments that are substantially the same, discounted cash flow method, option pricingmodel, etc. In valuation, the Company adopts valuation techniques that are applicable in the currentsituation and supported by sufficient data and other information to select input values consistent with thecharacteristics of assets or liabilities considered by market participants in the transactions of related assetsor liabilities, and give priority to the use of relevant observable input values as far as possible.Unallowable values are used if the relevant observable input values are not available or are not practicable.
7.Our own equity instruments
Equity instruments refer to contracts that can prove ownership of the Company's residual equity in assetsafter deducting all liabilities. The issuance (including refinancing), repurchase, sale or cancellation ofequity instruments by the Company are treated as changes in equity, and transaction costs related to equitytransactions are deducted from equity. The Company does not recognize changes in the fair value of equityinstruments.
11.Impairment of financial assets
The Company requires to confirm that the financial assets lost by impairment are financial assetsmeasured by amortized cost, and investment in debt instruments which are measured at fair value andwhose changes are included in other comprehensive gains, mainly including notes receivable, accountsreceivable, other receivables, creditor's rights investment, other creditor's rights investment and long-termreceivables and etc.
（1） Method of confirming impairment provision
Based on anticipated credit loss, the Company calculates impairment preparation and confirms creditimpairment loss according to the applicable anticipated credit loss measurement method (general methodor simplified method).
Credit loss refers to the difference between the cash flow of all contracts discounted according to theoriginal real interest rate and the expected cash flow of all contracts receivable according to the contract,that is, the present value of all cash shortages. Among them, the Company discounts the financial assetspurchased or originated with credit impairment at the actual interest rate adjusted by credit.
The general method of measuring anticipated credit loss is whether the credit risk of the Company'sfinancial assets has increased significantly since the initial recognition on each balance sheet day. If thecredit risk has increased significantly since the initial recognition, the Company shall measure the losspreparation according to the amount equivalent to the expected credit loss in the whole duration. If thecredit risk has not increased significantly since the initial recognition, the Company shall measure the loss
preparation according to the amount equivalent to the expected credit loss in the next 12 months. TheCompany shall consider all reasonable and evidenced information, including forward-looking information,when evaluating expected credit losses.
Assuming that their credit risk has not increased significantly since the initial recognition, theCompany may choose to measure the loss reserve according to the expected credit loss in the next 12months for financial instruments with low credit risk on the balance sheet date.
（2） Criteria for judging whether credit risk has increased significantly since the initialrecognition
If the probability of default of a financial asset on the estimated duration of the balance sheet issignificantly higher than the probability of default during the estimated duration of the initial recognition,the credit risk of the financial asset is significantly increased. Except for special circumstances, theCompany uses the change of default risk in the next 12 months as a reasonable estimate of the change ofdefault risk in the entire duration to determine whether the credit risk has increased significantly since theinitial recognition.
（3） A portfolio-based approach to assessing expected credit risk
The Company shall evaluate the credit risk of financial assets with distinct differences in credit risk,such as the receivables in dispute with the other party or involving litigation and arbitration, andreceivables that has been proved that the debtor may not be able to fulfill the obligation of repayment, etc.
In addition to the financial assets that assess credit risk individually, the Company shall dividefinancial assets into different groups based on common risk characteristics, and assess credit risk on thebasis of portfolio.
（4） Accounting treatment of impairment of financial assets
At the end of the duration, the Company shall calculate the anticipated credit losses of variousfinancial assets. If the anticipated credit losses are greater than the book value of its current impairmentprovision, the difference is deemed as impairment loss. If the balance is less than the book value of thecurrent impairment provision, the difference is deemed as impairment profit.
（5） Method of determining credit losses of various financial assets:
1.Notes receivable
The Company shall measure loss preparation for Notes receivable according to the amount ofanticipated credit loss equivalent to the entire duration. Based on the credit risk characteristics of billsreceivable, they are divided into different combinations:
| Items | Basis for determining combination |
| Bank acceptance | This combination is a receivable bank acceptance bill. |
| Items | Basis for determining combination |
| Commercial acceptance bills | This combination is a commercial acceptance bill receivable |
| Items | Basis for determining combination |
| Aging portfolio | The credit risk is characterized by the aging of receivables. |
| Items | Basis for determining combination |
| Interest receivable | This combination is interest receivable |
| Dividend receivable | This combination is dividend receivable |
| Other receivable | This combination is all kinds of daily accounts receivable |
whether the credit risk has increased significantly since the initial recognition.
12. Receivable financing
For bills receivable and accounts receivable classified as those measured at fair value and whosechanges are included in other comprehensive income, the portion with self-financing period within oneyear (including one year) is listed as receivables financing; If the period of self-acceptance is more thanone year, it shall be listed as other creditor's rights investment. For relevant accounting policies, pleaserefer to Note V, (10) "Financial Instruments" and Note V, (11) "Impairment of Financial Assets".
13.Inventory
1.Investories class
Inventory shall include the finished products or goods available for sale during daily activities, theproducts in the process of production, the stuff and material consumed during the process of production orthe services offered.2．Valuation method of inventory issuedThe company calculates the prices of its inventories according to the weighted averages method
3. Recognition Criteria for the Net Realizable Value of Different Category of Inventory and WithdrawingMethod of Inventory Falling Price ReservesThe inventory shall be measured by use of the lower between the cost and the net realizable value and theinventory falling price reserves shall be withdrawn as per the gap of single inventory cost minus the netrealizable value at the balance sheet date. The net realizable value refers to the amounts that the estimatedsale price of inventory minus the estimated costs ready to happen till the completion of works, theestimated selling expenses and the relevant expenses of taxation. The company shall recognize the netrealizable value of inventory based on the acquired unambiguous evidence and in view of the purpose tohold the inventory, the influence of matters after the balance sheet date and other factors.The net realizable value of inventory directly for sale shall be recognized according to the amounts of theestimated sale price of the inventory minus the estimated sale expenses and the relevant expenses oftaxation during the process of normal production and operation. The net realizable value of inventory thatrequired to conduct processing shall be recognized according to the amounts of the estimated sale price ofthe finished products minus the estimated costs ready to happen till the completion of works, the estimatedselling expenses and the relevant expenses of taxation. On the balance sheet date, the net realizable valueshall be respectively defined for the partial agreed with the contract price and others without the contractprice in the same inventory, and the amounts of the inventory falling price reserves withdrawn or returnedshall be respectively recognized in comparison with their corresponding costs.
4. Inventory System:Adopts the Perpetual Inventory System
5．Amortization method for low cost and short-lived consumable items and packaging materials
（1）Low cost and short-lived consumable items
Low cost and short-lived consumable items are amortized using immediate write-off method。
（2）Packaging materials
Packaging materials are amortized using
14. Available-for-sale non-current asset and disposal group
If the company recovers its book value mainly by sale of non-current asset (including exchange ofnon-monetary assets of commercial nature and similarly hereinafter) , instead of continued use of onenon-current asset or disposal group, which shall be included into available-for-sale. In specific standards,the following conditions shall be met at the same time: One non-current asset or disposal group isavailable for sale at all times under current status depending on standard practice of selling them in similartransactions; the company has made a resolution on the sale plan and gained definitive purchasecommitments; the sale is expected to be finished within one year. In which, the disposal group refers toone set of assets that may be disposed as a whole along with other assets by sale or other ways in one dealand the liability transferred and related directly to such assets. If the asset group or combination of assetgroup under account title disposal group amortizes the goodwill obtained from business combination inaccordance with No.8 of Accounting Standards for Business Enterprises-- Asset Impairment, the disposalgroup shall include the goodwill amortized to it.When the company’s initial measurement or re-measurement on the balance sheet date is classifiedinto available-for-sale non-current asset and disposal group, the book value shall be written down to thenet amount of fair value minus selling expenses if it is higher than the net amount of fair value minusselling expenses, the write-down shall be confirmed as the assets impairment loss and included in currentprofits and losses, meanwhile the available-for-sale asset depreciation reserves shall be accrued. For thedisposal group, the asset impairment loss shall be written off pro rata the book value of each non-currentasset that is applicable to No.42 of Accounting Standards for Business Enterprises: Available-for-saleNon-current Assets, Disposal Group and Discontinued Operations (hereinafter referred to as“Available-for-sale rule for measurement”) after deducting the book value of goodwill in it.If the net amount of the fair value of available-for-sale disposal group minus selling expensesincreases after the balance sheet date, the previous write-downs shall be recovered and reversed in assetimpairment loss of non-current assets that are applicable to available-for-sale rule for measurement afterbeing included into available-for-sale account title, the amount of reversal shall be included in currentprofits and losses and increased pro rata its book value based on the proportion of the book value of eachnon-current asset in the disposal group that is applicable to available-for-sale rule for measurement exceptfor goodwill; the book value of written-off goodwill and the asset impairment loss confirmed before thenon-current asset specified in available-for-sale rule for measurement is classified into available-for-saleasset must not be reversed.
The available-for-sale non-current assets or the non-current assets in the disposal group shall not beaccrued depreciation or amortization, the interest of debit in available-for-sale disposal group and otherexpenses shall continue to be confirmed.
The non-current asset will no longer be included into available-for-sale category or will be removedfrom the available-for-sale disposal group if it or the disposal group has no longer satisfied the conditionsfor classifying available-for-sale assets and measured as per the lower of: (1) book value of thenon-current asset before being classified into available-for-sale asset adjusted on the basis of thedepreciation, amortization or impairment that shall be confirmed on the assumption that the non-currentasset is not included into available-for-sale account title; (2)Recoverable amount.
15.Long-term equity investments
Long-term equity investment refers to the long-term equity investment that the company has control,joint control or significant influence on the invested entity. The long-term equity investment of theCompany that has no control, joint control or significant influence on the invested entity is accounted foras a financial asset measured at fair value and its changes are included in the profits and losses of thecurrent period. If it is non-transactional, the Company may choose to designate it as a financial assetmeasured at fair value and its changes are included in other comprehensive income during initial
recognition. For details of its accounting policies, please refer to Notes III and X "Financial Instruments".Joint control is the Company control over an arrangement in accordance with the relevant stipulations arecommon, related activities and the arrangement must be after sharing control participants agreed to thedecision-making. Significant influence is the Company s financial and operating policies of the entity hasthe right to participate in decision-making, but can not control or with other parties joint control over thosepolicies.
1. Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common controlis measured at the acquirer's share of the combination date book value of the acquiree's net equity in theultimate controller's consolidated financial statements. The difference between the cost and book value ofcash paid, non-monetary assets transferred and liabilities assumed is adjusted to capital reserves, and toretained earnings if capital reserves is insufficient. If the consideration is transferred by way of issuingequity instruments, the face value of the equity instruments issued is recognised in share capital and thedifference between the cost of the face value of the equity instruments issued is adjusted to capital reserves,and to retained earnings if capital reserves is insufficient.The cost of a long-term equity investmentacquired through business combination not under common control is the fair value of the assets transferred,liabilities incurred or assumed and equity instruments issued. (For the equity of the combined party undercommon control obtained step-by-step through multiple transactions and the business combination undercommon control ultimately formed, the company should respectively dispose all the transactions if belongto the package deal. For the package deal, all the transactions will be conducted the accounting treatmentas the deal with acquisition of control. For the non-package deal, the shares of the book value of thestockholders’ equity/owners’ equity of the combined party in the consolidated financial statements of theultimate control party shall be as the initial investment cost of the long-term equity investment, and thecapital reserves shall be adjusted for the difference between the initial investment cost of long-term equityinvestment and the sum of the book value of long-term equity investment before merging and that of newconsideration payment obtained on the merger date, or the retained earnings shall be adjusted if the capitalreserves are insufficient to offset. As for the equity investment held before the merger date, the accountingtreatment will not be conducted temporarily for other comprehensive income accounted by equity methodor confirmed for the financial assets available for sale.)All expenses incurred directly associated with the acquisition by the acquirer, including expenditure ofaudit, legal services, valuation and consultancy and other administrative expenses, are recognised in profitor loss for the period during which the acquisition occurs. For the merger of enterprises not under the samecontrol through gaining the shares of the combined enterprise by multiple steps of deals, it shall deal withit in the following two ways depending on that if it belongs to "a package deal": if it belongs to "a packagedeal", it shall deal with all the deals as one obtaining the control power; if it does not belong to "a packagedeal", it shall, on the date of merger, regard the sum of book value of the owner’s original equity of themerged enterprise and the newly increased investment cost as the initial cost of the long-term equityinvestment. For the shares originally held by this enterprise accounted for by weighted equity method, therelevant other comprehensive income shall not be accounted for temporarily.If the equity investment heldoriginally can be classified as the financial assets for sale, the difference between the fair value and thebook value, and the variation in the accumulative fair value of other comprehensive returns recordedoriginally will be transferred into the current profits and losses.All expenses incurred directly associated with the acquisition by the acquirer, including expenditure ofaudit, legal services, valuation and consultancy and other administrative expenses, are recognised in profitor loss for the period during which the acquisition occurs.Long-term equity investments acquired not through business combination are measured at cost on initial
recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash paid, the fairvalue of equity instrument issued, the contract price, the fair value or book value of the assets given awayin the case of non-monetary asset exchange, or the fair value of the relevant long-term equity investments.The cost of acquisition of a long-term equity investment acquired not through business combination alsoincludes all directly associated expenses, applicable taxes and fees, and other necessary expenses. Whenthe significant impact or the joint control but non-control on the invested party can be implemented due tothe additional investment, the long-term equity investment cost is the sum of the fair value of the equityinvestment originally held and the new investment costs based on the recognition of “AccountingStandards for Enterprises No.22 – Recognition and Measurement of Financial Instruments”.
2. Subsequent Measurement
To be invested joint control ( except constitute common operator ) or long-term equity investmentssignificant influence are accounted for using the equity method. In addition, the Company's financialstatements using the cost method of accounting for long-term equity can exercise control over the investee.
(1)Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except forcash dividends or profits declared but not yet paid that are included in the price or consideration actuallypaid upon acquisition of the long-term equity investment, investment income is recognized in the period inaccordance with the attributable share of cash dividends or profit distributions declared by the investee.
(2)Equity method of accounting for long-term equity investments
When using the equity method, the initial investment cost of long-term equity investment exceeds the investor's net identifiable assets of the fair share of the investment value, do not adjust the initial investment cost of long-term equity investment; the initial investment cost is less than the investee unit share of identifiable net assets at fair value, the difference is recognized in profit or loss, while the long-term equity investment adjustment costs.Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’sinterest in the fair values of the investee’s identifiable net assets at the time of acquisition, no adjustmentshall be made to the initial investment cost. The carrying amount of an long-term equity investmentmeasured using the equity method is adjusted by the Company's share of the investee's net profit and othercomprehensive income, which is recognised as investment income and other comprehensive incomerespectively. The carrying amount of an long-term equity investment measured using the equity method isreduced by profit distribution or cash dividends announced by the investee. The carrying amount of anlong-term equity investment measured using the equity method is also adjusted by the investee's equitymovement other than net profit, other comprehensive income and profit distribution, which is adjusted tocapital reserves。The net profit of the investee is adjusted by the fair value of the investee's identifiableassets as at acquistion. The financial statements and hence the net profit and other comprehensive incomeof an investee which does not adopt accounting policies or accounting period uniform with the Companyis adjusted by the Company's accounting policies and accounting period. The Company's share ofunrealised profit or loss arising from related party transactions between the Company and an associate orjoint venture is deducted from investment income. Unrealised loss arising from related party transactionsbetween the Company and an associate or joint venture which is associated with asset impairment is notadjusted. Where assets transferred to an associate or joint venture which form part of the Company'sinvestment in the investee but which does not enable the Company obtain control over the investee, thecost of the additional investment acquired is measured at the fair value of assets transferred and thedifference between the cost of the additional investment and the book value of the assets transferred isrecognised in profit or loss. Where assets transferred to an associate or joint venture form an operation, the
difference between the consideration received and the book value of the assets transferred in recognised inprofit or loss. Where assets transferred from an associate or joint venture form an operation, thetransaction is accounted for in accordance with CAS 20 - Business Combination, any gain or loss isreocgnised in profit or loss.The Company's share of an investee's net loss is limited by the sum of the book value of the long-termequity investment and other net long-term investments in the investees. Where the Company hasobligation to share additional net loss of the investee, the estimatedshare of loss recognised as accruedliabilities and investment loss. Where the Company has unrecognised share of loss of the investee whenthe investee generates net profit, the Company's unrecognised share of loss is reduced by the Company'sshare of net profit and when the Company's unrecognised share or loss is eliminated in full, the Company'sshare of net profit, if any, is recognised as investment income.
(3)Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests andportion of net asset cumulatively calculated from the acquisition date is adjusted as capital reserve. If thecapital reserve is not sufficient to absorb the difference, the excess are adjusted against returned earnings.
(4)Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a change in control, thedifference in the net asset between the amount of disposed long-term investment and the amount of theconsideration paid or received is adjusted to the owner’s equity. If the disposal of long-term investment ina subsidiary involves loss of control over the subsidiary, the related accounting policies in Note applies.For disposal of long-term equity investments in any situation other than the fore-mentioned situation, thedifference between the book value of the investment disposed and the consideration received is recognisedin profit or loss.The investee's equity movement other than net profit, other comprehensive income and profit distributionis reocgnised in profit or loss proportionate to the disposal.Where a long-term equity investment is measured by the equity method both before and after part disposalof the investment, cumulative other comprehensive income relevant to the investment recognised prior tothe acquistion is treated in the same manner that the investee disposes the relevant assets or liabilitiesproportionate to the disposal. The investee's equity movement other than net profit, other comprehensiveincome and profit distribution is reocgnised in profit or loss proportionate to the disposal.Where a long-term equity investment is measured at cost both before and after part disposal of theinvestment, cumulative other comprehensive income relevant to the investment recognised, as a result ofaccounting by equity method or recognition and measurement principles applicable to financialinstruments, prior to the Company's acquisition of control over the investee is treated in the same mannerthat the investee disposes the relevant assets or liabilities and recognised in profit or loss proportionate tothe disposal.The investee's equity movement other than net profit, other comprehensive income and profitdistribution, as a result of accounting by equity method, is reocgnised in profit or loss proportionate to thedisposal.
Where the Company's control over an investee is lost due to partial disposal of investment in the investeeand the Company continues to have significant influence over the investee after the partial disposal, theinvestment in measured by the equity method in the Company's separate financial statements; where theCompany's control over an investee is lost due to partial disposal of investment in the investee and theCompany ceases to have significant influence over the investee after the partial disposal, the investment in
measured in accordance with the recognition and measurement principles applicable to financialinstruments in the Company's separate financialstatements and the difference between the fair value andthe book value of the remaining investment at the date of loss of control is recognised in profit or loss.Cumulative other comprehensive income relevant to the investment recognised, as a result of accountingby equity method or recognition and measurement principles applicable to financial instruments, prior tothe Company's acquisition of control over the investee is treated in the same manner that the investeedisposes the relevant assets or liabilities on the date of loss of control. The investee's equity movementother than net profit, other comprehensive income and profit distribution, as a result of accounting byequity method, is reocgnised in profit or loss when control is lost. Where the remaining investment ismeasured by equity method, the fore-mentioned other comprehensive income and other equity movementare recognised in profit or loss proportionate to the disposal; Where the remaining investment is measuredin accordance with the recognition and measurement principles applicable to financial instruments, thefore-mentioned other comprehensive income and other equity movement are recognised in profit or loss infull.Where the Company's joint control or significant influence over an investee is lost due to partial disposalof investment in the investee,the remaining investment in the investee is measured in accordance with therecognition and measurement principles applicable to financial instruments, the difference between the fairvalue and the book value of the remaining investment at the date of loss of joint control or significantinfluence is recognised in profit or loss.Cumulative other comprehensive income relevant to theinvestment recognised, as a result of accounting by equity method, prior to the partial disposal is treated inthe same manner that the investee disposes the relevant assets or liabilities on the date of loss of jointcontrol or significant influence. The investee's equity movement other than net profit, other comprehensiveincome and profit distribution is reocgnised in profit or loss when joint control or significant influence islost.Where the Company's control over an investee is lost through multiple disposals and the multiple disposalsshall be viewed as one single transaction, the multiple disposals is accounted for one single transactionwhich result in the Company's loss of control over the investee. Each difference between the considerationreceived and the book value of the investment disposed is recognised in other comprehensive income andreclassified in full to profit or loss at the time when control over the investee is lost.
16.Investment real estate
1．The measurement mode of investment Real estateThe investment real estate of the company includes the leased land use rights, the leased buildings, theland use rights held and prepared to transfer after appreciation.The company shall adopt the cost mode to measure the investment Real estate.
2. Depreciation or Amortization Method by Use of Cost Mode
The leased buildings of the investment real estate in the company shall be withdrawn the depreciation bythe service life average method, and the depreciation policy is the same with that of the fixed assets. Theland use rights held and prepared to transfer after appreciation in the investment property shall beamortized by the line method, and the specific accounting policy is same with that of the intangible assets.
17.Fixed assets
1．The conditions of recognitionFixed assets refers to the tangible assets that are held for the sake of producing commodities, renderinglabor service, renting or business management and their useful life is in excess of one fiscal year. Thefixed assets can be recognized when the following requirements are all met: (1) the economic benefitsrelevant to the fixed assets will flow into the enterprise. (2) the cost of the fixed assets can be measuredreliably.The fixed assets of the company include the houses and buildings, the decoration of the fixed assets, themachinery equipment, the transportation equipment, the electronic instrument and other devices.
2. Initial Measurement and Subsequent Measurement of the Fixed Assets
The fixed assets shall be book kept as per the acquired actual cost, and the depreciation shall be withdrawnfrom the subsequent month after the usable status reserved and achieved.3．The method for depreciation
| Category | The method for depreciation | Expected useful life（Year） | Estimated residual value | Depreciation |
| House and Building- Production | Straight-line method | 35 | 4.00 | 2.74 |
| House and Building-Non- Production | Straight-line method | 40 | 4.00 | 2.40 |
| Decoration of Fixed assets | Straight-line method | 10 | 10.00 | |
| Machinery and equipment | Straight-line method | 10-14 | 4.00 | 9.60-6.86 |
| Transportation equipment | Straight-line method | 8 | 4.00 | 12.00 |
| Electronic equipment | Straight-line method | 8 | 4.00 | 12.00 |
| Other equipment | Straight-line method | 8 | 4.00 | 12.00 |
(2) Valuation of Fixed Assets Acquired under Finance Leases: the fixed assets acquired under financeleases shall be book kept according to the lower between the fair value of the leasing assets and the leastlease payment on the lease date.
(3) Depreciation Method of Fixed Assets Acquired under Finance Leases: the depreciation shall bewithdrawn for the fixed assets acquired under finance leases as per the depreciation policy of own fixedassets.
18.Construction in progress
1. The projects under construction shall be recognized when the economic benefits may flow into and thecost can be reliably measured. Meanwhile, the projects under construction shall be measured according tothe actual cost occurred before the assets are built to achieve the expected usable condition.
2. The projects under construction shall be transferred into the fixed assets according to the actual projectcosts when the expected usable condition achieved. For the expected usable condition achieved while thefinal accounts for completed projects not handled yet, the projects shall be transferred into the fixed assetsas per the estimated value. After the final accounts for completed projects handled, the original estimatedvalue shall be adjusted as per the actual cost, but the original withdrawn depreciation shall not be adjustedagain.
19.Borrowing costs
1. Recognition principles for capitalizing of loan expenses
Borrowing expenses occurred to the Company that can be accounted as purchasing or production ofasset satisfying the conditions of capitalizing, are capitalized and accounted as cost of related asset. Otherborrowing expenses are recognized as expenses according to the occurred amount, and accounted intogain/loss of current term.
2. Duration of capitalization of Loan costs
(1).When a loan expense satisfies all of the following conditions, it is capitalized:
1. Expenditures on assets have taken place.
2. Loan costs have taken place;
3. The construction or production activities to make assets to reach the intended use or sale of state havebegun.
（2）Capitalization of borrowing costs is suspended during periods in which the acquisition, constructionor production of a qualifying asset is interrupted by activities other than those necessary to prepare theasset for its intended use or sale, when the interruption is for a continuous period of more than 3 months.Borrowing costs incurred during these periods recognized as an expense for the current period until theacquisition, construction or production is resumed.
（3）When the construction or production meets the intended use or sale of state of capitalizationconditions, the Loan costs should stop capitalization.
3. Computation Method for Capitalization Rate and Amount of Borrowing CostsWith regard to the special borrowings for the purchase and construction of qualified assets, the capitalizedinterest amount shall be recognized according to the amount of the interest cost for the special borrowingsactually occurred during the current period (including the amortization of discount or premium recognizedas per the effective interest method) minus the interest income acquired after the borrowings deposit inbank or the investment income obtained from the temporary investment. For the general borrowings forthe purchase and construction of qualified assets, the capitalized interest amount of the general borrowings
shall be computed and recognized according to the weighted average of accumulative asset expensebeyond the expense of the special borrowings, multiplying the capitalization rate of general borrowings.
20.Intangible assets
1. Valuation Method, Service Life and Impairment Test of Intangible Assets
(1) The intangible assets include the land use rights, the professional technology and the software, whichare conducted the initial measurement as per the cost.
(2) The service life of intangible assets is analyzed and judged when of the company acquires theintangible assets. For the finite service life of the intangible assets, the years of service life or the quantityof service life formed and the number of similar measurement unit shall be estimated. If the term ofeconomic benefits of the intangible assets brought for the company is not able to be foreseen, theintangible assets shall be recognized as that with the indefinite service life.
(3) Estimation Method of Service life of Intangible Assets
1) For the intangible assets with the finite service life, the company shall generally consider the followingfactors to estimate the service life: ① the normal service life of products produced with the assets, andthe acquired information of the service life of similar assets. ② the estimation of the current stageconditions and the future development trends in the aspects of technology and craft. ③ the demand of theproducts produced by the assets or the offered services in the market. ④ the expectation of actionsadopted by current or potential competitors. ⑤ the expected maintenance expense for sustaining thecapacity to economic benefits brought by the assets and the ability to the relevant expense expected. ⑥the relevant law provision or the similar limit to the control term of the assets, such as the licensed useterm and the lease term. ⑦ the correlation with the service life of other assets held by the company.
2) Intangible Assets with Indefinite Service Life, Judgment Criteria on Indefinite Service Life and ReviewProcedure of Its Service LifeThe company shall be unable to foresee the term of economic benefits brought by the assets for thecompany, or the indefinite term of intangible assets recognized as the indefinite service life of intangibleassets.The judgment criteria of Indefinite service life: ① as from the contractual rights or other legal rights, butthe indefinite service life of contract provision or legal provisions. ② unable to judge the term ofeconomic benefits brought by the intangible assets for the company after the integration of information inthe same industry or the relevant expert argumentation.At the end of every year, the review should be made for the service life of the intangible assets with theindefinite service life, and the relevant department that uses the intangible assets, shall conduct the basicreview by the method from up to down, in order to evaluate the judgment criteria of the indefinite servicelife if there is the change.
(4) Amortization Method of Intangible Assets Value
The intangible assets with the finite service life shall be systematically and reasonably amortizedaccording to the expected implementation mode of the economic benefits related to the intangible assetsduring the service life, and the line method shall be adopted to amortize for the intangible assets unable toreliably recognize the expected implementation mode. The specific service life is as follows:
| Items | Amortization life time（Year） |
| Items | Amortization life time（Year） |
| Land use right | 50 |
| Proprietary technology | 15 |
| Software | 5 |
long-term assets have the impairment, the impairment test should be conducted, and the recoverableamount should be estimated. The impairment shall be confirmed if there exists after the comparison of theestimated recoverable amount of the assets and its book value, and if the assets impairment provision shallbe withdrawn to recognize the corresponding impairment losses. The estimation of the recoverable amountof assets should be confirmed according to the higher one between the net amount of the fair value minusthe disposal costs and the present value of the cash flow of assets expected in the future.The company shall conduct the impairment test at least every year for the goodwill established by thebusiness combination and the intangible assets with the indefinite service life whether there exists theimpairment.The impairment loss of long-term assets after recognized shouldn’t be reversed in the future accountingperiod.
23.Remuneration
The employee benefits of the company include short-term employee benefits, post-employment benefits,termination benefits and other long-term employee benefits.
1. Accounting Treatment Method of Short-term Compensation
During the accounting period of service provision of staff, the company shall regard the actual short-termcompensation as the liability and record into the current profits and losses or the relevant assets cost as perthe beneficiary. Of which, the non-monetary welfare shall be measured as per the fair value.
2. Accounting Treatment Method of Severance Benefit Plans
The severance benefit plans can be divided into the defined contribution plan and the defined benefit planaccording to the risk and obligation borne.
(1) The Defined Contribution Plan
The contribution deposits that paid to the individual subject for the services provided by the staffs on thebalance sheet date during the accounting period, shall be recognized as the liability, and recorded into thecurrent profits and losses or the relevant asset costs as per the beneficiary.
(2) The Defined Benefit Plan
The defined benefit plan is the severance benefit plans with the exception of the defined contributionplans.
1) Based on the expected cumulative welfare unit method, the company shall adopt unbiased and mutuallyconsistent actuarial assumptions to make evaluation of demographic variables and financial variables,measure and define the obligations arising from the benefit plan, and determine the period of the relevantobligations. The company shall discount all the defined benefit plan obligations, including the obligationwithin twelve months after the end of the annual report during the expected services provision ofemployee. The discount rate adopted in discounting shall be recognized according to the bonds matchedwith the defined benefit plan obligation term and the currency at the balance sheet date or the marketreturn of high-quality corporate bonds in the active market.
2) If there exist the assets for the defined benefit plan, the deficit or surplus arising from the present valueof the defined benefit plan obligations minus the fair value of the defined benefit plan assets arerecognized as the net liability or the net assets of the defined benefit plan. If there exists the surplus of thedefined benefit plan, the lower one between the surplus of the define benefit plan and the upper limit ofassets shall be used to measure the net assets of the defined benefit plan. The upper limit of assets refers to
the present value of economic benefits obtained from the refund of the defined benefit plans or thereduction of deposit funds of future defined benefit plans.
3) At the end of period, the employee’s payroll costs arising from the defined benefit plan are recognizedas the service costs, the net interests on the net liabilities or the net assets of the defined benefit plan, andthe changes caused by the net liabilities and the net assets of the defined benefit plan that re-measured. Ofwhich, the service costs and the net interests on the net liabilities or the net assets of the defined benefitplan shall be recorded into the current profits and losses or the relevant assets costs, the changes caused bythe net liabilities and the net assets of the defined benefit plan that re-measured shall be recorded into othercomprehensive incomes, which should not be switched back to the profits and losses during thesubsequent accounting period, but the amount recognized from other comprehensive incomes can betransferred within the scope of the rights and interests.
4) The profit or loss of one settlement shall be recognized when settling the defined benefit plan.
3. Accounting Treatment Method of Demission Welfare
The employee compensation liabilities generated by the demission welfare shall be recognized on the earlydate and recorded into the current profits and losses: (1) when the company can’t withdraw the demissionwelfare provided due to the rundown suggestion or the termination of labor relations plans. (2) when thecompany recognizes the costs or the expenses related to the reorganization of demission welfare payment.The earlier one between when the company can’t withdraw the rundown suggestion or the termination oflabor relations plans at its side and when the costs relevant to the recombination of dismission welfarepayment, shall be recognized as the liabilities arising from the compensation due to the termination oflabor relations with staff and shall be recorded into the current profits and losses. Then company shallreasonably predict and recognize the payroll payable arising from the dismission welfare. The dismissionwelfare, which is expected to finish the payment within twelve months after the end of the annual reportrecognized, shall apply to the relevant provisions of short-term compensation. The dismission welfare,which is expected to be unfinished for the payment within twelve months after the end of the annual reportrecognized, shall apply to the relevant provisions of short-term compensation, shall apply to the provisionsrelated to other long-term employee benefits.
4. Accounting Treatment Method of Other Long-term Employee Benefits
If other long-term employee benefits of employees provided by the company meet the conditions of thedefined contribution plan, the accounting treatment shall be made in accordance with the definedcontribution plan. Except for these, other long-term benefits shall be made the accounting treatmentaccording to the defined benefit plan, but the changes arising from the re-measurement of net liabilities ornet assets of other long-term employee benefits shall be recorded into the current profits and losses or therelevant assets costs.
24. Estimated Liabilities
1. Recognition Criteria of Estimated Liabilities
The liabilities shall be recognized when external guarantee, pending litigation or arbitration, productquality assurance, staff reduction plan, loss contract, recombination obligation, disposal obligation of thefixed assets and other pertinent businesses all meet the following requirements:
(1) The obligation is the current obligation borne by the company.
(2) The implementation of the obligation may cause the economic benefits out of the enterprise.
(3) The amount of the obligation can be measured reliably.
2. Measurement Method of Estimated Liabilities
The estimated liabilities shall be made the initial measurement according to the best estimate of theexpenditure required to settle the present obligation. There is the continuous scope for the requiredexpenditure, and the best estimate with the same possibilities resulted from various outcomes within thescope shall be recognized as per the intermediate value. The best estimate should be recognize accordingto the following methods:
(1) The best estimate shall be recognized as per the most possible amount if there are matters involved inthe single item.
(2) The best estimate shall be calculated and recognized as per the possible amount if there are mattersinvolved in the multiple item.If the company pays all the expenses for paying off the estimated liabilities, or partial estimates arecompensated by the third party or other parties, the compensation amount should be separately recognizedas the assets when the receipt of the compensation amount is basically determined. Meanwhile, thedetermined compensation amount shall not exceed the book value of the estimated liabilities recognized.The company shall make review of the book value of estimated liabilities at the balance sheet date. If thereis conclusive evidence that the book value cannot really reflect the current best estimate, the adjustmentshall be made for the book value in accordance with the current best estimate.
25. Share payment
1.Accounting Treatment Methods of Share Payment
Share payment is a transaction which is for obtaining the service provided by employees or other parties,where thus the equity instrument is granted , or for bearing the liability confirmed basing on the equityinstrument. Share payment is divided into the payment settled by equities and the payment settled by cash.
(1)Shared Payment settled by Equities
The share payment settled by equities, which is used for exchanging the service provided byemployees, will be measured according to the fair value of the equity instrument granted to employees ondate of grant. The amount of such fair value, under the situation that the rights can only be exercised afterthe service is finished and the set performance is achieved within the waiting period, and basing on theoptimum estimation for the number of equity instrument which exercise rights within the waiting period,will be measured according to straight-line method and counted into relevant costs and expenses. Whenthe rights can be exercised immediately after being granted, the payment will be counted into relevantcosts and expenses, and the capital reserve will be increased correspondingly.
On each and every balance sheet date within the waiting period, the Company will make optimumestimations according to the newly-obtained subsequent information after the changes occurred in thenumber of employees who exercise rights so as to modify the predicted number of the equity instrument ofexercising rights. The influence from above-mentioned estimations will be counted into relevant costs andexpenses at the current period, and the corresponding adjustment will be made for the capital reserve.If the fair value of the other parties’ service can be reliably measured, the share-based payment settled byequities which is used for exchanging the service of other parties will be measured according to that fairvalue on date of acquisition. If not, but the fair value of the equity instrument can be reliably measured, thepayment will be counted according to the fair value of the equity instrument on date of service acquisition,and it will be counted into relevant costs and expenses, and the equity of the shareholders will be increasedcorrespondingly.
(2) Share Payment settled by Cash
The share payment settled by cash will be measured according to the fair value of the liability confirmed
basing on the shares borne by the Company and other equity instruments. If the rights can be exercisedimmediately after being granted, the payment will be counted into relevant costs or expenses and theliability will be increased correspondingly. If the rights can only be exercised after the situation thatservice within the waiting period is completed and set performance is achieved, the service obtained at thecurrent period, according to the fair value amount of the liability borne by the Company, and basing on theoptimum estimation for the condition of exercising rights, will be counted into costs or expenses on eachand every balance sheet date during the waiting period, and the liability will be increased correspondingly.Each and every balance sheet date and settlement before relevant liability settlement, the fair value ofliability will be remeasured, of which changes occurred will be counted into the current period.
2.Relevant Accounting Treatment of Modification and Termination for Share-based Payment PlanWhen the Company modifies the share payment plan, if the fair value of the equity instrument granted isincreased after the modification, the increase in the service obtained will be correspondingly confirmedaccording to the increase in the fair value of equity instrument. The increase in the fair value of equityinstrument means the balance between the equity instrument before modification and the equity instrumentafter modification on modification date. If decrease occurred in the total fair value of the equity instrumentafter the modification or methods which are unbeneficial to employees are adopted in the modification,accounting treatment will still continue to be made for the service obtained, and such changes will beregarded as changes that have never occurred unless the Company has canceled partial or all equityinstruments.During the waiting period, if the granted equity instrument is cancelled, the company will treat thecancelled equity instrument as the accelerated exercise of power, and immediately include the balance thatshould be recognized in the remaining waiting period into the current profit and loss, and simultaneouslyconfirm the capital reserve. If the employee or other party can choose to satisfy the non-exercisablecondition but not satisfied in the waiting period, then the company will treat it as cancellation of thegranted equity instrument.
3. Accounting treatment involving the share payment transaction between the Company and theshareholders or the actual controller of the Company
Where involves the share payment transaction between the Company and the shareholders or theactual controller of the Company and one of the parties of the settlement company and theservice-accepting company is within the company and the other is not within the company, then thecompany performs the accounting treatment in the consolidated financial statements of the companyaccording to the following provisions:
(1) If the settlement company settles in its own equity instrument, then it treats the equity paymenttransaction as the equity-settled equity payment; otherwise, it treats as the cash-settled equity payment.
If the settlement company is an investor to the service-accepting company, it shall be recognized as along-term equity investment in the service-accepting company in accordance with the fair value of theequity instrument or the fair value of the liability it is assumed to bear on the grant date, and the capitalreserve (other capital reserve) or liabilities shall be recognized at the same time.
(2) If the service-accepting company has no settlement obligation or confers its own equity tools onthe employees of the company, then such equity payment transaction shall be treated as equity-settledequity payment; if the service-accepting company has the settlement obligation and confers the employeesof the company with not its own equity instrument, then such equity payment transaction shall be treatedas cash-settled equity payment;
In the case of the equity payment transaction occurs between the companies within the company, andthe service-accepting company and the settlement company are not the same company, then theconfirmation and measurement of the equity payment transaction shall be carried out respectively in thefinancial report of the service-accepting company and the settlement company, with the same analogy of
the above-said principle.
26. Revenue
1. Recognition Principle of Revenue
(1) The Goods for Sale
The revenue of the goods for sale shall be recognized when the following requirements are metsimultaneously: the transfer of main risks and rewards on ownership of the goods to the buyers, thecontinual management rights related to ownership no longer retained by the company and the effectivecontrol of the sold goods no longer implemented, the reliable measurement of the revenue amount, thepossible inflow of the relevant economic benefits, and the reliable measurement of the relevant costsincurred or to be incurred.
(2) The Service Provision
If the provided services transaction results can be reliably estimated at the balance sheet date (the reliablemeasurement of the revenue amount, the possible inflow of the relevant economic benefits, the reliablerecognition of the completion schedule of transaction, and the reliable measurement of the relevant costsincurred or to be incurred in the transaction), the company shall recognize the relevant service incomesaccording to the completion percentage method and recognized the completion schedule of the providedservice transaction according to the proportion of the costs occurred accounting for the total estimatedcosts. If the provided services transaction results cannot be reliably estimated at the balance sheet date andthe occurred service costs can be expected to have compensation, the company shall recognize to providethe service revenue according to the occurred service cost amount and transfer the service costs as per thesame amount. If the occurred service costs cannot be expected to have compensation, the occurred servicecosts shall be recorded into the current profits and losses and not be recognized as the service revenue.
(3) The Abalienation of the Right to Use Assets
The revenue of abalienation of the right to use assets shall be recognized when the abalienation of the rightto use assets meets the requirements of the possible inflow of the relevant economic benefits and thereliable measurement of revenue amount. The interest income shall be calculated and determinedaccording to time and actual interest rate of the monetary capital of the company used by others, and theroyalty revenue shall be measured and determined in accordance with the charging time and methodappointed in the relevant contract or agree.
2. The Specific Recognition Method of Revenue
The company mainly sells the polaroid, textiles and other products. The revenue of the sale of products indomestic market shall be recognized after the following requirements are met: The company has agreed todeliver the goods to the purchaser under the contract and the revenue amount of product sales has beendetermined, the payment for goods has been withdrawn or the payment vouchers has been obtained andrelated economic benefits are likely to inflow, and the costs related to the products can be measuredreliably. The revenue of the sale of products in foreign market shall be recognized after the followingrequirements are met: The company has made customs clearance and departure from port under thecontract, the bill of landing has obtained and the revenue of the sale of products has been recognized, thepayment for goods has been withdrawn or the payment vouchers has been obtained and related economicbenefits are likely to inflow, and the costs related to the products can be measured reliably.
27.Government subsidy
Government grants are monetary assets and non-monetary assets that the company has obtained freeof charge from the government and are divided into government grants related to assets and governmentgrants related to income. Asset-related government grants refer to government grants obtained by thecompany that are used to purchase or construct or otherwise form long-term assets. Income-related
government subsidies refer to government subsidies other than government subsidies related to assets.
If there is evidence at the end of the period that the company is able to meet the relevant conditionsstipulated in the financial support policy and it is expected to receive financial support funds, thegovernment subsidies shall be recognized according to the amount receivable. In addition, governmentgrants are confirmed upon actual receipt.
Asset-related government grants are recognized as deferred income and are charged to profit or lossfor the current period in a reasonable and systematic manner over the useful life of the relevant assets.Revenue-related government subsidies, which are used to compensate for the related costs or losses of theCompany in the future period, are recognized as deferred income, and are recognized in the profits andlosses of the current period in the period in which the relevant costs, expenses or losses are recognized.The relevant costs, expenses or losses that have been used to compensate the Company have been directlyrecorded in the current profits and losses. Government grants related to the company's daily activities areincluded in other income; those unrelated to the daily activities of the company are included innon-operating income.
For the policy-subsidized discounted loans obtained by the company, the accounting treatment isdivided into the following two cases: when the finance allocates the interest-subsidy funds to the loan bankand the loan bank provides the company with a policy-based preferential interest rate, the company usesthe actual amount of the loan received as the entry value of the loan, and calculates the relevant borrowingcosts according to the loan principal and the preferential policy interest rate; if the finance allocates theinterest-free funds directly to the company, the company will reduce the relevant borrowing costs by thecorresponding discount interest.
28.The Deferred Tax Assets / The deferred Tax Liabilities
1. Temporary Difference
The temporary difference includes the difference of the book value of assets and liabilities and the taxbasis, and the difference of the book value and the tax basis that no confirmation of assets and liabilitiesbut able to confirm the tax basis as per the provisions of tax law. The temporary difference can beclassified into the taxable temporary difference and the deductible temporary difference.
2. Recognition Basis of Deferred Tax Assets
For the deductible temporary difference, the deductible loss and the tax payment offset, the company shallrecognize the deferred tax assets arising from the future taxable income that obtained to deduce thedeductible temporary difference, the deductible loss and the tax payment offset.The deferred tax assets with the following features and arising from the initial recognition of assets orliabilities in the transaction shall not be recognized: (1) the transaction is not the business combination. (2)the transaction doesn’t influence the accounting profits and the taxable incomes (or the deductible losses).The company shall recognize the corresponding deferred tax assets for the deductible temporary differencerelated to the investment of subsidiaries, cooperative enterprises and joint ventures if the followingrequirements are simultaneously met: (1) the temporary difference is possible to be reversed in theforeseeable future. (2) the taxable income used to offset the deductible temporary difference is possible tobe obtained in the future.
3. Recognition Basis of Deferred Tax Liabilities
All the taxable temporary differences shall be recognized as the deferred tax liabilities.But the company shall not recognize the taxable temporary differences arising from the following
transactions as the deferred tax liabilities: (1) the initial recognition of goodwill. (2) the initial recognitionof assets or liabilities arising from the transactions with the following features: this transaction is not thebusiness combination, and the transaction doesn’t influence the accounting profits and the taxableincomes (or the deductible losses).The company shall recognize the corresponding deferred tax liabilities for the taxable temporarydifference related to the investment of subsidiaries, cooperative enterprises and joint ventures. Except thatthe following requirements are simultaneously met: (1) the investment enterprise can control the reversaltime of the temporary difference. (2) the temporary difference is possible to not be reversed in theforeseeable future.
4. Impairment of Deferred Tax Assets
The company shall review the book value of the deferred tax assets at the balance sheet date. If it is notpossible to obtain sufficient taxable income for the reduction of the benefit of the deferred tax assets in thefuture, the book value of the deferred tax assets shall be deduced. Except that the deferred tax assets andthe reduction amount are recorded into the owner’s equity when the original recognition, others shall berecorded into the current income tax expense. The book value of the deferred tax assets reduced can berecovered when sufficient taxable income is possibly obtained.
5. Income Tax Expense
The income tax expense should include the current income tax and the deferred income tax.Other comprehensive income or the current income tax and the deferred income tax related to thetransactions and items directly recorded into the stockholders’ equity, shall be recorded into othercomprehensive incomes or the stockholders’ equity, and the book value of goodwill shall be adjusted bythe deferred income tax arising from the business combination, but the rest of the current income tax andthe deferred income tax expense or income shall be recorded into the current profits and losses.
29.Lease
1. Accounting Treatment Method of Operating Lease
When the company is as the tenant, the rental within the lease term shall be recorded into the relevantassets cost or recognized as the current profits and losses as per the line method, and the initial directexpense occurred shall be directly recorded into the current profit and loss. The contingent rental shall berecorded into the current profit and loss once the actual occurrence.When the company is as the leaser, the rental within the lease term shall be recognized as the currentprofits and losses as per the line method, and the initial direct expense occurred shall be directly recordedinto the current profit and loss, except that the large amounts are capitalized and recorded into the profitand loss by stages. The contingent rental shall be recorded into the current profit and loss once the actualoccurrence.
2. Accounting Treatment Method of Finance Lease
When the company is as the tenant, the company shall recognize the less one between the fair value ofleasing assets and the present value of minimum lease payment at the lease commencement date as thebook value of rented assets, recognize the minimum lease payment as the book value of the long-termpayables, and the undetermined fiancé expense of the difference and the initial direct costs occurred shallbe recorded into the leasing asset value. During each lease period, the current financing charges shall bemeasured and recognized by the effective interest method.
When the company is as the leaser, the company shall recognize the sum of minimum lease receivablesand initial direct expense at the lease commencement date as the book value of finance lease receivables,and record the unguaranteed residual value. Meanwhile, the company shall recognize the differencebetween the sums of minimum lease receivables, minimum lease receivables and unguaranteed minus thesum of the present value as the unrealized financing income. During each lease period, the currentfinancing charges shall be measured and recognized by the effective interest method.
30.Change of main accounting policies and estimations
(1)Change of main accounting policies
(I) Accounting policy changes caused by implementation of new financial instrument standardsIn 2017, the Ministry of Finance revised and promulgated the Accounting Standards for BusinessEnterprises No.22-Recognition and Measurement of Financial Instruments, Accounting Standards forBusiness Enterprises No.23-Transfer of Financial Assets, Accounting Standards for Business EnterprisesNo.24-Hedge Accounting and Accounting Standards for Business Enterprises No.37-Presentation ofFinancial Instruments (the above four standards are collectively referred to as "New Financial InstrumentStandards"), which are required to come into force on January 1, 2019 for domestic listed enterprises.According to the regulations, the Company will implement the new financial instrument standards fromJanuary 1, 2019 and adjust the relevant contents of accounting policies. The Company began to implementthe new financial instrument standards at the time required by the Ministry of Finance after adopting aproposal at the 18th meeting of the 7th board of directors of the Company on April 25, 2019.The Company retrospectively applies the new financial instrument standards, but for classificationand measurement (including impairment) involving the inconsistency between the previous comparativefinancial statement data and the new financial instrument standards, the Company chooses not to repeat.Therefore, for the cumulative impact of the first implementation of this standard, the Company adjustedthe retained earnings or other comprehensive earnings at the beginning of 2019 and the amount of otherrelated items in the financial statements, which were not restated in the financial statements of 2018.
The main changes and impacts of the implementation of the new financial instrument guidelines onour Company are as follows:
- The structural deposits held by the Company were originally classified as other current assets,reclassified by the Company as financial assets measured at fair value and recorded in current profits andlosses on or after January 1, 2019, and reported as transactional financial assets;
- On January 1, 2019 and beyond, the Company designated non-tradable equity investments held asfinancial assets measured at fair value and included their changes in other comprehensive income, andreported them as investments in other equity instruments;
-In its daily fund management, the Company endorsed or discounted some bank acceptance bills,aiming at both receiving the contract cash flow and selling financial assets. Therefore, the Companyreclassified these bills receivable into financial asset categories measured at fair value with changesincluded in other comprehensive income and reported them as receivables financing on or after January 1,2019.
① Impact of first execution date on Balance Sheet items on January 1, 2019
a. Impact on consolidated statements
| Items | December 31,2018（Before change） | Reclassification | Re-measurement | January 1,2019（After change） |
| Assets： |
| Items | December 31,2018（Before change） | Reclassification | Re-measurement | January 1,2019（After change） |
| Other current assets | 639,797,959.30 | -540,000,000.00 | 99,797,959.30 | |
| Transactional Financial Assets | 540,000,000.00 | 540,000,000.00 | ||
| Notes receivable | 886,432.06 | -886,432.06 | ||
| Receivables financing | 886,432.06 | 886,432.06 | ||
| Financial assets available for sale (original guidelines) | 45,373,784.87 | -45,373,784.87 | ||
| Other equity instruments investment | 45,373,784.87 | 279,187,335.43 | 324,561,120.30 | |
| Deferred income tax assets | 6,036,198.23 | -66,663.75 | 5,969,534.48 | |
| Liabilities： | ||||
| Deferred income tax liabilities | 68,465,593.36 | 68,465,593.36 | ||
| Shareholder's equity： | ||||
| Other Comprehersive income | 1,339,208.41 | 170,899,572.18 | 172,238,780.59 | |
| Surplus public | 80,004,803.23 | 3,975,550.61 | 83,980,353.84 | |
| Undistributed profit | -57,774,473.41 | 35,779,955.53 | -21,994,517.88 |
| Items | December 31,2018 （Before change） | Reclassification | Re-measurement | January 1,2019（After change） |
| Assets： | ||||
| Other current assets | 500,000,000.00 | -500,000,000.00 | ||
| Transactional Financial Assets | 500,000,000.00 | 500,000,000.00 | ||
| Notes receivable | 15,373,784.87 | -15,373,784.87 | ||
| Receivables financing | 15,373,784.87 | 267,222,341.34 | 282,596,126.21 | |
| Financial assets available for sale (original guidelines) | 5,818,069.48 | -66,663.75 | 5,751,405.73 | |
| Other equity instruments investment | ||||
| Deferred income tax assets | 65,474,344.84 | 65,474,344.84 | ||
| Equity： | ||||
| Other Comprehersive income | 1,339,208.41 | 161,925,826.61 | 163,265,035.02 | |
| Surplus public | 80,004,803.23 | 3,975,550.61 | 83,980,353.84 | |
| Undistributed profit | 483,666,452.70 | 35,779,955.53 | 519,446,408.23 |
②Comparison of financial asset classification and measurement before and after the first implementation dateA. Impact on consolidated statements
| December 31,2018（Before change） | January 1,2019（After change） | ||||
| Items | Cassification | Book value | Items | Cassification | Book value |
| Other current assets-Structure Deposit | Amortized cost | 540,000,000.00 | Transactional Financial Assets | Measured at fair value and recorded in current profit and loss | 540,000,000.00 |
| Notes receivable | Amortized cost | 886,432.06 | Receivable financing | Measured at fair value and its changes are included in other comprehensive income | 886,432.06 |
| Available for sale of financial assets | Measured at fair value and its changes are included in other comprehensive income（Equity instrument） | 5,119,896.46 | Other Equity instrument investment | Measured at fair value and its changes are included in other comprehensive income | 324,561,120.30 |
| Cost measurement (equity instrument) | 40,253,888.41 | ||||
| December 31,2018（Before change） | January 1,2019（After change） | ||||
| Items | Cassification | Book value | Items | Cassification | Book value |
| Other current assets-Structure Deposit | Amortized cost | 500,000,000.00 | Transactional Financial Assets | Measured at fair value and recorded in current profit and loss | 500,000,000.00 |
| Available for sale of financial assets | Measured at fair value and its changes are included in other comprehensive income（Equity instrument） | 5,119,896.46 | Other Equity instrument investment | Measured at fair value and its changes are included in other comprehensive income | 282,596,126.21 |
| Cost measurement (equity instrument) | 10,253,888.41 | ||||
| Items | Consolidated retained earnings | Consolidated surplus reserves | Consolidation of other consolidated income |
| December 31,2018 | -57,774,473.41 | 80,004,803.23 | 1,339,208.41 |
| 1. Reclassify financial assets available for sale as investments in other equity instruments and remeasure them | 170,899,572.18 | ||
| 2. A remeasurement of the impairment of a financial asset available for sale | 35,779,955.53 | 3,975,550.61 | |
| January 1,2019 | -21,994,517.88 | 83,980,353.84 | 172,238,780.59 |
| No | Name | Amount (December 31,2018) |
| 1 | Notes receivable and account receivable | -529,340,447.65 |
| Notes receivable | 886,432.06 | |
| Account receivable | 528,454,015.59 | |
| 2 | Notes receivable and account receivable | -180,239,452.90 |
| Notes receivable | ||
| Account receivable | 180,239,452.90 |
| Taxes | Applicable tax rates |
| VAT | 16.00%,13.00%,6.00%,5.00% |
| Taxes | Applicable tax rates |
| City construction tax | 7.00% |
| Education surcharge | 3.00% |
| Local education surcharge | 2.00% |
| Business income tax | 25.00%,20.00%,16.50%,15.00% |
| Name of taxpayer | Income tax rates |
| Shenzhen Textile (Holdings) Co., Ltd | 25.00% |
| SAPO Photoelectric Co., Ltd. | 15.00% |
| Shenzhen Beauty Century Garment Co., Ltd. | 20.00% |
| Shenzhen Huaqiang Hotel | 25.00% |
| Shenfang Property Management Co., Ltd. | 20.00% |
| Shenzhen Lisi Industrial Co., Ltd. | 20.00% |
Company, are qualified small profit-making enterprises. In 2019, the enterprise income tax was levied at areduced rate of 20.00%. Meanwhile, the portion of the corresponding taxable income not exceeding RMB1 million will be included in the taxable income at a reduced rate of 25.00%. If the annual taxable incomeexceeds 1 million yuan but does not exceed 3 million yuan, it shall be included in the taxable income by
50.00%.
VII. Notes of consolidated financial statement
1.Monetary Capital
| Items | December 31,2019 | December 2018 |
| Cash at hand | 11,091.94 | 13,559.60 |
| Bank deposit | 272,366,495.29 | 1,137,431,239.39 |
| Other monetary funds | 137,187,260.29 | 4,314,575.61 |
| Total | 409,564,847.52 | 1,141,759,374.60 |
| Including : The total amount of deposit abroad | 3,272,384.31 | 9,294,408.13 |
| Items | December 31,2019 | December 31,2018 |
| Financial assets measured at their fair values and with the variation included in the current profits and losses | 830,000,000.00 | — |
| Including：Structure deposit | 830,000,000.00 | — |
| Total | 830,000,000.00 | — |
| Including： Part reclassified to other non-current financial assets | — |
| Items | December 31,2019 | December 31,2018 |
| Bank acceptance | 40,424,601.97 | 886,432.06 |
| .Commercial acceptance bill | ||
| Subtotal | 40,424,601.97 | 886,432.06 |
| Less：Bad debt provision |
| Items | December 31,2019 | December 31,2018 |
| Total | 40,424,601.97 | 886,432.06 |
| Items | Amount derecognizing at period –end | Amount derecognizing at period-end |
| Bank acceptance | 75,102,771.75 | |
| .Commercial acceptance bill | ||
| Total | 75,102,771.75 |
| Age | December 31,2019 |
| Within 1 year | 382,065,942.05 |
| 1-2 years | 813,122.40 |
| 2-3 years | 1,076.93 |
| 3-4 years | 6,728.70 |
| 4-5 years | 4,636,402.32 |
| Over 5 years | 7,930,426.56 |
| Subtotal | 395,453,698.96 |
| Less：Bad debt provision | 30,128,669.58 |
| Total | 365,325,029.38 |
| Category | December 31,2019 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| Category | December 31,2019 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| Accrual of bad debt provision by single item | 12,753,137.41 | 3.22 | 10,823,862.18 | 84.87 | 1,929,275.23 |
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 382,700,561.55 | 96.78 | 19,304,807.40 | 5.04 | 363,395,754.15 |
| Total | 395,453,698.96 | 100.00 | 30,128,669.58 | 7.62 | 365,325,029.38 |
| Category | December 31,2018 | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| Accounts receivable of individual significance and subject to individual impairment assessment | 6,300,455.84 | 1.11 | 3,998,201.79 | 63.46 | 2,302,254.05 |
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 552,278,688.56 | 97.66 | 27,621,586.89 | 5.00 | 524,657,101.67 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | 6,933,008.49 | 1.23 | 5,438,348.62 | 78.44 | 1,494,659.87 |
| Total | 565,512,152.89 | 100.00 | 37,058,137.30 | 6.55 | 528,454,015.59 |
| Account receivable （Unit） | December 31,2019 | |||
| Account receivable | Bad debt provision | Proportion(%) | Reason for allowance | |
| Dongguan Fair LCD Co., Ltd. | 1,697,342.87 | 1,697,342.87 | 100.00 | Beyond the credit period for a long time, uncertain recovered. |
| Guangdong Ruili Baolai Technology Co., Ltd. | 1,298,965.36 | 649,482.68 | 50.00 | Beyond the credit period for a long time, uncertain recovered. |
| Account receivable （Unit） | December 31,2019 | |||
| Account receivable | Bad debt provision | Proportion(%) | Reason for allowance | |
| Dongguan Yaxing Semiconductor Co., Ltd. | 2,797,016.81 | 1,650,239.92 | 59.00 | Beyond the credit period for a long time, uncertain recovered. |
| Shenzhen Gulida Microelectronics Co., Ltd. | 1,029,587.20 | 978,107.84 | 95.00 | Beyond the credit period for a long time, uncertain recovered. |
| Other | 6,959,812.37 | 6,826,796.71 | 98.09 | Beyond the credit period for a long time, uncertain recovered. |
| Total | 12,753,137.41 | 10,823,862.18 | 84.87 | |
| Items | December 31,2019 | ||
| Account receivable | Bad debt provision | Proportion(%) | |
| Within 1 year | 382,032,402.05 | 19,101,620.10 | 5.00 |
| 1-2 year | 668,159.50 | 203,187.30 | 30.41 |
| Total | 382,700,561.55 | 19,304,807.40 | 5.04 |
| Category | December 31,2018 | Amount of change in the current period | December 31,2019 | |||
| Accrual | Reversed or collected amount | Write-off | Other | |||
| Accrual of bad debt provision by single item: | 9,436,550.41 | 1,856,782.38 | 469,470.61 | 10,823,862.18 | ||
| Accrual of bad debt provision by portfolio: | 27,621,586.89 | 8,316,779.49 | 19,304,807.40 | |||
| Total | 37,058,137.30 | 1,856,782.38 | 8,786,250.10 | 30,128,669.58 | ||
| Name | Amount | Way |
| Dongguan Yaxing Semiconductor Co., Ltd. | 458,525.94 | Cash |
| Total | 458,525.94 | —— |
| Name | Nature | December 31,2019 | Aging | Proportion(%) | Bad debt provision |
| First | Goods | 117,965,861.15 | Within 1 year | 29.83 | 5,898,293.06 |
| Second | Goods | 53,893,840.80 | Within 1 year | 13.63 | 2,694,692.04 |
| Third | Goods | 41,487,571.67 | Within 1 year | 10.49 | 2,074,378.58 |
| Fourth | Goods | 23,781,168.18 | Within 1 year | 6.01 | 1,189,058.41 |
| Fifth | Goods | 22,135,123.42 | Within 1 year | 5.60 | 1,106,756.17 |
| Total | 259,263,565.22 | 65.56 | 12,963,178.26 |
| Items | December 31,2019 | December 31,2018 |
| Notes receivable | 17,933,597.98 | |
| Account receivable | ||
| Total | 17,933,597.98 |
| Aging | December 31,2019 | December 31,2018 | ||
| Amount | Proportion（%） | Amount | Proportion（%） | |
| Within 1 year | 18,234,600.87 | 98.86 | 226,726,744.30 | 98.99 |
| 1-2 years | 188,517.78 | 1.02 | 2,263,886.85 | 0.99 |
| 2-3 years | 9,530.00 | 0.05 | ||
| Over 3 years | 13,208.88 | 0.07 | 38,160.00 | 0.02 |
| Total | 18,445,857.53 | 100.00 | 229,028,791.15 | 100.00 |
the prepayment balance.
（2）The ending balance of Prepayments owed by the imputation of the top five parties
| Name | December 31,2019 | Proportion |
| First | 3,744,178.09 | 20.30 |
| Second | 3,382,704.14 | 18.34 |
| Third | 2,353,057.52 | 12.76 |
| Fourth | 1,491,020.44 | 8.08 |
| Fifth | 897,691.91 | 4.87 |
| Total | 11,868,652.10 | 64.34 |
| Items | December 31,2019 | December 31,2018 |
| Interest receivable | 7,610,043.19 | 5,589,704.44 |
| Other receivable | 4,830,717.94 | 9,257,192.06 |
| Total | 12,440,761.13 | 14,846,896.50 |
| Items | December 31,2019 | December 31,2018 |
| Fixed deposit | 109,425.24 | 1,302,963.56 |
| Structure deposit | 7,500,617.95 | 4,286,740.88 |
| Subtotal | 7,610,043.19 | 5,589,704.44 |
| Less：Bad debt provision | ||
| Total | 7,610,043.19 | 5,589,704.44 |
| Category | December 31,2019 | ||||
| Book balance | Bad debt provision | Proportion | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| Category | December 31,2019 | ||||
| Book balance | Bad debt provision | Proportion | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| First stage | 7,610,043.19 | 7,610,043.19 | |||
| Total | 7,610,043.19 | 7,610,043.19 | |||
| Aging | December 31,2019 |
| Within 1 year | 2,250,037.41 |
| 1-2 years | 1,213,773.48 |
| 2-3 years | 647,494.79 |
| 3-4 years | 1,837,174.29 |
| 4-5 years | 1,015,782.04 |
| Over 5 years | 13,835,408.91 |
| Subtotal | 20,799,670.92 |
| Less：Bad debt provision | 15,968,952.98 |
| Total | 4,830,717.94 |
| Nature | December 31,2019 | December 31,2018 |
| Customs bond | 326,628.25 | 101,758.24 |
| Export rebate | 1,191,949.50 | 3,140,110.71 |
| Unit account | 15,674,175.33 | 15,451,643.71 |
| Deposit | 2,109,061.49 | 1,875,008.00 |
| Reserve fund and staff loans | 428,019.47 | 506,154.77 |
| Other | 1,069,836.88 | 4,227,892.82 |
| Subtotal | 20,799,670.92 | 25,302,568.25 |
| Less：Bad debt provision | 15,968,952.98 | 16,045,376.19 |
| Total | 4,830,717.94 | 9,257,192.06 |
| Bad Debt Reserves | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit loss over life (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2019 | 1,652,090.82 | 14,393,285.37 | 16,045,376.19 | |
| Balance as at January 1, 2019 in current | 1,652,090.82 | 14,393,285.37 | 16,045,376.19 | |
| ——Transfer to stage II | ||||
| ——Transfer to stage III | ||||
| ——Transfer to stage II | ||||
| ——Transfer to stage I | ||||
| Provision in the current period | ||||
| Turn back in the current period | 76,423.21 | 76,423.21 | ||
| Reseller in the current period | ||||
| Write - off in the current period | ||||
| Other | ||||
| Balance as at December 31, 2019 | 1,575,667.61 | 14,393,285.37 | 15,968,952.98 |
| Category | December 31,2018 | Amount of change in the current period | December 31,2019 | |||
| Accrual | Reversed or collected amount | Write - off | Other | |||
| Accrual of bad debt provision by single item | 14,393,285.37 | 14,393,285.37 | ||||
| Accrual of bad debt provision by portfolio | 1,652,090.82 | 76,423.21 | 1,575,667.61 | |||
| Total | 16,045,376.19 | 76,423.21 | 15,968,952.98 | |||
(5) Other account receivables actually cancel after write-off :Nil
(6)Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
| Name | Nature | Year-end balance | Age | Portion in total other receivables(%) | Bad debt provision of year-end balance |
| First | Unit account | 11,389,044.60 | Over 5 years | 54.76 | 11,389,044.60 |
| Second | Unit account | 1,800,000.00 | 3-4 years | 8.65 | 1,800,000.00 |
| Third | Unit account | 1,018,295.37 | Within 1 year, 1-3 years | 4.90 | 181,045.68 |
| Fourth | Deposit | 980,461.06 | Over 5 yeras | 4.71 | 490,230.53 |
| Fifth | Deposit | 592,420.00 | Over 5 years | 2.85 | 592,420.00 |
| Total | 15,780,221.03 | 75.87 | 14,452,740.81 |
(7) Accounts receivable involved with government subsidies
| Name | Name of government subsidy project | end of year balance | Year-end aging | Estimated time, amount and basis |
| Shenzhen Municipal Commission of Science, Technology, Industry, Trade and Information Technology | Shenzhen Industrial and Commercial Electricity Cost Reduction Project | 427,896.00 | Within 1 year | Recovered in January 2020, the amount is 427,900 yuan, based on: Shenzhen Economic and Trade Information Regulations [2018] No. 12 |
| Total | 427,896.00 |
(8) No other account receivable which terminate the recognition owning to the transfer of the financialassets
(9) The amount of the assets and liabilities formed by the no transfer and the continues involvement ofother accounts receivable
8.Inventory
1）Inventories types
| Items | December 31,2019 | ||
| Book balance | Provision for bad debts | Book value | |
| Raw materials | 212,371,911.48 | 31,148,714.05 | 181,223,197.43 |
| Processing products | 5,962,105.18 | 5,962,105.18 | |
| Finished product | 135,636,148.29 | 53,692,060.27 | 81,944,088.02 |
| Semi-finished product | 130,209,635.92 | 36,196,938.50 | 94,012,697.42 |
| Goods in transit | 1,618,894.41 | 48,491.27 | 1,570,403.14 |
| Commissioned materials | 30,643,409.60 | 3,637,965.67 | 27,005,443.93 |
| Total | 516,442,104.88 | 124,724,169.76 | 391,717,935.12 |
| Items | December 31,2018 | ||
| Book balance | Provision for bad debts | Book value | |
| Raw materials | 164,096,057.16 | 14,452,368.67 | 149,643,688.49 |
| Processing products | 3,895,184.01 | 3,895,184.01 | |
| Finished product | 129,671,772.49 | 44,801,099.13 | 84,870,673.36 |
| Semi-finished product | 139,867,237.30 | 28,508,834.52 | 111,358,402.78 |
| Goods in transit | 80,839,399.33 | 937,486.83 | 79,901,912.50 |
| Commissioned materials | 10,082,857.63 | 10,082,857.63 | |
| Total | 528,452,507.92 | 88,699,789.15 | 439,752,718.77 |
| Items | December 31,2018 | Increased in current period | Decreased in current period | December 31,2019 | ||
| Provision | Other | Transferred back | Other | |||
| Raw materials | 14,452,368.67 | 27,212,118.08 | 10,515,772.70 | 31,148,714.05 | ||
| Items | December 31,2018 | Increased in current period | Decreased in current period | December 31,2019 | ||
| Provision | Other | Transferred back | Other | |||
| Finished product | 44,801,099.13 | 32,684,166.66 | 23,793,205.52 | 53,692,060.27 | ||
| Semi-finished product | 28,508,834.52 | 33,589,791.03 | 25,901,687.05 | 36,196,938.50 | ||
| Goods in transit | 937,486.83 | 48,491.27 | 937,486.83 | 48,491.27 | ||
| Commissioned materials | 3,637,965.67 | 3,637,965.67 | ||||
| Total | 88,699,789.15 | 97,172,532.71 | 61,148,152.10 | 124,724,169.76 | ||
| Items | Specific basis for withdrawal of provision for inventory | Reason for recovery of provision for inventory in this year | Reason for write-off of provision for inventory in this year |
| Raw materials | Due to a decline in the market price of polarizer products in this period, the realizable net value of relevant materials was lower than their inventory cost. | Use of relevant materials | |
| Finished product | Due to a decline in the market price of polarizer products in this period, the realizable net value of relevant materials was lower than their inventory cost. | Selling related finished goods | |
| Semi-finished product | Due to a decline in the market price of polarizer products in this period, the realizable net value of relevant materials was lower than their inventory cost. | Selling related semi-finished products | |
| Goods in transit | Due to a decline in the market price of polarizer products in this period, | Selling related finished goods |
| Items | Specific basis for withdrawal of provision for inventory | Reason for recovery of provision for inventory in this year | Reason for write-off of provision for inventory in this year |
| the realizable net value of relevant materials was lower than their inventory cost. |
| Items | December 31,2019 | December 31,2018 |
| Structural Deposit | — | 540,000,000.00 |
| After the deduction of input VAT | 140,821,609.72 | 99,797,959.30 |
| Total | 140,821,609.72 | 639,797,959.30 |
| Items | December 31,2019 | December 31,2018 | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Measured by fair value | — | — | — | 5,119,896.46 | 5,119,896.46 | |
| Measured by cost | — | — | — | 77,210,531.91 | 36,956,643.50 | 40,253,888.41 |
| Total | — | — | — | 82,330,428.37 | 36,956,643.50 | 45,373,784.87 |
11.Long-term equity investment
| Investees | December 31,2018 | Increase/decrease | December 31,2019 | Closing balance of impairment provision | |||||||
| Additional investment | Negative investment | Investment profit and loss recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint venture | |||||||||||
| Shenzhen Haohao Property Leasing Co., Ltd. | 5,641,139.93 | 4,916,674.82 | 1,275,534.89 | 2,000,000.00 | |||||||
| Anhui Huapeng Textile Co.,Ltd. | 11,784,626.51 | -1,685,792.74 | 10,098,833.77 | ||||||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 133,363,685.79 | -3,740,613.10 | 129,623,072.69 | ||||||||
| Subtotal | 17,425,766.44 | 133,363,685.79 | 4,916,674.82 | -4,150,870.95 | 2,000,000.00 | 139,721,906.46 | |||||
| 2. Affiliated Company | |||||||||||
| Shenzhen Changlianfa Printing & dyeing Company | 2,234,057.19 | 216,618.95 | 2,450,676.14 | ||||||||
| Jordan Garment Factory | 2,363,614.70 | -1,488,111.17 | 26,765.66 | 902,269.19 | |||||||
| Hongkong Yehui International Co., Ltd. | 10,928,647.33 | -1,981,720.10 | 188,150.70 | 9,135,077.93 | |||||||
| Subtotal | 15,526,319.22 | -3,253,212.32 | 214,916.36 | 12,488,023.26 | |||||||
| Total | 32,952,085.66 | 133,363,685.79 | 4,916,674.82 | -7,404,083.27 | 214,916.36 | 2,000,000.00 | 152,209,929.72 |
12. Other equity instruments investment
(1)Other equity instruments investment
| Items | Investment cost | December 31,2019 | January 1,2019 |
| FUAO（000030） | 8,940,598.31 | 6,568,923.76 | 5,119,896.46 |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd(Note) | 83,143,210.08 | ||
| Shenzhen Dailishi Underwear Co., Ltd. | 2,559,856.26 | 12,315,939.61 | 12,315,939.61 |
| Union Development Group Co., Ltd. | 2,600,000.00 | 152,469,200.00 | 152,469,200.00 |
| Shenzhen Xiangjiang Trade Co., Ltd. | 160,000.00 | 7,474,900.00 | 1,559,890.79 |
| Shenzhen Xinfang Knitting Co., Ltd. | 524,000.00 | 2,227,903.00 | 2,227,903.00 |
| Jintian Industry（Group）Co., Ltd. | 14,831,681.50 | ||
| Shenzhen Jiafeng Textile Industry Co., ltd. | 16,800,000.00 | ||
| Shenzhen Xieli Auto Co., Ltd. | 4,243,705.44 | 25,760,086.27 | 25,760,086.27 |
| Shenzhen South Textile Co., Ltd. | 1,500,000.00 | 13,464,994.09 | 13,464,994.09 |
| Changxing Junying Investment Partnership | 28,500,000.00 | 28,500,000.00 | 28,500,000.00 |
| Total | 80,659,841.51 | 248,781,946.73 | 324,561,120.30 |
| Name | Recognized dividend income | Accumulating income | Accumulating losses | Amount of other comprehensive income transferred to retained earnings | Reasons for being measured at fair value and whose changes are included in other comprehensive income | Reasons for other comprehensive income transferred to retained earning |
| Fuao auto parts co., Ltd.（000030） | 207,003.90 | 2,371,674.55 | Long-term holding | — | ||
| Shenzhen Dailishi Underwear Co., Ltd. | 943,396.23 | 9,756,083.35 | Long-term holding | — |
| Name | Recognized dividend income | Accumulating income | Accumulating losses | Amount of other comprehensive income transferred to retained earnings | Reasons for being measured at fair value and whose changes are included in other comprehensive income | Reasons for other comprehensive income transferred to retained earning |
| Union Development Group Co., Ltd. | 208,000.00 | 149,869,200.00 | Long-term holding | — | ||
| Shenzhen Xiangjiang Trade Co., Ltd. | 7,314,900.00 | Long-term holding | — | |||
| Shenzhen Xinfang Knitting Co., Ltd. | 200,000.00 | 1,703,903.00 | Long-term holding | — | ||
| Jintian Industry（Group）Co., Ltd. | 14,831,681.50 | Long-term holding | — | |||
| Shenzhen Jiafeng Textile Industry Co., ltd. | 16,800,000.00 | Long-term holding | — | |||
| Shenzhen Xieli Auto Co., Ltd. | 21,516,380.83 | Long-term holding | — | |||
| Shenzhen South Textile Co., Ltd. | 944,666.14 | 11,964,994.09 | Long-term holding | — | ||
| Changxing Junying Investment Partnership | 2,150,943.4 | Long-term holding | — |
| Name | Recognized dividend income | Accumulating income | Accumulating losses | Amount of other comprehensive income transferred to retained earnings | Reasons for being measured at fair value and whose changes are included in other comprehensive income | Reasons for other comprehensive income transferred to retained earning |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 77,651,921.37 | 58,238,941.03 | — | Transfer to the accounting of long-term equity investment, and transfer the other comprehensive income of 58,238,941.03 yuan during the holding period to retained earnings | ||
| Total | 4,654,009.67 | 279,777,382.64 | 34,003,356.05 | 58,238,941.03 | — |
| Items | House, Building | Land use right | Construction in process | Total |
| I. Original price | ||||
| 1. Balance at period-beginning | 309,234,260.74 | 309,234,260.74 | ||
| 2.Increase in the current period | ||||
| (1) Purchase | ||||
| 3.Decreased amount of the period | 52,051,000.00 | 52,051,000.00 | ||
| （1）Dispose | 52,051,000.00 | 52,051,000.00 | ||
| 4. Balance at period-end | 257,183,260.74 | 257,183,260.74 | ||
| II.Accumulated amortization | ||||
| 1.Opening balance | 141,236,318.76 | 141,236,318.76 | ||
| 2.Increased amount of the period | 7,120,445.96 | 7,120,445.96 | ||
| (1) Withdrawal | 7,120,445.96 | 7,120,445.96 | ||
| 3.Decreased amount of the period | 3,903,824.88 | 3,903,824.88 | ||
| （1）Dispose | 3,903,824.88 | 3,903,824.88 | ||
| 4. Balance at period-end | 144,452,939.84 | 144,452,939.84 | ||
| III. Impairment provision | ||||
| 1. Balance at period-beginning |
| Items | House, Building | Land use right | Construction in process | Total |
| 2.Increased amount of the period | ||||
| 4. Balance at period-end | ||||
| IV.Book value | ||||
| 1.Book value at period -end | 112,730,320.90 | 112,730,320.90 | ||
| 2.Book value at period-beginning | 167,997,941.98 | 167,997,941.98 |
| Items | December 31,2019 | December 31,2018 |
| Fixed assets | 903,229,077.83 | 987,876,247.55 |
| Liquidation of fixed assets | ||
| Total | 903,229,077.83 | 987,876,247.55 |
| Items | Houses & buildings | Machinery equipment | Transportations | Other equipment | Total |
| I. Original price | |||||
| 1.Opening balance | 548,584,026.60 | 1,011,061,597.26 | 9,997,715.53 | 30,466,523.80 | 1,600,109,863.19 |
| 2.Increased amount of the period | 10,664,079.90 | 13,753,264.55 | 1,840,794.79 | 3,813,970.09 | 30,072,109.33 |
| (1) Purchase | 427,838.56 | 13,753,264.55 | 1,840,794.79 | 3,813,970.09 | 19,835,867.99 |
| 2) Transferred from construction in progress | 10,236,241.34 | 10,236,241.34 | |||
| （3）Other | |||||
| 3.Decreased amount of the period | 4,457,692.39 | 5,485,170.94 | 1,677,626.00 | 2,061,417.07 | 13,681,906.40 |
| （1）Disposal | 4,457,692.39 | 5,485,170.94 | 1,677,626.00 | 2,061,417.07 | 13,681,906.40 |
| （2）Other transfer | |||||
| 4. Balance at period-end | 554,790,414.11 | 1,019,329,690.87 | 10,160,884.32 | 32,219,076.82 | 1,616,500,066.12 |
| II. Accumulated depreciation | |||||
| 1.Opening balance | 130,575,792.68 | 459,920,510.02 | 3,719,028.75 | 17,008,251.34 | 611,223,582.79 |
| 2.Increased amount of the period | 19,638,890.60 | 90,140,000.69 | 732,761.63 | 2,639,940.59 | 113,151,593.51 |
| (1) Withdrawal | 19,638,890.60 | 90,140,000.69 | 732,761.63 | 2,639,940.59 | 113,151,593.51 |
| Items | Houses & buildings | Machinery equipment | Transportations | Other equipment | Total |
| 3.Decrease in the reporting period | 3,732,211.16 | 4,199,070.66 | 1,610,520.96 | 1,683,021.89 | 11,224,824.67 |
| （1）Disposal | 3,732,211.16 | 4,199,070.66 | 1,610,520.96 | 1,683,021.89 | 11,224,824.67 |
| 4.Closing balance | 146,482,472.12 | 545,861,440.05 | 2,841,269.42 | 17,965,170.04 | 713,150,351.63 |
| III. Impairment provision | |||||
| 1.Opening balance | 1,004,032.85 | 6,000.00 | 1,010,032.85 | ||
| 2.Increase in the reporting period | |||||
| 3.Decrease in the reporting period | 883,396.19 | 6,000.00 | 889,396.19 | ||
| 4. Closing balance | 120,636.66 | 120,636.66 | |||
| IV. Book value | |||||
| 1.Book value of the period-end | 408,187,305.33 | 473,468,250.82 | 7,319,614.90 | 14,253,906.78 | 903,229,077.83 |
| 2.Book value of the period-begin | 417,004,201.07 | 551,141,087.24 | 6,278,686.78 | 13,452,272.46 | 987,876,247.55 |
| Items | December 31,2019 | December 31,2018 |
| Industrialization project of polaroid for super large size TV (Line 7) | 839,443,318.50 | 9,080,815.92 |
| Other | 422,957.42 | 6,540,470.72 |
| Total | 839,866,275.92 | 15,621,286.64 |
| Items | December 31,2019 | December 31,2018 | ||||
| Book balance | Provision for devaluation | Book Net value | Book balance | Provision for devaluation | Book Net value | |
| Industrialization project of polaroid for super large size TV (Line 7) | 839,443,318.50 | 839,443,318.50 | 9,080,815.92 | 9,080,815.92 | ||
| Other | 422,957.42 | 422,957.42 | 6,540,470.72 | 6,540,470.72 | ||
| Items | December 31,2019 | December 31,2018 | ||||
| Book balance | Provision for devaluation | Book Net value | Book balance | Provision for devaluation | Book Net value | |
| Total | 839,866,275.92 | 839,866,275.92 | 15,621,286.64 | 15,621,286.64 | ||
| Name | Budget | Amount at year beginning | Increase at this period | Transferred to fixed assets | Other decrease | Balance in year-end |
| Industrialization project of polaroid for super large size TV (Line 7) | 1959.50 million | 9,080,815.92 | 830,362,502.58 | 839,443,318.50 | ||
| Total | 9,080,815.92 | 830,362,502.58 | 839,443,318.50 |
（Continuous）
| Items | Proportion(%) | Progress of work | Capitalisation of interest accumulated balance | Including：Current amount of capitalization of interest | Capitalisation of interest ratio（%) | Source of funds |
| Industrialization project of polaroid for super large size TV (Line 7) | 42.84% | The main building has been capped | Self | |||
| Total | —— | —— | —— |
16. Intangible assets
(1) Information
| Items | Land use right | Patent right | Software | Total |
| I. Original price | ||||
| 1. Balance at period-beginning | 48,822,064.61 | 11,825,200.00 | 2,936,607.54 | 63,583,872.15 |
| 2.Increase in the current period | ||||
| (1) Purchase | ||||
| （2）Internal R & D | ||||
| 3.Decreased amount of the period | 563,825.61 | 563,825.61 | ||
| （1）Disposal | ||||
| （1）Disposal Subsidiary | ||||
| （3）Transfer to investment real estate | ||||
| （4）Other transfer | 563,825.61 | 563,825.61 | ||
| 4. Balance at period-end | 48,258,239.00 | 11,825,200.00 | 2,936,607.54 | 63,020,046.54 |
| II.Accumulated amortization | ||||
| 1. Balance at period-beginning | 12,243,972.52 | 11,825,200.00 | 1,633,883.78 | 25,703,056.30 |
| 2. Increase in the current period | 911,604.36 | 451,215.15 | 1,362,819.51 | |
| (1) Withdrawal | 911,604.36 | 451,215.15 | 1,362,819.51 | |
| （2）Business combination Increase | ||||
| （3）Other | ||||
| 3.Decreased amount of the period | 563,825.61 | 563,825.61 | ||
| （1）Disposal | ||||
| （1）Disposal Subsidiary | ||||
| （3）Transfer to investment real estate | ||||
| （4）Other transfer | 563,825.61 | 563,825.61 | ||
| 4. Balance at period-end | 12,591,751.27 | 11,825,200.00 | 2,085,098.93 | 26,502,050.20 |
| III. Impairment provision | ||||
| 1. Balance at period-beginning | ||||
| 2. Increase in the current period |
| Items | Land use right | Patent right | Software | Total |
| (1) Withdrawal | ||||
| 3.Decreased amount of the period | ||||
| （1）Disposal | ||||
| 4. Balance at period-end | ||||
| 4. Book value | ||||
| 1.Book value at period -end | 35,666,487.73 | 851,508.61 | 36,517,996.34 | |
| 2.Book value at period-beginning | 36,578,092.09 | 1,302,723.76 | 37,880,815.85 |
| Name of the investees or the events formed goodwill | December 31,2018 | Increase | Decrease | December 31,2019 |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | 2,167,341.21 | ||
| Shenzhen Shenfang Import and Export Co., Ltd. | 82,246.61 | 82,246.61 | ||
| SAPO Photoelectric | 9,614,758.55 | 9,614,758.55 | ||
| Total | 11,864,346.37 | 11,864,346.37 |
| Investee | December 31,2018 | Increased at this period | .Decreased at this period | December 31,2019 |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | 2,167,341.21 | ||
| Shenzhen Shenfang Import and Export Co., Ltd. | 82,246.61 | 82,246.61 | ||
| SAPO Photoelectric | 9,614,758.55 | 9,614,758.55 | ||
| Total | 11,864,346.37 | 11,864,346.37 |
| Items | December 31,2018 | Increase in this period | Amortized expenses | Other loss | December 31,2019 |
| Renovation fee | 985,691.64 | 957,475.09 | 311,743.27 | 1,631,423.46 | |
| Other | 500,517.39 | 754,999.52 | 194,189.70 | 1,061,327.21 | |
| Total | 1,486,209.03 | 1,712,474.61 | 505,932.97 | 2,692,750.67 |
19. Deferred income tax assets/deferred income tax liabilities
（1）Details of the un-recognized deferred income tax assets
| Items | December 31,2019 | December 31,2018 | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Assets depreciation reserves | 17,933,263.39 | 4,478,077.03 | 18,197,325.09 | 4,549,331.27 |
| Unattained internal sales profits | 2,502,421.73 | 375,363.26 | 2,591,536.27 | 388,730.44 |
| Changes in fair value of available for sale financial assets | 3,820,701.85 | 955,175.46 | ||
| Changes in fair value of investments in other equity instruments | 2,371,674.55 | 592,918.64 | ||
| Restricted stock repurchase interest | 686,670.00 | 171,667.50 | 571,844.26 | 142,961.06 |
| Total | 23,494,029.67 | 5,618,026.43 | 25,181,407.47 | 6,036,198.23 |
| Items | December 31,2019 | December 31,2018 | ||
| Deductible temporary difference | Deferred income tax liabilities | Deductible temporary difference | Deferred income tax liabilities | |
| The difference between the initial recognition cost and tax base of long-term equity investment of Guanhua Company | 77,651,921.36 | 19,412,980.34 | ||
| Changes in fair value of investments in other equity instruments | 202,125,461.26 | 50,531,365.32 | ||
| Total | 279,777,382.62 | 69,944,345.66 | ||
| Items | December 31,2019 | December 31,2018 |
| Deductible temporary difference | 156,410,415.69 | 128,283,915.49 |
| Deductible loss | 605,506,184.05 | 508,608,727.20 |
| Items | December 31,2019 | December 31,2018 |
| Total | 761,916,599.74 | 636,892,642.69 |
| Year | December 31,2019 | December 31,2018 | Remark |
| 2020 | 703,241.36 | ||
| 2021 | 1,128,868.47 | 3,880,135.73 | |
| 2023 | 129,226,944.33 | 129,226,944.33 | |
| 2024 | 148,095,898.11 | 148,095,898.11 | |
| 2025 | 83,287,153.64 | 83,287,153.64 | |
| 2026 | 120,820,767.06 | 120,820,767.06 | |
| 2028 | 22,594,586.97 | 22,594,586.97 | |
| 2029 | 100,351,965.47 | ||
| Total | 605,506,184.05 | 508,608,727.20 |
| Items | December 31,2019 | December 31,2018 | ||||
| Book balance | Provision for devaluation | Book Net value | Book balance | Provision for devaluation | Book Net value | |
| Advance payment for equipment fund | 3,079,321.10 | 3,079,321.10 | 152,688,087.18 | 152,688,087.18 | ||
| Advance payment for technical services | 176,764,571.83 | 176,764,571.83 | ||||
| Total | 3,079,321.10 | 3,079,321.10 | 329,452,659.01 | 329,452,659.01 | ||
| Items | December 31,2019 | December 31,2018 |
| Credit borrowings | 411,522,111.40 | |
| Total | 411,522,111.40 |
| Items | December 31,2019 | December 31,2018 |
| Within 1 years | 238,370,055.75 | 177,140,118.37 |
| Items | December 31,2019 | December 31,2018 |
| 1-2 years | 196,392.86 | 2,059,842.85 |
| 2-3 years | 1,691,830.35 | 37,402.40 |
| 3-4 years | 37,402.40 | 35,075.05 |
| 4-5 years | 35,075.05 | 281,166.48 |
| Over 5 years | 967,014.23 | 685,847.75 |
| Total | 241,297,770.64 | 180,239,452.90 |
| Items | December 31,2019 | December 31,2018 |
| Within 1 years | 29,824,350.33 | 119,293,518.44 |
| 1-2 years | 16,004.11 | 560,077.61 |
| 2-3 years | 30,171.98 | 210,330.74 |
| Over 3 years | 659,591.20 | 639,024.58 |
| Total | 30,530,117.62 | 120,702,951.37 |
| Items | December 31,2018 | Increase in this period | Decrease in this period | December 31,2019 |
| I. Short-term employee benefits | 32,506,267.08 | 161,658,957.04 | 155,609,043.92 | 38,556,180.20 |
| II. Post-employment benefits | 11,119,425.46 | 11,119,425.46 | ||
| III. Termination benefit | ||||
| Total | 32,506,267.08 | 172,778,382.50 | 166,728,469.38 | 38,556,180.20 |
| Items | December 31,2018 | Increase in this period | Decrease in this period | December 31,2019 |
| 1.Wages, bonuses, allowances and subsidies | 30,794,253.21 | 142,377,416.49 | 136,420,140.80 | 36,751,528.90 |
| Items | December 31,2018 | Increase in this period | Decrease in this period | December 31,2019 |
| 2.Employee welfare | 7,308,878.08 | 7,308,878.08 | ||
| 3. Social insurance premiums | 3,389,773.79 | 3,389,773.79 | ||
| Including：Medical insurance | 2,946,127.59 | 2,946,127.59 | ||
| Work injury insurance | 155,195.94 | 155,195.94 | ||
| Maternity insurance | 288,450.26 | 288,450.26 | ||
| 4. Public reserves for housing | 5,602,480.79 | 5,602,480.79 | ||
| 5.Union funds and staff education fee | 1,712,013.87 | 2,980,407.89 | 2,887,770.46 | 1,804,651.30 |
| Total | 32,506,267.08 | 161,658,957.04 | 155,609,043.92 | 38,556,180.20 |
| Items | December 31,2018 | Increase in this period | Decrease in this period | December 31,2019 |
| 1. Basic old-age insurance premiums | 8,885,794.40 | 8,885,794.40 | ||
| 2.Unemployment insurance | 212,521.77 | 212,521.77 | ||
| 3. Annuity payment | 2,021,109.29 | 2,021,109.29 | ||
| Total | 11,119,425.46 | 11,119,425.46 |
| Items | December 31,2019 | December 31,2018 |
| VAT | 2,992,712.57 | 793,392.58 |
| City Construction tax | 209,489.81 | 54,516.12 |
| Enterprise Income tax | 18,567,808.63 | 6,198,704.39 |
| Individual Income tax | 441,485.02 | 160,823.58 |
| House property Tax | 127,685.17 | 204,941.07 |
| Education surcharge | 149,635.58 | 37,825.82 |
| Other | 56,733.55 | 294,925.43 |
| Total | 22,545,550.33 | 7,745,128.99 |
| Items | December 31,2019 | December 31,2018 |
| Interest payable | 39,044,044.39 | |
| Other payable | 152,645,780.14 | 189,971,235.59 |
| Items | December 31,2019 | December 31,2018 |
| Total | 152,645,780.14 | 229,015,279.98 |
| Items | December 31,2019 | December 31,2018 |
| Pay the interest for long-term loans by installments. | 37,220,662.08 | |
| Pay the interest for short-term loans by installments. | 1,823,382.31 | |
| Total | 39,044,044.39 |
| Items | December 31,2019 | December 31,2018 |
| Engineering Equipment fund | 36,025,975.90 | 62,574,657.07 |
| Unit account | 51,891,693.06 | 53,935,705.78 |
| Deposit | 27,258,145.87 | 25,481,743.17 |
| Restrictive stock repurchase obligation | 16,825,673.40 | 27,802,523.26 |
| Other | 20,644,291.91 | 20,176,606.31 |
| Total | 152,645,780.14 | 189,971,235.59 |
| Items | December 31,2019 | December 31,2018 |
| Long-term borrowings due within 1 year | 40,000,000.00 | |
| Total | 40,000,000.00 |
| Items | December 31,2019 | December 31,2018 |
| Credit borrowings | 40,000,000.00 | |
| Less：Long-term borrowings due within 1 year | 40,000,000.00 | |
| Total |
| Items | December 31,2018 | Increase at this period | Decrease at this period | December 31,2019 | Reason |
| Items | December 31,2018 | Increase at this period | Decrease at this period | December 31,2019 | Reason |
| Govemment Subsidy | 137,991,698.33 | 1,748,781.00 | 18,475,908.11 | 121,264,571.22 | Govemment Subsidy |
| Total | 137,991,698.33 | 1,748,781.00 | 18,475,908.11 | 121,264,571.22 |
| Items | December 31,2018 | New grants amount of this period | Profit and loss amount recorded in the current period | Other transfer amount | Othber change | December 31,2019 | Income related to assets |
| Textile special funds | 571,428.57 | 142,857.16 | 428,571.41 | Related to assets | |||
| High-tech Industrialization demonstration projects | 200,000.00 | 200,000.00 | Related to assets | ||||
| National grant funds for new flat panel display industry | 1,000,000.00 | 1,000,000.00 | Related to assets | ||||
| Grant funds for TFT-LCD polarizer industry project | 4,333,333.34 | 1,300,000.00 | 3,033,333.34 | Related to assets | |||
| Grant funds for TFT-LCD polarizer narrow line (line 5) project | 2,000,000.00 | 500,000.00 | 1,500,000.00 | Related to assets | |||
| Purchase of imported equipment and technology | 677,016.78 | 175,090.20 | 501,926.58 | Related to assets | |||
| Innovation and venture capital for TFT-LCD polarier I project | 200,000.00 | 50,000.00 | 150,000.00 | Related to assets | |||
| Shenzhen polarizing materials and Technology Engineering Laboratory innovation venture capital | 312,500.00 | 50,000.00 | 262,500.00 | Related to assets | |||
| Shenzhen Engineering laboratory polarizing material and technical engineering | 3,125,000.00 | 500,000.00 | 2,625,000.00 | Related to assets |
| Items | December 31,2018 | New grants amount of this period | Profit and loss amount recorded in the current period | Other transfer amount | Othber change | December 31,2019 | Income related to assets |
| Capital funding for Technology Center | 1,875,000.00 | 300,000.00 | 1,575,000.00 | Related to assets | |||
| Subsidy funds to support the introduction of advanced technology | 57,552.41 | 14,388.10 | 43,164.31 | Related to assets | |||
| Local supporting funds for TFT-LCD polarizer Phase II Project (line 6) | 14,250,000.00 | 1,500,000.00 | 12,750,000.00 | Related to assets | |||
| Innovation and venture capital for TFT-LCD polarizer Phase II Project (line 6) | 475,000.00 | 50,000.00 | 425,000.00 | Related to assets | |||
| key technology research and development projects of optical compensation film for polarizer | 4,125,000.00 | 500,000.00 | 3,625,000.00 | Related to assets | |||
| State subsidy for TFT-LCD polarizer Phase II Project (line 6) | 9,500,000.00 | 1,000,000.00 | 8,500,000.00 | Related to assets | |||
| Strategic industries Development fund of Guangdong Province | 23,750,000.00 | 2,500,000.00 | 21,250,000.00 | Related to assets | |||
| Grants of Purchase equipment of TFT-LCD polarizing film phase II project | 28,500,000.00 | 3,000,000.00 | 25,500,000.00 | Related to assets | |||
| Energy saving transformation grant funds | 86,458.56 | 29,642.93 | 56,815.63 | Related to assets | |||
| Old elevator renovation fund subsidies | 1,147,008.67 | 142,255.72 | 1,004,752.95 | Related to assets |
| Items | December 31,2018 | New grants amount of this period | Profit and loss amount recorded in the current period | Other transfer amount | Othber change | December 31,2019 | Income related to assets |
| Polarization Industrialization Project for Super Large-sized TVs (Line 7) Central Budget Investment | 30,000,000.00 | 30,000,000.00 | Related to assets | ||||
| Research & development subsidy for key technologies of ultra-thin IPS polarizer for smart phone terminals | 2,000,000.00 | 2,000,000.00 | Related to assets |
| 5,000,000.00 | 5,000,000.00 | Related to assets | |||||
| Special Subsidy for Improving Atmospheric Environment Quality in Shenzhen | 1,033,507.00 | 1,033,507.00 | Related to assets | ||||
| 2018Discount on Imports of Special Funds for the Development of Foreign Trade and Economic Cooperation | 715,274.00 | 715,274.00 | Related to assets | ||||
| First Premium Subsidy for New Materials | 4,806,400.00 | 4,806,400.00 | Related to income | ||||
| Total | 137,991,698.33 | 1,748,781.00 | 18,475,908.11 | 121,264,571.22 |
(1).According to the "Notice on National Development and Reform Commission to the GeneralOffice of the textile project management of the special funds" (Faigaiban [2006]2841), on December 2006,the Company received "Textile special" funds RMB 2,000,000.00 from Shenzhen Finance Bureau. Thecompany will use 14 years as asset depreciation period for amortization with the corresponding equipmentin current period. The amortization in accordance with the corresponding equipment, The other income incurrent period is RMB142,857.16, the ending balance of uncompleted amortization is RMB428,571.41 .
(2).According to the document of Shenzhen Municipal Development and Reform Commission【2009】 No. 416 that "The Notice On issued the Governmental Investment Plan in 2009 on Zhong KeNew Industrial Internet Security Audit System and Other High-tech Industrialization DemonstrationProject and the Public Testing and Consultation Service of Information Security Industry and otherNational High-tech Industrial Base Platform Projects”, on May 2009, the company received the ShenzhenMunicipal Development and Reform Commission high-tech industrialization demonstration projectsupporting Capital RMB 2 million allocated by Shenzhen City Bureau of Finance for the construction of“The Project of the Construction Line of Polaripiece for TFT-LCD”.Our company will use 10 years asasset depreciation period for amortization in current period. The other income in current period isRMB200,000.00 and the balance amount of unfinished final amortization is RMB0.00.
(3) According to the document of the Office of the State Development and Reform Commission on "TheOffice of the State Development and Reform Commission on the Reply of New Flat-Panel DisplayIndustrialization Special Project” (Development and Reform Office High-Tech【2008】No. 2104), thecompany obtained the state subsidies RMB 10,000,000.00 from the State Development and ReformCommission New Flat-Panel Display Industrialization Special Project for the construction of “The Projectof Polaripiece Industrialization for TFT-LCD”. On June 2009, December 2009 and April 2010, thecompany received the special subsidies of State Development and Reform Commission RMB10,000,000.00. Our company will use 10 years as asset depreciation period for amortization. Thenon-operating income in current period is RMB1,000,000.00, the balance amount of unfinished finalamortization is RMB0.00.
(4) In accordance with the Notice of Forwarding the Reply of General Office of State Development andReform Commission Regarding Special Plan for Strategic Transformation and Industrialization of ColorTV Industry issued by Shenzhen Development and Reform Commission (Shen Fa Gai (2011) No. 823),State Development and Reform Commission approved including the project of industrialization ofpolarizer sheet for TFT-LCD of SAPO Photoelectric into the special plan for strategic transformation andindustrialization of color TV industry in 2010 and appropriated national aid of RMB 10,000,000.00 toSAPO Photoelectric for the research and development in the process of the project of industrialization andthe purchase of required software and hardware equipment. On June 2012 and September 2013, thecompany received the national grants of RMB 10,000,000.00.. According to the Notice of Issuing theGovernmental Investment Plan for 2011 Regarding Demonstration Project of High-tech IndustrializationIncluding Specialized Services Such As Disaster Recovery of Financial Information System issued byShenzhen Development and Reform Commission (Shen Fa Gai (2012) No. 3), the Company receivedsubsidy of RMB 3,000,000.00 for the project of industrialization of polarizer sheet for TFT-LCD in April2012. Our company will use 10 years as asset depreciation period for amortization in current period.Thenon-operating income in current period is RMB1,300,000.00. and the balance amount of unfinished finalamortization is RMB 3,033,333.34.
(5) According to the Notice about the Plan for Supporting the Second Group of Enterprises in Biological,Internet, New Energy and New Material Industries with Special Development Funds (Shen Fa Gai (2011)
No. 1782), the Company received subsidy of RMB 5,000,000.00 for the narrow-width line (line 5) ofphase-I project of polarizer sheet for TFT-LCD on February 2012. The Company planned to amortize thesubsidy over 10 years according to the depreciation period of relevant assets. The non-operating income incurrent period is RMB500,000.00 and the balance amount of unfinished final amortization isRMB1,500,000.00.
(6) On October 2013, The company received the grants for the purchase of imported equipment andtechnology in 2012 of RMB 1,750,902.00, the Company planned to amortize the subsidy over 10 yearsaccording to the depreciation period of relevant assets.The non-operating income in current period isRMB175,090.20 and the balance amount of unfinished final amortization is RMB501,926.58.
(7) On December 2013，The company received the funds for innovation and entrepreneurship of TFT-LCDpolarizing project from Pingshan New District Development and Finance Bureau of RMB500,000.00(matching funding category),the Company planned to amortize the subsidy over 10 yearsaccording to the depreciation period of relevant assets. The non-operating income in current period isRMB50,000.00 and the balance amount of unfinished final amortization is RMB150,000.00 .
(8) On December 2013，The company received the funds for innovation and entrepreneurship of TFT-LCDpolarizing project from Pingshan New District Development and Finance Bureau of RMB500,000.00(matching funding category),the Company planned to amortize the subsidy over 10 yearsaccording to the depreciation period of relevant assets. The non-operating income in current period isRMB50,000.00 and the balance amount of unfinished final amortization is RMB 262,500.00 .
(9) According to the Approval of Application of SAPO Photoelectric for Project Funds for ShenzhenPolarization Material and Technology Engineering Laboratory (Shen Fa Gai (2012) No. 1385), ShenzhenPolarization Material and Technology Engineering Laboratory was approved to be established on thestrength of SAPO Photoelectric with total project investment of RMB 24,390,000.00. As approved byShenzhen Municipal People's Government, this project was included in the plan for supporting the fourthgroup of enterprises with special fund for the development of strategic new industries in Shenzhen in 2012(new material industry). According to the Notice of Issuing the Plan for Supporting the Fourth Group ofEnterprises with Special Fund for Development of Strategic New Industries in Shenzhen in 2012 (Shen FaGai (2012) No. 1241), the Company received subsidy of RMB 5,000,000.00 on December 2012 forpurchasing instruments and equipment and improving existing technological equipment and test conditions.The fund gap will be filled by the Company through raising funds by itself. the Company planned toamortize the subsidy over 10 years according to the depreciation period of relevant assets. Thenon-operating income in current period is RMB500,000.00 and the balance amount of unfinished finalamortization is RMB2,625,000.00 .
(10) According to the “Announcement on the Identification of Technology Centers of 24 Enterprisesincluding Shenzhen Yuanwanggu Information Technology Joint Stock Company Limited as the MunicipalResearch and Development Centers (Technical Center)” (SJMXXJS [2013] No.137), the research anddevelopment center of SAPO has been regarded as 2012 annual municipal R&D center. In December 2013,the company has received the funding subsidy of RMB3 million for the construction of the technicalcenter. the Company planned to amortize the subsidy over 10 years according to the depreciation period ofrelevant assets. The non-operating income in current period is RMB300,000.00 and the balance amount ofunfinished final amortization is RMB1,575,000.00.
(11)On March 2014 the company received the introduction of advanced technology import subsidy fundsof RMB 143,881.00 from Shenzhen Finance Committee, the Company planned to amortize the subsidy
over 10 years according to the depreciation period of relevant assets. The non-operating income in currentperiod is RMB14,388.10 and the balance amount of unfinished final amortization is RMB43,164.31.
(12)According to the "Shenzhen Municipal Development and Reform Commission Reply for SAPOapplication for local matching funds of TFT-LCD polarizing film II project (Line 6) " (Shenzhen DRC[2013]No. 1771), the company obtained TFT-LCD polarizing film II project (line 6) local matching fundsof RMB 15,000,000.00 in April 2014. TFT-LCD polarizer Phase II project (Line 6) hit the expectedavailable state and transferred to fixed assets in June 2018. Amortized by a period of 10 years indepreciation of relevant assets, RMB1,500,000.00 was included into other incomes in the current period andthe ending outstanding balance was RMB 12,750,000.00 .
(13) In December 2014, the company received innovation venture capital (matching funding category)for Ping Shan District Development and Finance Bureau of TFT-LCD polarizing film II project (line 6) ofRMB 500,000.00. TFT-LCD polarizer Phase II project (Line 6) hit the expected available state andtransferred to fixed assets in June 2018. Amortized by a period of 10 years in depreciation of relevantassets, RMB 50,000.00 was included into other incomes in the current period and the ending outstandingbalance was RMB425,000.00.
(14)On Jan. 2015, the company received RMB 5 million of grants for key technologyresearch and development projects of optical compensation film for polarizer from Shenzhen Scientificand Technological Innovation Committee. The company has reached the expected date of use of theassets., the Company planned to amortize the subsidy over 10 years according to the depreciation period ofrelevant assets. The other income in current period is RMB500,000.00 and the balance amount of unfinishedfinal amortization is RMB3,625,000.00.
(15)According to "National Development and Reform Commission issued on industrialtransformation and upgrading projects (2
nd
industrial restructuring) notify the central budget for 2014investment plan" (NDRC Investment [2014] No. 1280), the company obtained TFT- LCD polarizer IIproject (line 6) state grants of RMB 10,000,000.00 in December 2014. TFT-LCD polarizer Phase II project(Line 6) hit the expected available state and transferred to fixed assets in June 2018. Amortized by a periodof 10 years in depreciation of relevant assets, RMB 1,000,000.00 was included into other incomes in thecurrent period and the ending outstanding balance was RMB8,500,000.00.
(16)According to “Reply on Congregating Development in Emerging Industrial Area Strategic PilotImplement Scheme of Guangdong Province ”(Reform and Development Office High-Tech [2013]No.2552,On December 2015, the Company received RMB20 million of the pilot project fund( period IIproject of TFT-LCD polarizer).On October 2016, the Company received RMB 5 million of Shenzhenstrategic emerging industries and the future development of industrial matching funds, TFT-LCD polarizerPhase II project (Line 6) hit the expected available state and transferred to fixed assets in June 2018.Amortized by a period of 10 years in depreciation of relevant assets, RMB 2,500,000.00 was included intoother incomes in the current period and the ending outstanding balance was RMB 21,250,000.00.
(17). According to Reform and Development Commission of Shenzhen Municipality sending thenotice of “Reply of National Reform and Development Office on Investing in Petrifaction and MedicineProject within Central Budget of 2013 for Industry Structure Adjustment Special Project”(Reform andDevelopment Commission of Shenzhen Municipality [2013]No.1449) , the Company received 30 millionRMB of new production line of TFT-LCD polarizer project period II and equipment purchase subsidy inAugust 2015 ,December 2015 and September 2016. TFT-LCD polarizer Phase II project (Line 6) hit theexpected available state and transferred to fixed assets in June 2018. Amortized by a period of 10 years indepreciation of relevant assets, RMB 3,000,000.00 was included into other incomes in the current period and
the ending outstanding balance was RMB 25,500,000.00.
(18) In 2015 and In 2016, the Company received the subsidy funds of 202,608.00 RMB and34,535.45 RMB on energy-saving reconstruction, amortized by 8-year depreciation life of the relevantasset, the Other income was RMB 29,642.93 at the current period, the ending balance without amortizationwas RMB56,815.63.
(19). In 2017, the company received 1,218,640.00 yuan for the old elevator upgrade subsidy, thecompany received 160,800.00 yuan for the old elevator upgrade subsidy in 2018,which was apportionedaccording to the depreciation period of the relevant assets. The current period was included in otherincome of 115,760.00 yuan, and the unassessed balance at the end of the period was 986,836.67 yuan.Subsidiaries that run property management business were subsidized by RMB 164,580.00 for updating andtransforming old and obsolete elevators this year and this subsidy was asset-related; RMB 11,755.72 wasincluded into the other income in the current period and the ending outstanding balance was RMB
148,416.28.
(20) According to the Notice of the Ministry of Industry and Information Technology of the NationalDevelopment and Reform Commission for Releasing the Central Budgetary Investment Plan of the 2017of the Technical Transformation of the Electronic Information Industry (NDRC Investment [2017] No.1649), the company received oversize TV for use in November 2017. In November 2017, the companyreceived an central budgetary investment of RMB 30,000,000.00 of the oversized TV polarizer industryproject. The company shall transfer the deferred income to the current profit or loss for the period ofdepreciation from the date when the relevant assets are ready for their intended use.
(21) In accordance with the development plans and policies of Shenzhen Municipality for Strategicemerging Industries, the Management Measures of Shenzhen City on Funds for Scientific andTechnological Research and Development, the Management Measures of Shenzhen City on Science andTechnology Plan Project and other relevant documents, Shenzhen Science and Technology InnovationCommission and SAPO Photoelectric completed the development of the key technology of the 20170535ultra-thin polarizer used in IPS smart phone terminal in the Shenzhen Science and Technology Plan issuedby SFG [2017] No. 1447 document. In February 2018, the company received funding from ShenzhenScience and Technology Innovation Commission of 2,000,000 yuan for R & D. The company will transferthe deferred income to the current profit and loss according to the depreciation period from the date whenthe relevant assets reach the expected usable status.
(22). According to Measures for Management of Science and Technology Research & DevelopmentFunds in Shenzhen, Measures for Management of Projects in Shenzhen Municipal Science andTechnology Program and other documents concerned, SAPO Photoelectric Co., Ltd. and ShenzhenScience and Technology Innovation Committee entered into a Contract of Projects in Shenzhen MunicipalScience and Technology Program through consultation to complete development of key techniques forhigh-performance polarizers for 2018N007 jumbo display panels in the program delivered in Shen Fa Gai[2018] No.324 document. The Company was granted with a financial subsidy of RMB 5,000,000.00 thisyear. The Company amortized and transferred the deferred income into the current profit and loss byperiod of depreciation after relevant assets hit the expected available state.
(23). According to the Measures of Shenzhen Municipality on Subsidy for Improving AtmosphericEnvironmental Quality (2018-2020) (SRHG [2018] No.2), in December 2019, the Company received asubsidy of 1,033,507.00 yuan from Shenzhen Municipal Human Settlements Committee. The Companycompleted the transformation of the relevant assets into fixed assets in December 2019. The Company will
allocate the relevant assets according to their depreciation years in January 2020, with an unamortizedamount of 1,033,507.00 yuan at the end of the period.
(24). According to the relevant provisions of the Notice of the Ministry of Finance and the Ministryof Commerce on the Key Work of Special Funds for the Development of Foreign Trade in 2018 (CH [2018]No.91) and the Catalogue of Technologies and Products Encouraged for Import (2016 Edition), In August2019, the Company received a special interest subsidy of 715,274.00 yuan from Shenzhen MunicipalBureau of Commerce for the central foreign trade development fund in 2018, and applied for 3,809,994.77yuan as the imported interest subsidy equipment amount, 715,274.00 yuan as the amortized amount in thecurrent period and 0.00 yuan as the unamortized amount at the end of the period.
(25). Compliance with the document spirit of the Notice of Ministry of Industry and InformationTechnology, Ministry of Finance and China Insurance Regulatory Commission on Piloting an InsuranceCompensation Mechanism for the First Batch of Key New Materials (Gong Xin Bu Lian Yuan [2017]No.222 document). In December 2018, the Company received a relevant premium subsidy of RMB4,806,400.00 from the Ministry of Industry,In April and July 2019, the Company paid the relevantpremium of 5,988,205.00 yuan, and amortized the premium subsidy of 4,806,400.00 yuan, with anunamortized amount of 0.00 yuan at the end of the period.
30.Stock capital
| Items | December 31,2018 | Changed（+，-） | December 31,2019 | ||||
| Issuance of new share | Bonus shares | Capitalization of public reserve | Other | Subtotal | |||
| Total shares | 511,274,149.00 | -1,935,720.00 | -1,935,720.00 | 509,338,429.00 | |||
| Items | December 31,2018 | Increase in the current period | Decrease in the current period | December 31,2019 |
| Share premium | 1,848,960,987.54 | 9,155,955.60 | 1,839,805,031.94 | |
| Other | 16,755,996.09 | 118,361,220.00 | 135,117,216.09 | |
| Total | 1,865,716,983.63 | 118,361,220.00 | 9,155,955.60 | 1,974,922,248.03 |
32. Treasury stock
| Items | December 31,2018 | Increase in the current period | Decrease in the current period | December 31,2019 |
| Treasury stock | 27,230,679.00 | 11,091,675.60 | 16,139,003.40 | |
| Total | 27,230,679.00 | 11,091,675.60 | 16,139,003.40 |
33.Other Comprehensive income
| Items | December 31,2018 | Changes in accounting policies affecting amounts | January 1,2019 | Amount of current period | December 31,2019 | |||||
| Amount incurred before income tax | Less：Amount transferred into profit and loss in the current period that recognied into other comprehensive income in prior period | Less：Prior period included in other composite income transfer to retained income in the current period | Less：Income tax expenses | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||||
| 1. Other comprehensive income that cannot be reclassified in the loss and gain in the future | 170,899,572.18 | 170,899,572.18 | 7,364,036.51 | 58,238,941.03 | 1,841,009.12 | -52,715,913.64 | 118,183,658.54 | |||
| Changes in fair value of investments in other equity instruments | 170,899,572.18 | 170,899,572.18 | 7,364,036.51 | 58,238,941.03 | 1,841,009.12 | -52,715,913.64 | 118,183,658.54 | |||
| 2.Other comprehensive | 1,339,208.41 | 1,339,208.41 | 214,916.36 | 214,916.36 | 1,554,124.77 | |||||
| Items | December 31,2018 | Changes in accounting policies affecting amounts | January 1,2019 | Amount of current period | December 31,2019 | |||||
| Amount incurred before income tax | Less：Amount transferred into profit and loss in the current period that recognied into other comprehensive income in prior period | Less：Prior period included in other composite income transfer to retained income in the current period | Less：Income tax expenses | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||||
| income reclassifiable to profit or loss in subsequent periods | ||||||||||
| Translation differences of financial statements denominated | 1,339,208.41 | 1,339,208.41 | 214,916.36 | 214,916.36 | 1,554,124.77 | |||||
| Total of other comprehensive income | 1,339,208.41 | 170,899,572.18 | 172,238,780.59 | 7,578,952.87 | 58,238,941.03 | 1,841,009.12 | -52,500,997.28 | 119,737,783.31 | ||
34.Surplus reserve
| Items | December 31,2018 | Changes in accounting policies affecting amounts | January 1,2019 | Increase in the current period | Decrease in the current period | December 31,2019 |
| Statutory surplus reserve | 80,004,803.23 | 83,980,353.84 | 6,616,569.55 | 90,596,923.39 | ||
| Total | 80,004,803.23 | 83,980,353.84 | 6,616,569.55 | 90,596,923.39 |
| Items | Amount of this period | Amount of last period |
| Before adjustments: Retained profits at the period end | -57,774,473.41 | -32,266,087.44 |
| Adjustment: Total unappropriated profits at the beginning of the year | 35,779,955.53 | |
| After adjustments: Retained profits at the period beginning | -21,994,517.88 | -32,266,087.44 |
| Add: Net profit attributable to owners of the Company for the period | 19,679,910.43 | -22,980,624.93 |
| Other consolidated earnings carried forward to retained earnings attributable to owners of the Company for the period | 58,238,941.03 | — |
| Less: Appropriation to statutory surplus reserve | 6,616,569.55 | 2,527,761.04 |
| Retained profits at the period end | 49,307,764.03 | -57,774,473.41 |
| Items | Amount of current period | Amount of previous period |
| Income | Cost | Income | Cost | |
| Main business cost | 2,099,197,694.45 | 1,915,880,730.30 | 1,266,481,655.09 | 1,136,768,017.37 |
| Other business cost | 58,987,161.26 | 57,614,878.05 | 5,875,116.25 | 5,482,267.30 |
| Total | 2,158,184,855.71 | 1,973,495,608.35 | 1,272,356,771.34 | 1,142,250,284.67 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Domestic and foreign trade | 517,020,991.54 | 483,603,729.67 | 278,139,524.35 | 271,514,631.70 |
| Manufacturing | 1,475,804,647.66 | 1,408,148,827.10 | 879,409,830.28 | 839,415,041.00 |
| Property management, leasing | 106,372,055.25 | 24,128,173.53 | 98,327,018.46 | 25,838,344.67 |
| Glycol bulk trade | 10,605,282.00 | |||
| Total | 2,099,197,694.45 | 1,915,880,730.30 | 1,266,481,655.09 | 1,136,768,017.37 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Property and rental income | 106,372,055.25 | 24,128,173.53 | 98,327,018.46 | 25,838,344.67 |
| Textile income | 46,047,351.10 | 39,166,964.15 | 47,188,632.17 | 41,092,884.63 |
| Polaroid income | 1,429,757,296.56 | 1,368,981,862.95 | 832,221,198.11 | 798,322,156.37 |
| Trade income | 517,020,991.54 | 483,603,729.67 | 278,139,524.35 | 271,514,631.70 |
| Glycol bulk trade | 10,605,282.00 | |||
| Total | 2,099,197,694.45 | 1,915,880,730.30 | 1,266,481,655.09 | 1,136,768,017.37 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Domestic | 1,922,327,308.13 | 1,751,836,922.09 | 939,119,434.34 | 819,468,645.28 |
| Oversea | 176,870,386.32 | 164,043,808.21 | 327,362,220.75 | 317,299,372.09 |
| Total | 2,099,197,694.45 | 1,915,880,730.30 | 1,266,481,655.09 | 1,136,768,017.37 |
| Name | Income | Proportion |
| Name | Income | Proportion |
| First | 725,983,985.65 | 33.64 |
| Second | 256,086,053.64 | 11.87 |
| Third | 141,106,466.92 | 6.54 |
| Fourth | 129,050,621.86 | 5.98 |
| Fifth | 68,422,745.04 | 3.17 |
| Total | 1,320,649,873.11 | 61.20 |
| Items | Amount of current period | Amount of previous period |
| Urban construction tax | 665,327.79 | 645,044.28 |
| Education surcharge | 477,821.51 | 462,140.55 |
| House taxes | 5,772,193.68 | 5,803,460.97 |
| Other | 1,550,800.42 | 1,131,491.82 |
| Total | 8,466,143.40 | 8,042,137.62 |
| Items | Amount of current period | Amount of previous period |
| Wage | 3,900,045.35 | 3,301,333.20 |
| Transportation changes | 6,328,597.94 | 4,246,929.38 |
| Exhibition fee | 131,576.37 | 124,705.56 |
| Business expenses | 380,985.91 | 442,238.21 |
| Samples and product loss | 708,859.57 | 659,642.03 |
| Insurance expenses | 5,649,250.00 | |
| Sell | 3,077,231.50 | |
| Other | 608,532.02 | 861,710.67 |
| Total | 20,785,078.66 | 9,636,559.05 |
| Items | Amount of current period | Amount of previous period |
| Items | Amount of current period | Amount of previous period |
| Wage | 57,632,391.81 | 52,311,665.52 |
| Including ：Equity incentive fee | -356,400.00 | |
| Depreciation of fixed assets | 11,714,741.86 | 11,005,866.31 |
| Water and electricity | 2,736,839.25 | 3,749,739.12 |
| Agency expenses | 6,188,892.57 | 3,857,237.09 |
| Intangible assets amortization | 1,362,819.51 | 1,334,685.09 |
| Travel expenses | 1,506,687.67 | 1,606,997.78 |
| Office expenses | 878,072.35 | 926,011.06 |
| Business entertainment | 922,668.63 | 1,067,901.96 |
| Lawsuit expenses | 327,254.72 | 158,490.57 |
| Repair charge | 2,030,445.26 | 2,883,879.67 |
| Property insurance | 483,245.82 | 424,962.59 |
| Low consumables amortization | 110,298.00 | 26,694.80 |
| Board fees | 65,020.00 | |
| Other | 10,976,484.92 | 9,171,287.74 |
| Total | 96,870,842.37 | 88,590,439.30 |
| Items | Amount of current period | Amount of previous period |
| Wage | 13,430,653.87 | 13,172,333.89 |
| Material | 34,839,486.54 | 24,537,372.56 |
| Depreciation | 2,782,174.41 | 2,480,311.39 |
| Fuel & Power | 1,447,036.66 | 835,650.39 |
| Travel expenses | 356,165.02 | 460,801.83 |
| Other | 323,197.83 | 465,316.09 |
| Total | 53,178,714.33 | 41,951,786.15 |
| Items | Amount of current period | Amount of previous period |
| Interest expenses | 4,893,018.58 | 14,179,121.73 |
| Items | Amount of current period | Amount of previous period |
| Interest income | -8,593,894.58 | -27,438,299.41 |
| Exchange loss | 16,760,131.65 | 10,070,501.67 |
| Fees and other | 2,803,543.99 | 2,217,014.64 |
| Total | 15,862,799.64 | -971,661.37 |
| Items | Amount of current period | Amount of previous period |
| Govemment Subsidy | 27,547,902.92 | 17,228,202.21 |
| Total | 27,547,902.92 | 17,228,202.21 |
| Items | Amount of this period | Amount of last period | Assets-related/income -related |
| Subsidy amortization of the project of TFT-LCD polarizer industrialization | 1,300,000.00 | 1,300,000.00 | Related to assets |
| National grant funds for new flat panel display industry | 1,000,000.00 | 1,000,000.00 | Related to assets |
| Grant funds for TFT-LCD polarizer narrow line (line 5) project | 500,000.00 | 500,000.00 | Related to assets |
| Shenzhen polarizing material and technical engineering | 500,000.00 | 500,000.00 | Related to assets |
| Amortization of funds for the Development of key Technology of Optical compensation Film for Polarizer | 500,000.00 | 500,000.00 | Related to assets |
| Subsidy funds to support the introduction of advanced technology | 300,000.00 | 300,000.00 | Related to assets |
| Old Elevator Renovation Fund Subsidy | 142,255.72 | 120,168.00 | Related to assets |
| National grant funds for new flat panel display industry | 200,000.00 | 200,000.00 | Related to assets |
| Imported equipment and technology discount funds | 175,090.20 | 175,090.20 | Related to assets |
| Textile special funds | 142,857.16 | 142,857.16 | Related to assets |
| Innovation entrepreneurship fund amortization of TFT-LCD polarizer period I project for Pingshan New District Development and Finance Bureau | 50,000.00 | 50,000.00 | Related to assets |
| Shenzhen Engineering laboratory polarizing material and technical engineering | 50,000.00 | 50,000.00 | Related to assets |
| Energy saving transformation grant funds amortization | 29,642.93 | 29,642.93 | Related to assets |
| Financing aid amortization of introducing advanced technique | 14,388.10 | 14,388.10 | Related to assets |
| Amortization of supporting funds for TFT-LCD polarizer phase II project (line 6) | 1,500,000.00 | 750,000.00 | Related to assets |
| Amortization of production plant and equipment subsidy for line 6 | 4,000,000.00 | 2,000,000.00 | Related to assets |
| Pingshan new Area development and finance bureau special support fund amortization | 50,000.00 | 25,000.00 | Related to assets |
| Shenzhen finance committee second batch of enterprise research and development subsidy funds | 2,500,000.00 | 1,250,000.00 | Related to assets |
| Cost reduction subsidy for industrial and commercial electricity in Shenzhen in 2018 | 6,486,248.28 | 4,613,272.07 | Related to income |
| Shenzhen standard special fund | 360,000.00 | 965,000.00 | Related to income |
| Pingshan science and technology innovation service department national high enterprise award | 30,000.00 | Related to income | |
| Tax official fee refund | 416,818.25 | Related to income | |
| First Premium Subsidy for New Materials | 4,806,400.00 | Related to income | |
| Other | 25,087.51 | 38,872.35 | Related to income |
| Shenzhen Pingshan District Finance Bureau Pingshan District 2019 foreign trade steady growth special funding | 360,000.00 | Related to income | |
| Cuizhu Street 2018 Old Residential Property Management Support Project Qualified Property Tianbei Compound | 30,000.00 | Related to income | |
| Stable Post Subsidy | 174,114.77 | 237,911.40 | Related to income |
| Second Enterprise R & D Subsidy Fund of Shenzhen Finance Committee | 1,935,000.00 | 2,430,000.00 | Related to income |
| Patent grants | 6,000.00 | Related to income | |
| Total | 27,547,902.92 | 17,228,202.21 |
| Items | Amount of this period | Amount of last period |
| Long-term equity investment returns accounted for by equity method | -7,404,083.27 | 1,260,154.95 |
| Investment income from the disposal of long-term equity investment | 55,481,817.13 |
| Items | Amount of this period | Amount of last period |
| Hold the investment income during from available-for-sale financial assets | — | 4,264,611.76 |
| Dispose of proceeds from investments available for sale of financial assets | — | -6,002,923.49 |
| Dividend income earned during investment holdings in other equity instruments | 4,654,009.67 | — |
| structured deposit interest | 25,306,786.72 | — |
| Trust income | 52,271,862.25 | |
| Total | 78,038,530.25 | 51,793,705.47 |
| Items | Amount of this period | Amount of last period |
| Loss of bad debts in other receivables | 6,929,467.72 | — |
| Loss of bad accounts receivable | 76,423.21 | — |
| Total | 7,005,890.93 | — |
| Items | Amount of this period | Amount of last period |
| Losses on bad debt | -17,594,190.59 | |
| Loss of inventory price | -97,172,532.71 | -86,870,737.13 |
| Loss on impairment of financial assets available for sale | -873,360.18 | |
| Loss on impairment of fixed assets | -1,010,032.85 | |
| Total | -97,172,532.71 | -106,348,320.75 |
| Items | Amount of current period | Amount of previous period | Amount included in non-recurrent gains and losses for the year |
| Gains & losses on foreign investment in fixed assets | 3,967.97 | 3,967.97 | |
| Gains& losses on the disposal of fixed assets | 3,967.97 | 3,967.97 | |
| Total | 3,967.97 | 3,967.97 |
47. Non-Operation income
| Items | Amount of current period | Amount of previous period | Amount included in non-recurrent gains and losses for the year |
| Gains from disposal of non-current assets | 39,823.01 | 39,823.01 | |
| Including：Fixed assets | 39,823.01 | 39,823.01 | |
| Return insurance settlement income | 4,033,846.00 | 4,033,846.00 | |
| Other | 929,879.33 | 1,265,178.66 | 929,879.33 |
| Total | 5,003,548.34 | 1,265,178.66 | 5,003,548.34 |
| Items | Amount of current period | Amount of previous period | Amount included in non-recurrent gains and losses for the year |
| Non-current asset Disposition loss | 414,453.28 | 97,477.14 | 414,453.28 |
| Fine expenses | 6,000.00 | 6,000.00 | |
| Other | 121.79 | 121,626.64 | 121.79 |
| Total | 420,575.07 | 219,103.78 | 420,575.07 |
| Items | Amount of current period | Amount of previous period |
| Current income tax expense | 28,069,828.99 | 12,440,996.95 |
| Deferred income tax expense | -10,748.77 | -3,561,401.84 |
| Total | 28,059,080.22 | 8,879,595.11 |
| Items | Amount of current period |
| Total profits | 9,532,401.59 |
| Income tax computed in accordance with the applicable tax rate | 2,383,100.40 |
| Effect of different tax rate applicable to the subsidiary Company | 9,445,356.09 |
| Influence of income tax before adjustment | 178,201.63 |
| Influence of non taxable income | 3,471,893.40 |
| Impact of non-deductible costs, expenses and losses | 221,237.56 |
| Affect the use of deferred tax assets early unconfirmed deductible losses | -775,053.15 |
| The current period does not affect the deferred tax assets recognized deductible temporary differences or deductible loss | 19,522,497.03 |
| Tax rate adjustments result in changes in the balance of deferred income tax assets/liabilities at the beginning of the year | 5,458.59 |
| Impact of additional deductions for R & D expense | -5,982,605.36 |
| Impact of income tax relief preferences | -411,005.97 |
| Income tax expense | 28,059,080.22 |
| Items | Amount of current period | Amount of previous period |
| Letter of Credit Deposit | 32,712,277.24 | |
| Interest income and other | 21,399,077.97 | 28,377,924.90 |
| Government Subsidy | 7,584,936.53 | 20,452,835.82 |
| Customs bonds | 1,454,781.62 | |
| Ethylene glycol bulk trade | 249,057,800.00 | |
| Total | 61,696,291.74 | 299,343,342.34 |
| Items | Amount of current period | Amount of previous period |
| Structured deposits, financial products, principal and income | 4,093,427,051.70 | 4,170,920,804.54 |
| L/C margin for purchase of line 7 equipment | 71,030,367.00 |
| Items | Amount of current period | Amount of previous period |
| Total | 4,164,457,418.70 | 4,170,920,804.54 |
| Items | Amount of current period | Amount of previous period |
| Structured deposits, financial products, principal and income | 4,360,000,000.00 | 3,625,700,000.00 |
| L/C margin for purchase of line 7 equipment | 196,430,000.00 | |
| Total | 4,556,430,000.00 | 3,625,700,000.00 |
| Items | Amount of current period | Amount of previous period |
| Performance compensation | 197,268,700.00 | |
| Borrowing funds | 6,506,454.17 | |
| Total | 203,775,154.17 |
| Items | Amount of current period | Amount of previous period |
| Restricted stock of stock repurchase incentive object | 11,091,675.60 | |
| Borrowing funds | 2,700,000.00 | |
| Total | 13,791,675.60 |
| Supplement Information | Amount of current period | Amount of previous period |
| I. Adjusting net profit to cash flow from operating activities | ||
| Net profit | -18,526,678.63 | -62,302,707.38 |
| Supplement Information | Amount of current period | Amount of previous period |
| Add: Impairment loss provision of assets | 35,134,984.42 | 56,159,345.95 |
| Credit impairment losses | -7,005,890.93 | — |
| Depreciation of fixed assets, oil and gas assets and consumable biological assets | 120,272,039.47 | 99,629,480.53 |
| Amortization of intangible assets | 1,362,819.51 | 1,334,685.09 |
| Amortization of Long-term deferred expenses | 505,932.97 | 285,940.05 |
| Loss on disposal of fixed assets, intangible assets and other long-term deferred assets | -3,967.97 | |
| Loss on scrap of fixed assets | 374,630.27 | 97,477.14 |
| Loss on fair value changes | ||
| Financial cost | 4,734,103.39 | -727,282.72 |
| Loss on investment | -78,038,530.25 | -51,793,705.47 |
| Decrease in deferred income tax assets | -10,748.77 | -3,561,401.84 |
| Increased of deferred income tax liabilities | ||
| Decrease of inventories | 12,010,403.04 | -200,819,304.94 |
| Decease of operating receivables | 289,069,889.61 | -394,843,085.92 |
| Increased of operating Payable | 23,266,802.37 | 96,402,638.36 |
| Other | -356,400.00 | |
| Net cash flows arising from operating activities | 383,145,788.50 | -460,494,321.15 |
| II. Significant investment and financing activities that without cash flows: | ||
| Debt-to-capital conversion | ||
| Convertible loan due within 1 year | ||
| Fixed assets acquired under financial lease | ||
| 3．Movement of cash and cash equivalents： | ||
| Ending balance of cash | 268,646,588.18 | 1,133,574,235.22 |
| Less: Beginning balance of cash equivalents | 1,133,574,235.22 | 1,161,240,139.33 |
| Add：Ending balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase of cash and cash equivalents | -864,927,647.04 | -27,665,904.11 |
(2)Composition of cash and cash equivalents
| Items | Year-end balance | Year-beginning balance |
| I. Cash | 268,646,588.18 | 1,133,574,235.22 |
| Including：Cash at hand | 11,091.94 | 13,559.60 |
| Demand bank deposit | 268,424,080.67 | 1,133,556,630.43 |
| Demand other monetary funds | 211,415.57 | 4,045.19 |
| II. Cash equivalents | ||
| III. Balance of cash and cash equivalents at the period end | 268,646,588.18 | 1,133,574,235.22 |
| Inlduding：Use of restricted cash and cash equivalents by parent companies or subsidiaries within grou |
| Items | Book value at the end of the period | Restricted reason |
| Monetary fund | 136,975,844.72 | Deposit |
| Total | 136,975,844.72 |
| Items | Closing foreign currency balance | Exchange rate | Closing convert to RMB balance |
| Monetary funds | |||
| Including：USD | 1,363,560.55 | 6.9762 | 9,512,471.11 |
| HKD | 842,898.28 | 0.89578 | 755,051.42 |
| JPY | 185,763,316.00 | 0.0641 | 11,907,428.56 |
| Account receivable | |||
| Including：USD | 1,224,165.15 | 6.9762 | 8,540,020.92 |
| HKD | 278,280.00 | 0.89578 | 249,277.66 |
| Other receivable | |||
| Including：USD | 37,399.02 | 6.9762 | 260,903.04 |
| Account payable |
| Including：USD | 2,253,789.92 | 6.9762 | 15,722,889.24 |
| JPY | 1,606,412,540.42 | 0.0641 | 102,971,043.84 |
| Other payable | |||
| Including：USD | 676,686.00 | 6.9762 | 4,720,696.87 |
| HKD | 1,401,053.73 | 0.8958 | 1,255,063.93 |
| JPY | 3,732,900.00 | 0.0641 | 239,278.89 |
| Euro | 27,388.00 | 7.8155 | 214,050.91 |
| Subsidiary | Main operation | Registered place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| Shenzhen Lishi Industry Development Co., Ltd | Shenzhen | Shenzhen | Domestic trade, Property Management | 100.00 | Establish | |
| Shenzhen Huaqiang Hotel | Shenzhen | Shenzhen | Accommodation, restaurants, business center; | 100.00 | Establish | |
| Shenfang Property Management Co., Ltd. | Shenzhen | Shenzhen | Property Management | 100.00 | Establish | |
| Shenzhen Beauty Century Garment Co., Ltd. | Shenzhen | Shenzhen | Production of fully electronic jacquard knitting whole shape | 100.00 | Establish | |
| SAPO Photoelectric Co., Ltd | Shenzhen | Shenzhen | Operating import and export business | 60.00 | Purchase | |
| Shenzhen Shenfang Import & export Co., Ltd. | Shenzhen | Shenzhen | Operating import and export business | 100.00 | Establish | |
| Shengtou (Hongkong) Co.,Ltd. | Hongkong | Hongkong | Production and sales of polarizer | 100.00 | Establish | |
| Joint venture or associated | Place of | Place of | Nature | Holding proportion(%) | The accounting |
| enterprise | operation | registration | Directly | treatment of investment in | ||
| Shenzhen Changlianfa Printing and dyeing Company | Shenzhen | Shenzhen | Property leasing | 40.25 | Equity method | |
| Jordan Garment Factory | Jordan | Jordan | Manufacturing | 35.00 | Equity method | |
| Yehui International Co., Ltd. | Hongkong | Hongkong | Manufacturing | 22.75 | Equity method | |
| Anhui Huapeng Textile Co., Ltd. | Anhui | Anhui | Manufacturing | 50.00 | Equity method | |
| Shenzhen Guanhua Printing & Dyeing Co.,Ltd. | Shenzhen | Shenzhen | Property leasing | 50.16 | Equity method |
| Items | Year-end balance/ Amount of current period | Year-beginning balance/ Amount of previous period |
| Joint venture： | ||
| Total book value of the investment | 139,721,906.46 | 17,425,766.44 |
| Total amount of the pro rata calculation of the following items | ||
| --Net profit | -4,150,870.95 | 671,689.37 |
| --Other Comprehensive income | ||
| --Total comprehensive income | -4,150,870.95 | 671,689.37 |
| Dividends received from joint ventures this period | 2,000,000.00 | 400,000.00 |
| Associated enterprise： | ||
| Total book value of the investment | 12,488,023.26 | 15,526,319.22 |
| Total amount of the pro rata calculation of the following items | ||
| --Net profit | -3,253,212.32 | 588,465.58 |
| --Other Comprehensive income | 214,916.36 | 621,283.04 |
| --Total comprehensive income | -3,038,295.96 | 1,209,748.62 |
| Dividends received from joint ventures this period | 694,713.40 |
within certain scope.（I）Credit RiskThe credit risk of the company is primarily attributable to bank deposits and receivables. Of which, thebank deposits are mainly deposited in the medium and large commercial banks with strength, highcredibility. For the receivables, the company has developed the relevant policies to control the credit risk,and set up the corresponding debt and credit limit after the credit status of debtor is evaluated based onfinancial condition of debtor, credit history, external ratings, possibility of guarantee obtained from thethird party. Meanwhile, the company shall regularly monitor the debtor’s credit history. With regard to thebad credit record for the debtor, the company shall adopt the written reminder, shortening or cancel ofcredit period to ensure the overall credit risks within the controllable scope.（II）Market riskMarket risk of financial instrument arises from changes in fair value or future cash flow of financialinstruments affected by market price . Market risks includes foreign exchange risk and interest risk.
(1) Interest Rate Risk
The interest rate risk faced by the company is mainly from the bank borrowings. The company is faced theinterest rate risk of the cash flow due to the financial liability of the floating interest rate, and faced theinterest rate risk of the fair value due to the financial liability of the fixed interest rate. The company shalldetermine the relative proportion in the fixed and floating interest rate contracts.
(2) Foreign Exchange Risk
The foreign exchange risks faced by the company are mainly from the financial assets and liabilities basedon the price of US dollar and JPY. The company matches the income and expenditure of foreign currencyas far as possible in order to reduce the foreign exchange risk.（III）Liquidity riskLiquidity risk refers to fund shortage problems when fulfilling obligations settled in cash or other financialassets. The company shall guarantee to have the sufficient funds to repay the debts through monitoring thecash balance, the marketable securities available to be cash and the rolling forecast for the future cashflow.XI. The disclosure of the fair value(I) Closing fair value of assets and liabilities calculated by fair value
| Items | Closing fair value | |||
| Fir value measurement items at level 1 | Fir value measurement items at level 2 | Fir value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | ||||
| 1. Transactional financial assets | 830,000,000.00 | 830,000,000.00 | ||
| Financial assets measured at fair value through changes in comprehensive income | 830,000,000.00 | 830,000,000.00 | ||
| 2.Receivable financing | 17,933,597.98 | 17,933,597.98 | ||
| 3.Other equity instrument investment | 8,940,598.31 | 239,841,348.42 | 248,781,946.73 | |
| Items | Closing fair value | |||
| Fir value measurement items at level 1 | Fir value measurement items at level 2 | Fir value measurement items at level 3 | Total | |
| Total of Consistent fair value measurement | 8,940,598.31 | 1,087,774,946.4 | 1,096,715,544.71 | |
| Name | Registered address | Nature | Registered capital （RMB10,000) | The parent company of the Company's shareholding ratio | The parent company of the Company’s vote ratio |
| Name | Registered address | Nature | Registered capital （RMB10,000) | The parent company of the Company's shareholding ratio | The parent company of the Company’s vote ratio |
| Shenzhen Investment Holdings Co.,Ltd. | 18/F, Investment Building, Shennan Road, Futian District, Shenzhen | Equity investment , Real-estate Development and Guarantee | 27,649 million | 45.96 | 45.96 |
| Name | Relation of other Related parties with the company |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | Sharing Company |
| Other related party | Relationship to the Company |
| Shenzhen Shenchao Technology Investment Co., Ltd. | Subject to the same party controls |
| Shenzhen Tianma Microelectronics Co., Ltd. | Chairman of the Board Is the Vice Chairman of the Company |
| Shengbo （HK）Co., Ltd. | The Company Executives are Director of the company |
| Hangzhou Jinjiang Group Co., Ltd. | The controlling party of SAPO Photoelectric Shareholder |
| Lan Xi Jinxin Investment Management Co., Ltd. | A subsidiary of Hangzhou Jinjiang Group Co., Ltd. |
| Zhejiang Hengjie Industry Co., Ltd. | A subsidiary of Hangzhou Jinjiang Group Co., Ltd. |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Sharing Company of Hangzhou Jinjiang Group Co., Ltd. |
| Other related party | Relationship to the Company |
| Shenzhen Xinfang Knitting Co., Ltd. | Sharing Company |
| Shenzhen Dailishi Underwear Co., Ltd. | Sharing Company |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | Sharing Company |
| Shenzhen City Construction Development （Group）Co., Ltd. | Subject to the same party controls |
| Related parties | Content of related transaction | Amount of current period | Amount of previous period |
| Shenzhen Tianma Microelectronics Co., Ltd. | Sales polarizer sheet | 1,444,346.74 | 2,463,750.30 |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Sales polarizer sheet | 141,106,466.92 | 87,524,774.55 |
| Related parties | Content of related transaction | Amount of current period | Amount of previous period |
| Kunshan Zhiqimei Material Technology Co., Ltd. | Support film | 143,888,209.10 | 48,771,009.61 |
| Related party | Amount | Start date | Expiring date | Note |
| Related party | Amount | Start date | Expiring date | Note |
| Borrowing fund： | ||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 3,806,454.17 | 2019.07.30 | 2020.07.30 | The annual lending rate is 0.30% |
| Shenzhen Dailishi Underwear Co., Ltd. | 2,700,000.00 | 2019.04.08 | 2019.10.31 | The annual lending rate is 0.4.35；Principal and interest repaid at maturity |
actual assessment amount. After the capital increase is completed, the shareholding ratio of eachshareholder in Guanhua will remain unchanged. As of December 31, 2019, the capital increase has beencompleted. The annual interest rate for lending is 4.35%. The principal and interest have been repaid onthe due date.
5. Rewards for the key management personnel
| Items | Amount of current period | Amount of previous period |
| Rewards for the key management personnel | 6.1638 million | 6.056 million |
| Name | Related party | December 31,2019 | December 31,2018 | ||
| Balance of Book | Bad debt Provision | Balance of Book | Bad debt Provision | ||
| Account receivable | Shenzhen Tianma Microelectronics Co., Ltd. | 733,038.52 | 36,651.93 | 894,474.64 | 44,723.73 |
| Account receivable | Kunshan Zhiqimei Material Technology Co., Ltd. | 53,893,840.80 | 2,694,692.04 | 84,062,627.96 | 4,203,131.40 |
| Other Account receivable | Anhui Huapeng Textile Company | 1,800,000.00 | 1,800,000.00 | 1,800,000.00 | 1,800,000.00 |
| Other Account receivable | Shenzhen Dailishi Underwear Co., Ltd. | 404,780.23 | 20,239.01 | 416,464.86 | 20,823.24 |
| Name | Related party | December 31,2019 | December 31,2018 |
| Account payable | Kunshan Zhiqimei Material Technology Co., Ltd. | 56,245,028.58 | 17,405,753.46 |
| Other payable | Shenzhen Xinfang Knitting Co., Ltd. | 244,789.85 | 244,789.85 |
| Other payable | Shenzhen Changlianfa Printing and dyeing Co., Ltd. | 1,580,949.95 | 1,178,449.95 |
| Other payable | Yehui International Co.,Ltd. | 1,216,719.38 | 1,190,070.22 |
| Other payable | SAPO （Hongkong）Co., Ltd. | 315,000.00 | 315,000.00 |
| Other payable | Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 3,811,053.20 | |
| Interest payable | Shenzhen Shenchao Technology Investment Co., Ltd. | 37,220,662.08 |
| Items | Related content |
| Items | Related content |
| Total amount of various equity instruments granted by the company during the current period | |
| Total amount of various equity instruments that the company exercises during the period | |
| Total amount of various equity instruments that have expired in the current period | 127,900 shares |
| The scope of executive price of the company’s outstanding share options at the end of the period and the remaining term of the contract | |
| The scope of executive price of the company’s other equity instruments at the end of the period and the remaining term of the contract | 5.73yuan/share，1 year |
| Restriction lifting period | Performance assessment goals |
| The first restriction lifting period | In 2018, the earnings per share shall be no less than 0.07 yuan, and shall not be lower than the 75 fractiles level of the comparable listed companies in the same industry; the growth rate of operating revenue in 2018 compared with 2016 is not less than 70%, and is not lower than the 75 fractiles level of comparable listed companies in the same industry; in 2018, the proportion of optical film business such as polarizers to operating revenue is no less than 70%. |
| The second restriction lifting period | In 2019, earnings per share shall be no less than 0.08 yuan, and shall not be lower than the 75 fractiles level of the comparable listed companies in the same industry; the growth rate of operating revenue in 2019 compared with 2016 is not less than 130%, and is not lower than the 75 fractiles level of comparable listed companies in the same industry; in 2019, the proportion of optical film business such as polarizers to operating revenue is not less than 75%. |
| The third restriction lifting period | In 2020, the earnings per share shall be no less than 0.20 yuan, and shall not be lower than the 75 fractiles level of comparable listed companies in the same industry; the growth rate of operating revenue in 2020 is not less than 200% compared to 2016, and is not lower than the 75 fractiles level of comparable listed companies in the same industry. In 2020, the proportion of optical film business such as polarizers to operating revenue will be no less than 80%. |
Note: Earnings per share=net profit/total capital stock attributable to common shareholders of theCompany upon deduction of non-recurring profit and loss.On June 24, 2019, according to the resolution of the 19th meeting of the Company's seventh board ofdirectors, the Company repurchased and cancelled 1,877,720 restricted stocks that did not meet theconditions for lifting the restriction on sale in phase I, and repurchased and cancelled 58,000 restrictedstocks that had been granted to 3 employees but had not yet been released from restriction on sale, and1,935,720 restricted stocks in total.On December 30, 2019, according to the resolution of the 25th meeting of the 7th board of directorsof the Company, the Company repurchased and cancelled 69,900 shares of all restricted stocks that havebeen granted to 3 employees but have not yet been released from the restriction on sale. The capitalreduction has not yet completed the relevant procedures such as industrial and commercial changeregistration. The final share capital included 69,900 shares of the above repurchased shares.
2. Equity-settled share-based payment
| Items | Related contents |
| Determination method of the fair value of equity instruments on the grant date | The closing price of the company's stock on grant date - grant price |
| Determination basis of the number of vesting equity instruments | On each balance sheet date of the waiting period, it is determined based on the latest information such as the change in the number of people that can be released from restrictions and the completion of performance indicators |
| The reasons for the significant difference between the current estimate and the previous estimate | |
| Equity-settled share-based payment is included in the accumulated amount of capital reserve | - |
| Total amount of fees confirmed by equity-settled share-based payments in the current period | - |
XIV. CommitmentsNilXV. Events after balance sheet dateNilXVI. Other significant events(I)Divisional information
(1)Basis for determining reporting divisions and accounting policies
The Company determines its operating divisions based on its internal organizational structure,management requirements and internal reporting system. Based on the operating divisions, the Companyconfirms four reporting divisions, namely textiles, polarizer, trade and property leasing.
Divisional reporting information is disclosed in accordance with the accounting policies andmeasurement standards adopted by each division when reporting to the management. These measurementbasis are consistent with the accounting and measurement basis for financial statement preparation.
(2)Financial information of the report division In 10,000 yuan
| Items | Polarizer | Trade | Textile | Property lease | Offset between divisions | Total |
| Main business income | 142,975.73 | 51,702.10 | 4,616.46 | 10,652.21 | -26.73 | 209,919.77 |
| Main business cost | 136,898.19 | 48,360.37 | 3,916.70 | 2,421.66 | -8.85 | 191,588.07 |
| Total assets | 324,283.77 | 16,578.21 | 3,602.04 | 110,274.72 | -1,598.75 | 453,139.99 |
| Total indebtedness | 43,495.72 | 2,917.36 | 1,969.31 | 21,107.26 | -1,811.22 | 67,678.43 |
On the premise of reaching a consensus on the future management and development of SAPOPhotoelectric, the Company signed a Cooperation Agreement with Jinjiang Group and Jinhang Investment.Jinjiang Group will make a performance commitment to SAPO Photoelectric so as to achieve better resultsin the cooperation after the introduction of strategic investors. According to the Cooperation Agreement,after Jinjiang Group invests in SAPO Photoelectric through Jinhang, it will give full play to JinjiangGroup's advantages in system, mechanism, industry, management and other aspects and its successfulexperience in industry integration, and it has made performance commitment to SAPO Photoelectric. Thedetails are as follows: sales revenue and net profit in 2017, 2018 and 2019 shall not be less than 1.5 billionyuan/50 million yuan, 2 billion yuan/100 million yuan and 2.5 billion yuan/150 million yuan respectively,and in principle, the sales revenue of polarizer and related optical film products shall account for not lessthan 70% of the total revenue in 2017 and not less than 80% after 2018. If the above performancecommitment is not fulfilled, Jinjiang Group shall supplement the balance of net profit by cash in 10 daysafter statistics are completed on annual sales income and annual net profit among other data.
(1) Performance compensation of SAPO Photoelectric in 2018
In 2018, SAPO Photoelectric realized an operating revenue of 1.125 billion yuan, and a net profit of-97,268,700 yuan, with sales revenue of polarizer and related optical film products accounting for 74.01%of the total revenue. Therefore, SAPO Photoelectric has not fulfilled its performance commitment in 2018.
On September 20, 2019, the Company and Jinjiang Group reached an agreement on the compensationfor the 2018 performance commitment, and signed the Payment Agreement for the PerformanceCommitment Compensation for 2018. Both parties confirmed that the complement of the 2018performance commitment was 197,268,700 yuan. This year, SAPO Photoelectric received thecompensation for performance commitment of 50 million yuan, 70 million yuan and 77,268,700 yuanfrom Jinjiang Group on October 9, October 31, 2019 and November 29, 2019 respectively, totaling197,268,700 yuan in cash. Jinjiang Group has fulfilled its performance commitment compensationobligations in accordance with the Payment Agreement. This year, SAPO Photoelectric received aperformance commitment compensation of 197,268,700 yuan for Jinjiang Group, which was fullyincluded in the capital reserve (other capital reserves).
(2)Performance compensation of SAPO Photoelectric in 2019
In 2018, SAPO Photoelectric realized an operating revenue of 1.953 billion yuan, and a net profit of--94,783,800 yuan, with sales revenue of polarizer and related optical film products accounting for 73.21%of the total revenue. Therefore, SAPO Photoelectric has not fulfilled its performance commitment in 2019
The Company has recently learned that Jinjiang Group has initiated arbitration to ShenzhenInternational Arbitration Court in accordance with the dispute settlement method agreed in theCooperation Agreement signed with the company. On March 9, 2020, the company received the 2020 Shen
Guozhong Acceptance No. 452-2 "Arbitration Notice" and the "Application for Arbitration" submitted byJinjiang Group as the applicant. Jinjiang Group's arbitration request made the following changes to the"Cooperation Agreement": (1) the original Article 3.1 of the "Cooperation Agreement" was deleted, andthe relevant outstanding rights and obligations were no longer performed; (2) the original Article 6.4 of the"Cooperation Agreement" was deleted, and Unfulfilled rights and obligations are no longer fulfilled. As ofthe date of this report, the above arbitration has not yet been heard. In view of the company's involvementin the above arbitration matters and the uncertainty of the arbitration results, there is uncertainty inJinjiang Group's performance of Shengbo Optoelectronics' 2019 annual performance commitments..XVII. Notes s of main items in financial reports of parent company
(1) Account receivable
1. Aging disclosure
| Aging | December 31,2019 |
| Within 1 year | 550,453.73 |
| Less：Bad debt provision | 27,522.69 |
| Total | 522,931.04 |
| Category | December 31,2019 | ||||
| Book balance | bad debt provision | Book value | |||
| Amount | Proportion（%） | Amount | Proportion（%） | ||
| Accounts receivable of individual significance and subject to individual impairment assessment | |||||
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 550,453.73 | 100.00 | 27,522.69 | 5.00 | 522,931.04 |
| Total | 550,453.73 | —— | 27,522.69 | —— | 522,931.04 |
| Category | December 31,2018 | ||||
| Book balance | bad debt provision | Book value | |||
| Amount | Proportion（%） | Proportion（%） | |||
| Category | December 31,2018 | ||||
| Book balance | bad debt provision | Book value | |||
| Amount | Proportion（%） | Proportion（%） | |||
| Accounts receivable of individual significance and subject to individual impairment assessment | |||||
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 570,471.80 | 100.00 | 28,523.59 | 5.00 | 541,948.21 |
| Accounts receivable of individual insignificance but subject to individual impairment assessment | |||||
| Total | 570,471.80 | 100.00 | 28,523.59 | 5.00 | 541,948.21 |
| Category | December 31,2018 | Amount of change in the current period | December 31,2019 | |||
| Accrual | Reversed or collected amount | Write-off | Other | |||
| Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio | 28,523.59 | 1,000.90 | 27,522.69 | |||
| Total | 28,523.59 | 1,000.90 | 27,522.69 | |||
| Items | December 31,2019 | December 31,2018 |
| Interest receivable | 7,329,228.31 | 4,974,799.47 |
| Dividend receivable | ||
| Other account receivable | 9,710,277.69 | 8,881,582.55 |
| Total | 17,039,506.00 | 13,856,382.02 |
| Items | December 31,2019 | December 31,2018 |
| Fixed deposit | 884,141.92 | |
| Structure deposit | 7,329,228.31 | 4,090,657.55 |
| Subtotal | 7,329,228.31 | 4,974,799.47 |
| Less：Bad debt provision | ||
| Total | 7,329,228.31 | 4,974,799.47 |
| Aging | December 31,2019 |
| Within 1 year | 5,143,593.73 |
| 1-2 years | 3,828,819.36 |
| 2-3 years | 1,830,359.77 |
| 3-4 years | 1,810,047.30 |
| 4-5 years | |
| Over 5 years | 12,476,252.43 |
| Subtotal | 25,089,072.59 |
| Less：Bad debt provision | 15,378,794.90 |
| Total | 9,710,277.69 |
(2) Classified by the nature of accounts
| Nature | December 31,2019 | December 31,2018 |
| Internal current account | 9,366,582.51 | 8,578,542.00 |
| Unit account | 15,678,175.33 | 15,451,143.71 |
| Other | 44,314.75 | 35,200.01 |
| Subtotal | 25,089,072.59 | 24,064,885.72 |
| Less：Bad debt provision | 15,378,794.90 | 15,183,303.17 |
| Total | 9,710,277.69 | 8,881,582.55 |
| Bad Debt Reserves | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit loss over life (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2019 | 1,090,352.22 | 14,092,950.95 | 15,183,303.17 | |
| Balance as at January 1, 2019 in current | ||||
| ——Transfer to stage II | ||||
| ——Transfer to stage III | ||||
| ——Transfer to stage II | ||||
| ——Transfer to stage I | ||||
| Provision in the current period | 195,491.73 | 195,491.73 | ||
| Turn back in the current period | ||||
| Reseller in the current period | ||||
| Write - off in the current period | ||||
| Other | ||||
| Balance as at December 31, 2019 | 1,285,843.95 | 14,092,950.95 | 15,378,794.90 |
| Category | December 31,2018 | Amount of change in the current period | December 31,2019 | |||
| Accrual | Reversed or collected amount | Write - off | Other | |||
| Accrual of bad debt provision by single item | 14,092,950.95 | 14,092,950.95 | ||||
| Accrual of bad debt provision by portfolio | 1,090,352.22 | 195,491.73 | 1,285,843.95 | |||
| Total | 15,183,303.17 | 195,491.73 | 15,378,794.90 |
| Name | Nature | Year-end balance | Age | Portion in total other receivables(%) | Bad debt provision of year-end balance |
| First | Unit account | 11,389,044.60 | Over 5 years | 45.39 | 11,389,044.60 |
| Second | Internal current account | 7,875,600.00 | Within 1 year, 1-3 years | 31.39 | 912,680.00 |
| Third | Unit account | 1,800,000.00 | 3-4 years | 7.17 | 1,800,000.00 |
| Fourth | Internal current account | 1,490,982.51 | Within 1 year | 5.94 | 74,549.13 |
| Fifth | Unit account | 1,018,295.37 | Within 1 year,1-3 years | 4.06 | 181,045.68 |
| Total | 23,573,922.48 | 93.96 | 14,357,319.41 |
3.Long-term equity investment
(1) Classification of long-term equity investments
| Items | December 31,2019 | December 31,2018 | ||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||
| Investment to the subsidiary | 1,966,803,211.46 | 16,582,629.30 | 1,950,220,582.16 | 1,980,806,395.91 | 16,582,629.30 | 1,964,223,766.61 | ||
| Investment to joint ventures and associated enterprises | 152,209,929.72 | 152,209,929.72 | 32,952,085.66 | 32,952,085.66 | ||||
| Total | 2,119,013,141.18 | 16,582,629.30 | 2,102,430,511.88 | 2,013,758,481.57 | 16,582,629.30 | 1,997,175,852.27 | ||
| Name | December 31,2018 | Increase | Decrease | December 31,2019 | Withdrawn impairment provision in the reporting period | Closing balance of impairment provision |
| SAPO Photoelectric | 1,924,663,070.03 | 1,924,663,070.03 | 14,415,288.09 | |||
| Shenzhen Lisi Industrial Development Co., Ltd. | 8,073,388.25 | 8,073,388.25 | ||||
| Shenzhen Beauty Century Garment Co., Ltd. | 30,867,400.00 | 14,003,184.45 | 16,864,215.55 | 2,167,341.21 | ||
| Shenzhen Huaqiang Hotel | 15,489,351.08 | 15,489,351.08 | ||||
| Shenfang Property Management Co., Ltd. | 1,713,186.55 | 1,713,186.55 | ||||
| Total | 1,980,806,395.91 | 14,003,184.45 | 1,966,803,211.46 | 16,582,629.30 |
long-term equity investment was reduced by 12 million yuan; On August 31, 2019, Shenzhen Beauty Century Garment Co., Ltd. transferred the assets andliabilities related to the business of the Storage and Transportation Department to the Company. The Company reduced its investment in Shenzhen MeibainianGarments Co., Ltd. by 2,003,184.45 yuan.
（3）Investment to joint ventures and associated enterprises
| Name | December 31,2018 | Increase /decrease in reporting period | December 31,2019 | Closing balance of impairment provision | |||||||
| Add investment | Decreased investment | Gain/loss of Investment | Adjustment of other comprehensive income | Other equity changes | Declaration of cash dividends or profit | Withdrawn impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| Shenzhen Haohao Property Leasing Co., Ltd. | 5,641,139.93 | 4,916,674.82 | 1,275,534.89 | 2,000,000.00 | |||||||
| Anhui Huapeng Textile Co.,Ltd. | 11,784,626.51 | -1,685,792.74 | 10,098,833.77 | ||||||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 133,363,685.79 | -3,740,613.10 | 129,623,072.69 | ||||||||
| Subtotal | 17,425,766.44 | 133,363,685.79 | 4,916,674.82 | -4,150,870.95 | 2,000,000.00 | 139,721,906.46 | |||||
| II. Associated enterprises | |||||||||||
| Shenzhen Changlianfa Printing and dyeing Company | 2,234,057.19 | 216,618.95 | 2,450,676.14 | ||||||||
| Jordan Garnent Factory | 2,363,614.70 | -1,488,111.17 | 26,765.66 | 902,269.19 | |||||||
| Yehui International Co., Ltd. | 10,928,647.33 | -1,981,720.10 | 188,150.70 | 9,135,077.93 | |||||||
| Subtotal | 15,526,319.22 | -3,253,212.32 | 214,916.36 | 12,488,023.26 | |||||||
| Total | 32,952,085.66 | 133,363,685.79 | 4,916,674.82 | -7,404,083.27 | 214,916.36 | 2,000,000.00 | 152,209,929.72 |
4.Business income, Business cost
（1）Business income, Business cost
| Items | Amount of current period | Amount of previous period | ||
| Income | Cost | Income | Cost | |
| Main business cost | 71,861,233.77 | 8,340,126.19 | 63,874,796.19 | 10,026,643.42 |
| Other business cost | 51,724,519.33 | 52,314,425.79 | 4,452,884.21 | 4,452,884.20 |
| Total | 123,585,753.10 | 60,654,551.98 | 68,327,680.40 | 14,479,527.62 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Rental industry | 71,861,233.77 | 8,340,126.19 | 63,874,796.19 | 10,026,643.42 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Rental industry | 71,861,233.77 | 8,340,126.19 | 63,874,796.19 | 10,026,643.42 |
| Name | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Shenzhen | 71,861,233.77 | 8,340,126.19 | 63,874,796.19 | 10,026,643.42 |
| Name | Income | Proportion |
| First | 31,922,951.26 | 25.83% |
| Second | 2,164,816.38 | 1.75% |
| Third | 1,991,746.99 | 1.61% |
| Fourth | 1,961,215.20 | 1.59% |
| Fifth | 1,854,120.00 | 1.50% |
| Total | 39,894,849.83 | 32.28% |
5.Investment income
| Items | Amount of current period | Amount of previous period |
| Income from long-term equity investment measured by adopting the equity method | -7,404,083.27 | 1,260,154.95 |
| Investment income from the disposal of long-term equity investment | 55,481,817.13 | |
| Hold the investment income during from available-for-sale financial assets | — | 1,215,316.98 |
| Dividend income earned during investment holdings in other equity instruments | 1,558,400.13 | — |
| The equity of Anhui Huapeng textile co., ltd. is included in the profit and loss of long-term equity investment remeasured at fair value | -6,002,923.49 | |
| Structured deposit interest | 18,417,333.36 | — |
| Total | 68,053,467.35 | -3,527,451.56 |
| Items | Amount | Notes |
| Non-current asset disposal gain/loss(including the write-off part for which assets impairment provision is made) | 54,895,878.65 | Mainly due to the disposal of long-term equity investments. |
| Govemment subsidy recognized in current gain and loss(excluding those closely related to the Company’s business and granted under the state’s policies) | 27,547,902.92 | Mainly due to recognize other income from government subsidies related to the main business. |
| Gain/loss from change of fair value of transactional financial asset and liabilities, and investment gains from disposal of transactional financial assets and liabilities and sellable financial assets other than valid period value instruments related to the Company’s common businesses. | ||
| Switch back of provision for depreciation of account receivable which was singly taken depreciation test. | 469,470.61 |
| Items | Amount | Notes |
| Net amount of non-operating income and expense except the aforesaid items | 4,582,973.27 | Mainly due to the return ofnew material |
| Other non-recurring Gains/loss items | ||
| Subtotal | 87,496,225.45 | |
| Less:Amount of influence of income tax | 13,886,055.96 | |
| Amount of influence of minority interests | 12,750,409.50 | |
| Total | 60,859,759.99 |
| Profit of report period | Weighted average returnee equity(%) | Earnings per share | |
| Basic earnings per share(RMB/share） | Diluted earnings per share(RMB/share) | ||
| Net profit attributable to the Common stock shareholders of Company. | 0.75 | 0.04 | 0.04 |
| Net profit attributable to the Common stock shareholders of Company after deducting of non-recurring gain/loss. | -1.58 | -0.08 | -0.08 |