Shenzhen Textile (Holdings) Co., Ltd.
2019 Annual Report
March 2020
I. Important Notice, Table of Contents and Definitions
The Board of Directors , Supervisory Committee, All Directors, Supervisors and Senior executives of the
Company hereby guarantees that there are no misstatement, misleading representation or important omissions in
this report and shall assume joint and several liability for the authenticity, accuracy and completeness of the
contents hereof.
Mr.Zhu Jun, The Company leader, Mr. He Fei, Person in charge of accounting works, Ms. Mu Linying,the person
in charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticity
and 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 are
advised to pay attention to investment risks. For details, please refer to the possible risk factors that the company
may face in the “IX Prospects for the future development of the company" in the “Section IV Discussion and
Analysis 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 Websit（e http://www.cninfo.com.cn）are the
media for information disclosure appointed by the Company, all information under the name of the Company
disclosed 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 shall
prevail.
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either.
Tableof Contents
I.Important Notice,TableofcontentsandDefinitions
II. BasicInformationoftheCompanyandFinancialindex
III. OutlineofCompanyBusiness
IV. Management’sDiscussionandAnalysis
V. ImportantEvents
VI. ChangeofsharecapitalandshareholdingofPrincipalShareholders
VII. SituationofthePreferredShares
VIII. Informationaboutconvertiblecorporatebonds
IX. InformationaboutDirectors,SupervisorsandSeniorExecutives
X. Administrativestructure
XI. CorporateBond
XII. FinancialReport
XIII. Documentsavailableforinspection
Definition
Termstobedefined Refers Definition
to
Company/TheCompany/ShenTextile Refers ShenzhenTextile(Holdings)Co.,Ltd
to
ArticlesofAssociation Refers ArticlesofAssociationofShenzhenTextile(Holdings)Co.,Ltd
to
Actualcontroller/NationalAssetsRegulatory Refers National AssetsRegulatory Commissionof ShenzhenMunicipalPeople's
CommissionofShenzhenMunicipalPeople's to Government
Government
TheControllingshareholder/Shenzhen Refers ShenzhenInvestmentHoldingCo.,Ltd.
InvestmentHoldingCo.,Ltd. to
ShenchaoTechnology Refers ShenzhenShenchaoTechnologyInvestmentCo.,Ltd.
to
SAPOPhotoelectric Refers ShenzhenSAPOPhotoelectricCo.,Ltd.
to
JinjiangGroup Refers HangzhouJinjiangGroupCo.,Ltd.
to
JinhangInvestment Refers HangzhouJinhangEquityInvestmentFundPartnership(LP)
to
ShenzhenCityConsturctionGroup Refers ShenzhenCityConstructionDevelopment(Group)Co.,Ltd.
to
NittoDenko Refers NittoDenkoCorporation
to
KunshanZhiqimei Refers KunshanZhiqimeiMaterialTechnologyCo.,Ltd.
to
HaohaoPropertyCompany Refers ShenzhenHaohaoPropertyLeasingCo.,Ltd.
to
GuanhuaCompany Refers ShenzhenGuanhuaPrinting&DyeingCo.,Ltd.
to
Line 6 Refers TFT-LCDpolarizerIIphaseLine6project
to
Line 7 Refers IndustrializationprojectofpolaroidforsuperlargesizeTV
to
“CSRC” Refers ChinaSecuritiesRegulatoryCommission
to
CompanyLaw Refers CompanyLawofthePeople’sRepublicofChina
to
SecuritiesLaw Refers SecuritiesLawofthePeople’sRepublicofChina
to
TheReport Refers 2019AnnualReport
to
II.Basic Information of the Company and Financial index
Ⅰ.Company Information
Stockabbreviation ShenTextileA,ShenTextileB Stockcode 000045,200045
Stockexchangeforlisting ShenzhenStockExchange
Namein Chinese 深圳市纺织(集团)股份有限公司
Chineseabbreviation (If any) 深纺织
Englishname(Ifany) SHENZHENTEXTILE （HOLDINGS） CO.,LTD
Englishabbreviation(Ifany) STHC
LegalRepresentative ZhuJun
Registeredaddress 6/F,ShenfangBuilding,No.3HuaqiangNorthRoad,FutianDistrict,Shenzhen
PostalcodeoftheRegistered 518031
Address
OfficeAddress 6/F,ShenfangBuilding,No.3HuaqiangNorthRoad,FutianDistrict,Shenzhen
Postalcodeoftheoffice 518031
address
InternetWebSite http://www.chinasthc.com
E-mail szfzjt@chinasthc.com
Ⅱ.Contact personandcontactmanner
Boardsecretary SecuritiesaffairsRepresentative
Name JiangPeng LiZhenyu
Contactaddress 6/F,ShenfangBuilding,No.3Huaqiang 6/F,ShenfangBuilding,No.3Huaqiang
NorthRoad,FutianDistrict,Shenzhen NorthRoad,FutianDistrict,Shenzhen
Tel 0755-83776043 0755-83776043
Fax 0755-83776139 0755-83776139
E-mail jiangp@chinasthc.com lizy@chinasthc.com
Ⅲ. Informationdisclosureandplaced
NewspapersselectedbytheCompanyforinformation SecuritiesTimes,ChinaSecurities,ShanghaiSecuritiesDaily,Securities
disclosure DailyandHongkongCommercialDaily.
InternetwebsitedesignatedbyCSRCforpublishing http://www.cninfo.com.cn
theAnnualreportoftheCompany
TheplacewheretheAnnualreportispreparedand SecretarialofficeoftheBoard
placed
Ⅳ.Changes inRegistration
OrganizationCode 19217374-9
InJuly2012,Thebusinessscopeofthecompanyischangedto"production,textiles
processing,knitwear,clothing,upholsteryfabrics,belts,trademarkbands,handicrafts
(withoutrestrictions);generalmerchandise,thespecialequipmentofthetextile
Changesinprincipalbusinessactivities industry,textileequipmentandaccessories,instruments,standardparts,rawtextile
sincelisting(ifany) materials,dyes,electronicproducts,chemicalproducts,mechanicalandelectrical
equipment,lightindustrialproducts,officesuppliesanddomestictrade(excludingthe
franchise,thecontrolandthemonopolyofgoods);operationofimportandexport
business."afterapprovalofShenzhenMarketSupervisoryAuthority.
InOctober2004,InaccordancewiththeDecisiononEstablishingShenzhenInvestment
HoldingsCo.,Ltd.issuedbyState-ownedAssetsAdministrationCommitteeof
Changesisthecontrollingshareholderin ShenzhenMunicipalPeople'sGovernment(ShenGuoZiWei(2004)No.223
thepast(isany) Document),ShenzhenInvestmentManagementCo.,Ltd.,thecontrollingshareholder
oftheCompany,andShenzhenConstructionHoldingCompanyandShenzhen
CommerceandTradeHoldingCompanymergedintoShenzhenInvestmentHoldings
Co.,Ltd.
Ⅴ. OtherRelevantInformation
CPAs engaged
NameoftheCPAs PekingCertifiedPublicAccountants（SpecialGeneaalPartnership）
Officeaddress： 11/F,ZhongtangBuilding,No.110,XihimenStreet,Beijing
NamesoftheCertifiedPublic LongZhe,LiuRu
Accountantsasthesignatories
The sponsorperformingpersistantsupervisiondutiesengagedbytheCompanyinthereportingperiod.
□ Applicable√Notapplicable
The sponsorperformingpersistantsupervisiondutiesengagedbytheCompanyinthereportingperiod.
□ Applicable√Notapplicable
VI.Summary ofAccountingdataandFinancialindex
May theCompanymakeretroactiveadjustmentorrestatementoftheaccountingdataofthepreviousyears
□ Yes√No
2019 2018 Changedoverlastyear 2017
（％）
Operatingincome（RMB） 2,158,184,855.71 1,272,356,771.34 69.62% 1,475,545,719.72
Netprofitattributabletothe
shareholdersofthelistedcompany 19,679,910.43 -22,980,624.93 185.64% 52,776,101.46
（RMB）
Netprofitafterdeductingof
non-recurringgain/lossattributable -41,179,849.56 -65,404,429.81 37.04% 3,140,446.26
totheshareholdersoflisted
company（RMB）
Cashflowgeneratedbybusiness 383,145,788.50 -460,494,321.15 183.20% -28,518,702.31
operation,net（RMB）
Basicearningper 0.04 -0.04 200.00% 0.10
share(RMB/Share)
Dilutedgainsper 0.04 -0.04 200.00% 0.10
share(RMB/Share)(RMB/Share)
WeightedaverageROE(%) 0.75% -0.96% 1.71% 2.23%
Endof Changedoverlastyear
Endof2019 Endof2017
2018 （％）
Grossassets（RMB） 4,531,399,885.99 4,619,203,416.79 -1.90% 4,195,746,507.56
Netassetsattributableto
shareholdersofthelistedcompany 2,727,764,144.36 2,373,329,991.86 14.93% 2,397,474,603.79
（RMB）
VII.The differencesbetweendomesticandinternationalaccountingstandards
1．SimultaneouslypursuanttobothChineseaccountingstandardsandinternationalaccountingstandardsdisclosed
in thefinancialreportsofdifferencesinnetincomeandnetassets.
□ Applicable□√Notapplicable
Nil
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese
accounting standards.
□ Applicable√Notapplicable
Nil
VIII.Main FinancialIndexbyQuarters
In RMB
Firstquarter Secondquarter Thirdquarter Fourthquarter
Operatingincome 592,839,958.12 416,023,337.38 631,655,475.88 517,666,084.33
Netprofitattributabletothe 10,381,938.06 -2,549,650.08 9,061,067.98 2,786,554.47
shareholdersofthelistedcompany
Netprofitafterdeductingof
non-recurringgain/lossattributable 7,034,190.76 -17,582,772.96 -1,542,112.46 -29,089,154.90
totheshareholdersoflisted
company
NetCashflowgeneratedby 23,567,172.13 259,190.22 262,706,321.30 96,613,104.85
businessoperation
Whether significantvariancesexistbetweentheabovefinancialindexortheindexwithitssumandthefinancial
index ofthequarterlyreportaswellassemi-annualreportindexdisclosedbytheCompany.
□ Yes √No
IX.Items andamountofnon-currentgainsandlosses
√Applicable □Notapplicable
In RMB
Items Amount(2019) Amount(2018) Amount(2017) Notes
Non-currentassetdisposal Mainlyduetothe
gain/loss(includingthewrite-offpartfor 54,895,878.65 -97,477.14 -52,131.44 disposaloflong-term
whichassetsimpairmentprovisionismade) equityinvestments.
Mainlydueto
Govemmentsubsidyrecognizedincurrent recognizeother
gainandloss(excludingthosecloselyrelated 27,547,902.92 17,228,202.21 12,567,426.98 incomefrom
totheCompany’sbusinessandgranted governmentsubsidies
underthestate’spolicies) relatedtothemain
business.
Gain/lossonentrustingotherswith 52,271,862.25 49,885,730.58
investmentorassetmanagement
Gain/lossfromchangeoffairvalueof
transactionalfinancialassetandliabilities,
andinvestmentgainsfromdisposalof
transactionalfinancialassetsandliabilities
andsellablefinancialassetsotherthanvalid
periodvalueinstrumentsrelatedtothe
Company’scommonbusinesses.
Switchbackofprovisionfordepreciationof
accountreceivablewhichwassinglytaken 469,470.61 332,073.93
depreciationtest.
Netamount of non-operating income and 4,582,973.27 1,143,552.02 -1,175,757.59 Mainlyduetothe
expenseexcepttheaforesaiditems returnofnewmaterial
Othernon-recurringGains/lossitems 23,068,858.53
Less:Influencedamountofincometax 13,886,055.96 48,007.18 1,828,395.90
Influenced amountofminorshareholders’ 12,750,409.50 28,074,327.28 33,162,149.89
equity(aftertax)
Total 60,859,759.99 42,423,804.88 49,635,655.20 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on
information disclosure for CompaniesOfferingtheir Securities to the Public-Non-recurringGains and Losses and
its non-recurring gain/loss items as illustrated in the ExplanatoryAnnouncement No.1 on information Disclosure
for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as
recurring gainsandlosses,itisnecessarytoexplainthereason.
□ Applicable√Notapplicable
None ofNon-recurringgain/lossitemsrecorgnizedasrecurringgain/loss/itemsasdefinedbytheinformation
disclosure explanatoryAnnouncementNo.1-Non–recurringgain/lossinthereportperiod.
III. Business Profile
Ⅰ.Main Business the Company is Engaged in During the Report Period
1.Main Business the CompanyThe company's main business covered such the high and new technology industry as represented by LCDpolarizer, its own property management business and the retained business of high-end textile and 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 Productbreadth Plannedcapacity Mainproducts
Line1 Pingshan 500mm 600,000m2 TN/STN/dyefilm
Line2 Pingshan 500mm 1.2millionm2 TN/STN/CSTN
Line3 Pingshan 650mm 1millionm2 TN/STN/CSTN/TFT
Line4 Pingshan 1490mm 6millionm2 TN/STN/CSTN/TFT
Line5 Pingshan 650mm 2millionm2 TFT
Line6 Pingshan 1490mm 10millionm2 TFT/OLED
Line7
(Under construction) Pingshan 2500mm 32millionm2 TFT/OLED
(II) Company'sbusinessmodel
The priority of the polarizer industry is gradually shifting from the conventional research &
development-production-sales business model to the customer-oriented business model of joint research &
development and full service. The Company reduced production links and costs and created value for customers
and a win-win situation through cooperation by understanding customers' needs, making high-quality products
through joint research & development and high-standard production management and using advanced polarizer
rolling andattachingequipmentinconjunctionwithdownstreampanelmanufacturers'productionlines.
(III) MajorfactorsfordrivingtheCompany'sperformance
Refer to"III.Analysisoncorecompetitiveness"inthissectionfordetails.
(IV) Development stage and periodic characteristicsof the industry where the Company is involved and the
Company's positionintheindustry
Refer to"IX.Company'soutlookforfuturedevelopment"inSectionIVfordetails.
In the future, the Company will deepen driving the mixed-ownership reform work and strengthen strategic
cooperation based on more than 20 years of industrial operation experience and regional advantages. To be
specific, the Company will further optimize its equity structure, invigorate its operation and promote its
production technology and business management standards through integration of resources in the polarizer and
optical film industries; meanwhile, the Company will spare no effort to push forward the construction of an
ultra-wide polarizer production line to occupy the highly lucrative jumbo LCD TV polarizer product market; in
addition to working on the polarizer industry,the Company will make a leaping developmenttowards the optical
film industrytomakeSAPOPhotoelectricabiggerandstrongerenterprise.
II.Major ChangesinMainAssets
1.Major ChangesinMainAssets
Main assets Majorchanges
Equityassets Nomajorchanges
Fixedassets Nomajorchanges
Intangibleassets Nomajorchanges
Construction inprogressincreasedby824.245millionyuanyearonyear,withan
Constructioninprocess increaseof5276.42%,mainlyduetotheincreaseinconstructioninvestmentinprogress
of thepolarizerindustrializationprojectforultra-largetelevision(Line7).
Monetary fundsdecreasedby732,194,500yuanyearonyear,withadecreaseof64.13%,
Monetaryfunds mainlydueto:firstly,theinvestmentintheconstructionofLine7ofthepolarizer
industrialization projectforultra-largeTV;Secondly,therepaymentofloanandinterest,
and thirdly,thepurchaseoffinancialproducts.
Notes receivableincreasedby39,538,200yuanyearonyear,withanincreaseof
Notesreceivable 4460.37%,mainlyduetothesubstantialincreaseinsalesacceptanceandsettlementof
customers thisyear.
Accountreceivable Accountsreceivabledecreasedby163.129millionyuanyearonyear,withadecreaseof
30.87%, mainlyduetotherecoveryoftradereceivablesinthepreviousyear.
repayments decreasedby210,582,900yuanyearonyear,withadecreaseof
Prepayment 91.95%,mainlyduetothe207.74millionyuanoftraderepaymentscarriedforwardfrom
the previousyear.
Other currentassetsdecreasedby498,976,300yuanyearonyear,withanIncreaseof
Otheraccountreceivable 77.99%,mainlyduetothereclassificationofothercurrentassetstotransactionalfinancial
assets underthenewfinancialinstrumentstandardsforthefirsttime.
Long-term equityinvestmentincreasedby119,257,800yuanyearonyear,withan
increase of361.91%,mainlyduetothechangeoftheeffectonGuanhuacompany,
Long-termequityinvestment convertingitfromanon-tradableequityinstrumenttoalong-termequityinvestment,
and theincreaseincapitalofthecompanywithinvestmentrealestate
Investment realestatedecreasedby55,267,600yuanyearonyear,withadecreaseof
RealestateInvestment 32.90%,mainlyduetothecapitalincreaseofShenzhenGuanhuaPrintingandDyeing
Co., Ltd.bytheCompany'sinvestmentrealestate.
Other non-currentassetsdecreasedby326,373,300yuanyearonyear,withadecreaseof
Othernon-currentassets 99.07%,mainlyduetothetransferofprepaymentsfromothernon-currentassetsto
projects underconstructioninthecurrentyearbeforethemainbodyofLine7projecthas
not beenconstructed.
2. MainConditionsofOverseasAssets
□ Applicable √Notapplicable
III.Analysis OncoreCompetitiveness
（1）Technology advantages.SAPOPhotoelectricisthefirstdomesticnationalhigh-techcompanywhichentered
into theR&Dandproductionofthepolarizer，Weareoneofthelargest,mosttechnicalandprofessionalpolarizer
R&D teams in the country and has more than 20 years of operating experience in the polarizer industry. Products
include TN-type, STN-type, IPS-TFT-type, VA-TFT-type,OLED, vehicle-mounted industrial display, flexible
display, 3D stereo and polarizer for sunglasses, and optical film for touch screens, etc., We have proprietary
technology for polarizers and new intellectual property rights for various new products. By the end of the
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 got
authorized); 1 overseas invention patent(0 patents got authorized); 6 overseas utility model patents(4 patents got
authorized). There were 4 national standards and 2 industrial standards that were developed by the company are
approved and then will be implemented. The company, possessing the two technology platforms “Shenzhen
polarizing materials and engineering laboratory" and "Municipal research and development center", focused on
the R&D and the industrialization of the core production technology of LCD polarizer, the developing and
industrialization of the new products of OLED polarizer and the “domestication” research on the production
materials of polarizer. Through the introduction of various types of sophisticated testing equipments to perfect the
test means of small-scale test and medium-scale test, further by improving the incentive system of research and
development and building the collaborative innovation platform of“Industry-Study-Research-Utilization”and so
forth means, the company comprehensively enhanced the level of research and development.
（2）Talents advantages. The Company has 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 ofpeer-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 and
pursuing excellent quality" and focused on product quality control. The company strictly controls product
performance indicators, standardizes inspection standards for incoming materials, starts with quality improvement
and consumption reduction, and achieves simultaneous increase in output and quality; through the introduction of
a modern quality management system, the products have passed ISO9001 Quality Management System and
ISO14001 Environmental Management System, OHSAS18000 Occupational Health and Safety Management
System, QCO80000 System Certification; the product is tested by SGS and meets the environmental
protection ,The company had increased the automatic detecting and marking equipments in the beginning section
and the ending section, strictly controlled the product quality and improved the product utilization rate and
product management efficiency.
（5）Management advantages. SAPO Photoelectric has accumulated rich management experiences in more than
20 years in the manufacturing of polarizer, possessing the home most advanced control technology of the
production management process of the polarizer and quality management technology and the stable raw material
procurement channel so forth management systems. The company had carried out comprehensive benchmarking
work, organized the management personnel to learn advanced experiences from customers and peers to force the
elevation 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 the
company's management efficiency. After the introduction of the strategic investor, Through close cooperation with
Jinjiang Group, we complement each other's strengths, absorb the vitality of private enterprises, continue to
implement advanced management systems, reasonable incentive mechanisms, etc., improve the efficiency of
decision-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 vitality
of 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 Analysis
Ⅰ.General
In 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 improved
In 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 utilitymodels.
(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 effort
In 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 polarizer
In 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 protection
Firstly, 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 treatment
in wastewaterandwastegas,dischargedthemaccordingtostandardsandachievedzerocomplaints.
（VI) ConstantreinforcementoffoundationandstrengtheningofprimaryPartybuildingwork
The Company has fully implemented Xi Jinping's new era characteristic socialism thought and the spirit of
the 19th National Congress of the Communist Party of China, insisted on strengthening Party self-discipline and
developing democracy, continuously strengthened the party organization's political guidance to the enterprise,
strengthened the ideological & political and organizational construction, continuously tamped the party
construction foundation, and earnestly performed the main responsibility;The superior and bottom levels worked
together to carry out in-depth education activities on the theme of "Stay true to the mission" and continuously
strengthened the "four consciousnesses", firmly established the "four self-confidence" and achieved the "two
maintenance".
Ⅱ.Main businessanalysis
1. General
Refer torelevantcontentsof “1.Summarization” in “DiscussionandAnalysisofManagement”.
2. Revenueandcost
(1)Component ofBusinessIncome
In RMB
2019 2018
Increase/decrease
Amount Proportion Amount Proportion
Totaloperating 2,158,184,855.71 100% 1,272,356,771.34 100% 69.62%
revenue
OnIndustry
Manufacturing 1,475,804,647.66 68.38% 879,409,830.28 69.12% 67.82%
Leaseand
Managementof 106,372,055.25 4.93% 98,327,018.46 7.73% 8.18%
Property
Domesticand 517,020,991.54 23.96% 288,744,806.35 22.69% 79.06%
foreigntrade
Other 58,987,161.26 2.73% 5,875,116.25 0.46% 904.02%
OnProducts
Leaseand
Managementof 106,372,055.25 4.93% 98,327,018.46 7.73% 8.18%
Property
Textile 46,047,351.10 2.13% 47,188,632.17 3.71% -2.42%
Polarizersheet 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%
(2)Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit
with Profitover10%
√ Applicable□Notapplicable
InRMB
Increase/decrease Increase/decrease Increase/decrease
Grossprofit ofrevenueinthe ofbusinesscost ofgrossprofit
Turnover Operationcost rate(%) sameperiodof overthesame rateoverthesame
the previous periodof periodofthe
year(%) previousyear(%) previousyear(%)
OnIndustry
Manufacturing 1,475,804,647.66 1,408,148,827.10 4.58% 67.82% 67.75% 0.04%
Domesticand 517,020,991.54 483,603,729.67 6.46% 79.06% 78.11% 0.50%
foreigntrade
Leaseand
Managementof 106,372,055.25 24,128,173.53 77.32% 8.18% -6.62% 3.60%
Property
OnProducts
Polarizersheet 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%
Leaseand
Managementof 106,372,055.25 24,128,173.53 77.32% 8.18% -6.62% 3.60%
Property
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%
Under circumstancesofadjustmentinreportingperiodforstatisticscopeofmainbusinessdata,adjustedmain
business basedonlatestonyear’sscopeofperiod-end.
□ Applicable √Notapplicable
(3)Whether theCompany’sPhysicalSalesIncomeExceededServiceIncome
√ Yes □No
Classification Items Unit 2019 2018 Changes
Sales (0000’ square 1,797.1 1,079.2 66.52%
meters)
Polarizersheet Production (0000’ square 1,806.66 1,110.26 62.73%
meters)
Stock (0000’ square 128.01 118.45 8.07%
meters)
Sales 0000’ pieces 257 295 -12.88%
Knittedclothing Production 0000’ pieces 261 296 11.82%
Stock 0000’ pieces 53 49 8.16%
Explanation forayear-on –yearchangeofover30%
√Applicable□ Notapplicable
The productionvolumeofpolarizerswas62.73%andtheSalesvolumeincreasedby62.73%,TFT-LCDPhaseII
Line 6wasputintoproductioninthesecondhalfof2018.Theproductioncapacitywasreleasedinthesameyear,
with ayear-on-yearincreaseonsalesvolume.
(4)Degree ofPerformanceoftheSignificantSalesContractSigneduptothisReportPeriod
□ Applicable √Notapplicable
(5)Component ofbusinesscost
Industry andproductclassification
InRMB
2019 2018
Industry Items Proportion in the Proportioninthe Increase/Decrease
Amount operating costs Amount operatingcosts (%)
(%) (%)
Domesticand Polarizersheet, 483,603,729.67 24.50% 271,514,631.70 23.77% 78.11%
foreigntrade Textile
Manufacturing Polarizersheet, 1,408,148,827.10 71.35% 839,415,041.00 73.49% 67.75%
Knittedclothing
Leaseand Rental，
Managementof Accommodation 24,128,173.53 1.22% 25,838,344.67 2.26% -6.62%
Property
Other Other 57,614,878.05 2.92% 5,482,267.30 0.48% 950.93%
InRMB
2019 2018
Classificationof Items Proportionin Proportionin Increase/Decrease
products Amount operation Amount operation (%)
costs(%) costs(%)
Polarizersheet Directmaterials 1,094,486,243.59 55.46% 633,828,818.77 55.49% 72.68%
Polarizersheet Directlabor 46,306,446.19 2.35% 31,895,556.85 2.79% 45.18%
Polarizersheet Powercosts 46,800,313.93 2.37% 23,825,672.61 2.09% 96.43%
Polarizersheet Manufacturing 181,388,859.24 9.19% 108,772,108.14 9.52% 66.76%
costs
Knittedclothing Directmaterials 20,014,843.33 1.01% 21,024,776.26 1.84% -4.76%
Knittedclothing Directlabor 9,480,251.60 0.48% 9,321,761.79 0.82% 1.70%
Knittedclothing Powercosts 1,370,323.40 0.07% 1,851,454.61 0.16% -25.99%
Knittedclothing Manufacturing 8,301,545.82 0.42% 8,903,943.69 0.78% -6.77%
costs
Note
(6)Whether ChangesOccurredinConsolidationScopeintheReportPeriod
□Yes √No
(7)Relevant SituationofSignificantChangesorAdjustmentoftheBusiness,ProductorServiceintheCompany’s
Report Period
□ Applicable √Notapplicable
(8)Situation ofMainCustomersandMainSupplier
Information ofMainCustomers
Totalsalesamounttotop5customers(RMB) 1,320,649,873.11
Proportionof sales to top 5 customers in the annual 61.20%
sales(%)
Proportionof the sales volume to the top five customers 6.54%
inthetotalsalestotherelatedpartiesintheyear
Information oftheCompany’stop5customers
No Name Amount(RMB) Proportion(%)
1 Customer1 725,983,985.65 33.64%
2 Customer2 256,086,053.64 11.87%
3 Customer3 141,106,466.92 6.54%
4 Customer4 129,050,621.86 5.98%
5 Customer5 68,422,745.04 3.17%
Total -- 1,320,649,873.11 61.20%
Other Note:
√Applicable □Notapplicable
In the report period, the Company bore a relation with the Third biggest client of the top five clients but the
Company's directors, supervisors, senior executives, key management and technical personnel, shareholders with
more than 5% of shares, actual controllers and other related parties had no direct or indirect rights or interests in
any keyclient.
Principal suppliers
Totalpurchaseoftop5Suppliers（RMB） 567,207,701.48
Percentageof total purchase of top 5 suppliers In total 42.38%
annualpurchase(%)
Proportionofpurchaseamountfromthetop5suppliersin
thetotal purchase amount from the related parties in the 10.75%
year
Information aboutthetop5suppliers
No Name Amount（RMB） Proportion
1 Supplier1 159,308,563.81 11.90%
2 Supplier2 143,888,209.10 10.75%
3 Supplier3 120,450,278.57 9.00%
4 Supplier4 72,692,651.77 5.43%
5 Supplier5 70,867,998.23 5.29%
Total -- 567,207,701.48 42.38%
Other Notes:
√Applicable □Notapplicable
In the report period, the Company bore a relation with the first suppliers of the top five suppliers but the
Company's directors,andthedirectors,supervisorsand seniormanagement,coretechnicalstaff,shareholderswith
holding of morethan5% stocks,actual controllersand otheraffiliatedpartiesdo not havedirector indirectequity
of themajorsuppliers.
3.Expenses
In RMB
2019 2018 Increase/Decrea Notes
se(%)
Sale expenses Mainlyduetotheincreaseinnew
materialinsurancepremiums
year-on-year,theexpansionofnew
20,785,078.66 9,636,559.05 115.69%customersthroughchanneldealers,
channeldealerservicecommissions
increasedyear-on-year,andsales
revenueincreasedduetoincreased
transportationcosts.
Administrationexpenses 96,870,842.37 88,590,439.30 9.35%
Financialexpenses 15,862,799.64 -971,661.37 -1,735.54% Mainlyduetotheexchangeloss
increasedyear-on-year.
R&Dcost 53,178,714.33 41,951,786.15 26.76%
4.R& DExpenses
√Applicable □Notapplicable
In 2019, the R&D Departmentcarried out a total of 10 R&D projects, involving the applicationand development
of IPS-TV products, TN- MNT products, IPS-MNT,thin IPS mobile phone products, etc., and achieved fruitful
results.
1. It completed the development and verification of three TV products of L branch throughout the year and
achieved smoothmassproduction;
2. ItcompletedthedevelopmentofIPS-MNTproductsofLbranchandachievedsmoothmassproduction;
3. Itrealizedsmallbatchsupplyfor55inchnewcompensationfilmNR01;
4. Thin brightening products for mobile phones have been imported into clients to realize mass production and
supply;
5. The technology of high permeability and high bias achieved a technological breakthrough, which is the
technical basisfortheidentificationofhighpermeabilityandhighbiasproductsinthefuture.
Situation ofResearchandDevelopmentInputbytheCompany
2019 2018 Increase/Decrease(%)
NumberofResearchand 117 107 9.35%
Developmentpersons(persons)
Proportion ofResearchand 10.89% 10.18% 0.71%
Developmentpersons
AmountofResearchand
DevelopmentInvestment 53,178,714.33 41,951,786.15 26.76%
(RMB)
Proportion ofResearchand
DevelopmentInvestmentof 2.46% 3.30% -0.84%
OperationRevenue
AmountofResearchand
DevelopmentInvestment 0.00 0.00 0.00%
Capitalization(RMB)
ProportionofCapitalization
Research andDevelopment 0.00% 0.00% 0.00%
InvestmentofResearchand
DevelopmentInvestment
The ReasonoftheProminentChangeinTotalAmountofResearchandDevelopmentInputOccupyingthe
Business IncomeYearonYear
□ Applicable √Notapplicable
Explanation oftheReasonforSubstantialChangesintheResearchandDevelopmentInput’sCapitalizationRate
and ItsReasonableness
□ Applicable √Notapplicable
5.Cash Flow
In RMB
Items 2019 2018 Increase/Decrease(%)
Subtotalofcashinflowreceived 2,339,186,620.64 1,573,802,884.38 48.63%
fromoperationactivities
Subtotalofcashoutflow
receivedfromoperation 1,956,040,832.14 2,034,297,205.53 -3.85%
activities
Netcashflowarisingfrom 383,145,788.50 -460,494,321.15 183.20%
operatingactivities
Subtotalofcashinflowreceived 4,231,006,091.64 4,176,293,175.68 1.31%
frominvestingactivities
Subtotalofcashoutflowfor 5,175,229,656.48 4,006,115,720.59 29.18%
investmentactivities
Netcashflowarisingfrom -944,223,564.84 170,177,455.09 -654.85%
investmentactivities
Subtotalcashinflowreceived 289,808,607.92 630,493,275.82 -54.03%
fromfinancingactivities
Subtotalcashoutflowfor 593,817,393.81 367,419,548.31 61.62%
financingactivities
Netcashflowarisingfrom -304,008,785.89 263,073,727.51 -215.56%
financingactivities
Netincreaseincashandcash -864,927,647.04 -27,665,904.11 3,026.33%
equivalents
Note totheyear-on-yearchangeoftherelevantdata
√Applicable □Notapplicable
1. The net cash flow from operating activities increased by RMB 843,640,109.65 compared with the previous
period, adecreaseof183.2%,Itwasmainlyduetotherecoveryoftradereceivablesinthepreviousyear.
2. The net cash flow from investment activities decreased by RMB-1,114,401,019.93from the previous period,a
decrease of 654.85%, It was mainly due to the investment in the construction of Line 7 project and the purchase
and financingofidlefunds.
3. The net cash flow from financing activities decreased byRMB -567,082,513.40 from the previous period, a
decrease of215.56%,Itwasmainlyduetorepaymentofloansandinterest.
Notes tothebigdifferencebetweencashflowfromoperatingactivitiesandnetprofitinthereportingyear
√Applicable □Notapplicable
During thereportingperiod,thenetcashflowfromtheCompany'soperatingactivitieswas383,145,788.5yuan,
The net profit in the consolidated statement of the companywas -18,526,678.63yuan, with significant difference
between thetwo,mainlybecausetheincreaseinthenetcashflowfromoperatingactivitiesinthecurrentyearwas
mainly affectedbythe"recoveryoftradereceivablesinthepreviousyear"andtherecoveryoftradereceivablesin
the currentyearwas495millionyuan.
Ⅲ.Analysis ofNon-coreBusiness
√ Applicable □Notapplicable
InRMB
Amount Proportionintotal Explanationofcause Sustainable(yesorno)
profit
Thedividends, contract fees
and interest on structured Share-holding enterprises'
deposits from participating dividends and contract fees
enterprises were obtained; were sustainable; Interest on
Investmentincome 78,038,530.25 818.67% Investment income from structured deposits and
disposalof long-term equity investment income from
investment was obtained. disposal of long-term equity
Mainly non-current assets investments were not
damaged and scrapped sustainable.
losses.
Impairmentof -97,172,532.71 -1,019.39% Lossofinventoryprice Havethesustainability
assets falling,
Non-operating 5,003,548.34 52.49%Mainlyduetotheinsurance Notsustainable.
income claims
Non-operating 420,575.07 4.41% Mainlynon-currentassets Notsustainable.
expenses damageandscraplosses
Otherincome 27,547,902.92 288.99% Mainlygovernment Havethesustainability
subsidies
Ⅳ.Condition ofAssetandLiabilities
1.Condition ofAssetCausingSignificantChange
In RMB
Endof2019 Endof2018 Proportio
Proportionin Proportionin n Notestothesignificantchange
Amount thetotal Amount thetotal increase/d
assets(%) assets(%) ecrease
Mainlyduetotheconstruction
investmentoflarge-sizeTVpolarizer
Monetaryfund 409,564,847.5 9.04% 1,141,759,374. 23.31% -14.27%industrializationproject(line7),
2 60 repaymentofshort-termloansand
interest,andpurchaseofwealth
managementproducts.
Accounts 365,325,029.3 8.06% 528,454,015.59 10.79% -2.73% Mainlyduetotherepaymentoftrade
receivable 8 business.
Inventories 391,717,935.1 8.64% 439,752,718.77 8.98% -0.34%
2
Investmentreal 112,730,320.9 Mainlyduetotheinvestmentinreal
estate 0 2.49% 167,997,941.98 3.43% -0.94% estateinShenzhenGuanhuaPrinting&
DyeingCo.,Ltd.
Mainlyduetothechangesintheability
ofShenzhenGuanhuaPrintingand
DyeingCo.,Ltd.,theconversionof
Long-termequity 152,209,929.7 3.36% 32,952,085.66 0.67% 2.69% non-tradingequityinstrumentsinto
investment 2 long-termequityinvestment,and
investmentinrealestatetoincreasethe
capitalofShenzhenGuanhuaPrinting
&DyeingCo.,Ltd.
Fixedassets 903,229,077.8 19.93% 987,876,247.55 20.17% -0.24%
3
Constructionin 839,866,275.9 18.53% 15,621,286.64 0.32% 18.21%Mainlyduetotheconstruction
process 2 investmentofLine7projects.
Short-termloans 0.00% 411,522,111.40 8.40% -8.40% Mainlyduetorepaymentofworking
capitalloansandforeignexchange
Long-termloans 0.00% 0.00
Non-current Mainlyduetotherepaymentof
liabilitiesdue 40,000,000.00 0.82% -0.82% ShenzhenChaochao'slong-termloans,
within1year asoftheendofthereportingperiod
2.Asset andLiabilitiesMeasuredbyFairValue
√ Applicable □Notapplicable
InRMB
Gain/losson Cumulative Impairment Purchased Soldamount
Amountat fairvalue fairvalue
Item year changeinthe change provisionsin amountinthe inthe Other Amountat
reporting recordedinto thereporting reporting reporting change yearend
beginning period equity period period period
Financial
assets
1.Financial
assets
measuredat
fairvalue
throughprofit 540,000,000.0 290,000,000. 830,000,000
orloss 0 00 .00
(excluding
derivative
financial
assets)
4．Other
equity 324,561,120.3 7,364,036.51 83,143,210.0 248,781,946
Instrument 0 8 .73
Investment
Subtotalof 864,561,120.3 290,000,000. 83,143,210.0 1,078,781,9
financial 0 7,364,036.51 00 8 46.73
assets
Total 864,561,120.3 7,364,036.51 290,000,000. 83,143,210.0 1,078,781,9
0 00 8 46.73
Financial 0.00 0.00
Liability
Other change
Whether the measurement attribute of the Company's main assets changed significantly during the reporting
period
√ Yes□No
Reasons for major changes in the measurement attributes of the Company's main assets during the reporting
period andtheirimpactonitsoperatingresultsandfinancialstatus
Since January 1, 2019, the Company has implemented the new financial instrument standards. The impact on
major assetswasasfollows:
1. The structural deposits held by the Company were originally classified as other current assets, measured in
amortized cost, reclassified as financial assets measured at fair value and recorded in current profits and losses on
or after January 1, 2019, and reported as transactional financial assets, reducing other current assets by 540
million 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 after
January 1, 2019, and are reported as investments in other equity instruments, resulting in a decrease of
45,373,784.87 yuan in available-for-sale financial assets, an increase of 324,561,120.30 yuan in investments in
other equity instruments, a decrease of 66,663.75 yuan in deferred income tax assets and an increase of
279,120,671.68 yuan in total assets.
3. Restricted asset rights as of the end of this Reporting Period
Not applicable
Ⅴ.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 applicationoftheraisedfunds
√ Applicable□Notapplicable
InRMB10,000
Amount of Accumulat Proportion Total
raised ive amount of raised Amountof Useand Amountof
Total Total capitalof of raised capital of the Whereabo theRaised
Yearof Wayof Total Amountof amountof whichthe capital of which the Unused utsofthe Fundwith
Raising Raising raised theRaised Raised purpose which the purpose Raised Unused over2
capital FundUsed Funds was purpose has been Fund at Raised Years’
at the changedin has been changed the Fund Idling
thereport changed (%) Current
period Period
All
deposited
inthe
2013 Non-publi 96,175.1 29,303.51 75,970.5 0 30,927.22 32.16% 1,496.52 special 0
c issue account
forthe
raised
funds.
Total -- 96,175.1 29,303.51 75,970.5 0 30,927.22 32.16% 1,496.52 -- 0
Notetouseofraisedcapital
Duringthereportingperiod,theCompanyactuallyusedtheraisedfundsof293.0351millionyuan,andtheaccumulateduseofraised
fundswas759.705 millionyuan,ofwhich34.2356 millionyuanofraisedfundswasactuallyusedforthesecondphaseoftheline6
projectofTFT-LCDpolarizer-andtheaccumulateduseofraisedfundsforitwas349.9369millionyuan;theactualuseoftheraised
fundsforthe7thlineprojectwas258.8025millionyuan,withtheaccumulateduseofraisedfundsforitwas409.7681millionyuan.
（2）Promised projectsofraisedcapital
√ Applicable □Notapplicable
InRMB10,000
Accumul Investme Date
Total ated nt whenthe Hasany
Project raised Total Amount amount progress project Benefit Hasthe material
Committedinvestment changed(i capital investme invested invested endedthe has realized predicted change
projectsandinvestment ncluding invested ntafter inthe attheend reporting reached inthe resultbe taken
partial as adjustme reporting ofthe period(% the reporting realized placein
change) committe nt(1) period reporting )(3)=(2)( predicted period feasibility
d period(2) 1) applicabl
estatus
Committedinvestmentprojects
Phase-II
projectofpolarizer Yes 96,175.1 70,034 3,423.26 34,993.69 49.97%June -5,867.21No Yes
sheetforTFT-LCD 7,2018
(Line6)
Theutilizationofthe Not
surplusraisedfunds No 25,880.25 40,976.81 applicabl No
（Line7project） e
Subtotalofcommitted -- 96,175.1 70,034 29,303.51 75,970.5 -- -- -5,867.21 -- --
investmentprojects
Subtotalofcommittedinvestmentprojects
No
Total -- 96,175.1 70,034 29,303.51 75,970.5 -- -- -5,867.21 -- --
Situationaboutnot
cominguptoschemed
progressorexpected Notapplicable
revenueandthereason
(inspecificproject)
Accordingtothelatestsituationoftheindustrydevelopment,theoriginalsecondphaseconstruction
schemeoftheTFT-LCDpolarizerwasoptimized,andthenaccordingtotheresultsconcludedbythe
experts,thecompanydecidedtocontinuetopromotetheconstructionoftheNo.6lineproject.Atthesame
Notestosignificant time,inthelightoftherewasalargefundsgapbetweentheactualraisedcapitalandtheplannedraised
changeinfeasibilityof capitalforthesecondphaseproject,thenbycomprehensiveconsiderationsofthecompany’sproduction
theproject linescaleandtheoperationpressure,thecompanydecidedtoterminatetheprojectofNo.7line,andthe
correspondingamountoffundsof309.2722millionyuan(includinginterests)forNo.7lineprojectshallbe
changedforpermanentlysupplementingtheliquidity.TheProposalonAlterationoftheUseofPartofthe
RaisedCapitalfortheSecondPhaseProjectofTFT-LCDPolarizerwasexaminedandapprovedinthe
2015annualshareholdermeetingonApril21,2016..
Amount,application Notapplicable
andapplication
progressofthe
unbookedproceeds
Aboutthechangeof Notapplicable
theimplementationsite
oftheprojectsinvested
withtheproceeds
Adjustmentofthe Notapplicable
implementationwayof
investmentfundedby
raisedcapital
Abouttheinitial Notapplicable
investmentinthe
projectsplannedtobe
investedwiththe
proceedsandthe
replacement
Usingtheidleproceeds Notapplicable
tosupplementthe
workingcapitalon
temporarybasis
Applicable
OnAugust31,2018,inthecompany'ssecondextraordinaryshareholders’ meetingof2018,the
“ProposalontheUseofSurplusRaisedFundstoInvestintheLarge-scaleTVPolarizerIndustrialization
Project(Line7)” wasreviewedandapproved,agreeingtocontinuetodeposit134.7172millionyuanin
theoriginalspecialaccountofraisedfundsforthefollow-upexpenditureofline6projectandthe
remainingsurplusraisedfundsshallbeusedfortheinvestmentofline7project,withtheamountshallbe
subjecttotheinterestsettlementofthebankonthedaythefundsaretransferredout.Accordingtotheuse
arrangementforthesurplusraisedfunds,onNovember12,2018,theCompanytransferredthesurplus
raisedfundsfortheNo.6lineprojectby405.8311millionyuantothenewlyopenedspecialaccountof
raisedfundsforprojectofLine7,whichwillbeusedfortheultra-large-sizeTVpolarizerindustrialization
project(Line7),andasofNovember12,2018,thebalanceofthespecialaccountforraisedfundsofline6
Balanceofthe was80.3569millionyuan.Thereasonsforthesurplusoftheraisedfundswereasfollows:1.theinterest
proceedsinprocessof incomeandtheinvestmentincomeofthebankwealthmanagementproductsweregeneratedduringthe
projectimplementation depositoftheraisedfunds;2.tograsptheopportunityoftherapiddevelopmentofthedomesticpolarizer
andthecause industryandacceleratetheconstructionoftheNo.6lineproject,theCompanyhadinadvanceinvested
somefundsinthesecondphaseofthepolarizerprojectofLine6,andinviewofthefactthatthefunds
raisedatthetimewereinplace,astherewasalargefundinggapbetweentheactualraisedfundsandthe
plannedandtheoriginalinvestmentprojectneededtobere-demonstrated,theCompanydidnotreplacethe
advanceinvestmentintimeaftertheraisedfundswerereceived;3.thesecondphaseofthepolarizer
projectwassubsidizedbytheNationalDevelopmentandReformCommissionandtheShenzhen
MunicipalGovernmentaftertheprojectwasestablished,whichhadbeenallputintotheproject
constructionaccordingtotherequirements,therebyreducedtheinvestmentoftheraisedfunds
accordingly;4.toensuretheoriginalinvestmentprojecttohaveagoodmarketprospectandprofitability,
theCompanyoptimizedtheconstructionplanoftheoriginalraised-fundsinvestmentprojectofNo.6line,
anditadoptedthecostcontrol,optimizedtheproductionprocessandtookothermeasurestoachieve
reasonablesavingsunderthepremiseofensuringtheoriginaldesignandtechnicalconditionsofthe
project.
Aboutapplicationand AsofDecember31,2019,thebalanceoftheraisedfundswas14.9652millionyuan,ofwhich14.7799
statusoftheproceeds millionyuanwasdepositedinthespecialaccountofraisedfundsforprojectoftheline6,andthespecial
unused accountofraisedfundsforprojectoftheline7had185,300yuan.
AsofDecember31,2019,theaccumulatedinvestmentforthesecondphaseofLine6projectwas
Problemsexistingin 699.5442millionyuan,accountingfor99.89%ofthetotalinvestmentof700.34millionyuanafterthe
applicationofthe change,ofwhichtheactualinvestmentpaymentwas686.7019millionyuan(usingtheraisedfundsof
proceedsandthe 349.9369millionyuan,usingitsownfundsandgovernmentfundsof336.7650millionyuan).Asof
informationdisclosure December31,2019,thecumulativeinvestmenttotheLine7projectwas1,321.7555millionyuan,ofwhich
orotherissues theactualinvestmentpaymentwas923.6872millionyuan(usingtheraisedfundsof409.7681million
yuan,usingitsownfundsandgovernmentfundsof513.9191millionyuan).
（3）Changes ofraisedfundsprojects
□ Applicable √Notapplicable
Nil
Ⅵ.Significant AssetandRightOffering
1.Situation ofSignificantAssetSale
□ Applicable√Notapplicable
Nil
2.Situation ofSubstantialStakeSale
√Applicable □Notapplicable
Proporti
Net ononof
profits thenet Whether
contribu profits execute
ted by ofthe Whether as
the contribu the schedul
equities ted involve edand
Transact tothe Influenc amount Pricing Whether Relation d iffailed,
ion listed eofthe ofthe principl wasthe ship equities should Disclos
Counter Sold Sold price(R compani selling equities esofthe related withthe all statethe Disclos ure
party equities date MB esfrom ofthe selling equities transacti center complet reasons uredate Index
10,000) the Compan tothe selling on party eedthe andthe
period-b y listed ownersh adopted
eginto compani ip measure
thesold estothe transfer mentsof
date total the
(RMB amo9un compan
10,000) tofthe y
net
profits
This
transacti
onis
based
onthe
compan
y's
purpose
of Shenzhe
concentr n
ating Investm
resource ent
sto Holding
develop sCo.,
50% themain Ltd.,the （http://
Shenzheequity business sole www.cn
nCity of of sharehol info.co
Constru Shenzhe polarize derof Implem m.cn）on
ction n Decemb 6,055.4 4,161.1 rsandto 211.44Market the entedas Decemb Decemb
DevelopHaohao er 1 4 promote % Principl Yes Urban Yes schedul er er21,
ment Property 19,2019 the e Constru ed 21,2019 2019,An
(Group) Leasing compan ction nounce
Co., Co., y's Group, ment
Ltd. Ltd. strategic isthe No.:201
layout. controlli 9-70
The ng
complet sharehol
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the the
transacti compan
onwill y
havea
positive
impact
onthe
compan
y's2019
annual
results.
Ⅶ.Analysis oftheMainShareHoldingCompaniesandShareParticipatingCompanies
√ Applicable □Notapplicable
Situation ofMainSubsidiariesandtheJoint-stockCompanywithover10%netprofitinfluencingtotheCompany
InRMB
Company Companytype Sectors Registered Totalassets Netassets Turnover Operating NetProfit
Name engagedin capital profit
Shenzhen
Lisi Domestic
Industrial Subsidiary trade,Lease 2,360,000.00 37,905,725.4 31,606,145.1 8,444,486.72 3,778,948.49 3,546,590.92
Development 8 8
Co.,Ltd.
Shenzhen Accommodat 33,127,173.6 26,774,498.8 12,169,563.2
Huaqiang Subsidiary ion,business 10,005,300.0 6 2 5 5,127,931.15 3,860,999.02
Hotel center;
Shenfang
Property Subsidiary Property 1,600,400.00 10,950,617.0 3,934,546.90 18,123,677.1 481,655.68 451,324.87
Management management 2 1
Co.,Ltd.
Shenzhen Productionof
Beauty fully
Century Subsidiary electronic 13,000,000.0 36,020,394.0 16,327,291.7 48,879,762.9 2,866,904.51 2,866,904.51
GarmentCo., jacquard 8 5 7
Ltd. knitting
wholeshape
SAPO Production 583,333,333. 3,233,730,22 2,801,536,03 1,840,279,08 -92,982,192. -89,030,335.
Photoelectric Subsidiary andsalesof 00 0.23 8.10 3.06 22 68
Co.,Ltd. polarizer
Shenzhen Operating
Shenfang importand 38,834,438.2 112,741,877.
Import& Subsidiary export 5,000,000.00 4 9,660,856.07 80 3,272,716.24 2,445,665.57
exportCo., business
Ltd.
Shengtou Salesof 40,429,303.6
（HK）Co., Subsidiary polarizer HKD10,000 7,968,871.14 6,306,112.31 5 358,171.79 800,885.41
Ltd.
Acquirement anddisposalofsubsidiariesintheReportingperiod
□ Applicable√Notapplicable
Note
The financial data of SAPO Photoelectric mentioned in the table above are the financial statements data of its
parent company and non-consolidated statements data. Shenzhen Shenzhen Textile Importand Export Co., Ltd.
and Shengbo Photoelectric Company Limited are SAPO Photoelectric. The fluctuation of subsidiary SAPO
Photoelectric Performanceandthe reasons for itschangeare describedin detailin Section IVOperating Situation
Discussions and Analysis and Section V Important Matters. Section III: Performance of Commitments. The
commitment madebyshareholdersandcounterpartiesinreportingannualoperatingperformance.
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 "13th Five-Year Plan", the Company will keep quickly driving the polarizer industry to goprofessional, mass and efficient, seize the good opportunity of great development in the industry, make full use ofpolicies of the state and Shenzhen in favor of development of the polarizer industry, further deepen themixed-ownership reform, boost industrial integration, accelerate ultra-wide production line construction, raise theproduction technology and business management standards with effort, enhance talent team building, give fullplay to effects of the long-term incentive mechanism and inspire its vitality to boost a constant growth of its mainbusiness--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 period
Applicable √ □ Not applicable
The company did not receive researches, visits and interviews received in this reporting period.
V.Important Events
ⅠSpecification ofprofitdistributionofcommonsharesandcapitalizingofcommonreserves
Formulation, implementation and adjustment of profit distribution policy of common shares especially cash
dividend policyduringthereportingperiod
□ Applicable √Notapplicable
The profitdistributionpreplanorproposalandthepreplanorproposalofconversionofthecapitalreserveinto
share capitalinthepastthreeyears(withthereportingperiodinclusive):
Based on the needs of the construction of Polarizer for oversized TV project and the company business
development, there were no cash dividends and there were no capital reserves converted into share capital in the
last threeyears.
Dividend distributionofthelatestthreeyears
In RMB
Ratioofthe Ratioofthe
cashbonus totalcash
bonus(other
Net profit Ratioofthe byother ways
attributableto cashbonusin waysinnet included)in
commonstock netprofit Proportionfor profit netprofit
Amountfor shareholdersof attributableto cashbonusby attributable Totalcash attributable
Yearfor commonstock tocommon bonus(other
bonusshares cashbonus(tax listedcompany shareholdersof otherways(i.e. stock ways tocommon
included) in listedcompany share shareholders included) stock
consolidation containedin buy-backs) oflisted shareholders
statement for consolidation company oflisted
bonusyear statement containedin company
consolidation containedin
consolidation
statement 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%
In thereportingperiod,boththeCompany’sprofitandtheparentcompany’sretainedearningswerepositive
however notcashdividenddistributionproposalhasbeenputforward.
□Applicable√ Notapplicable
II. ProfitdistributionplanandcapitalizingofcommonreservesplanforthePeriod
□ Applicable √Notapplicable
The Companyhasnoplanofcashdividendscarriedout,bonusissuedandcapitalizingofcommonreserveseither.
III. Commitmentstofulfillthesituation
1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the
reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior
management personnelandotherrelatedparities.
√ Applicable □Notapplicable
Timeof Periodof
Commitment Commitmen Type Contents making commitme Fulfillme
tmaker commitme nt nt
nt
AsShenzhenInvestmentHoldingsCo.,Ltd.,the
controllingshareholderofthecompany,committed
whentherestricted-for-salesharesfromtheshares
restructuringwerelistedforcirculationinthemarket:
i.iftheyplantosellthesharesthroughthesecurities
Commitment Shenzhen Share exchangesysteminthefuture,andthedecreaseofthe Sustained Under
onshare Investment reduction sharestheyholdreaches5%within6monthsafterthe August4, and Fulfillme
reform Holdings commitment firstdecrease,theywilldiscloseanannouncement 2006 effective nt
Co.,Ltd. indicatingthesalethroughthecompanywithintwo
tradingdaysbeforethefirstdecrease;ii.Theyshall
strictlyobservethe “GuidelinesonTransferof
Restricted-for-saleOriginalSharesofListed
Companies”andtheprovisionsoftherelevant
businessprinciplesofShenzhenStockExchange.
Commitment
inthe
acquisition
reportorthe
reporton
equitychanges
Commitment
madeuponthe
assets
replacement
Commitmen ShenzhenInvestmentHoldingsCo.,Ltd.signeda
tson “LetterofCommitmentandStatementonHorizontal
Shenzhen horizontal CompetitionAvoidance” whenthecompanyissued
Commitments Investment competition, non-publicstocksin2009.PursuanttotheLetterof October9, Sustained Under
madeupon Holdings related CommitmentandStatement,ShenzhenInvestment 2009 and Fulfillme
issuance Co.,Ltd. transaction HoldingsCo.,Ltd.anditswhollyownedsubsidiary, effective nt
andcapital subsidiariesundercontroloranyothercompaniesthat
occupation haveactualcontrolofitshallnotbeinvolvedinthe
businessthesameasorsimilartothoseShenzhen
Textilecurrentlyorwillruninthefuture,orany
businessesoractivitiesthatmayconstitutedirector
indirectcompetitionwithShenzhenTextile;ifthe
operationsofShenzhenInvestmentHoldingsCo.,
Ltd.anditswhollyownedsubsidiaries,subsidiaries
undercontrolorothercompaniesthathaveactual
controlofitcompetewithShenzhenTextileinthe
sameindustryorcontradicttheinterestoftheissuer
inthefuture,ShenzhenInvestmentHoldingsCo.,Ltd.
shallurgesuchcompaniestoselltheequity,assetsor
businesstoShenzhenTextileorathirdparty;when
thehorizontalcompetitionmayoccurduetothe
businessexpansionconcurrentlynecessaryfor
ShenzhenInvestmentHoldingsCo.,Ltd.andits
whollyownedsubsidiaries,subsidiariesundercontrol
orothercompaniesthathaveactualcontrolofitand
ShenzhenTextile,ShenzhenTextileshallhave
priority.
Thecommitmentsduringtheperiodnon-public
issuancein2012:1.ShenzhenInvestmentHoldings,
asthecontrollingshareholderofShenzhenTextile,
currentlyhasn'ttheproductionandbusinessactivities
ofinter-industrycompetitionwithShenzhenTextile
oritsshare-holdingsubsidiary.2.Shenzhen
InvestmentHoldingsanditsshare-holding
subsidiariesorotherenterprisesownedtheactual
controlrightscan'tbedirectlyandindirectlyonbehalf
Commitmen ofanyperson,companyorunittoengageinthesame
tson orsimilarbusinessinanydistrictsinthefuturebythe
Shenzhen horizontal formofshare-holding,equityparticipation,joint
Investment competition, venture,cooperation,partnership,contract,lease,etc., July14, Sustained Under
Holdings related andensurenottousethecontrollingshareholder's 2012 and Fulfillme
Co.,Ltd. transaction statustodamagethelegitimaterightsandinterestsof effective nt
andcapital ShenzhenTextileandothershareholders,ortogain
occupation theadditionalbenefits.3.Iftherewillbethesituation
ofinter-industrycompetitionwithShenzhenTextile
forShenzhenInvestmentHoldingsandits
share-holdingsubsidiariesorotherenterprisesowned
theactualcontrolrightsinthefuture,Shenzhen
InvestmentHoldingswillpromotetherelated
enterprisestoavoidtheinter-industrycompetition
throughthetransferofequity,assets,businessand
otherways.4.Abovecommitmentswillbe
continuouslyeffectiveandirrevocableduring
ShenzhenInvestmentHoldingsasthecontrolling
shareholderofShenzhenTextileorindirectly
controllingShenzhenTextile.
1.Thecompanyundertakesnottoprovideloans,loan
guarantees,andanyotherformsoffinancial
Shenzhen assistancetotheincentiveobjectsforobtainingthe
Equity Textile(Hold Other restrictedstocksintheincentiveplan;2.The November December Under
incentive ings)Co., commitment companyundertakesthatthereisnocircumstancethat 27,2017 27,2021 Fulfillme
commitment Ltd. thestockincentiveshallbeprohibitedasstipulatedin nt
theprovisionsofArticle7ofthe “Measuresforthe
ManagementofStockIncentivesofListed
Companies”.
Other
commitments
madeto
minority
shareholders
Executed Yes
timelyornot?
Ifthe
commitments
failedto
completethe
execution
whenexpired,
should Notapplicable
specifically
explainthe
reasonsof
unfulfillment
andthenet
stageofthe
workingplan
2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the
forecast period, the company has assets or projects meet the original profit forecast made and the reasons
explained
√Applicable □Notapplicable
Assetor ProjectStart date ofEnd date of the Forecast Actual
Name of the forecasting forecasting earnings(RMB earnings(RMB Reason for lessDisclosure date Reference for
Earnings period period 10,000) 10,000) thanforecast oftheForecast theForecast
Forecast
Subsidiary- Seeon
SAPO http://www.cn
Photoelectric December Seeon December info.com.cn
January 1,2019 15,000 -9,478.38 http://www.cni announcement
Introduces 31,2019 nfo.com.cn 31,2019 (Announceme
strategic nt
investors No.:2016-67)
Commitments madebyshareholdersorcounterpartiesinreportingannualoperatingresults
√ Applicable □Notapplicable
I. BasicInformation
In order to improve the operation situation of SAPO Photoelectric, By the end of 2016, the company introduced
Hangzhou JinjiangGroup Co., Ltd. (hereinafterreferredto as "Jinjianggroup") as a strategic investorthrough the
capital increase and share expansion in the SAPO Photoelectric. The company, SAPO Photoelectric ,Jinjiang
Group and Hangzhou Jinhang Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to
as “Jinhang Investment”)-whose actual controller is Jinjiang Group-jointly signed the “SAPO Photoelectric
Capital Increase Agreement”, of which Jinhang Investment, as the principal body of the capital increase,
subscribed for 40% equity of SAPO Photoelectric with that the increased capital was RMB 1,352.64 million. In
order to give full play to the advantages of the private enterprise's institutional mechanism and state-owned
enterprises' resources, the company and the Jinjiang Group reached a consensus on the future operation,
management and development of SAPO Photoelectric , and signed the "Cooperation Agreement", whereby the
Jinjiang Group madea commitmentto the businessperformance of SAPOPhotoelectricin order to achieve better
results aftertheintroductionofthestrategicinvestor.
II. InformationofBusinessPerformanceCommitmentandCompensationArrangements
According tothe “CooperationAgreement”,afterJinjiangGroup’sinvestmentinSAPOPhotoelectricthrough
Jinhang Investment, Jinjiang Group’s advantages in system, mechanism, industry, management, etc. and
successful experience in industry integration will be fully utilized, and it has made the business performance
commitment toSAPOPhotoelectric,withdetailsasfollow:
Thesales revenue and net profits for 2017, 2018 and 2019 shall be not less than RMB 1.5 billion/50 million,
RMB 2 billion/100 million, and RMB 2.5 billion/150 million respectively. In principle, the sales revenue of
polarizers and related optical film products shall account for not less than 70 % of the total revenue in 2017 and
not less than 80 % of the totalrevenue after2018. If failto achieve the above-said businessperformance,Jinjiang
Group shall make a cash supplement for the difference less than the net profits within 10 days from the
completion ofthestatisticaldataofannualsalesrevenueandannualnetprofit.
Themethod of calculating the actual profit for the above-mentioned years shall be based on the current
effective accounting standards in China, and shall be calculated and determined based on the special audit results
issued byaqualifiedaccountingfirmengagedbythecompany.
III. CompletionofSAPOPhotoelectric2019performancecommitments
In 2019, faced with the adverse effects of intensified market competition, large fluctuations in exchange rate,
relocation of some production lines, aging of some equipment, and low product prices, SAPO Photoelectric
cooperated with JinjiangGroup and activelyresponded to the adverseeffects. Under severe externalconditions,
the CompanyisguaranteedtooperatestablyandtheimpactofadversefactorsontheCompanyisreducedthrough
continuous optimization of product sales structure, active promotion of inventory de-stocking, continuous
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 realized
Although 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 Arbitration
Court on January 14th, 2020, in accordance with the dispute settlement method agreed in the Cooperation
Agreement 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). At
present, 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 actively
resolve 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, the
company will hire special lawyers to represent the arbitration.
Fulfillment of performance commitment and impact on goodwill impairment test
Not applicable
IV. 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 Qualified
Auditor’s Report Issued by the CPAs.
□ Applicable √ Not applicable
VI. Explain change of the accounting policy, accounting estimate and measurement methods as compared
with 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 standards
In 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 reporting
period
□Applicable √Notapplicable
No majoraccountingerrorswithinreportingperiodthatneedsretrospectiverestatementfortheCompanyinthe
period.
VIII. Explainchangeoftheconsolidationscopeascomparedwiththefinancialreportingoflastyear.
□Applicable √Notapplicable
No changesinconsolidationstatement’sscopefortheCompanyintheperiod.
IX. Engagement/DisengagementofCPAs
CPAs currentlyengaged
NameofthedomesticCPAs PekingCertifiedPublicAccountants（SpecialGeneral
Partnership）
Remunerationfordomesticaccountingfirm(RMB10,000) 65
Continuouslifeofauditingservicefordomesticaccountingfirm 9
NameofdomesticCPA LongZhe,LiuRlu
Continuousfixednumberofyearfortheauditingservice
providedbyCPAindomesticCPAFirms 2
Has theCPAsbeenchangedinthecurrentperiod
□ Yes √No
Description oftheCPAs,financialadviserorsponsorengagedforinternalcontrolauditing
√Applicable □Notapplicable
During thereportingperiod,thecompanyengagedPekingCertifiedPublicAccountants(SpecialGeneralPartnership) asthe
company's internalcontrolauditagencyfor2019,withanauditremunerationofRMB250,000(includingtravel
expenses andotherexpenses).
X.Situation ofFacingListingSuspensionandListingTerminationaftertheDisclosureoftheYearlyReport
□Applicable √Notapplicable
XI.Bankruptcy reorganization
□Applicable √Notapplicable
No bankruptcyreorganizationfortheCompanyinreportingperiod.
XII.Significant lawsuitsandarbitrationsoftheCompany
□Applicable √Notapplicable
No significantlawsuitsandarbitrationsoccourredinthereportingperiod.
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 the
company, 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 or
Other Employee Incentive Measures
√Applicable □ Not applicable
(I) Formulation of Restricted Stock Incentive Plan
On 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 7th boardmeeting of the company’s 7th session board of directors, and related proposals agreed to fulfill the relevantprocedures and related proposals agreed to fulfill the relevant procedures
On December 11, 2017, the SASAC agreed in principle to implement the restricted stock incentive plan.
On December 14, 2017, the company held the third extraordinary shareholders' general meeting in 2017,which reviewed and approved the Proposal on the Company's Implementation Measures of Evaluation for the2017 Restricted Stock Incentive Plan (Draft) and summary and Proposal on the Company's ImplementationMeasures of Evaluation for the 2017 Restricted Stock Incentive Plan and other issues.
(II) Information on granting the restricted stock
On December 14, 2017, the company held the 8th meeting of the 7th Board of Directors, which reviewed and
approved the “Proposal on Adjusting the List of Incentive Objects and Granting Quantity of the 2017 Restricted
Stock Incentive Plan” and the “Proposal on Granting the Restricted Stocks to Incentive Objects”. The restricted
shares 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 China
Securities 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 objects
On 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 restricted
On June26,2019,theCompanyheldits2018annualshareholders'meetingtoconsiderandpasstheProposal
on Repurchase and Cancellation of Some Restricted Shares, agreeing to repurchase and cancel the 1,877,720
restricted shares held by 116incentive objects at a repurchase price of 5.92 yuan per share in phase I and 58,000
restricted shares held by 3 original incentive objects who left the company for personal reasons at a repurchase
price of5.73yuanpershare,andatotalof1,935,720restrictedshareswererepurchasedandcanceled.
On September 12, 2019, the above-mentioned restricted stock companies completed the repurchase and
cancellation proceduresinShenzhenBranchofChinaSecuritiesDepositoryandClearingCorporationLimited.
On September 12, 2019, the above-mentioned restricted stock companies completed the repurchase and
cancellation proceduresinShenzhenBranchofChinaSecuritiesDepositoryandClearingCorporationLimited.
2. Regardingtherepurchaseandcancellationofsomerestrictedstocks,i.e.therepurchaseandcancellationof
restricted stocksheldby3originalincentiveobjects
On December 30, 2019, the Company held the 25th meeting of the 7th board of directors and the 17th
meeting of the 7th board of supervisors to consider and pass the Proposal on Repurchase and Cancellation of
Some Restricted Shares, agreeing that the company will repurchase and cancel 69,900 restricted shares held by 3
original incentiveobjectswholeftthecompanyforpersonalreasonsatarepurchasepriceof5.73yuanpershare.
On January 16, 2020, the Company convened the first extraordinary shareholders' meeting in 2020 to
consider and pass the Proposal on Repurchase and Cancellation of Some Restricted Shares and agreed to
repurchase andcancel69,900sharesofrestrictedsharesheldby3originalincentiveobjectswho leftthecompany
for personalreasonsatarepurchasepriceof5.73yuanpershare.
On January17,2020,theCompany'sregisteredcapitalwillbereducedduetotherepurchaseandcancellation
of some restricted stocks. According to the Company Law and other relevant laws and regulations, the Company
discloses the Announcementon Reduction of Capital for Repurchase andCancellation of Some RestrictedStocks
(No 2020-02), and creditorsare hereby notified that they have the right to require the Company to repay debts or
provide corresponding guarantees within 45 days from the date of this announcement. If the creditor fails to
exercise the above rights within the prescribed time limit, the repurchase and cancellation will continue to be
implemented accordingtolegalprocedures.
XVI. Materialrelatedtransactions
1. Relatedtransactionsinconnectionwithdailyoperation
√Applicable □Notapplicable
Whethe
Trading rover
Principl limit the Market Index
Subjects eof Amount priceof of
Related Relation Typeof ofthe pricing Priceof oftrade Ratioin approve approve Wayof similar Dateof informa
parties ship trade related the trade RMB10 similar paymen trade disclosu tion
transacti related ,000) trades d d t availabl re disclos
ons transacti e ure
ons （RMB limited
’0000） ornot
(Y/N)
http://w
Purchas ww.cni
Kunshan Jingjian Purchas eof nfo.co
Zhiqimei g eof optical m.cnOn
Materials Group's products film Market Agreem 14,388. 14,388. April April
Technolo sharehol from products Principl ent 82 11.75% 20,880 No Transfer 82 27,2019 27,2019
gyCo., ding related and e price (Annou
Ltd. compan parties relevant ncemen
y material t
s No.201
9-19)
http://w
Purchas ww.cni
Kunshan Jingjian eof nfo.co
Zhiqimei g Saleof optical m.cnOn
Materials Group's goodsto film Market Agreem 14,110. 14,110. April April
Technolo sharehol related products Principl ent 65 11.01% 21,996 No Transfer 65 27,2019 27,2019
gyCo., ding parties and e price (Annou
Ltd. compan relevant ncemen
y material t
s No.201
9-19)
Total -- -- 28,499. -- 42,876 -- -- -- -- --
47
Detailsofanysalesreturnofalarge Notapplicable
amount
Givetheactualsituationinthereport
periodwhereaforecasthadbeen
madeforthetotalamountsofroutine Normalperformance
related-partytransactionsbytypeto
occurinthecurrentperiod(ifany)
Reasonforanysignificantdifference
betweenthetransactionpriceandthe Notapplicable
marketreferenceprice(ifapplicable)
2. Related-partytransactionsarisingfromassetacquisitionorsold
√ Applicable□Notapplicable
Book Valuation Transacti
Subjects Principle valueof of Transfer
ofthe ofpricing ongainor Indexof
Related Relations Typeof related the assets transferre price Wayof loss Dateof informati
parties hip trade transactio related transferre dassets （RMB payment disclosure on
ns transactio （RMB disclosure
ns d（RMB （RMB 10,000) 10,000)
10,000) 10,000)
Shenzhen
Investme
nt
Holdings http://ww
Co.,Ltd., w.cninfo.
Shenzhenthesole 50% com.cnO
City sharehold equityof n
Constructerofthe Shenzhen Decembe
ion Urban Equity Haohao Market 435.55 6,055.41 6,055.41 Transfer 5,548.18 December r
Develop Construct transfer Property principle 21,2019 21,2019(
ment ion Leasing Announc
(Group) Group,is Co.,Ltd. ement
Co.,Ltd. the No.2019-
controllin 70)
g
sharehold
erofthe
company
Reasonsforthedifferencebetweenthe
transferpriceandthebookvalueor Thetransferpriceisconsistentwiththeassessedvalue.
valuationvalue（Ifany）
Impactonthecompany'soperatingresults Haveapositiveimpactonthecompany's2019annualresults.
andfinancialstatus
Iftherelevanttransactioninvolves
performanceagreement,theperformance Notapplicable
ofthereportduringthereportingperiod
3. Related-partytransitionswithjointinvestments
□Applicable √Notapplicable
No mainrelatedtransactionsofjointinvestmentoutsidefortheCompanyinreportingperiod.
4. Creditsandliabilitieswithrelatedparties
√Applicable □Notapplicable
Was thereanynon-operatingcreditorliabilitywithanyrelatedparty?
√ Yes □No
Due fromrelatedparties
Newly
Doesthere increased Amount Interestin
exist Opening amountin recoveredin the Ending
Related Relationshi Causesof non-operati balance the the Interestrate reporting balance
parties p formation oncapital (RMB reporting reporting period(RM (RMB10,00
occupancy? 10,000) period period(RM B10,000) 0)
（RMB B10,000)
10,000)
Shenzhen
Dailishi Sharing Investment No 41.64 98.84 100 40.48
Underwear company dividend
Co.,Ltd.
Anhui
Huapeng Joint Investment No 180 180
TextileCo., venture dividend
Ltd.
Kunshan Jingjiang
Zhiqimei Group's Sale
Materials shareholdin products No 8,406.26 14,110.65 17,127.53 5,389.38
Technologygcompany
Co.,Ltd.
The
Shenzhen Chairman
Tianma ofthe
MicroelectrCompany Sale No 89.44 144.43 160.57 73.3
onicsCo., wasVice products
Ltd. Chairman
ofthe
company
Influenceoftherelated
rightsofcreditand During the reporting period, the creditor's rights of related parties were formed by normal production,
liabilitiesuponthe operation and investment activities. There was no financial risk caused by the occupation of funds by
company’soperation related parties, nor was there any damage to the company's interests caused by unfair prices of related
resultsandfinancial transactions.
position
Due torelatedparties
Amount Amount
Opening newly repaidinthe Interestin Ending
Relatedparties Relationship Causesof balance(RM increasedin reporting Interestrate thereporting balance
formation B10,000) thereporting period(RMB period(RMB (RMB10,000)
period(RMB 10,000) 10,000)
10,000)
Kunshan Jingjiang
Zhiqimei Group's
Materials shareholding Purchase 1,740.57 14,388.82 10,504.89 5,624.5
Technology company
Co.,Ltd.
Shenzhen
Xinfang Sharing Current 24.48 24.48
KnittingCo., company amount
Ltd.
Shenzhen
Changlianfa Sharing Current
Printing& company amount 117.84 40.25 158.09
dyeing Co.,
Ltd.
Shenzhen
Haohao Sharing Current
Property company amount 445.45 104.69 340.76
LeasingCo.,
Ltd
Yehui Sharing Current
International company amount 119.01 2.66 121.67
Co.,Ltd.
SAPO（HK）Sharing Current 31.5 31.5
Co.,Ltd. company amount
Shenzhen
Shenchao Controlled Interest
Technology bythesame payable 3,722.07 53.47 3,774.54 0
Investment party
Co.,Ltd.
Shenzhen
Guanhua Sharing Current
Pringing& company amount 381.11 381.11
DyeingCo.,
Ltd.
Influenceoftherelatedrights During the reporting period, the debts of related party was caused by normal production and
ofcreditandliabilitiesupon operation activities, and there was no act damaging the interests of the Company and its
thecompany’soperation shareholders.
resultsandfinancialposition
5. Othersignificantrelated-partytransactions
□ Applicable√Notapplicable
Nil
XVII.Particulars aboutsignificantcontractsandtheirfulfillment
1. Particularsabouttrusteeship,contractandlease
(1) Trusteeship
□Applicable √Notapplicable
No trusteeship,contractorleasingfortheCompanyinreportingperiod.
(2) Contract
□ Applicable√Notapplicable
No anycontractfortheCompanyinthereportingperiod.
(3) Lease
□Applicable √Notapplicable
No anyleasefortheCompanyinthereportingperiod..
2.Guarantees
□Applicable √Notapplicable
No anyguaranteesfortheCompanyinthereportingperiod..
3.Situation ofEntrustingOthersforManagingSpotAsset
(1)Situation ofEntrustedFinance
√ Applicable□Notapplicable
Overview ofentrustedwealth-managementduringthereportingperiod
In RMB 10,000
Source of funds for The Occurred Amount of Un-recovered of
Specifictype entrusted financial Entrusted Unduebalance overdueamount
management Wealth-management
Bankfinancialproducts Selffund 383,000 5,000 0
Bankfinancialproducts Raisefund 95,000 0 0
Total 478,000 5,000 0
The detailedinformationofentrustedwealth-managementwithsignificantamountorlowsafety,poorliquidityor
high riskwithnopromiseofprincipal
√ Applicable□Notapplicable
In RMB10,000
Name Type Produc Amou Capita Start Expiry Funds Metho Refere Expect Actual The Amou Wheth Wheth Summ
of of tType nt l Date Date Alloca d of nce ed profit actual nt ofer er ary of
Truste Trustee Source tion Rewar Annua Incom and recove provis passed there events
e Organi d lized e (if loss ry of ion forthe is anyand
Organization( Deter Rate any) during profit impair statuto entrust relate
zation or minati of the and ment ry ed d
(or Trustee on Return reporti loss (if proced financ search
Truste ) ng during any) ure ial index
e period the plan (if
Name) reporti in theany)
ng future
period
The
princi
pal of
China 160
Merch millio http://
ants n yuan www.
Bank and cninfo
Co., Bank interes .com.c
Ltd.Sh Structu June financi Due t of Not n(Ann
enzhenBank re 16,000Raise May 10,201 al paymen 3.50% 50.63 50.63 506,30 Yes applic ounce
Shenfa Deposi fund 8,2019 9 produc tata 0.00yu able ment
ng t ts time an No.20
Buildi have 19-22,
ng been 2019-
Branc recove 29)
h red on
the
maturi
ty
date.
The
princi
pal of
China 120
Merch millio http://
ants n yuan www.
Bank and cninfo
Co., Structu Bank Due interes .com.c
Ltd.Sh re Raise June July financi paymen t of Not n(Ann
enzhenBank Deposi 12,000fund 19,201 19,201 al tata 3.45% 34.03 34.03 340,30 Yes applic ounce
Shenfa t 9 9 produc time 0 yuan able ment
ng ts have No.20
Buildi been 19-29,
ng recove 2019-
Branc red on 33)
h the
maturi
ty
date.
The
princi
pal of
120
SPD millio
Bank n yuan
Co., and
Ltd. Structu Bank Due interes
Shenz re Self May June financi paymen t of Not
hen Bank Deposi 12,000Fund 23,201 24,201 al tata 3.65% 38.4 37.72 377,20 Yes applic
Pingsh t 9 9 produc time 0 yuan able
an ts have
Branc been
h recove
red on
the
maturi
ty
date.
The
princi
pal of
China 220
Merch millio
ants n yuan
Bank and
Co., Bank interes
Ltd.Sh Structu Octob Januar financi Due t of Not
enzhenBank re 22,000Self er y al paymen 3.93% 213.19 213.19 2.1319 Yes applic
Shenfa Deposi Fund 9,2018 7,2019 produc tata millio able
ng t ts time n yuan
Buildi have
ng been
Branc recove
h red on
the
maturi
ty
date.
The
princi
pal of
China 220
Merch millio
ants n yuan
Bank and
Co., Bank interes
Ltd.Sh Structu Januar July financi Due t of Not
enzhenBank re 22,000Self y 29,201 al paymen 3.86% 421.11 421.114.2111 Yes applic
Shenfa Deposi Fund 29,201 9 produc tata millio able
ng t 9 ts time n yuan
Buildi have
ng been
Branc recove
h red on
the
maturi
ty
date.
The
princi
pal of
220
millio
SPD n yuan
Bank and
Co., Bank interes
ltd. Structu July Januar financi Due t of Not
Fengh Bank re 22,000Self 30,201 y al paymen 4.05% 457.88 455.4 4.554 Yes applic
uang Deposi Fund 9 31,202 produc tata millio able
Buildi t 0 ts time n yuan
ng have
Branc been
h recove
red on
the
maturi
ty
date.
Total 106,00 -- -- -- -- -- -- 1,215. 1,212. -- -- -- --
0 24 08
Entrusted financing appears to be unable to recover the principal or there may be other circumstances that
may resultinimpairment
□ Applicable√Notapplicable
（2）Situation ofEntrustedLoans
□ Applicable√Notapplicable
No anyEntrustedloansfortheCompanyinthereportingperiod..
4. Othersignificantcontract
√ Applicable□Notapplicable
Compan Compan Contract Contract Book Assessed Appraisa Base Pricing Transacti Whether Connecti Executio Date ofDisclosur
y Namey NameObject Signing Value of Value ofl AgencyDate ofPrinciple on PriceA on n Disclosur eIndex
of theof the Date the the Name (IfAssessm (RMB10, Related Relation Conditio e
Party Other Assets Assets Any) ent (if 000) Traction n As Of
Making Party of Involved Involved any) The End
the the by the by the Of The
contract Contract Contract Contract Reportin
(RMB10,(RMB10, gPeriod
000) (If 000)
Any)
SAPO Hangzh Nitto Novem Consid Withno In Novem
Photoelou Denko ber 6, ering associat normal ber 7,
Jinjiang provide 2017 ion perform 2017
ectric Group s the relation ance
Co., polarize formula ship
Ltd., r tionof with
Kunsha manufa the
n cturing market compan
Zhiqim technol price y
ei ogy and and Http://
Materia related www.c
l corpora technic ninfo.c
Technol tion. al om.cn:
ogy service
Co., period, (Annou
Ltd., ncemen
Japan No the 86,900No t
Nitto final
Denko transact No.:20
Corpor 17-53)o
ation ion n
priceis Novem
based ber7,
onthe 2017
comme
rcial
negotiat
ion
results
ofboth
parties.
XVIII. Socialresponsibilities
1. Performanceofpovertyrelievingresponsibilities
(1)The protectionofshareholder’srightsandinterests
Duringthe reporting period, the company operated with in accordance with laws and strictlyconformed to the
requirements of laws and regulations such as The Company Law, The Securities Law and Corporate Governance
Guidelines for Listed Companies, and the company continuously perfected the governance structure and further
standardized the operation of the company. Adhered to the core system constituted by shareholders' meeting,
board of directors, board of supervisors and the independent director system, further improved the corporate
governance structure and the management system, constantly improved the company's internal control system in
the process of business management, adopted effective measures to prevent operational risks and soundly
safeguarded and protected the rights and interests of shareholders to lay a solid foundation for the company's
healthy, sustainabledevelopment.Independent directorshave paid close attention to the company's operation, put
forward many valuable professional suggestions for the company's daily operation and key concerns, and played
an important role in improving the company's supervision mechanism and protecting the legitimate rights and
interests ofthecompanyandallshareholders.
accurately, completely, timely, and fairly discloses information that has a significant impact on investment
decisions, the disclosure content is concise and easy to understand, and fully reveals risks, facilitates access for all
shareholders. And according to regulatory requirements, the company further sort out and improve relevant
systems and improve the quality of information disclosure.
During the reporting period, the company further improved information disclosure and information transparency,
strictly fulfilled the obligation of information disclosure in accordance with regulatory requirements,
communicated and communicated with investors through multiple channels, answered questions raised by
investors in a timely manner, improved information transparency, and cooperated with regulatory authorities and
at the same time, cooperated with the regulatory authorities to purify the market space, safeguard the interests of
investors, especially small and medium-sized investors, and achieve positive interaction and harmonious (2) The
protection 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 of
up-to-standard emission, the Company further reduced emission of pollutants to practically fulfill the social
responsibility as a listed company and inflicted no major environmental protection accident. Furthermore, the
Company advocated for green officewith effortand carried out environmentalprotection publicity and education
activities in a variety of forms to enhance the energy-savingand emission reductionawareness among employees
and coordinate production & operation and environmental protection in production to fulfill its social
responsibility literally.
(4) Theprotectionofconsumerrightsandinterests
The company always sticks to the core values of "honesty, responsibility first". As the responsibility to the
customer 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 product
quality motive our performance and sustainable development and guarantee long-term customers. And our
long-term partnership is established on the basis of initiative attention, quick responding and sincere care to
customers.
2. Executionofsocialresponsibilityoftargetedpovertyalleviation
(1) Precisionpovertyalleviationprogram
The company has no precise social responsibility for poverty alleviation in theperiodand bas no follow-up plan
either.
(2) Annualprecisionpovertyalleviation
(3) Accuracyofpovertyalleviation
Index Measurementunit Quantity/Status
I.Generalsituation —— ——
II.BreakdownInput —— ——
1.Povertyalleviationbyindustrialdevelopment —— ——
2.Povertyalleviationbytransferemployment —— ——
3.Povertyalleviationbyrelocation —— ——
4.Educationalpovertyalleviation —— ——
5.Healthpovertyalleviation —— ——
6.Ecologicalprotectionpovertyalleviation —— ——
7.Guaranteeofallthedetails —— ——
8.Socialpovertyalleviation —— ——
9.Otherprojects —— ——
III.Awards(Contentandlevel) —— ——
（4）Subsequent targetedpovertyalleviationprogram
3. Informationonenvironmentalprotection
The ListedCompanyanditssubsidiarywhetherbelongstothekeysewageunitsreleasedfromenvironmental
protection department
Yes
Main Emission Implemente
Companyor pollutant Emission Emission port Emission d pollutantTotal Verified Excessive
subsidiary and specificway portnumber distribution concentratio emission emission total emission
name pollutant condition n standards emission condition
name
The
Exhaust discharge
SAPO gas:non-m portis
Photoelectri ethane Altitude 2 locatedon <100mg/m3 120mg/m3 840kg/d 1728kg/d No
c total emission theeastside
hydrocarb oftheroof
ons ofBuilding
No. 1
Open
SAPO Waste channel Southeast
Photoelectriwater：CODdischarge 1 sideofplant <60mg/L 70mg/L 37.5804t/a 43.8438t/a No
c after area
treatment
Prevention andcontrolofpollutionfacilitiesconstructionandoperation
(1) Organicexhaustemission
The waste gas treatment facility adopted the RTO waste gas regenerative incineration process of SAPO
Photoelectric. whichcanfullymeettheemissionrequirementsofdischargegas.Theremovalrateoforganicwaste
gas VOCsreachedmorethan99%,Meanwhile,theequipmentadoptedtheimportedthermalstoragematerial,with
the heat storage effect reached 90%, so that the equipment operation had low energy consumption; after RTO
treatment, theexhaustgasproducedbytheproductionprocesscanmeetthedischargestandard.
(2) Wastewaterdischarge:
The wastewater treatment facility adopts fenton + biological method + physicochemical method +MBR
membrane wastewater treatment process. The equipment has the advantages of stable operation, low energy
consumption, low maintenance cost, high degree of automation, good wastewater treatment effect and strong
impact resistance. The waste water produced in the production process can meet the environmental protection
requirements ofstandarddischargeafterbeingtreatedbywastewatertreatmentfacilities.
Situation of Construction project environmental impact assessment and other environmental protection
administrative licenses
The Company compliedwith relevant environmentalprotectionregulationsat such three stages as project design,
construction and operation and obtained environmental protection approvals needed at each corresponding stage
including EIA report, EIA approval, environmental protection acceptance decision and emission permit among
others.
Emergency Plan for Emergency Environmental Incidents
According to the actual situation of the company, the preparation of the emergency plan for emergency
environmental incidents was completed, and an emergency environmental emergency plan filing application
Environmental Self-Monitoring ProgramSurveillance done subject to surveillance requirements made by the surveillance station and operation needs of allsystems of SAPO，the specific monitoring programs are as follows: organic exhaust gas is 8 times per year (2 perquarter), wastewater discharge is 4 times per year (once per quarter), boiler exhaust gas is 2 times per year (onceevery six months), and canteen fume is 2 times per year (once every six months), the noise at the plant boundaryis 2 times per year (once every six months).
Other Environmental Information That Should Be DisclosedNil
Other Environmental Related InformationNil
XIX. Other material events
√ Applicable □ Not applicable
(I) Progress of 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 investors
In 2019, the Company actively promoted the business cooperation with Jinjiang Group and properly solved the
running-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 related
optical film products to total income did not reach the set performance commitment. Jinjiang Group should make
up the difference of 197,268,700 yuan in SAPO Photoelectric net profit in 2018 in cash. Based on the principles of
objectivity, impartiality and truth, and in order to protect the interests of listed companies and all shareholders, the
Company held several rounds of communication and negotiations with Jinjiang Group, and the two parties finally
signed the Payment Agreement for the Performance Commitment Compensation for 2018, agreeing that Jinjiang
Group would pay the performance commitment compensation in three phases by November 30, 2019, totaling
197,268,700 yuan. During the reporting period, Jinjiang Group has fulfilled its 2018 performance commitment
compensation obligation in accordance with the Payment Agreement. For details, please refer to the
Announcement of 2019-21,2019-41 2019-45,2019-47,2019-51,2019-52,2019-62 and 2019-68 on the website of
http://www.cninfo.com.cn.
The Company has reached a preliminary consensus with Jinjiang Group on follow-up cooperation. The two
parties will focus on the construction of Line 7 project, the operation improvement and management optimization
of SAPO Photoelectric. On the basis of the above two tasks, the two parties will carry out follow-up cooperation
and 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 controllingsubsidiary SAPO Photoelectric signed the Changxing Junying
Equity Investment Partnership (Limited Partnership) Agreement with the fund manager Huizhi Investment
Management Co.,Ltd,generalpartnerJinxinInvestmentCo.,Ltdandotherlimitedpartners,andco-sponsoredthe
establishment of an industrial fund, focusing on the optical film industry chain related projects related to the
company's main business,with a fund size of 50 millionyuan. SAPOPhotoelectric,as one of the limitedpartners
of theindustrialfund,subscribedforacapitalcontributionof28.5millionyuan.
For detailsJuchaoWebsite:（http://www.cninfo.com.cn.(AnnouncementNo.2017--55).
On February 10, 2018, Changxing Junying Equity Investment Partnership completed the industrial and
commercial registration and completed the private equity investment fund registration on February 8, 2018. For
details JuchaoWebsite:（http://www.cninfo.com.cn.(AnnouncementNo.2018--05).
As of December 31, 2019, Changxing Junying had accumulated 3 investment projects with a total investment of
42 millionyuan.Theprofitduringthereportingperiodwas2,150,900yuan.
No Name Investment Fundcontribution
（RMB 10,000）
1 ShenzhenKaichuangShijiaTechnologyCo.,Ltd. OpticalFilm 1,400
2 ShenzhenShenfuyuElectronicTechnologyCo.,Ltd. OpticalFilm 1,300
3 ShenzhenHengbaoshunTechnologyDevelopmentCo.,Ltd. OpticalFilm 1,500
VI.Change of share capital and shareholding of Principal Shareholders
Ⅰ.Changes insharecapital
1. Changesinsharecapital
In Shares
Beforethechange Increase/decrease（+，-） AftertheChange
Amount Proportio Capitaliza
n Share Bonus tionof Proportio
allotment shares common Other Subtotal Quantity n
reserve
fund
1.Shareswithconditional 4,829,550 0.94% -1,935,72 -1,935,72 2,893,830 0.57%
subscription 0 0
1.State-ownedshares 0 0.00% 0 0 0 0.00%
2.State-ownedlegalperson 0 0.00% 0 0 0 0.00%
shares
3.Otherdomesticshares 4,829,550 0.94% -1,935,72 -1,935,72 2,893,830 0.57%
0 0
Incl：Domesticlegalperson 0 0.00% 0 0 0 0.00%
shares
DomesticNaturalPerson 4,829,550 0.94% -1,935,72 -1,935,72 2,893,830 0.57%
shares 0 0
4.Foreignshare 0 0.00% 0 0 0 0.00%
Incl：Foreignlegalperson 0 0.00% 0 0 0 0.00%
share
ForeignNaturalPerson 0 0.00% 0 0 0 0.00%
shares
II.Shareswithunconditional 506,444,5 99.06% 0 0 506,444,5 99.43%
subscription 99 99
1.CommonsharesinRMB 457,016,5 89.39% 0 0 457,016,5 89.73%
99 99
2.Foreignsharesindomestic 49,428,00 9.67% 0 0 49,428,00 9.70%
market 0 0
3.Foreignsharesinforeignc 0 0.00% 0 0 0 0.00%
market
4.Other 0 0.00% 0 0 0 0.00%
III.Totalofcapitalshares 511,274,1 100.00% -1,935,72 -1,935,72 509,338,4 100.00%
49 0 0 29
Reasons forsharechanged
√ Applicable □Notapplicable
The reasons for this share change 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 repurchasedandcanceledthe1,877,720restrictedstocksheldby116incentiveobjectsthatdidnotmeet
the conditions for releasing the restricted stocks in phase I. Secondly,three original incentive objects Zhang Yu,
Hu Kaihua and Luo Chengxia left the Company for personal reasons. According to the relevant provisions of the
company's Incentive Plan for Restricted Stock in 2017 (Draft), the above personnel no longer meet the incentive
conditions, and the Company has repurchase and cancelled 58,000 restricted stocks that it has been granted but
has not yet lifted the restriction on sale. To sum up, a total of 1,935,720 restricted stocks were repurchased and
canceled.
For detailsJuchaoWebsite:（http://www.cninfo.com.cn.(AnnouncementNo.2019--27).
Approval ofChangeofShares
√ Applicable□Notapplicable
The repurchaseandcancellationofsomerestrictedstockswerereviewedandapprovedbythe19thmeetingofthe
seventh board of directors, the 13th meeting of the seventh board of supervisors and the 2018 annual general
meeting of shareholders. For details Juchao Website: （ http://www.cninfo.com.cn. (Announcement
No.2019--24,2019-25 and2019-30).
Ownership transferofsharechanges
√ Applicable□Notapplicable
Regarding the transfer of the above restricted stocks, ShineWing Accounting Firm (special general partnership)
verified some restricted stocks cancelled by the above repurchase and issued the capital verification report
XYZH/2019SZA20370. TheCompanycompletedthe repurchaseandcancellationproceduresin Shenzhenbranch
of China Securities Depository and Clearing Co., Ltd on September 12, 2019. For details Juchao Website:
（http://www.cninfo.com.cn. (AnnouncementNo.2019--42).
Progress onanysharerepurchase:
√ Applicable□Notapplicable
For details, please refer to Section V,"XV.Implementation of the Company's Equity Incentive Plan, Employee
Stock OwnershipPlanorOtherEmployeeIncentiveMeasures(III)ProgressofRestrictedStock".
Progress onreducingtherepurchasedsharesbymeansofcentralizedbidding:
□ Applicable√Notapplicable
Influence onthebasicEPSanddilutedEPSaswellasotherfinancialindexesofnetassetspershareattributableto
common shareholdersofCompanyinlatestyearandperiod
√ Applicable□Notapplicable
After the Company repurchased and cancelled some restricted stocks, the total capital of the Company was
changed from 511,274,149 shares to 509,338,429 shares. The impact of this share change on the Company's
financial indicators such as basic earnings per share and diluted earnings per share, net assets per share
attributable tothecompany'scommonshareholdersinthelatestyearandperiodisasfollows:
Items Year2018 Year2019
According to the originalAccording to the newAccording to the new
capital capital capital
Basic earningspershare(yuan/share) -0.04 -0.05 0.04
Diluted earningspershare -0.04 -0.05 0.04
Net assetspershare 4.64 4.66 5.36
Other informationnecessarytodiscloseforthecompanyorneedtodisclosedunderrequirementfromsecurity
regulators
□ Applicable√Notapplicable
2. Changeofshareswithlimitedsalescondition
□ Applicable√Notapplicable
Ⅱ.Issuing andlisting
1.Explanation oftheSituationoftheSecurityIssue(NoPreferredShares)intheReportPeriod
□ Applicable√Notapplicable
2.Change ofassetandliabilitystructurecausedbychangeoftotalcapitalsharesandstructure
□ Applicable√Notapplicable
3.About theexistingemployees’shares
□Applicable √Notapplicable
Ⅲ.Shareholders andactualcontrollingshareholder
1. Numberofshareholdersandshareholding
In Shares
Total
Totalnumber Total Thetotalnumbero preferred shareh
ofcommon shareholdersat fpreferredshareho oldersattheend
shareholdersat theendofthe ldersvotingrights ofthemonth
theendofthe 31,622monthfromthe 32,552restoredatperiod-e 0 fromthedateof 0
reporting dateofdisclosing nd(ifany)(See disclosingthe
period theannualreport Notes8) annualreport(if
any)(SeeNotes
8)
Particularsaboutsharesheldabove5%byshareholdersortoptenshareholders
Proportio Number Changes Amount Amount Numberofsharepledged/frozen
Shareholders Natureof nof ofshares in of of
shareholder shares heldat reporting restricted un-restrict Stateofshare Amount
held（%） period period shares edshares
-end held held
Shenzhen State-ownedlegal 234,069,4 234,069,4
Investment person 45.96% 36 0 36
HoldingsCo.,Ltd.
Shenzhen
Shenchao State-owned 16,129,03 16,129,03
Technology 3.17% 0
InvestmentCo., Legalperson 2 2
Ltd.
LuYunlong DomesticNature 0.67% 3,400,450 3,400,450 3,400,450
person
SunHuiming DomesticNature 0.63% 3,224,767 32,000 3,224,767
person
LiSongqiang DomesticNature 0.56% 2,873,078 0 2,873,078
person
KuangGuowei DomesticNature 0.29% 1,452,800 -4,200 1,452,800
person
ZhangLing DomesticNature 0.27% 1,400,000 1,400,000 1,400,000
person
ZhuYe DomesticNature 0.27% 1,360,545 228,600 1,360,545
person
HongFan DomesticNature 0.26% 1,338,900 310,000 1,338,900
person
JiangZilan DomesticNature 0.23% 1,187,500 1,187,500 1,187,500
person
Strategy investors or general legal
personbecomes top 10 shareholders No
duetorightsissued(ifapplicable（)See
Notes3）
ShenzhenShenchaoTechnologyInvestmentCo.,Ltd.isawholly-ownedsubsidiaryof
ShenzhenInvestmentHoldingsCo.,Ltd.,AccordingtothedecisionoftheState-owned
AssetsSupervisionandAdministrationCommissionofShenzhenMunicipalPeople's
Government,ShenzhenShenchaoTechnologyInvestmentCo.,Ltdwastransferredto
ShenzhenMajorIndustrialInvestmentGroupCo.,LtdinJune2019.ShenzhenInvestment
Explanationonshareholders HoldingsCo.,LtdandShenzhenShenchaoTechnologyInvestmentCo.,Ltdareboth
participatinginthemargintrading controlledbytheState-ownedAssetsSupervisionandAdministrationCommissionofthe
business ShenzhenMunicipalPeople'sGovernment,sotheyarepersonsactinginconcert.Except
this,theCompanydidnotwhetherthereisrelationshipbetweenthetoptenshareholders
holdingnon-restrictednegotiablesharesandbetweenthetoptenshareholdersholding
non-restrictednegotiablesharesandthetop10shareholdersorwhethertheyarepersons
takingconcertedactiondefinedinRegulationsonDisclosureofInformationabout
ShareholdingofShareholdersofListedCompanies.
Shareholdingoftop10shareholdersofunrestrictedshares
Name oftheshareholder Quantityofunrestrictedsharesheldattheendofthe Sharetype
reporting period Sharetype Quantity
ShenzhenInvestmentHoldingsCo., 234,069,436 Commonshares 234,069,436
Ltd. inRMB
ShenzhenShenchaoTechnology 16,129,032 Commonshares 16,129,032
InvestmentCo.,Ltd. inRMB
LuYunlong 3,400,450 Commonshares 3,400,450
inRMB
SunHuiming 3,224,767 Foreignsharesin 3,224,767
domesticmarket
LiSongqiang 2,873,078 Commonshares 2,873,078
inRMB
KuangGuowei 1,452,800 Commonshares 1,452,800
inRMB
ZhangLing 1,400,000 Commonshares 1,400,000
inRMB
ZhuYe 1,360,545 Commonshares 1,360,545
inRMB
HongFan 1,338,900 Commonshares 1,338,900
inRMB
JiangZilan 1,187,500 Commonshares 1,187,500
inRMB
ShenzhenShenchaoTechnologyInvestmentCo.,Ltd.isawholly-ownedsubsidiaryof
ShenzhenInvestmentHoldingsCo.,Ltd.,AccordingtothedecisionoftheState-owned
AssetsSupervisionandAdministrationCommissionofShenzhenMunicipalPeople's
Explanationonassociatedrelationship Government,ShenzhenShenchaoTechnologyInvestmentCo.,Ltdwastransferredto
orconsistentactionamongthetop10 ShenzhenMajorIndustrialInvestmentGroupCo.,LtdinJune2019.ShenzhenInvestment
shareholdersofnon-restricted HoldingsCo.,LtdandShenzhenShenchaoTechnologyInvestmentCo.,Ltdareboth
negotiablesharesandthatbetweenthe controlledbytheState-ownedAssetsSupervisionandAdministrationCommissionofthe
top10shareholdersofnon-restricted ShenzhenMunicipalPeople'sGovernment,sotheyarepersonsactinginconcert.Except
negotiablesharesandtop10 this,theCompanydidnotwhetherthereisrelationshipbetweenthetoptenshareholders
shareholders holdingnon-restrictednegotiablesharesandbetweenthetoptenshareholdersholding
non-restrictednegotiablesharesandthetop10shareholdersorwhethertheyarepersons
takingconcertedactiondefinedinRegulationsonDisclosureofInformationabout
ShareholdingofShareholdersofListedCompanies.
TheCompanyShareholderLiSongqiangholds2,872,653sharesoftheCompanythrough
Explanationonshareholders stockaccountwithcredittransaction;TheCompanyShareholderZhuYeholds1,182,045
participatinginthemargintrading sharesoftheCompanythroughstockaccountwithcredittransaction;TheCompany
business(ifany)(SeeNotes4) ShareholderJiangZilanholds1,187,500sharesoftheCompanythroughstockaccountwith
credittransaction.
Whether toptencommonshareholdersortoptencommonshareholderswithun-restrictsharesheldhavea
buy-back agreementdealinginreportingperiod.
□ Yes√No
The toptencommonshareholdersortoptencommonshareholderswithun-restrictsharesheldoftheCompany
have nobuy –backagreementdealinginreportingperiod.
2.Controlling shareholder
Nature ofControllingShareholders:Localstateholding
Type ofControllingShareholders:Legalperson
NameoftheControlling Legal
shareholder representative/Leade Dateofincorporation Organizationcode Principalbusinessactivities
r
Investmentand acquisition
of financial and similar
financialstock rights such
asbank,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
andservice in the field of
strategicemergingindustry;
Carry out investment,
operationand management
of state-owned stocks of
ShenzhenInvestment WangYongjian October13,2004 76756642-1 wholly-owned, holding and
HoldingsCo.,Ltd. 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
businessscope needs to be
approved according to
national regulations, the
business can only be
operatedafter the approval
isobtained).
Shen PropertyA（000011），Quantityofshares380.38million，Shareholdingratio：63.82%；SPGA
（000029），Quantityofshares642.88million，Shareholdingratio：63.55%；ShenUniverse A
（000023），Quantityofshares12.27million，shareholdingratio：8.85%；Pingan（601318），
Quantity ofshares962.72million，shareholdingratio：5.27%；GuosenSeurities（002736），Quantity
Equityofother ofshares2749.53million，shareholdingratio：33.53%；GuotaiJunan（601211），Quantityofshares
domestic/foreignlisted 609.24million，Hshareholdingratio：103.37%,Totalshareholdingratio:8.00%；Tellingholding
companywithshare （000829），Quantityofshares195.03million，shareholdingratio：18.8%；ShenzhenInternational
controllingandshare （00152），Quantityofshares：952.01million，shareholdingratio：44.04%；BeautySta（r002243），
participationby Quantityofshares：604082million，shareholdingratio：51.93%；HopewellHighway(00737），
Quantity ofshares：2213.45million，shareholdingratio：71.83%;Infinova（002528），Quantityof
controllingshareholderin shares：315.83million，shareholdingratio：26.35%;EternalAsia（002183），Quantityofshares：
reportingperiod 388.45million，shareholdingratio：18.3%；ShenEnerty（000027)，Quantityofshares：5.64million，
shareholding ratio：0.14%;BankCommunication（601328）Quantityofshares：9.52million，
shareholding ratio：0.01%；TehanEcological （300197）Quantityofshares：113.98million，
shareholding ratio：4.86%andCHINAVANKE（02202）Quantityofshares：77.278million，
shareholding ratio：0.68%.
Change oftheactualcontrollerinthereportingperiod
□Applicable √Notapplicable
Nil
3．Information aboutthecontrollingshareholderoftheCompany
Actual controllernature：Localstateownedassetsmanagement
Actual controllertype：Legalperson
Name ofthecontrolling Legal Dateof
shareholder representative/per establishment Organizationcode Principalbusinessactivities
sonincharge
Performing theresponsibilities
State-ownedAssetsRegulatory ofinvestorsonbehalfofthe
CommissionofShenzhen YuGang July31,2004 K3172806-7 stateandsupervisingand
MunicipalPeople'sGovernment managingstate-ownedassets
according toauthorizationand
law.
Equityofother
domestic/foreignlisted
companywithshare ExceptforShenzhenHoldingsCo.,Ltd.,theholdingshareholderofthecompany,otherdomestic
controllingandshare andforeignlistedcompaniesoftheequityheldbytheactualcontrollerhaven’tbeenshowninthe
participationby
controllingshareholderin listofthetoptenshareholdersofthecompany.
reportingperiod
Changes oftheactualcontrollerinthereportingperiod
□Applicable √Notapplicable
No Changes of the actual controller in the reporting period
Block 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 Party
and 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.
VIIIInformation about convertible corporate bonds
□ Applicable√Notapplicable
Duringthereportingperiod,thecompanydidnothaveconvertiblecorporatebonds.
IX. Information about Directors, Supervisors and Senior Executives
I. Changeinsharesheldbydirectors,supervisorsandseniorexecutives
Amount Amount
Shares ofshares ofshares Other Shares
Office Starting Expiry heldat increased decreased changes heldat
Name Positions status Sex Age dateof dateof the atthe atthe increase/d the
tenure tenure year-begi reporting reporting ecrease year-gegi
n(share) period(sh period(sh n(share)
are) are)
ZhuJun Board Inoffice Male 56 January July 137,000 54,800 82,200
chairman 16,2015 18,2020
Zhu Director, July July
Meizhu General Inoffice Male 55 19,2017 18,2020 228,000 54,000 174,000
Manager
Director,
Deputy
Secretar
yofthe
Party
Ning committ December July
Maozai eeand Inoffice Male 44 14,2017 18,2020 122,000 48,800 73,200
Secretar
yofthe
Commis
sionfor
Discipli
ne
HuangYu Director Inoffice Male 45 July July 0 0 0
19,2017 18,2020
HeFei Director Inoffice Male 41 January July 0 0 0
16,2020 18,2020
HeFei CFO Inoffice Male 41 December July 0 0 0
2,2019 18,2020
Wang Director Inoffice Male 47 Septembe July 0 0 0
Chuan r1,2018 18,2020
He Independ July July
Zhuowen ent Inoffice Male 57 19,2017 18,2020 0 0 0
Director
Cai Independ July July
Yuanqingent Inoffice Male 50 19,2017 18,2020 0 0 0
Director
Independ January July
WangKai ent Inoffice Male 36 16,2020 18,2020 0 0 0
Director
Chairman
ofthe
MaYi superviso Inoffice Male 53 January July 0 0 0
ry 16,2020 17,2020
committe
e
Sharehold
Yan ers' Inoffice Male 39 January July 0 0 0
Shuwen Superviso 16,2020 18,2020
rs
Zhang Employee August July
Xiaodongsuperviso Inoffice Male 44 9,2013 18,2020 7,000 1,700 5,300
r
LeKunjui Deputy Inoffice Male 56 April July 122,000 48,800 73,200
GM 28,2017 18,2020
Liu Deputy Inoffice Male 55 July July 125,000 48,800 76,200
Honglei GM 19,2017 18,2020
Secretary
Jiang tothe Inoffice Female 49 January July 100,000 40,000 60,000
Peng boardof 16,2015 18,2020
directors
DiYan Director, Dimission Female 49 April Novembe 0 0 0
CFO 28,2017 r27,2019
Independ August January
HeQiang ent Dimission Male 67 16,2013 16,2020 0 0 0
Director
Chairman
ofthe
Wang superviso Dimission Male 51 May January 0 0 0
Weixing ry 20,2015 16,2020
committe
e
Sharehold
Zou ers' Dimission Male 37 December June 0 0 0
Zhiwei Superviso 14,2017 26,2019
rs
Sharehold
LiLei ers' Dimission Male 44 June January 0 0 0
Superviso 26,2019 16,2020
rs
Total -- -- -- -- -- -- 841,000 0 296,900 544,100
II. Changeinsharesheldbydirectors,supervisorsandseniorexecutives
√ Applicable□Notapplicable
Name Positions Types Date Reason
DiYan Director,CFO Dimission November Jobchange
27,2019
HeQiang Independent Dimission January16,2020 Thetermofofficeexpires.
Director
Chairmanofthe
WangWeixing supervisory Dimission January16,2020 Jobchange
committee
LiLei Shareholders' Dimission January16,2020 Jobchange
Supervisors
ZouZhiwei Shareholders' Dimission June26,2019 Jobchange
Supervisors
III.Posts holding
Professional background,workexperienceandmaindutiesintheCompanyofexistingdirectors,supervisorsand
senior management
(1) Director
Zhu Jun, Male, Born in 1963, Master degree，senior engineer , member of the Communist party, He served
successively as secretary of Lige Village, Yutai County, Shandong Province, workshop director of Shandong
Jining Cotton Mill, deputy factory director of Jining Chemical Fibre Factory, office director of Jining Textile
Industry Company, deputy county head of Wenshang County, Shandong Province, office director of Shandong
Textile Department, chief of Personnel Education Division, manager,general manager assistant , Deputy General
Manager, General Manager of Enterprise management Dept of the Company. He served as secretary of Party
Committee ,Board Chairmanof the Company,Director and ViceBoard chairman of TianmaMicroelectronicCo.,
Ltd.
Zhu Meizhu, Male, Born in 1964, Master degree, Senior engineer, once served successively as chief Deputy
general Manager of Enterprise Management Dept of the Company,Director of R& D Center, Assistant General
Manager and Deputy General Manager, He serves as director and General Manager of the Company, and Board
Chairman of SAPO Photoelectric Co., Ltd.
Ning Maozai, male, born in 1975, bachelor degree, senior administration engineer, Chinese Communist Party
member; he has served successively as the office clerk of Shenzhen Guomao Automobile Industry Co., Ltd, the
clerk, principal staff member, associate director and director of party-mass office of Shenzhen Property
Development (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 Inspection
Committee, and supervisor of SAPO Photoelectric Co., Ltd.
Huang Yu, male, born in 1974, postgraduate, senior accountant, Chinese Communist Party member; he has
served successively as the manger of audit department Ⅱ of Shenzhen Hengdaxin Accounting Firm and assistant
director, 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, principal
staff member of the business division Ⅱ of Shenzhen SASAC, vice minister and minister of the financial budget
department 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.and
director 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 served
successively as deputy minister, minister and assistant director to the cooperation and development department of
Shenzhen National High-tech Industry Innovation Center, served as chairman and general manager of Shenzhen
Innovation 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., Ltd
and director of the Company.
He Zuowen, male, born in 1962, MBA, associate professor in accountancy, charted certified accountant and
certified tax agent in securities and futures industry. At present he acts as a partner of Da Hua Certified Public
Accountants(Special General Partnership) and secretary of Party General Branch of Shenzhen Branch, meanwhile
he holds the position of chairman of Shenzhen Tianye Certified Tax Agents Limited Corporation, consultancy
expert of Internal Control Standard Committee of the Ministry of Treasury, judge of Guangdong Senior
Accountant Evaluation Committee, member of CPC Shenzhen Social Organization Disciplinary Examination
Committee, deputy secretary & secretary of Discipline Inspection Commission of CPC Shenzhen CPA Industry
Board, director of Shenzhen Certified Tax Agents Association and independent director of Shenzhen JPT
OPTO-ELECTRONICS Co., Ltd., Independent director of Shenzhen Yirui Biology Co., Ltd., the Company's
independent directors.
Cai Yuanqing, born in 1969, Doctor of Laws of Hiroshima University, professor of Law School of Shenzhen
University, director of Company Law Research Center and GSI(Graduate Student Instructor); Meanwhile, he acts
as an arbitrator of Shenzhen Arbitration Commission ,independent director of Shenzhen Rongda Photosensitive
Science & Technology Co., Ltd., Independent director of Shenzhen Oufei Technology Co., Ltd., Independent
director 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 served
successively as the loan officer of the finance department of Zhejiang Ningbo International Trust and Investment
Corporation, 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 Shenzhen
Leaguer Venture Capital Co., Ltd, vice president & chief financial officer of Shenzhen Leaguer Digital Television
Co., Ltd, chairman & general manager of Shenzhen Oriscape Electronic Co., Ltd, vice president of Shenzhen
International Technology Transfer Center, Tsinghua University, associate director of the industrial funds
preparatory 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 served
Technician , Work director, Deputy director of office of First film factory of Ministry of Chemical
Engineering,Director of personnel Education Dept of Education Department of China Lekai Film Group, he has
served as the deputy general manager and general manager of SAPO Photoelectric Co., Ltd from June 2012 to
May 2013 and the head of the party-mass work department and the manager of the business management
department of Shenzhen Textile (Holdings) Co., Ltd; At present he holds the position of deputy general manager
of the company. He is also the secretary and director of the party branch of Shenzhen SAPO Photoelectric
Technology Co.,Ltd.
Jiang Peng, Female, born in 1970, Bachelor Degree, member of communist party, She served as officer of the
Secretary Office of Shandong Fishery Group Co.,Ltd., Deputy Director of the Secretary office and Securities
affairs Representative of Shandong Zhonglu Oceanic Fisheries Co., Ltd., Securities Representative of Huafu
Holding Co., Ltd., Securities affairs representative and Officer of the Secretariat of the Board of the Company,
now servesasthesecretaryoftheBoardoftheCompany.
Office takinginshareholdercompanies
√Applicable □Notapplicable
Titles Doeshe/she
Names ofthe engagedin Sharingdateof Expirydateof receive
persons in Namesoftheshareholders the officeterm officeterm remunerationor
office shareholders allowancefromthe
shareholder
HuangYu ShenzhenInvestmentHoldingsCo.,Ltd. Chief March4,2017 Yes
accountant
Ministerof
WangChuan ShenzhenInvestmentHoldingsCo.,Ltd. Industry May23,2018 Yes
Management
Department
Deputy
Directorof
YuanShuwen ShenzhenInvestmentHoldingsCo.,Ltd. discipline September Yes
Inspection& 18,2017
Supervision
Office
Offices takeninotherorganizations
√Applicable □Notapplicable
Titles Doeshe/she
Nameofthe engagedin Startingdateof Expirydateof receive
personsin Nameofotherorganizations theother officeterm officeterm remunerationor
office organizations allowancefrom
otherorganization
TianmaMicroelectronicCo.,Ltd. Vice February
ZhuJun Chairman 28,2013 July7,2022 No
TianmaMicroelectronicCo.,Ltd. February
ZhuJun Director 19,2013 July7,2022 No
HuangYu ShenzhenGeneralInstituteofArchitectural Director October No
DesignandResearchCo.,Ltd. 12,2009
HuangYu ShenzhenKunpengEquityInvestment Director December No
ManagementCo.,Ltd. 23,2016
HuangYu ShenzhenCityConstruction Director April7,2017 No
Development(Group)Co.,Ltd.
HuangYu SIHCInternationalCapitalLtd Director August20,2018 No
HuangYu ShenzhenInvestmentControlEastChina Board December No
SeaInvestmentCo.,Ltd. Chairman 18,2019
WangChuan ShenzhenShenfubao(Group)Co.,Ltd. Director June21,2018 No
WangChuan ShenzhenShentouEnvironmentTechnologyDirector June27,2018 No
Co., Ltd.
WangChuan ShenzhenShentouEducationCo.,Ltd. Director July27,2018 No
WangChuan ShenzhenInternationalTenderingCo.,Ltd. Director July27,2018 No
WangChuan ULTRARICHINTERNATIONAL Director June27,2018 No
LIMITED
HeZuowen Dahuacertifiedpublicaccountants(special Partner December Yes
generalpartnership)Shenzhenbranch 1,2002
HeZuowen ShenzhenCertifiedTaxAgentsAssociation GM, December Yes
Chairman 1,2008
HeZuowen ShenzhenTongyiIndustryCo.,Ltd. Independent October Yes
director 11,2018
HeZuowen ShenzhenJPTOPTO-ELECTRONICSCo., Independent June1,2017 Yes
Ltd. director
HeZuowen ShenzhenYiruiBiologyCo.,Ltd., Independent October1,2017 Yes
director
CaiYuanqing ShenzhenUniversity, Lawprofessor April1,2001 Yes
CaiYuanqing Shenzhenarbitrationcommission Arbitrator April1,2007 Yes
CaiYuanqing ChinaMerchantsShekouIndustrialZone Independent September September Yes
HoldingsCo.,Ltd. director 12,2018 11,2021
CaiYuanqing ShenzhenRongdaPhotosensitive& Independent December August30,2020 Yes
TechnologyCo.,Ltd. director 31,2014
CaiYuanqing ShenzhenOufeiTechnologyCo.,Ltd. Independent July28,2017 November Yes
director 24,2020
CaiYuanqing OgilvyMedicalSuppliesCo.,ltd. Independent September September Yes
director 20,2016 18,2022
Associate December
WangKai SouthUniversityofScienceandTechnologyprofessor, 1,2018 Yes
Researcher
WangKai ShenzhenPlanckInnovationTechnology Director October1,2016 Yes
Co.,ltd.
YuanShuwen ShenzhenInternationalTenderingCo.,Ltd. Supervisor October No
22,2017
LeKunjiu ShenzhenGuanhuaPrinting&Dyeing Board June6,2017 No
Co.,Ltd. Chairman
Punishments to the current and leaving board directors, supervisors and senior managers during the report period
by securitiesregulatorsintherecentthreeyears
□ Applicable √Notapplicable
IV. Remunerationtodirectors,supervisorsandseniorexecutives
Decision-making procedures,basisfordeterminationandactualpaymentoftheremunerationtodirectors,
supervisors andseniorexecutives
In the reportperiod, The remunerationof directorsandsenior managementpaidby thecompanyis determinedby
“Director Compensation Management System” and “Executive Compensation Management and Evaluation
System”,theremunerationofindependentdirectorsisdeterminedaspertheresolutionofshareholders’meeting,
and theremunerationofsupervisorspaidbythecompanyisdeterminedbytheirpositionheldinthecompany.
Remuneration todirectors,supervisorsandseniorexecutivesinthereportingperiod
InRMB10,000
Total Remuneration
Name Positions Sex Age Officestatus remuneration actuallyreceives
receivedfromthe attheendofthe
shareholder reportingperiod
ZhuJun BoardChairman Male 56 InOffice 74.57 No
ZhuMeizhu Director,GM Male 55 Inoffice 72.25 No
Director,Deputy
Secretaryofthe
NingMaozai Partycommittee Male 44 InOffice 59.75 No
andSecretaryof
theCommission
forDiscipline
HuangYu Director Male 45 Inoffice 0 Yes
HeFei Director,CFO Male 41 Inoffice 3.21Yes
WangChuan Director Male 47 Inoffice 0 Yes
HeZhuowen Independent Male 57 Inoffice 11.03No
Director
CaiYuanqing Independent Male 50 Inoffice 11.03No
Director
WangKai Independent Male 36 Inoffice 0 No
Director
Chairmanofthe
MaYi supervisory Male 53 Inoffice 0 No
committee
YuanShuwen Shareholder's Male 39 Inoffice 0 Yes
supervisor
Employee
ZhangXiaodong Male 44 Inoffice 37.86 Yes
supervisor
LeKunjiu DeputyGM Male 56 Inoffice 61.06 No
LiuHonglei DeputyGM Male 55 Inoffice 55.24 No
JiangPeng Secretarytothe Female 49 Inoffice 57.72 No
boardofdirectors
DiYan Director,CFO Female 49 Dimission 75.96 No
HeQiang Independent Male 67 Dimission 11.03No
Director
Chairmanofthe
WangWeixing supervisory Male 51 Dimission 85.68 No
committee
ZouZhiwei Shareholder's Male 37 Dimission 0 Yes
supervisor
LiLei Shareholder's Male 44 Dimission 0 Yes
supervisor
Total -- -- -- -- 616.39 --
Note: The salaries of directors, supervisors and senior managers who are paid in the company are composed of
basic salary and annual performanceappraisalsalary.Among them, director and CFO He Fei joined the company
on December 2, 2019, and his salary is calculated from December 2019. The salary of independent directors
during thereportingperiodwasadjustedto120,000yuanfrom100,000yuan.
.
Incentive equitytodirectors,supervisorsor/andseniorexecutivesinthereportingperiod
√ Applicable□Notapplicable
In shares
Name Position Number ofNumber of Exercise Market Number of Number ofNumber of Granting Number of
vested exercise price ofpriceattherestrictive shares newly-awa price ofrestrictive
shares stocks the end ofstock hold unlocked rded restrictive stock hold
during theduring the exercise report at the in therestrictive stock at the end
report report stock period beginning current stock (Yuan perof the
period period during the(Yuan perof the period during the share) report
report share) report report period
period period period
(Yuan per
share)
ZhuJun Board 0 0 7.45 137,000 54,800 0 5.73 82,200
Chairman
Zhu Director, 0 0 7.45 135,000 54,000 0 5.73 81,000
Meizhu GM
Director,
Deputy
Secretary
of the
Party
Ning committee 0 0 7.45 122,000 48,800 0 5.73 73,200
Maozai and
Secretary
of the
Commissi
on for
Discipline
LeKunjiu Deputy 0 0 7.45 122,000 48,800 0 5.73 73,200
GM
Liu Deputy 0 0 7.45 122,000 48,800 0 5.73 73,200
Honglei GM
Secretary
JiangPeng tothe 0 0 7.45 100,000 40,000 0 5.73 60,000
board of
directors
Total -- 0 0 -- -- 738,000 295,200 0 -- 442,800
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 liftingthe restrictionon salefor the first timestipulatedin the IncentivePlanfor Restricted
Stock in2017(Draft).AccordingtoChapterVIIIoftheIncentivePlanforRestrictedStockin2017(Draft),
the conditions for granting restrictedstock and the conditions for lifting the restriction on sale that "if the
conditions forliftingtherestrictiononsaleinthecurrentperiodarenot met,theCompanywillrepurchase
Remark（ifany） andcanceltherestrictedstocksthatcanbereleasedinthecurrentyearinaccordancewiththeprovisions of
this plan",theCompanyrepurchasedandcanceledtherestrictedstocksheldbytheincentiveobjectsofthe
2017 restricted stock incentive plan that do not meet the conditions for releasing the restricted stocks in
phase I.FordetailsJuchaoWebsite:（http://www.cninfo.com.cn.(AnnouncementNo.2019--27,2019-31and
2019-42).
V. Particularsaboutemployees.
1. Staffjobs,education,jobtitlenumberandproportionrefertothefollowingpiechart:
Numberofin-servicestaffoftheparentcompany（person） 47
Numberofin-servicestaffofthemainsubsidiaries（person） 1,291
Totalnumberofthein-servicestaff（person） 1,338
Totalnumberofstaffreceivingremunerationinthecurrent 1,338
period（person）
Thenumberoftheparentcompanyandthemainsubsidiary’s 0
retiredstaffswhoneedtobearthecost（person）
Professional
Classified accordingbyProfessions Numberofpersons（person）
Production 937
Sales 34
Technical 194
Financial 49
Administrative 124
Total 1,338
Education
Classifiedaccordingbyeducationbackground Numberofpersons（person）
Postgraduateorabove 33
Universities 222
Colleges 113
Mid-school orbelow 970
Total 1,338
2. Remunerationpolicies
In 2019, the Company carried out management for employees’ compensation in strict accordance with the
state’s relevant laws and regulations and guaranteed the fairness and reasonability of the compensation, which
offered relevant rewards and incentives to the employees, accelerate them to jointly develop with the Company ,
and simultaneouslyreflectedhumanisticcareoftheCompany.
3.Training plan
According totheCompany'sdevelopmentstrategy,combinedwiththeactualneedsofemployees'continuous
development related to the Company's business operations, the Company paid more attention to optimizing the
Company's training system and further refining the training content on the basis of the original training work in
2019. Firstly,it upgraded the "ShenzhenTextileGroup Network College" to further expand the range of students,
increased quality courses and improved the quality of online courses; Secondly, it innovated online knowledge
contest activities and enriched training forms and contents; Thirdly, it continued to promote "reading after
practice", created a good atmosphere for reading and learning, and strengthened the construction of learning
organization; Fourthly,it broadened the sharing content of "Shenzhen TextileForum" and deepened the sharing
and communication among enterprises on a regular basis; Fifthly, it promoted the company's "Elite Plan" and
"Baby Eagle Plan" and trained and improved the quality and ability of talents according to different groups of
employees.
4. Outsourcingsituation
□ Applicable√Notapplicable
X. Administrative structure
I. Basic state of corporate governance
In the reporting period, the company regulated operations and strengthen risk control in strict accordance with
Securities Law, Corporation Law, the Shenzhen Stock Exchange Standard Operation Instructions for Main-Board
Listed 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, normative
business operation and impeccable corporate governance structure meet the requirements of the normative
documents for regarding corporate governance of listed companies issued by the China Securities Regulatory
Commission.
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 of
Corporation Law, Articles of Corporation and Rule of Procedure of Shareholders' Meeting. Companies actively
protected the voting rights of minority investors, and general meetings were convened in the form of live network
to 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 all
conducted in strict accordance with the Articles of Corporation and Rule of Procedure of Shareholders' Meeting.
All the directors performed directors ' duties, exercise directors’ rights, attended related meetings and actively
participated in the training and became familiar with relevant laws and regulations with serious, diligent and
honest attitudes. Independent directors independently performed their duties in strict accordance with Articles of
Corporation, The independent director system and other relevant laws and regulations, expressed fully their
independent opinions on corporate operation, decision-making, and important matters, etc. Strategy, audit,
remuneration, evaluation, nomination committees were established under board of directors, all committees
functioned properly, and performed duties such as internal audits, compensation assessment, nomination of senior
management 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 therequirements 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 toenhance 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 the
relevant provisions of CSRC,
√ Yes □No
There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant
provisions of CSRC.
Shenzhen Investment Holdings Co., Ltd., the holding shareholder of the company, is a Shenzhen SASAC
enterprise. The company has complied with the relevant provisions on the state-owned asset management of
holding shareholders to report non-public information to holding shareholders, mainly including:Letters submitted
monthly index table; fee schedule during the reporting, financial assets table, summary quarterly deposits and
borrowings and financing.In order to strengthen the management of non-public information, the company has
strictly controlled the scope of learners, standardized the process of information delivery and strictly implemented
as per the “Management System on Learner of Insider Information”, took practical measures to prevent inside
information leaks and insider trading.
In addition, there is no difference among the governance of the company, “Company Law” and the relevant
provisions of China Securities Regulatory Commission.
II. Independence and Completeness in business, personnel , assets, organization and finance
The code of conduct of the controlling shareholders of the company did not go beyond the general meetings
directly or indirectly to interfere with the decision-making and business activities, the company had independent
and complete business and autonomous operation capacity , achieved “five point separation” in respect of
personnel, financial, asset, agencies, business.
III. Competitionsituationsoftheindustry
□ Applicable√NotApplicable
IV. AnnualGeneralMeetingandExtraordinaryShareholders’ MeetingsintheReportingPeriod
1.Annual GeneralMeeting
Sessions Type Investor MeetingDate Disclosuredate Disclosureindex
participationratio
（http://www.cninfo
AnnualGeneral Shareholders’ 49.00%June26,2019 June27,2019 .com.cn）
Meetingof2018 GeneralMeeting Announcement
No.:2019-30
Thefirstprovisional Provisional （http://www.cninfo
shareholders’ shareholders’ 49.19%October9,2019 October10,2019 .com.cn）
Generalmeetingin GeneralMeeting Announcement
2019 No.:2019-51
Thesecond （http://www.cninfo
provisional Provisional .com.cn）
shareholders’ shareholders’ 49.15%November4,2019 November5,2019 Announcement
Generalmeetingin GeneralMeeting No.:2019-64
2019
2. Requestforextraordinarygeneralmeetingbypreferredstockholderswhosevotingrightsrestore
□ Applicable√Notapplicable
V. Responsibilityperformanceofindependentdirectorsinreportperiod
1. Theattendingofindependentdirectorstoboardmeetingsandshareholders’ generalmeeting
The attendingofindependentdirectors
Numberof Failureto
Board Numberof personally Numberof
Independent meetings Numberof meetings Numberof Numberof attendboard attendanceat
Directors necessarytobe spot attendedby attendancesby absence meetings general
attendedinthe attendances Communicatio representative successively meetingsof
reporting n twice(Yes/No) shareholders
period
HeQiang 10 2 8 0 0 No 0
HeZuowen 10 2 8 0 0 No 3
CaiYuanqing 10 2 8 0 0 No 3
Notes tofailuretopersonallyattendBoardMeetingsSuccessivelyTwice
No
2.Objection ofindependentdirectorsonsomerelevantissues
Objection ofindependentdirectorsonsomerelevantissues
□ Yes √No
Independent directorsproposednoobjectionagainsttherelevantmattersinthereportingperiod.
3. Othernotestodutyperformanceofindependentdirectors
Has anindependentdirector’sadvicetotheCompanybeenaccepted
√ Yes□No
Explanation onacceptanceoforfailuretoacceptanindependentdirector’sadvicetotheCompany.
In the report period, the independent directors of the Company seriously fulfilled duties according to the
requirement ofsupervisionlawsandregulationsandSystemoftheCompany’sIndependentDirector：
（1）Attend the board of directors convened by the Company on time and attend the shareholders' meeting and
other relevant meetings. Before the meeting, the independent directors carefully reviewed the meeting materials,
made full use of their professional advantages and business management experience, and put forward reasonable
opinions and suggestions on the proposal. They also expressed independent opinions on related parties' fund
occupation, internal control, changes in accounting policies, profit distribution, appointment of audit institutions,
appointment of directors and independent directors, appointment of senior management personnel, use of idle
raised funds, cash management of self-owned funds, related party transactions, repurchase and cancellation of
some restricted stocks, insurance of directors, supervisors and senior management personnel, signing of the
Payment Agreement for the Performance Commitment Compensation for 2018 and equity transfer, giving full
play totheguidanceandsupervisionroleofindependentdirectors.
（2）Theindependent directors actively participated in the work of the board’s special committee, and gave
independentcommentsfor eventsinvolvedwith theCompany’speriodicalreport,dutyperformanceandfurther
employmentof annual audit institution, self-assessment report of internal control, To express opinions on such
mattersasnominationofcandidatesfordirectors,whichfactuallymaintainedtheinterestoftheCompanyandthe
shareholders’,especiallythepublicshareholder’s,andwhichbenefitedtheboard’scorefunctionatcorporate
governance.
（3）It kept communicationwith the managementof theCompany,listenedto the reportsof relevantpersonnelin
detail, and focused on the trade, trust financing, fund investment operation of subsidiary SAPO Photoelectric
during 2017-2018, performance commitment compensation matters of subsidiary SAPO Photoelectric, polarizer
industrialization projectforsuper-largeTV,entrustedfinancinganddailyrelatedtransactionswithsomeofitsown
funds, soastotimelyunderstandandmastertheprogressofmajorissuesoftheCompany.
（4）The Companycheckedmanagementanduse of fundsraisedand supervisedcompensationand performance
of duties of directors and senior executives, commitments of the Company and related parties and their
performance to practically safeguard the interest of the Company as a whole and prevent any harm on legitimate
rights andinterestsofminorityshareholders.
Refer totheannouncementofthehttp://www.cninfo.com.cndisclosureonMarch14,2020
VI. Duty Performance of Special Committees under the Board of Directors in the Reporting Period
The independent directors of the company are the key members of all professional committees of the Board of
Directors, and are in the majority and the conveners of Audit Committee, Remuneration and Appraisal Committee
and Nomination Committee. Also, all the three independent directors can attend the daily meeting held by every
special committee on time.
(1) Audit Committee: during the reporting period, the Audit Committee has held 2 meetings, carefully examined
the regular reports of the company and effectively implemented the work schedule of annual reports. Also, the
Audit Committee has reviewed the internal control of the company, supervised the effective implementation of
internal control, the self-assessment of internal control. It listened to the report maded by the Company's
management team on the production, operation and the financial situation. Before the meeting of the board of
directors is held to review the annual report, it met with the annual accountant to communicate the audit opinions
and understand the audit situation, and made a comprehensive and objective evaluation on the auditor's
completion of this year's work and the quality of his practice; During the reporting period, it held meetings and
made 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 audit
institution and revision of the internal audit system. The Audit Committee also specially deliberated the work plan
of the internal audit department, listened to reports on the implementation of the internal audit plan and problems
found 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 Assessment
Committee held 3 meetings to discuss the repurchase and cancellation of some restricted stocks of the Company
and 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 hold
meetings and formulate resolutions on the nomination of independent director candidates, nomination of
non-independent director candidates, and appointment of senior management personnel.
VII. Work of the supervisory Committee
Did the supervisory Committee find any risk existing in performing the supervision activities in the reporting
period
□Yes √No
The supervisory Committee has no objection opinion any matters under supervision in the reporting period
VIII. Assessment and incentive Mechanism for Senior executives
The company complies with “Executive Compensation Management and Evaluation System” to conduct the
evaluation for the accomplishment of annual work of the senior executives. The salaries of the senior executives
are determined according to the duty scope, post value, individual ability, wages level on the market, economic
profits of the company and operation goal accomplishment of senior executives with adhering to the principle of
market orientation, responsibility with unified right, and incentive and equal restriction. According to the actual
situation of the Company, the 2019 annual senior management assessment plan will be implemented from March
to June 2020.
IX. Internalcontrolsituations
1.Specific situationsonmajordefectsofinternalcontroldiscoveredduringreportperiod
√ Yes □No
About thesignificantDefectsoftheinternalcontrolfoundintheinternalcontrolself-assessmentreportinthereportingperiod
Theidentificationandrectificationofdeficiencyoftheinternalcontrol:
1.Theidentificationandrectificationofdeficiencyoftheinternalcontrolinthefinancialstatement
Inaccordance with above identification standard of deficiency of the internal control in the financial statement, there is no the
seriousandimportantdeficiencyofinternalcontrolinthefinancialstatementduringthereportingperiod.
2.Theidentificationandrectificationofdeficiencyoftheinternalcontrolexceptforthatofthefinancialstatementinaccordance
withaboveidentificationstandardofdeficiencyoftheinternalcontrolexceptforthatofthefinancialstatement,thereisnothe
seriousandimportantdeficiencyofinternalcontrolexceptforthatofthefinancialstatementduringthereportingperiod.
2.Self-evaluation reportoninternalcontrol
Disclosuredateofappraisalreporton March14,2020
internalcontrol
Disclosureindexofappraisalreporton JuchaoWebsite:（http://www.cninfo.com.cn）,Self-evaluationreportofinternalcontrol
internalcontrol
Proportionof total unit assets covered by
appraisal in the total assets of the 100.00%
consolidated financial statements of the
company
Proportionoftotalunitincomescovered
byappraisalinthetotalbusinessincomes 100.00%
oftheconsolidatedfinancialstatementsof
thecompany
Standards ofDefectsEvaluation
Category FinancialReport Non-financialReport
Inthefollowingcircumstances,the
companywasidentifiedasexisting
non-financial –reportingrelated
significantdefectsofinternalcontrolling
defects:
Thebusinessactivitiesofthecompany
seriouslyviolatednationallawsand
Thedefectsrelatedtofinancialreportswere regulations;(2)Thedecision-making
dividedintogeneraldefects,important processof"Three-Importance&
defectsandsignificantdefectsaccordingto One-Large"wereunscientific,leadingto
theirseverity.Significantdefectsreferredto majordecisionerrors,andcausingmajor
oneormultiplecombinationsofcontrolling propertylosestothecompany;(3)
defects,whichmayleadtoseriousdeviation Massivelossofkeypostsortechnology
fromthecontrollingobjectives.Important talents;(4)Thecontrollingsystem
defectsreferredtooneormultiple involvingimportantbusinessfieldsofthe
Qualitativestandard combinationsofcontrollingdefects,and companyfailed;(5)ItCausedserious
theirseverityandeconomicconsequences negativeeffectsonbusinessofthe
werebelowsignificantdefects,butthey company,andtheeffectscouldn’tbe
couldstillleadtoseriousdeviationfromthe eliminated;(6)Theevaluationresultsof
controllingobjectives.Generaldefects internalcontrolweresignificantdefects,
referredtootherinternalcontrollingdefects andcouldn’tgeteffectiverectification.
whichcouldn'tconstitutesignificantdefects Importantdefectsreferredtooneor
orimportantdefects. multiplecombinationsofcontrolling
defects,andtheirseverityandeconomic
consequenceswerebelowsignificant
defects,buttheycouldstillleadto
seriousdeviationfromthecontrolling
objectives.Generaldefectsreferredto
otherinternalcontrollingdefectswhich
couldn'tconstitutesignificantdefectsor
importantdefects.
Misstatementamountoffinancialstatement
fellintothefollowingintervals:significant
defects:Misstatementamount≥1.5%of
totalrevenue;Misstatementamount≥10%
ofgrossprofit;Misstatementamount≥1%
oftotalasset;Misstatementamount≥5%of
netasset.significantdefects:0.5%ofTotal
revenue≤Misstatementamount ＜ 1.5%of
totalrevenue;5%ofgrossprofit
Quantitativecriteria ≤Misstatementamount ＜ 10%ofgross Notapplicable
profit;0.5%ofTotalasset≤Misstatement
amount＜ 1%oftotalrevenue;3%ofNet
assets≤Misstatementamount ＜ 5%ofnet
assets.Generaldefects:0%oftotalrevenue
＜Misstatementamount＜0.5%ofTotal
revenue;2%ofgrossprofitt ＜Misstatement
amount＜5%oftotalprofit;0%oftotal
assets＜Misstatementamount＜0.5oftotal
assets;0%ofnetassets ＜Misstatement
amount＜3%ofnetassets.
Numberofmajordefectsinfinancial 0
reporting（a）
Numberofmajordefectsinnonfinancial 0
reporting(a)
Numberofimportantdefectsinfinancial 0
reporting（a）
Numberofimportantdefectsinnon 0
financialreporting（a）
X. InternalControlauditreport
√ Applicable□Notapplicable
Reviewopinionsintheinternalcontrolauditreport
ToallshareholdersofShenzhenTextile(Holdings)Co.,Ltd.：
Accordingto the relevant requirements of the “Audit Guideline of Enterprise Internal Control” and the Chinese CPAcriteria, the
companyhas audited the effectiveness of internal control of the financial statement of Shenzhen Textile (Holdings) Co., Ltd.
(ShenzhenTextile)atthedateofDecember31,2019.
1.The responsibility of enterprise for the internal control. According to the provisions of “Fundamental Norms for Enterprise
InternalControl”,“OperationGuidelineofEnterpriseInternalControl”and“EvaluationGuidelineofEnterpriseInternalControl”,
the company has established, perfected and effectively implemented the internal control, and made an evaluation for its
effectiveness,whicharetheresponsibilitiesoftheBoardofDirectorsofShenzhenTextile.
2.TheresponsibilityofCPA.Thecompanyshallberesponsiblefortheexpressionofauditopinionsontheeffectivenessofinternal
controlin the financial statementand the disclosure of serious deficiency of internal control exceptfor the financial statement on
thebasisoftheimplementationofaudit.
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.
Basedontheauditresultsofinternalcontrol,thefutureinternalcontrolisexpectedtohaveacertainrisk.
4.Theauditopinionsofinternalcontrolinthefinancialstatement.ThecompanybelievesthatShenzhenTextilehasmaintainedthe
effectiveinternal control of the financial statement in all the major aspects according to “Fundamental Norms for Enterprise
InternalControl”andtherelevantprovisionsonDecember31,2019.
PekingCertifiedPublicAccountants(SpecialGeneralPartnership)
Chinese C.P.A.
(Project partner)
Long ZheiYong
ChineseC.P.A.
LiuRu
March12,2020
Disclosuredateofauditreport
ofinternalcontrol(full-text) Disclosure
Indexofauditreportof
internalcontrol(full-text) March14,2020
Internalauditreport’sopinion JuchaoWebsite: （http://www.cninfo.com.cn）;AuditreportofinternalcontrolofPeking
CertifiedPublicAccountants(QXSZ(20209)No.：0127
Typeofauditreportoninternal Unqualifiedauditor’sreport
control
Whetherthereissignificant No
defection non-financialreport
Has theCPAsissuedaqualifiedauditor’sreportofinternalcontrol.
□ Yes√No
Does theinternalcontrolauditreportissuedbytheCPAsagreewiththeself-assessmentreportoftheBoardof
Directors
√Yes □No
XI. Corporation bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without
payment in full at maturity on the approval date for annual report disclosed
No
XII.Financial Report
I.Auditreport
Typeofauditopinion StandardUnqualifiedopinion
Typeofauditopinion March12,2020
Peking Certified Public Accountants(Special General
Nameofauditfirm
Partnership)
Theauditreportnumber QinXinZi【2020】No.0124
Nameofthecertifiedaccountants LongZhe,LiuRu
Auditors’ Report
ToallshareholdersofShenzhenTextile(Holdings)Co.,Ltd.：
I.Opinion
Wehaveauditedthefinancialstatementsof ShenzhenTextile(Holdings)Co.,Ltd . (hereinafterreferredto
as"theCompany"),whichcomprisethebalancesheetasatDecember31,2019, andtheincomestatement,
thestatement of cash flows and the statement of changes in owners' equity for the year then ended and
notestothefinancialstatements.
Inour opinion, the attached financial statements are prepared, in all material respects, in accordance
with Accounting Standards for Business Enterprises and present fairly the financial position of the
CompanyasatDecember31,2019anditsoperatingresultsandcashflowsfortheyearthenended.
II.BasisforOurOpinion
Weconducted our audit in accordance with the Auditing Standards for Certified Public Accountants in
China.Ourresponsibilitiesunderthosestandardsarefurtherdescribedin theAuditor'sResponsibilitiesfor
theAudit of the Financial Statements section of our report. According to the Code of Ethics for Chinese
CPA,weareindependentoftheCompanyinaccordancewiththeCode ofEthicsforChineseCPAandwe
havefulfilled our other ethical responsibilitiesin accordancewith these requirements.We believe that the
auditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
III.KeyAuditMatters
Keyaudit matters are those matters that, in our professional judgment, were of most significance in our
auditof the financial statements of the current period. These matters were addressed in the context of our
auditof the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separateopiniononthesematters.
(Ⅰ)Recognitionofrevenue
1. Descriptionofmatters
Asindicated in Remark Ⅴ(36) of the financial statement, the revenues of the period of Shenzhen
Textile (Holdings) Co., Ltd is 2,158,184,855.71 yuan, which are mainly sourced from sales revenue of
diffuser 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 operating
results 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 the
effectiveness of internal control in relation to revenue recognition; re-check on the basis of product and
business type the consistency of accounting policy used for various revenue recognition with Accounting
Standard for Business Enterprises; perform analytical procedure on the revenue and evaluate the
rationality 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 to
revenue recognition policy; Sample the revenue recognized before or after the balance sheet date and
check relevant supportive documents to evaluate if the revenue has been recognized in an appropriate
period; Sample the recognized accounts receivable and revenue, perform confirmation procedure to
evaluate 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 information
The management of the Company is responsible for the other information. The other information
comprises information of the Company's annual report in 2019, but excludes the financial statements and
our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
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 the
requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for
designing, implementing and maintaining internal control that is necessary to ensure that the financial
statements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of the Company is responsible for assessing the
Company's ability to continue as a going concern, disclosing matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial 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 the
Company, and conclude, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company's ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor'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 our
auditor's report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements and bear all
liability for the opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit matters, including any significant deficiencies in internal
controlthatweidentifyduringouraudit.
Wealso provide those charged with governance with a statement that we have complied with relevant
ethicalrequirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Fromthe matters communicated with those charged with governance, we determine those matters that
wereofmostsignificanceintheauditofthefinancialstatementsofthecurrentperiodandarethereforethe
keyaudit matters. We describe these matters in our auditor's report unless law or regulation precludes
publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a matter
shouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonably
beexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.
PekingCertifiedPublicAccountants(SpecialGeneralPartnership)
Chinese C.P.A. LongZhe（ProjectPartner)
Chinese C.P.A. LiuRu
March 12,2020
II.FinancialStatements
StatementinFinancialNotesarecarriedinRMB/CNY
1.Consolidatedbalancesheet
Preparedby:ShenzhenTextile(Holdings)Co.,Ltd.
December 31,2019
In RMB
Items December31,2019 December31,2018
Currentasset：
Monetary fund 409,564,847.52 1,141,759,374.60
Settlement provision
Outgoingcallloan
Transactionalfinancialassets 830,000,000.00
Financialassetsmeasuredatfair
valuewithvariationsaccountedinto
currentincomeaccount
Derivativefinancialassets
Notesreceivable 40,424,601.97 886,432.06
Account receivable 365,325,029.38 528,454,015.59
Financing ofreceivables 17,933,597.98
Prepayments 18,445,857.53 229,028,791.15
Insurance receivable
Reinsurancereceivable
Provisions ofReinsurancecontracts
receivable
Other accountreceivable 12,440,761.13 14,846,896.50
Including：Interest receivable 7,610,043.19 5,589,704.44
Dividend receivable
Repurchasing offinancialassets
Inventories 391,717,935.12 439,752,718.77
Contract assets
Assets heldforsales
Non-currentassetduewithin1year
Other currentasset 140,821,609.72 639,797,959.30
Totalofcurrentassets 2,226,674,240.35 2,994,526,187.97
Non-current assets：
Debtinvestment
Availableforsaleoffinancialassets 45,373,784.87
Other investmentonbonds
Expiredinvestmentinpossess
Long-termreceivable
Longtermshareequityinvestment 152,209,929.72 32,952,085.66
Otherequityinstrumentsinvestment 248,781,946.73
Othernon-currentfinancialassets
Propertyinvestment 112,730,320.90 167,997,941.98
Fixed assets 903,229,077.83 987,876,247.55
Constructioninprogress 839,866,275.92 15,621,286.64
Production physicalassets
Oil &gasassets
Use rightassets
Intangible assets 36,517,996.34 37,880,815.85
Developmentexpenses
Goodwill
Long-termexpensestobeamortized 2,692,750.67 1,486,209.03
Deferredincometaxasset 5,618,026.43 6,036,198.23
Othernon-currentasset 3,079,321.10 329,452,659.01
Totalofnon-currentassets 2,304,725,645.64 1,624,677,228.82
Totalofassets 4,531,399,885.99 4,619,203,416.79
Currentliabilities
Short-termloans 411,522,111.40
LoanfromCentralBank
Borrowingfunds
Transactional financialliabilities
Financialliabilitiesmeasuredatfair
valuewithvariationsaccountedinto
currentincomeaccount
Derivativefinancialliabilities
Notespayable
Account payable 241,297,770.64 180,239,452.90
Advance receipts 30,530,117.62 120,702,951.37
Contract liabilities
Sellingofrepurchasedfinancialassets
Deposit takingandinterbank
deposit
Entrustedtradingofsecurities
Entrustedsellingofsecurities
Employees’ wagepayable 38,556,180.20 32,506,267.08
Taxpayable 22,545,550.33 7,745,128.99
Otheraccountpayable 152,645,780.14 229,015,279.98
Including：Interest payable 39,044,044.39
Dividend payable
Fees andcommissionspayable
Reinsurance feepayable
ContractLiabilities
Liabilities heldforsales
Non-currentliabilityduewithin1 40,000,000.00
year
Othercurrentliability
Totalofcurrentliability 485,575,398.93 1,021,731,191.72
Non-currentliabilities：
Reserve fundforinsurance
contracts
Long-termloan
Bondpayable
Including：preferredstock
Sustainabledebt
Leaseliability
Long-term payable
Long-termremunerationpayableto
staff
Expectedliabilities
Deferred income 121,264,571.22 137,991,698.33
Deferredincometaxliability 69,944,345.66
Othernon-currentliabilities
Totalnon-currentliabilities 191,208,916.88 137,991,698.33
Totalofliability 676,784,315.81 1,159,722,890.05
Owners’ equity
Sharecapital 509,338,429.00 511,274,149.00
Otherequityinstruments
Including：preferredstock
Sustainabledebt
Capitalreserves 1,974,922,248.03 1,865,716,983.63
Less：Sharesinstock 16,139,003.40 27,230,679.00
Othercomprehensiveincome 119,737,783.31 1,339,208.41
Special reserve
Surplusreserves 90,596,923.39 80,004,803.23
Commonriskprovision
Retainedprofit 49,307,764.03 -57,774,473.41
Totalofowner’sequitybelongtothe 2,727,764,144.36 2,373,329,991.86
parentcompany
Minorityshareholders’ equity 1,126,851,425.82 1,086,150,534.88
Totalofowners’ equity 3,854,615,570.18 3,459,480,526.74
Totalofliabilitiesandowners’ equity 4,531,399,885.99 4,619,203,416.79
LegalRepresentative:ZhuJun
Person-in-chargeoftheaccountingwork：HeFei
Person-in-chargeoftheaccountingorgan：MuLinying
2.BalancesheetofParentCompany
InRMB
Items December31,2019 December31,2018
Currentasset：
Monetaryfund 27,979,338.37 85,416,567.74
Transactionalfinancialassets 650,000,000.00
Financialassetsmeasuredatfair
valuewithvariationsaccountedinto
currentincomeaccount
Derivativefinancialassets
Notes receivable
Account receivable 522,931.04 541,948.21
Financingofreceivables
Prepayments 768,099.94 17,436.00
Otheraccountreceivable 17,039,506.00 13,856,382.02
Including：Interest receivable
Dividend receivable
Inventories
Contract assets
Assets heldforsales
Non-current asset due within 1
year
Other currentasset 500,000,000.00
Totalofcurrentassets 696,309,875.35 599,832,333.97
Non-currentassets：
Debtinvestment
Availableforsaleoffinancialassets 15,373,784.87
Other investmentonbonds
Expiredinvestmentinpossess
Long-termreceivable
Longtermshareequityinvestment 2,102,430,511.88 1,997,175,852.27
Otherequityinstrumentsinvestment 206,816,952.64
Othernon-currentfinancialassets
Propertyinvestment 107,199,622.80 161,053,628.71
Fixedassets 25,500,695.77 26,565,399.91
Constructioninprogress 19,552.00
Production physicalassets
Oil &gasassets
Use rightassets
Intangible assets 659,937.75 1,012,374.75
Developmentexpenses
Goodwill
Long-termexpensestobeamortized 800,858.17
Deferredincometaxasset 5,466,478.06 5,818,069.48
Othernon-currentasset
Totalofnon-currentassets 2,448,894,609.07 2,206,999,109.99
Totalofassets 3,145,204,484.42 2,806,831,443.96
Currentliabilities
Short-term loans
Transactional financialliabilities
Financialliabilitiesmeasuredatfair
valuewithvariationsaccountedinto
currentincomeaccount
Derivativefinancialliabilities
Notes payable
Account payable 411,743.57 411,743.57
Advancereceipts 2,878,936.58 639,024.58
Contract Liabilities
Employees’ wagepayable 11,910,175.11 9,760,306.51
Taxpayable 20,801,961.18 5,494,627.33
Otheraccountpayable 119,984,209.60 141,746,352.67
Including：Interest payable
Dividend payable
Liabilities heldforsales
Non-currentliabilityduewithin1
year
Othercurrentliability
Totalofcurrentliability 155,987,026.04 158,052,054.66
Non-currentliabilities：
Long-termloan
Bondpayable
Including：preferredstock
Sustainabledebt
Leaseliability
Long-term payable
Long-termremunerationpayableto
staff
Expectedliabilities
Deferred income 600,000.00 700,000.00
Deferredincometaxliability 66,953,097.14
Othernon-currentliabilities
Totalnon-currentliabilities 67,553,097.14 700,000.00
Totalofliability 223,540,123.18 158,752,054.66
Owners’ equity
Sharecapital 509,338,429.00 511,274,149.00
Otherequityinstruments
Including：preferredstock
Sustainabledebt
Capitalreserves 1,589,869,499.36 1,599,025,454.96
Less：Sharesinstock 16,139,003.40 27,230,679.00
Othercomprehensiveincome 110,764,037.74 1,339,208.41
Special reserve
Surplusreserves 90,596,923.39 80,004,803.23
Retained profit 637,234,475.15 483,666,452.70
Totalofowners’ equity 2,921,664,361.24 2,648,079,389.30
Totalofliabilitiesandowners’ equity 3,145,204,484.42 2,806,831,443.96
3.ConsolidatedIncomeStatement
In RMB
Items Year2019 Year2018
I. Incomefromthekeybusiness 2,158,184,855.71 1,272,356,771.34
Incl：Business income 2,158,184,855.71 1,272,356,771.34
Interestincome
Insurancefeeearned
Feeandcommissionreceived
II.Totalbusinesscost 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 andcommissionpaid
Insurance dischargepayment
Net claimamountpaid
Insurancepolicydividendpaid
Insurancepolicydividendpaid
Reinsuranceexpenses
Businesstaxandsurcharge 8,466,143.40 8,042,137.62
Sales expense 20,785,078.66 9,636,559.05
Administrativeexpense 96,870,842.37 88,590,439.30
R&Dexpense 53,178,714.33 41,951,786.15
Financialexpenses 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
Investmentgain（“-”forloss） 78,038,530.25 51,793,705.47
Including:investmentgainsfrom -7,404,083.27 1,260,154.95
affiliates
Financialassetsmeasuredatamortized
costceasetoberecognizedasincome
Gainsfromcurrencyexchange
Net exposurehedgingincome
Changingincomeoffairvalue
Creditimpairmentloss 7,005,890.93
Impairment lossofassets -97,172,532.71 -106,348,320.75
Assetsdisposalincome 3,967.97
III.Operationalprofit（“-”forloss） 4,949,428.32 -54,469,187.15
Add：Non-operationalincome 5,003,548.34 1,265,178.66
Less:Non-operatingexpense 420,575.07 219,103.78
IV.Total profit(“-”forloss) 9,532,401.59 -53,423,112.27
Less：Incometaxexpenses 28,059,080.22 8,879,595.11
V.Netprofit -18,526,678.63 -62,302,707.38
(I)Classificationbybusiness
continuity
1.Netcontinuingoperatingprofit -18,526,678.63 -62,302,707.38
2.Terminationofoperatingnetprofit
(II)Classificationbyownership
1.Net profit attributable to the owners of 19,679,910.43 -22,980,624.93
parentcompany
2.Minorityshareholders’ equity -38,206,589.06 -39,322,082.45
VI.Netafter-taxofothercomprehensive -52,500,997.28 -879,495.46
income
Netofprofitofothercomprehensiveinco -52,500,997.28 -879,495.46
meattributabletoownersoftheparentco
mpany.
（I）Othercomprehensiveincomeitems
thatwillnotbereclassifiedinto -52,715,913.64
gains/lossesinthesubsequentaccounting
period
1.Re-measurementofdefinedbenefitpla
nsofchangesinnetdebtornetassets
2.Othercomprehensiveincomeunderthe
equitymethodinvesteecannotbereclass
ifiedintoprofitorloss.
3.Changesinthefairvalueof -52,715,913.64
investmentsinotherequityinstruments
4.Changesinthefairvalueofthe
company’screditrisks
5.Other
（II）
Othercomprehensiveincomethatwillbe 214,916.36 -879,495.46
reclassifiedintoprofitorloss.
1.Othercomprehensiveincomeunderthe
equitymethodinvesteecanbereclassifie
dintoprofitorloss.
2.Changesinthefairvalueof
investmentsinotherdebtobligations
3.Gainsandlossesfromchangesinfairv -1,500,778.50
alueavailableforsalefinancialassets
4.Othercomprehensiveincomearising
fromthereclassificationoffinancial
assets
5.Held-to-maturityinvestmentsreclassifi
edtogainsandlossesofavailableforsal
efinancialassets
6.Allowanceforcreditimpairmentsin
investmentsinotherdebtobligations
7.Reserveforcashflowhedges
8.Translationdifferencesincurrencyfina 214,916.36 621,283.04
ncialstatements
9.Other
Netofprofitofothercomprehensiveinco
meattributabletoMinorityshareholders’
equity
VII.Totalcomprehensiveincome -71,027,675.91 -63,182,202.84
Totalcomprehensiveincomeattributable -32,821,086.85 -23,860,120.39
totheowneroftheparentcompany
Totalcomprehensiveincome -38,206,589.06 -39,322,082.45
attributableminorityshareholders
VIII.Earningspershare
（I）Basicearningspershare 0.04 -0.04
(II)Dilutedearningspershare 0.04 -0.04
Thecurrentbusinesscombinationundercommoncontrol,thenetprofitsofthecombinedpartybeforeachi
evednetprofitofRMB0.00,lastperiodthecombinedpartyrealizedRMB0.00.
LegalRepresentative:ZhuJun
Person-in-chargeoftheaccountingwork：HeFei
Person-in-chargeoftheaccountingorgan：MuLinying
4.IncomestatementoftheParentCompany
In RMB
Items Year2019 Year2018
I.Incomefromthekeybusiness 123,585,753.10 68,327,680.40
Incl：Businesscost 60,654,551.98 14,479,527.62
Business taxandsurcharge 3,088,345.17 2,907,383.37
Salesexpense
Administrative expense 38,275,813.43 31,726,924.70
R&Dexpense
Financial expenses -2,114,743.82 -16,480,997.63
Including：Interestexpenses 476,191.57 571,844.26
Interestincome 2,611,348.37 17,084,555.65
Add：Otherincome 106,720.83 107,858.68
Investmentgain（“-”forloss） 68,053,467.35 -3,527,451.56
Including:investmentgainsfrom -7,404,083.27 1,260,154.95
affiliates
Financialassetsmeasuredat
amortizedcostceasetoberecognized
asincome
Netexposurehedgingincome
Changingincomeoffairvalue
Creditimpairmentloss -194,490.83
Impairment lossofassets -1,488,429.82
Assetsdisposalincome 280.00
II.Operationalprofit（“-”forloss） 91,647,763.69 30,786,819.64
Add ：Non-operationalincome 146,868.07 24,597.81
Less：Non-operationalexpenses 5,061.99
III.Total profit(“-”forloss) 91,794,631.76 30,806,355.46
Less：Income taxexpenses 25,628,936.32 5,528,745.08
IV.Netprofit 66,165,695.44 25,277,610.38
1.Netcontinuingoperatingprofit
2.Terminationofoperatingnetprofit
V.Netafter-taxofothercomprehensive -52,500,997.28 -879,495.46
income
（I）Othercomprehensiveincomeitems
thatwillnotbereclassifiedinto -52,715,913.64
gains/lossesinthesubsequent
accountingperiod
1.Re-measurementofdefinedbenefitpl
ansofchangesinnetdebtornetassets
2.Othercomprehensiveincomeunderth
eequitymethodinvesteecannotberecl
assifiedintoprofitorloss.
3.Changesinthefairvalueof -52,715,913.64
investmentsinotherequityinstruments
4.Changesinthefairvalueofthe
company’screditrisks
5.Other
(II)Othercomprehensiveincomethatwi 214,916.36 -879,495.46
llbereclassifiedintoprofitorloss.
1.Othercomprehensiveincomeunderth
eequitymethodinvesteecanbereclassi
fiedintoprofitorloss.
2.Changesinthefairvalueof
investmentsinotherdebtobligations
3.Gainsandlossesfromchangesinfair -1,500,778.50
valueavailableforsalefinancialassets
4.Othercomprehensiveincome
arisingfromthereclassificationof
financialassets
5.Held-to-maturityinvestmentsreclassif
iedtogainsandlossesofavailablefors
alefinancialassets
6.Allowanceforcreditimpairments
ininvestmentsinotherdebtobligations
7.Reserveforcashflowhedges
8.Translationdifferencesincurrencyfin 214,916.36 621,283.04
ancialstatements
9.Other
VI.Totalcomprehensiveincome 13,664,698.16 24,398,114.92
VII.Earningspershare
（I）Basicearningspershare
(II)Dilutedearningspershare
5.ConsolidatedCashflowstatement
In RMB
Items Year2019 Year2018
I.Cashflowsfromoperatingactivities
Cashreceivedfromsalesofgoodsor 2,239,603,149.40 1,178,134,497.59
rendingofservices
Net increaseofcustomerdeposits
andcapitalkeptforbrothercompany
Netincreaseofloansfromcentralbank
Netincreaseofinter-bankloansfrom
otherfinancialbodies
Cashreceivedagainstoriginalinsurance
contract
Netcashreceivedfromreinsurance
business
Netincreaseofclientdepositand
investment
Cashreceivedfrominterest,
commissionchargeandcommission
Netincreaseofinter-bankfundreceived
Netincreaseofrepurchasingbusiness
Netcashreceivedbyagentin
securitiestrading
Tax returned 37,887,179.50 96,325,044.45
Othercashreceivedfrombusiness 61,696,291.74 299,343,342.34
operation
Sub-total ofcashinflow 2,339,186,620.64 1,573,802,884.38
Cashpaidforpurchasingof 1,664,396,359.07 1,459,074,751.17
merchandiseandservices
Netincreaseofclienttradeandadvance
Netincreaseofsavingsincentralbank
andbrothercompany
Cashpaidfororiginalcontractclaim
Netincreaseinfinancialassetsheld
fortradingpurposes
NetincreaseforOutgoingcallloan
Cashpaidforinterest,processingfee
andcommission
Cashpaidtostaffsorpaidforstaffs 163,768,856.39 146,910,083.29
Taxespaid 31,514,698.29 45,580,651.00
Othercashpaidforbusinessactivities 96,360,918.39 382,731,720.07
Sub-totalofcashoutflowfrombusiness 1,956,040,832.14 2,034,297,205.53
activities
Netcashgeneratedfrom/usedin 383,145,788.50 -460,494,321.15
operatingactivities
II.Cashflowgeneratedbyinvesting
Cashreceivedfrominvestment 60,428,769.00
retrieving
Cashreceivedasinvestmentgains 5,821,323.94 5,359,325.16
Netcashretrievedfromdisposalof
fixedassets,intangibleassets,andother 298,580.00 13,045.98
long-termassets
Netcashreceivedfromdisposalof
subsidiariesorotheroperationalunits
Otherinvestment-relatedcashreceived 4,164,457,418.70 4,170,920,804.54
Sub-totalofcashinflowdueto 4,231,006,091.64 4,176,293,175.68
investmentactivities
Cashpaidforconstructionoffixed
assets, intangibleassetsandother 618,799,656.48 380,415,720.59
long-term assets
Cashpaidasinvestment
Netincreaseofloanagainstpledge
Netcashreceivedfromsubsidiariesand
otheroperationalunits
Othercashpaidforinvestment 4,556,430,000.00 3,625,700,000.00
activities
Sub-totalofcashoutflowdueto 5,175,229,656.48 4,006,115,720.59
investmentactivities
Netcashflowgeneratedbyinvestment -944,223,564.84 170,177,455.09
III.Cashflowgeneratedbyfinancing
Cashreceivedasinvestment
Including:Cashreceivedasinvestment
fromminorshareholders
Cashreceivedasloans 86,033,453.75 630,493,275.82
Otherfinancing –relatedcash 203,775,154.17
received
Sub-totalofcashinflowfromfinancing 289,808,607.92 630,493,275.82
activities
Cashtorepaydebts 536,552,100.76 347,609,345.87
Cashpaidasdividend,profit,or 43,473,617.45 19,810,202.44
interests
Including:Dividendandprofitpaidby
subsidiariestominorshareholders
Othercashpaidforfinancingactivities 13,791,675.60
Sub-totalofcashoutflowdueto 593,817,393.81 367,419,548.31
financingactivities
Netcashflowgeneratedbyfinancing -304,008,785.89 263,073,727.51
IV.Influenceofexchangerate 158,915.19 -422,765.56
alternationoncashandcashequivalents
V.Netincreaseofcashandcash -864,927,647.04 -27,665,904.11
equivalents
Add:balanceofcashandcash 1,133,574,235.22 1,161,240,139.33
equivalentsatthebeginningofterm
VI..Balanceofcashandcash 268,646,588.18 1,133,574,235.22
equivalentsattheendofterm
6.CashflowstatementoftheParentCompany
In RMB
Items Year2019 Year2018
I.Cashflowsfromoperatingactivities
Cash received from sales of goods or 76,051,827.26 70,428,184.75
rendingofservices
Taxreturned
Othercashreceivedfrombusiness 16,144,244.57 22,064,255.92
operation
Sub-totalofcashinflow 92,196,071.83 92,492,440.67
Cashpaidforpurchasingof 5,479,277.51 5,684,253.84
merchandiseandservices
Cashpaidtostaffsorpaidforstaffs 22,463,068.76 19,166,726.43
Taxespaid 20,712,126.49 15,493,316.47
Othercashpaidforbusinessactivities 25,827,850.33 6,553,493.05
Sub-totalofcashoutflowfrombusiness 74,482,323.09 46,897,789.79
activities
Netcashgeneratedfrom/usedin 17,713,748.74 45,594,650.88
operatingactivities
II.Cashflowgeneratedbyinvesting
Cashreceivedfrominvestment 72,428,769.00
retrieving
Cashreceivedasinvestmentgains 2,715,003.90 2,310,030.38
Netcashretrievedfromdisposalof
fixedassets,intangibleassets,andother 34,500.00
long-termassets
Netcashreceivedfromdisposalof
subsidiariesorotheroperationalunits
Otherinvestment-relatedcashreceived 1,448,303,833.93 566,305,459.40
Sub-totalofcashinflowdueto 1,523,482,106.83 568,615,489.78
investmentactivities
Cashpaidforconstructionoffixed
assets, intangibleassetsandother 10,991,096.71 2,493,900.87
long-term assets
Cash paidasinvestment
Netcashreceivedfromsubsidiariesand
otheroperationalunits
Othercashpaidforinvestment 1,580,000,000.00 940,000,000.00
activities
Sub-totalofcashoutflow dueto 1,590,991,096.71 942,493,900.87
investmentactivities
Netcashflowgeneratedbyinvestment -67,508,989.88 -373,878,411.09
III.Cashflowgeneratedbyfinancing
Cashreceivedasinvestment
Cash receivedasloans
Otherfinancing –relatedashreceived 3,806,454.17
Sub-totalofcashinflowfrom 3,806,454.17
financingactivities
Cashtorepaydebts
Cashpaidasdividend,profit,or 356,766.80
interests
Othercashpaidforfinancingactivities 11,091,675.60
Sub-totalofcashoutflowdueto 11,448,442.40
financingactivities
Netcashflowgeneratedbyfinancing -7,641,988.23
IV.Influenceofexchangerate
alternationoncashandcashequivalents
V.Netincreaseofcashandcash -57,437,229.37 -328,283,760.21
equivalents
Add:balanceofcashandcash 85,416,567.74 413,700,327.95
equivalentsatthebeginningofterm
VI..Balanceofcashandcash 27,979,338.37 85,416,567.74
equivalentsattheendofterm
7.ConsolidatedStatementonChangeinOwners’ Equity
Amountinthisperiod
In RMB
Year2019
Owner’s equityAttributabletotheParentCompany
OtherEquity
instrument Other Minor Total
Items share Capital Less: Compr Specia Surplu Comm Retain shareh of
Capitprefe Susta reserve Shares ehensi lized s onrisk ed Other Subtot olders owners
a rred inabl Other s in ve reserve reserve provisi profit al ’ ’
stock e stock Incom s on equity equity
debt e
I.Balanceatthe 511,2 1,865, 27,230 1,339, 80,004 -57,77 2,373, 1,086, 3,459,
endoflastyear 74,14 716,98 ,679.0 208.41 ,803.2 4,473. 329,99 150,53 480,52
9.00 3.63 0 3 41 1.86 4.88 6.74
Add: Change of 170,89 3,975, 35,779 210,65 210,65
accounting 9,572. 550.61 ,955.5 5,078. 5,078.
policy 18 3 32 32
Correctingof
previouserrors
Mergerof
entitiesunder
commoncontrol
Other
II.Balanceatthe 511,2 1,865, 27,230 172,23 83,980 -21,99 2,583, 1,086, 3,670,
beginningof 74,14 716,98 ,679.0 8,780. ,353.8 4,517. 985,07 150,53 135,60
currentyear 9.00 3.63 0 59 4 88 0.18 4.88 5.06
III.Changedin -1,93 109,20 -11,09 -52,50 6,616, 71,302 143,77 40,700 184,47
thecurrentyear 5,720 5,264. 1,675. 0,997. 569.55 ,281.9 9,074. ,890.9 9,965.
.00 40 60 28 1 18 4 12
（1）Total 5,737, 19,679 25,417 -38,20 -12,78
comprehensive 943.75 ,910.4 ,854.1 6,589. 8,734.
income 3 8 06 88
（II）Investment-1,93 -11,09
ordecreasingof 5,720 -9,155, 1,675.
capitalby .00 955.60 60
owners
1．Ordinary Sh
aresinvestedby
shareholders
2．Holders ofo
therequityinstr
umentsinvested
capital
3．Amountof
sharespaidand
accountedas
owners’equity
-1,93 -9,155, -11,09
4．Other 5,720 955.60 1,675.
.00 60
（III）Profit 6,616, -6,616,
allotment 569.55 569.55
1.Providingof 6,616, -6,616,
surplusreserves 569.55 569.55
2.Providing of
common risk
provisions
3．Allotmentto
theowners(or
shareholders)
4．Other
(IV)Internal -58,23 58,238
transferringof 8,941. ,941.0
owners’equity 03 3
1.Capitalizing
ofcapital
reserves(orto
capitalshares)
2.Capitalizing
ofsurplus
reserves(orto
capitalshares)
3．Makingup
lossesby
surplus
reserves.
4.Change
amountof
definedbenefit
plansthatcarry
forward
Retained
earnings
5．Other
comprehensive -58,23 58,238
income 8,941. ,941.0
carry-over 03 3
retained
earnings
6．Other
(V)Special
reserves
1.Providedthis
year
2．Usedthis
term
118,36 118,36 78,907 197,26
（VI）Other 1,220. 1,220. ,480.0 8,700.
00 00 0 00
IV.Balanceat 509,3 1,974, 16,139 119,73 90,596 49,307 2,727, 1,126, 3,854,
theendofthis 38,42 922,24 ,003.4 7,783. ,923.3 ,764.0 764,14 851,42 615,57
term 9.00 8.03 0 31 9 3 4.36 5.82 0.18
Amountinlastyear
In RMB
Year 2018
Owner’s equityAttributabletotheParentCompany
Other Equity
instrument Other Minor Totalof
Items share Capital Less: Compr Specia Surplu Comm Retain shareho owners
Capit prefe Susta reserve Shares ehensi lized s onrisk ed Other Subtot lders’ ’
a rred inabl Other s in ve reserve reserve provisi profit al equity equity
stock e stock Incom s on
debt e
I.Balanceatthe 511,2 1,866, 27,230 2,218, 77,477 -32,26 2,397, 1,125,5 3,523,0
endoflastyear 74,14 001,47 ,679.0 703.87 ,042.1 6,087. 474,60 44,525. 19,129.
9.00 5.17 0 9 44 3.79 79 58
Add:Changeof
accounting
policy
Correctingof
previouserrors
Mergerof
entitiesunder
common
control
Other
II.Balanceat 511,2 1,866, 27,230 2,218, 77,477 -32,26 2,397, 1,125,5 3,523,0
thebeginning 74,14 001,47 ,679.0 703.87 ,042.1 6,087. 474,60 44,525. 19,129.
ofcurrentyear 9.00 5.17 0 9 44 3.79 79 58
III.Changedin -284,4 -879,4 2,527, -25,50 -24,14 -39,393 -63,538
thecurrentyear 91.54 95.46 761.04 8,385. 4,611. ,990.91 ,602.84
97 93
（1）Total -879,4 -22,98 -23,86 -39,322 -63,182
comprehensive 95.46 0,624. 0,120. ,082.45 ,202.84
income 93 39
（II）
Investmentor -284,4 -284,4 -284,49
decreasingof 91.54 91.54 1.54
capitalby
owners
1．OrdinarySh
aresinvestedb
yshareholders
2．Holdersof
otherequityins
trumentsinvest
edcapital
3．Amountof
sharespaidand -284,4 -284,4 -284,49
accountedas 91.54 91.54 1.54
owners’equity
4．Other
（III）Profit 2,527, -2,527,
allotment 761.04 761.04
1.Providingof 2,527, -2,527,
surplusreserves 761.04 761.04
2.Providingof
common risk
provisions
3．Allotmentto
theowners(or
shareholders)
4．Other
(IV)Internal
transferringof
owners’equity
1.Capitalizing
ofcapital
reserves(orto
capitalshares)
2.Capitalizing
ofsurplus
reserves(orto
capitalshares)
3．Makingup
lossesby
surplus
reserves.
4.Change
amountof
definedbenefit
plansthatcarry
forward
Retained
earnings
5．Other
comprehensive
income
carry-over
retained
earnings
6．Other
(V).Special
reserves
1.Providedthis
year
2．Usedthis
term
（VI）Other -71,908 -71,908
.46 .46
IV.Balanceat 511,2 1,865, 27,230 1,339, 80,004 -57,77 2,373, 1,086,1 3,459,4
theendofthis 74,14 716,98 ,679.0 208.41 ,803.2 4,473. 329,99 50,534. 80,526.
term 9.00 3.63 0 3 41 1.86 88 74
8.Statementofchangeinowner’sEquityoftheParentCompany
Amountinthisperiod
In RMB
Year2019
OtherEquityinstrument
Less: Other Specializ Totalof
Items Share preferr Capital Compreh Surplus Retaine
capital ed Sustain Other reserves Sharesin ensive ed reserves dprofit Other owners’
stock able stock Income reserve equity
debt
I.Balance at the 511,27 1,599,02 27,230,6 1,339,20 80,004,8 483,66 2,648,079,
endoflastyear 4,149.0 5,454.96 79.00 8.41 03.23 6,452.7 389.30
0 0
Add: Change of 161,925, 3,975,55 35,779, 201,681,3
accounting 826.61 0.61 955.53 32.75
policy
Correcting of
previouserrors
Other
II.Balance at the 511,27 1,599,02 27,230,6 163,265, 83,980,3 519,44 2,849,760,
beginning of 4,149.0 5,454.96 79.00 035.02 53.84 6,408.2 722.05
currentyear 0 3
III.Changed in -1,935, -9,155,9 -11,091, -52,500, 6,616,56 117,78 71,903,63
thecurrentyear 720.00 55.60 675.60 997.28 9.55 8,066.9 9.19
2
（I）Total 5,737,94 66,165, 71,903,63
comprehensive 3.75 695.44 9.19
income
(II)Investment
ordecreasingof -1,935, -9,155,9 -11,091,
capitalby 720.00 55.60 675.60
owners
1．Ordinary Sha
resinvestedbys
hareholders
2．Holders ofot
herequityinstru
mentsinvestedc
apital
3.Amountof
sharespaidand
accountedas
owners’ equity
4．Other -1,935, -9,155,9 -11,091,
720.00 55.60 675.60
（III）Profit 6,616,56 -6,616,
allotment 9.55 569.55
1.Providingof 6,616,56 -6,616,
surplusreserves 9.55 569.55
2．Allotmentto
theowners(or
shareholders)
3．Other
(IV)Internal -58,238, 58,238,
transferringof 941.03 941.03
owners’ equity
1.Capitalizing
ofcapital
reserves(orto
capitalshares)
2.Capitalizing
ofsurplus
reserves(orto
capitalshares)
3．Makingup
lossesbysurplus
reserves.
4.Change
amountof
definedbenefit
plansthatcarry
forward
Retained
earnings
5．Other
comprehensive -58,238, 58,238,
income 941.03 941.03
carry-over
retainedearnings
6．Other
(V)Special
reserves
1.Providedthis
year
2．Usedthisterm
（VI）Other
IV.Balanceat 509,33 1,589,86 16,139,0 110,764, 90,596,9 637,23 2,921,664,
theendofthis 8,429.0 9,499.36 03.40 037.74 23.39 4,475.1 361.24
term 0 5
Amountinlastyear
In RMB
Year 2018
OtherEquity
instrument Other
Items Share Capital Less: Compre Specializ Surplus Retained Totalof
Capital preferr Sustai reserves Shares hensive ed reserves profit Other owners’
ed nable Other instock Income reserve equity
stock debt
I.Balance at the 511,27 1,599,3 27,230,6 2,218,7 77,477, 460,916,6 2,624,037,6
endoflastyear 4,149. 81,854. 79.00 03.87 042.19 03.36 74.38
00 96
Add: Change of
accounting
policy
Correcting of
previouserrors
Other
II.Balance at 511,27 1,599,3 27,230,6 2,218,7 77,477, 460,916,6 2,624,037,6
the beginning 4,149. 81,854. 79.00 03.87 042.19 03.36 74.38
ofcurrentyear 00 96
III.Changed in -356,40 -879,49 2,527,7 22,749,84 24,041,714.
thecurrentyear 0.00 5.46 61.04 9.34 92
（I）Total -879,49 25,277,61 24,398,114.
comprehensive 5.46 0.38 92
income
(II)Investment
ordecreasingof -356,40 -356,400.00
capitalby 0.00
owners
1．Ordinary Sh
aresinvestedby
shareholders
2．Holdersofo
therequityinstr
umentsinvested
capital
3.Amountof
sharespaidand -356,40 -356,400.00
accountedas 0.00
owners’equity
4．Other
（III）Profit 2,527,7 -2,527,76
allotment 61.04 1.04
1.Providingof 2,527,7 -2,527,76
surplusreserves 61.04 1.04
2．Allotmentto
theowners(or
shareholders)
3．Other
(IV)Internal
transferringof
owners’equity
1.Capitalizing
ofcapital
reserves(orto
capitalshares)
2.Capitalizing
ofsurplus
reserves(orto
capitalshares)
3．Makingup
lossesby
surplus
reserves.
4.Change
amountof
definedbenefit
plansthatcarry
forward
Retained
earnings
5．Other
comprehensive
income
carry-over
retained
earnings
6．Other
(V)Special
reserves
1.Providedthis
year
2．Usedthis
term
（VI）Other
IV.Balanceat 511,27 1,599,0 27,230,6 1,339,2 80,004, 483,666,4 2,648,079,3
theendofthis 4,149. 25,454. 79.00 08.41 803.23 52.70 89.30
term 00 96
III.BasicInformationoftheCompany
(1)Company Profile
1.Enterpriseregistrationaddress,organizationmodeandheadquarteraddress.
Thecompanywas previouslytheShenzhenTextileIndustryCompany,onApril13, 1994,approvedbythe
Letter(1994)No.15issued by Shenzhen Municipal People's Government, the Company was restructured
andnamed as Shenzhen Textile (Holdings) Co., Ltd. In the same year, approved by the (1994) No.19 file
ofShenzhenshi, the shares of the company were listed in Shenzhen Stock Exchange. The company now
holdsa unified social credit code for the 91440300192173749Y business license,Registration address
and headquarter address are 6/F,Shenfang Building, No.3 Huaqiang Road. North, Futian District,
Shenzhen.
2.Enterprise’sbusinessnatureandmajorbusinessoperation.
At present, the Company is mainly engaged in high-tech industry focusing on R&D, production and
marketingof polarizers for liquid crystal display, management of properties in bustling business districts
ofShenzhenandreservedhigh-classtextileandgarmentbusiness.
3. Approval of the financial statements reported
The financial statements have been authorized for issuance by the Board of Directors of the Group on
March12,2020.
(2)Scope of consolidated financial statements
1.As of the end of the reporting period, there are 7 subsidiaries companies included in the consolidated fin
ancial statements: SAPO Photoelectric Co., Ltd., Shenzhen Lisi Industrial Development Co.,
Ltd.,Shenzhen Huaqiang Hotel, Shenzhen Shenfang Property Management Co., Ltd. Shenzhen Beaufity
Garments Co., Ltd.,Shzhen Shenfang Import & Export Co., Ltd., and Shengtou (Hongkong) Co., Ltd.
2．The scope of consolidated financial statements this period did not change.
IV.Basis for the preparation of financial statements
（1）Basis for the preparation
This company’s financial statements is based on going-concern assumption and worked outaccording to actual transactions and matters, Accounting Standard for Business Enterprises--BasicStandard(issued by No.33 Decree of the Ministry of Finance and revised by No.76 Decree of 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 will
cause 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 accounting
standards. They truly and completely reflect the financial situations, operating results, equity changes and
cash flow, and other relevant information of the company.
2.Fiscal Year
The Company adopts the Gregorian calendar year commencing on January 1 and ending on December 31
as the fiscal year.
3. Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assets
form processing until. Less than 1 year is for the normal operating cycle in the company.
With regard to less than 1 year for the normal operating cycle, the assets realized or the liabilities repaid at
maturity within one year as of the balance sheet date shall be classified into the current assets or the
current 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 the
combination date, obtains control of another enterprise participating in the combination is the absorbing
party, while that other enterprise participating in the combination is a party being absorbed. Combination
date is the date on which the absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise
being combined at the combination date. The difference between the carrying amount of the net assets
obtained and the carrying amount of consideration paid for the combination (or the total face value of
shares issued) is adjusted to the capital premium in the capital reserve. If the balance of the capital
premium is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to the
combination 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 the
relevant profit and loss, other comprehensive income and other owner equity are confirmed between the
ultimate control date and the combining date for the combining party and the combined party on the
acquirement date, and shall respectively offset the initial retained incomes or the profits and losses of the
current period during the comparative statement.
(2) Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties both
before and after the business combination. For a business combination not involving enterprises under
common control, the party that, on the acquisition date, obtains control of another enterprise participating
in the combination is the acquirer, while that other enterprise participating in the combination is the
acquiree. 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 the
acquiree during the merger on the acquisition date, is recognized as the business reputation. While the
merger cost is less than the fair value shares of identifiable net assets obtained by the acquiree during the
merger, all the measurement on the identifiable assets, the liabilities, the fair value of liabilities and the
merger cost obtained by the acquiree should firstly be rechecked, and the difference shall be recorded into
the current profits and costs if the merger cost is still less than the fair value shares of identifiable net
assets obtained by the acquiree during the merger after rechecking.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with
the 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 expected
economic benefits on the acquisition date arose from deductible temporary difference by the acquiree can
be achieved, relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not
sufficient, 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 that
involves multiple exchange transactions, according to “The notice of the Ministry of Finance on the
issuance 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-term
investment” accounting treatment, if it does not belong to the “package deal” to distinguish the
individual financial statements and the consolidated financial statements related to the accounting
treatment:
In the individual financial statements, the total value of the book value of the acquiree's equity investment
before the acquisition date and the cost of new investment at the acquisition date, as the initial cost of the
investment, the acquiree's equity investment before the acquisition date involved in other comprehensive
income, in the disposal of the investment will be in other comprehensive income associated with the use of
infrastructure and the acquiree directly related to the disposal of assets or liabilities of the same accounting
treatment (that is, except in accordance with the equity method of accounting in the defined benefit plan
acquiree is remeasured net changes in net assets or liabilities other than in the corresponding share of the
lead, and the rest into the current investment income).
In the combination financial statements, the equity interest in the acquiree previously held before the
acquisition date re-assessed at the fair value at the acquisition date, with any difference between its fair
value and its carrying amount is recorded as investment income.The previously-held equity interest in the
acquiree involved in other comprehensive income and other comprehensive income associated with the
purchase of the foundation should be used party directly related to the disposal of assets or liabilities of the
same accounting treatment (that is, except in accordance with the equity method of accounting in the
acquiree is remeasured defined benefit plans other than changes in net liabilities or net assets due to a
corresponding share of the rest of the acquisition date into current investment income).
6.Preparation of the consolidated financial statements
(1)The scope of consolidationThe scope of consolidation for the consolidated financial statements is determined on the basis 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 an
enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant elements
involved in the control of the change, the company will be re-evaluated.
( 2)Preparation of the consolidated financial statements.
The Company based on its own and its subsidiaries financial statements, in accordance with other relevant
information, to prepare the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating results
and cash flows from the acquisition (the date when the control is obtained) are included in the consolidated
income statement and consolidated statement of cash flows, as appropriated; no adjustment is made to the
opening balance and comparative figures in the consolidated financial statements. Where a subsidiary and
a party being absorbed in a merger by absorption was acquired during the reporting period, through a
business combination involving enterprises under common control, the financial statements of the
subsidiary 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, based
on their carrying amounts, from the date that common control was established, and the opening balances
and 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 the
Company, the Company makes necessary adjustments to the financial statements of the subsidiary based
on the Company’s own accounting period or accounting policies. Where a subsidiary was acquired during
the reporting period through a business combination not under common control, the financial statements
was reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition.
Intra-Group balances and transactions, and any unrealized profit or loss arising from intra-Group
transactions, 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 presented
separately in the consolidated balance sheet within shareholders’/ owners’ equity and net profit. Net profit
or loss attributable to minority shareholders in the subsidiaries is presented separately as minority interest
in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a subsidiary
exceeds the minority shareholders ’ portion of the opening balance of shareholders ’ /equity of the
subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or
other reasons, the remaining equity investment is re-measured at its fair value at the date when control is
lost. The difference between 1) the total amount of consideration received from the transaction that
resulted in the loss of control and the fair value of the remaining equity investment and 2) the carrying
amounts of the interest in the former subsidiary’s net assets immediately before the loss of the control is
recognized as investment income for the current period when control is lost. Other comprehensive income
related to the former subsidiary's equity investment, using the foundation and the acquiree directly related
to the disposal of the same assets or liabilities are accounted when the control is lost(ie, in addition to the
former subsidiary is remeasured at the net defined benefit plan or changes in net assets and liabilities
resulting from, the rest are transferred to the current investment income). The retained interest is
subsequently measured according to the rules stipulated in the - “Chinese Accounting Standards for
Business Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards for
Business Enterprises No.22 - Determination and measurement of financial instruments”.
The company through multiple transactions step deal with disposal of the subsidiary's equity investment
until the loss of control, need to distinguish between equity until the disposal of a subsidiary's loss of
control over whether the transaction is package deal. Terms of the transaction disposition of equity
investment in a subsidiary, subject to the following conditions and the economic impact of one or more of
cases, usually indicates that several transactions should be accounted for as a package deal:①these
transactions are considered。simultaneously, or in the case of mutual influence made, ②these transactions
as a whole in order to achieve a complete business results; ③the occurrence of a transaction depends on
occurs at least one other transaction; ④a transaction look alone is not economical, but when considered
together with other transaction is economical.
If they does not belong to the package deal, each of them separately, as the case of a transaction in
accordance with “without losing control over the disposal of a subsidiary part of a long-term equity
investments“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 a
disposal of a subsidiary and the loss of control of the transaction. However, before losing control of the
price of each disposal entitled to share in the net assets of the subsidiary 's investment corresponding to the
difference between the disposal, recognized in the consolidated financial statements as other
comprehensive income, loss of control over the transferred together with the loss of control or loss in the
period.
7.Joint venture arrangements classification and Co-operation accounting treatment
(1)Joint arrangementA 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 busi
ness 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 in
vestments .
8.Recognition Standard of Cash & Cash Equivalents
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments
having short holding term (normally will be due within three months from the day of purchase), with
strong liquidity and easy to be exchanged into certain amount of cash that can be measured reliably and
have 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 amount
when the foreign currency transaction is initially recognized. On the balance sheet date, the monetary
items of foreign currency are translated as per the shot exchange rate on the balance sheet date, the foreign
exchange conversion gap due to the exchange rate, except for the balance of exchange conversion arising
from special foreign currency borrowings capitals and interests for the purchase and construction of
qualified capitalization assets, shall be recorded into the profits and losses of the current period. The
non-monetary items of foreign currency measured at the historical cost shall still be translated at the spot
exchange rate on the transaction date, of which the RMB amount shall not be changed. The non-monetary
items of foreign currency measured at the fair value shall be translated at the spot exchange rate on the fair
value recognized date, the gap shall be recorded into the 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 is
adopted as the translation exchange rate. For the owner’s equity, the shot exchange rate on the transaction
date is adopted as the translation exchange rate, with the exception of “undistributed profits”. The
incomes and expenses in the income statement shall be translated at the spot exchange rate or the
approximate exchange rate on the transaction date. The translation gap of financial statement of foreign
currency converted above shall be listed in other comprehensive incomes under the owner’s equity in the
consolidated balance sheet.
10.Financial instruments
When the company becomes a party to the financial instrument contract, the relevant financial assets or
financial 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 contractual
cash flow of financial assets, the Company classifies financial assets into: financial assets measured in
amortized cost; financial assets measured at fair value and their's changes are included in other
comprehensive income; financial assets measured at fair value and their's changes are included in current
profits and losses.
Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair
value, whose changes are included in current profits and losses, relevant transaction costs are directly
included in current profits and losses; For other types of financial assets, relevant transaction costs are
included in the initial recognition amount. Accounts receivable or notes receivable arising from the sale of
products or the provision of labor services that do not include or take into account significant financing
components are initially recognized by the Company in accordance with the amount of consideration that
the 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) aresubsequently 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 a
pass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either has transferred
substantially all the risks and rewards of the asset, or has neither transferred norretained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the
asset, the asset is recognized according to the extent it exists as financial asset, and correspondent liability
is recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise is
facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the carrying amount
of the financial asset transferred; and the sum of the consideration received from the transfer and any
cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or
loss.
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 is
derecognized, based on the relative fair value of those parts. The difference between (a) the carrying
amount allocated to the part derecognized; and (b) the sum of the consideration received for the part
derecognized and any cumulative gain or loss allocated to the part derecognized which has been
previously recognized in other comprehensive income, is recognized in profit or loss.
The Company uses recourse sale financial assets, or financial assets held endorser, determine almost all of
the risks and rewards of ownership of the financial assets have been transferred if. Has transferred the
ownership of the financial assets of almost all the risks and rewards to the transferee, the derecognition of
the financial asset; retains ownership of the financial assets of almost all of the risks and rewards of
financial assets that are not derecognised; neither transfers nor retains ownership of the financial assets of
almost all of the risks and rewards, then continue to determine whether the enterprise retains control of the
assets and the accounting treatment in accordance with the principles described in the preceding
paragraphs.
4.Termination confirmation of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, the Company shall
terminate the recognition of the financial liability (or part thereof). If the Company (the debtor) signs an
agreement 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 original
financial liabilities, it shall terminate the recognition of the original financial liabilities and at the same
time confirm a new financial liabilities. If the Company substantially amends the contract terms of the
original financial liabilities (or part thereof), it shall terminate the confirmation of the original financial
liabilities 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 the
consideration paid (including the transferred non-cash assets or liabilities assumed) shall be included in the
profits 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 assets
and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle
the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net
amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial
liabilities 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 liabilities
Fair value refers to the price that a market participant must pay to sell or transfer a liability in an orderly
transaction that occurs on the measurement date. If there is an active market for financial instruments, the
Company will determine their fair value by quoting prices in the active market. Quotes in active markets
refer 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 fair
transactions. 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 market
transactions by parties familiar with the situation and willing to trade, and reference to current fair values
of other financial instruments that are substantially the same, discounted cash flow method, option pricing
model, etc. In valuation, the Company adopts valuation techniques that are applicable in the current
situation and supported by sufficient data and other information to select input values consistent with the
characteristics of assets or liabilities considered by market participants in the transactions of related assets
or 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 assets
after deducting all liabilities. The issuance (including refinancing), repurchase, sale or cancellation of
equity instruments by the Company are treated as changes in equity, and transaction costs related to equity
transactions are deducted from equity. The Company does not recognize changes in the fair value of equity
instruments.
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
preparationaccording to the amount equivalent to the expected credit loss in the next 12 months. The
Companyshallconsiderallreasonableandevidencedinformation,includingforward-lookinginformation,
whenevaluatingexpectedcreditlosses.
Assuming that their credit risk has not increased significantly since the initial recognition, the
Companymay choose to measure the loss reserve according to the expected credit loss in the next 12
monthsforfinancialinstrumentswithlowcreditriskonthebalancesheetdate.
（2） Criteria for judging whether credit risk has increased significantly since the initial
recognition
Ifthe probability of default of a financial asset on the estimated duration of the balance sheet is
significantlyhigher 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, the
Companyuses the change of default risk in the next 12 months as a reasonable estimate of the change of
defaultrisk in the entire duration to determine whether the credit risk has increased significantlysince the
initialrecognition.
（3） Aportfolio-basedapproachtoassessingexpectedcreditrisk
TheCompany 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, and
receivablesthathasbeenprovedthatthedebtormaynotbeabletofulfilltheobligationofrepayment,etc.
Inaddition to the financial assets that assess credit risk individually, the Company shall divide
financialassets into different groups based on common risk characteristics, and assess credit risk on the
basisofportfolio.
（4） Accountingtreatmentofimpairmentoffinancialassets
Atthe end of the duration, the Company shall calculate the anticipated credit losses of various
financialassets. If the anticipated credit losses are greater than the book value of its current impairment
provision,the difference is deemed as impairment loss. If the balance is less than the book value of the
currentimpairmentprovision,thedifferenceisdeemedasimpairmentprofit.
（5） Methodofdeterminingcreditlossesofvariousfinancialassets:
1.Notesreceivable
The Company shall measure loss preparation for Notes receivable according to the amount of
anticipatedcredit loss equivalent to the entire duration. Based on the credit risk characteristics of bills
receivable,theyaredividedintodifferentcombinations:
Items Basisfordeterminingcombination
Bank acceptance Thiscombinationisareceivablebankacceptancebill.
Items Basis for determining combination
Commercial acceptance bills This combination is a commercial acceptance bill receivable
2.Accounts Receivable
The Company measures the loss reserve for receivables by an amount equivalent to the expectedcredit loss during the duration.
In regard to accounts receivable with significant financing components, the Company shall choose tomeasure loss preparation according to the amount equivalent to the expected credit loss within the durationall the time.
In addition to the accounts receivable for which credit risk is assessed individually, aging is used asthe credit risk characteristic to measure loss reserve.
Items Basis for determining combination
Aging portfolio The credit risk is characterized by the aging of receivables.
3.Other account receivable
The Company has measured the impairment loss based on the amount of expected credit losses in thenext 12 months or the entire duration, based on whether the credit risk of other receivables has increasedsignificantly since the initial recognition.
In addition to the other accounts receivable which assesses the credit risk individually, they aredivided into different portfolios based on their credit risk characteristics:
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
4. Creditor's rights investment
Creditor's rights investment mainly accounts for bond investment measured by amortized cost, etc.The Company has measured the impairment loss based on the amount of expected credit losses in the next12 months or the entire duration, based on whether the credit risk has increased significantly since theinitial recognition.
5. Other creditor's rights investment
Other debt investments are mainly accounted for as bond investments measured at fair value and theirchanges are included in other comprehensive income. The Company has measured the impairment lossbased on the amount of expected credit losses in the next 12 months or the entire duration, based onwhether 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.Inventory1.Investories classInventory 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 issued
The 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 Withdrawing
Method of Inventory Falling Price Reserves
The inventory shall be measured by use of the lower between the cost and the net realizable value and the
inventory falling price reserves shall be withdrawn as per the gap of single inventory cost minus the net
realizable value at the balance sheet date. The net realizable value refers to the amounts that the estimated
sale price of inventory minus the estimated costs ready to happen till the completion of works, the
estimated selling expenses and the relevant expenses of taxation. The company shall recognize the net
realizable value of inventory based on the acquired unambiguous evidence and in view of the purpose to
hold 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 the
estimated sale price of the inventory minus the estimated sale expenses and the relevant expenses of
taxation during the process of normal production and operation. The net realizable value of inventory that
required to conduct processing shall be recognized according to the amounts of the estimated sale price of
the finished products minus the estimated costs ready to happen till the completion of works, the estimated
selling expenses and the relevant expenses of taxation. On the balance sheet date, the net realizable value
shall be respectively defined for the partial agreed with the contract price and others without the contract
price in the same inventory, and the amounts of the inventory falling price reserves withdrawn or returned
shall 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 itemsLow cost and short-lived consumable items are amortized using immediate write-off method。
（2）Packaging materialsPackaging 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 initialrecognition. 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 costThe 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 of
audit, legal services, valuation and consultancy and other administrative expenses, are recognised in profit
or loss for the period during which the acquisition occurs. For the merger of enterprises not under the same
control through gaining the shares of the combined enterprise by multiple steps of deals, it shall deal with
it in the following two ways depending on that if it belongs to "a package deal": if it belongs to "a package
deal", it shall deal with all the deals as one obtaining the control power; if it does not belong to "a package
deal", it shall, on the date of merger, regard the sum of book value of the owner’s original equity of the
merged enterprise and the newly increased investment cost as the initial cost of the long-term equity
investment. For the shares originally held by this enterprise accounted for by weighted equity method, the
relevant other comprehensive income shall not be accounted for temporarily.If the equity investment held
originally can be classified as the financial assets for sale, the difference between the fair value and the
book value, and the variation in the accumulative fair value of other comprehensive returns recorded
originally will be transferred into the current profits and losses.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure of
audit, legal services, valuation and consultancy and other administrative expenses, are recognised in profit
or 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 fair
value of equity instrument issued, the contract price, the fair value or book value of the assets given away
in 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 also
includes all directly associated expenses, applicable taxes and fees, and other necessary expenses. When
the significant impact or the joint control but non-control on the invested party can be implemented due to
the additional investment, the long-term equity investment cost is the sum of the fair value of the equity
investment originally held and the new investment costs based on the recognition of “Accounting
Standards for Enterprises No.22 – Recognition and Measurement of Financial Instruments”.
2. Subsequent MeasurementTo be invested joint control ( except constitute common operator ) or long-term equity investmentssignificant influence are accounted for using the equity method. In addition, the Company's financialstatements using the cost method of accounting for long-term equity can exercise control over 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 for
cash dividends or profits declared but not yet paid that are included in the price or consideration actually
paid upon acquisition of the long-term equity investment, investment income is recognized in the period in
accordance 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 inve
stor's net identifiable assets of the fair share of the investment value, do not adjust the initial investment co
st of long-term equity investment; the initial investment cost is less than the investee unit share of identifia
ble net assets at fair value, the difference is recognized in profit or loss, while the long-term equity investm
ent adjustment costs.
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s
interest in the fair values of the investee’s identifiable net assets at the time of acquisition, no adjustment
shall be made to the initial investment cost. The carrying amount of an long-term equity investment
measured using the equity method is adjusted by the Company's share of the investee's net profit and other
comprehensive income, which is recognised as investment income and other comprehensive income
respectively. The carrying amount of an long-term equity investment measured using the equity method is
reduced by profit distribution or cash dividends announced by the investee. The carrying amount of an
long-term equity investment measured using the equity method is also adjusted by the investee's equity
movement other than net profit, other comprehensive income and profit distribution, which is adjusted to
capital reserves。The net profit of the investee is adjusted by the fair value of the investee's identifiable
assets as at acquistion. The financial statements and hence the net profit and other comprehensive income
of an investee which does not adopt accounting policies or accounting period uniform with the Company
is adjusted by the Company's accounting policies and accounting period. The Company's share of
unrealised profit or loss arising from related party transactions between the Company and an associate or
joint venture is deducted from investment income. Unrealised loss arising from related party transactions
between the Company and an associate or joint venture which is associated with asset impairment is not
adjusted. Where assets transferred to an associate or joint venture which form part of the Company's
investment in the investee but which does not enable the Company obtain control over the investee, the
cost of the additional investment acquired is measured at the fair value of assets transferred and the
difference between the cost of the additional investment and the book value of the assets transferred is
recognised 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 in
profit or loss. Where assets transferred from an associate or joint venture form an operation, the
transaction is accounted for in accordance with CAS 20 - Business Combination, any gain or loss is
reocgnised in profit or loss.
The Company's share of an investee's net loss is limited by the sum of the book value of the long-term
equity investment and other net long-term investments in the investees. Where the Company has
obligation to share additional net loss of the investee, the estimatedshare of loss recognised as accrued
liabilities and investment loss. Where the Company has unrecognised share of loss of the investee when
the investee generates net profit, the Company's unrecognised share of loss is reduced by the Company's
share of net profit and when the Company's unrecognised share or loss is eliminated in full, the Company's
share 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 and
portion of net asset cumulatively calculated from the acquisition date is adjusted as capital reserve. If the
capital 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, the
difference in the net asset between the amount of disposed long-term investment and the amount of the
consideration paid or received is adjusted to the owner’s equity. If the disposal of long-term investment in
a 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, the
difference between the book value of the investment disposed and the consideration received is recognised
in profit or loss.
The investee's equity movement other than net profit, other comprehensive income and profit distribution
is reocgnised in profit or loss proportionate to the disposal.
Where a long-term equity investment is measured by the equity method both before and after part disposal
of the investment, cumulative other comprehensive income relevant to the investment recognised prior to
the acquistion is treated in the same manner that the investee disposes the relevant assets or liabilities
proportionate to the disposal. The investee's equity movement other than net profit, other comprehensive
income and profit distribution is reocgnised in profit or loss proportionate to the disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the
investment, cumulative other comprehensive income relevant to the investment recognised, as a result of
accounting by equity method or recognition and measurement principles applicable to financial
instruments, prior to the Company's acquisition of control over the investee is treated in the same manner
that the investee disposes the relevant assets or liabilities and recognised in profit or loss proportionate to
the disposal.The investee's equity movement other than net profit, other comprehensive income and profit
distribution, as a result of accounting by equity method, is reocgnised in profit or loss proportionate to the
disposal.
Where the Company's control over an investee is lost due to partial disposal of investment in the investee
and the Company continues to have significant influence over the investee after the partial disposal, the
investment in measured by the equity method in the Company's separate financial statements; where the
Company's control over an investee is lost due to partial disposal of investment in the investee and the
Company 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 financial
instruments in the Company's separate financialstatements and the difference between the fair value and
the 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 accounting
by equity method or recognition and measurement principles applicable to financial instruments, prior to
the Company's acquisition of control over the investee is treated in the same manner that the investee
disposes the relevant assets or liabilities on the date of loss of control. The investee's equity movement
other than net profit, other comprehensive income and profit distribution, as a result of accounting by
equity method, is reocgnised in profit or loss when control is lost. Where the remaining investment is
measured by equity method, the fore-mentioned other comprehensive income and other equity movement
are recognised in profit or loss proportionate to the disposal; Where the remaining investment is measured
in accordance with the recognition and measurement principles applicable to financial instruments, the
fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss in
full.
Where the Company's joint control or significant influence over an investee is lost due to partial disposal
of investment in the investee,the remaining investment in the investee is measured in accordance with the
recognition and measurement principles applicable to financial instruments, the difference between the fair
value and the book value of the remaining investment at the date of loss of joint control or significant
influence is recognised in profit or loss.Cumulative other comprehensive income relevant to the
investment recognised, as a result of accounting by equity method, prior to the partial disposal is treated in
the same manner that the investee disposes the relevant assets or liabilities on the date of loss of joint
control or significant influence. The investee's equity movement other than net profit, other comprehensive
income and profit distribution is reocgnised in profit or loss when joint control or significant influence is
lost.
Where the Company's control over an investee is lost through multiple disposals and the multiple disposals
shall be viewed as one single transaction, the multiple disposals is accounted for one single transaction
which result in the Company's loss of control over the investee. Each difference between the consideration
received and the book value of the investment disposed is recognised in other comprehensive income and
reclassified 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 estate
The investment real estate of the company includes the leased land use rights, the leased buildings, the
land 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 by
the service life average method, and the depreciation policy is the same with that of the fixed assets. The
land use rights held and prepared to transfer after appreciation in the investment property shall be
amortized by the line method, and the specific accounting policy is same with that of the intangible assets.
17.Fixedassets
1．Theconditionsofrecognition
Fixedassets refers to the tangible assets that are held for the sake of producing commodities, rendering
laborservice, renting or business management and their useful life is in excess of one fiscal year. The
fixedassets can be recognized when the following requirements are all met: (1) the economic benefits
relevantto the fixed assets will flow into the enterprise. (2) the cost of the fixed assets can be measured
reliably.
Thefixed assets of the company include the houses and buildings, the decoration of the fixed assets, the
machineryequipment,thetransportationequipment,theelectronicinstrumentandotherdevices.
2.InitialMeasurementandSubsequentMeasurementoftheFixedAssets
Thefixedassetsshallbebookkeptaspertheacquiredactualcost,andthedepreciationshallbewithdrawn
fromthesubsequentmonthaftertheusablestatusreservedandachieved.
3．Themethodfordepreciation
Category Themethodfor Expectedusefullife Estimatedresidual Depreciati
depreciation （Year） value on
HouseandBuilding- Straight-linemethod 35 4.00 2.74
House and BuilPdriondgu-Nctoionn-Straight-linemethod
40 4.00 2.40
Production
Decoration ofFixedassets Straight-linemethod 10 10.00
Machineryandequipment Straight-linemethod 10-14 4.00 9.60-6.86
Transportationequipment Straight-linemethod 8 4.00 12.00
Electronicequipment Straight-linemethod 8 4.00 12.00
Otherequipment Straight-linemethod 8 4.00 12.00
4．Cognizanceevidenceandpricingmethodoffinancialleasingfixedassets
(1)RecognitionCriteriaoftheFixedAssetsunderFinancingLease
Thefinancinglease shall be recognized if the followingone or several criteriaare met: ① the ownership
ofthe leasingassetsshallbe transferredto the tenantwhen the expirationof lease term. ② the tenanthas
theoption to purchase the leasing assets, and the made purchase price is expected to be far less than the
fairvalue of the leasing assets in the implementation of the option. Thus, it can be reasonably recognized
thatthe tenant will implement the option on the lease date. ③ the ownership of assets is not transferred,
butthe lease term shall be the most of the life of the lease assets. ④ the least present value of the lease
paymentof the tenantandtheleastpresentvalue of the leasereceiptson the lease datealmostequal to the
fairvalueoftheleasingassetsontheleasedaterespectively. ⑤ theleasingassetshavethespecialnature,
andonlythetenantcanuseifthereisnomajormodifications.
(2) Valuation of Fixed Assets Acquired under Finance Leases: the fixed assets acquired under finance
leases shall be book kept according to the lower between the fair value of the leasing assets and the least
lease payment on the lease date.
(3) Depreciation Method of Fixed Assets Acquired under Finance Leases: the depreciation shall be
withdrawn for the fixed assets acquired under finance leases as per the depreciation policy of own fixed
assets.
18.Construction in progress
1. The projects under construction shall be recognized when the economic benefits may flow into and the
cost can be reliably measured. Meanwhile, the projects under construction shall be measured according to
the 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 project
costs when the expected usable condition achieved. For the expected usable condition achieved while the
final accounts for completed projects not handled yet, the projects shall be transferred into the fixed assets
as per the estimated value. After the final accounts for completed projects handled, the original estimated
value shall be adjusted as per the actual cost, but the original withdrawn depreciation shall not be adjusted
again.
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 have
begun.
（2）Capitalization of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted by activities other than those necessary to prepare the
asset 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 the
acquisition, construction or production is resumed.
（3）When the construction or production meets the intended use or sale of state of capitalization
conditions, the Loan costs should stop capitalization.
3. Computation Method for Capitalization Rate and Amount of Borrowing Costs
With regard to the special borrowings for the purchase and construction of qualified assets, the capitalized
interest amount shall be recognized according to the amount of the interest cost for the special borrowings
actually occurred during the current period (including the amortization of discount or premium recognized
as per the effective interest method) minus the interest income acquired after the borrowings deposit in
bank or the investment income obtained from the temporary investment. For the general borrowings for
the purchase and construction of qualified assets, the capitalized interest amount of the general borrowings
shall be computed and recognized according to the weighted average of accumulative asset expense
beyondtheexpenseofthespecialborrowings,multiplyingthecapitalizationrateofgeneralborrowings.
20.Intangibleassets
1.ValuationMethod,ServiceLifeandImpairmentTestofIntangibleAssets
(1)The intangible assets include the land use rights, the professional technology and the software, which
areconductedtheinitialmeasurementasperthecost.
(2) The service life of intangible assets is analyzed and judged when of the company acquires the
intangibleassets. For the finite service life of the intangibleassets, the years of servicelife or the quantity
of service life formed and the number of similar measurement unit shall be estimated. If the term of
economic benefits of the intangible assets brought for the company is not able to be foreseen, the
intangibleassetsshallberecognizedasthatwiththeindefiniteservicelife.
(3)EstimationMethodofServicelifeofIntangibleAssets
1)For the intangible assetswith the finite service life, the company shall generally consider the following
factorsto estimate the service life: ① the normal service life of products produced with the assets, and
the acquired information of the service life of similar assets. ② the estimation of the current stage
conditionsandthefuturedevelopmenttrendsintheaspectsoftechnologyandcraft. ③ thedemandofthe
products produced by the assets or the offered services in the market. ④ the expectation of actions
adopted by current or potential competitors. ⑤ the expected maintenance expense for sustaining the
capacityto economic benefits brought by the assets and the ability to the relevant expense expected. ⑥
therelevant law provision or the similar limit to the control term of the assets, such as the licensed use
termandtheleaseterm. ⑦ thecorrelationwiththeservicelifeofotherassetsheldbythecompany.
2)IntangibleAssetswith IndefiniteService Life, JudgmentCriteriaon IndefiniteServiceLife andReview
ProcedureofItsServiceLife
The company shall be unable to foresee the term of economic benefits brought by the assets for the
company,or the indefinite term of intangible assets recognized as the indefinite service life of intangible
assets.
Thejudgmentcriteriaof Indefiniteservicelife: ① as from the contractualrightsor other legalrights,but
the indefinite service life of contract provision or legal provisions. ② unable to judge the term of
economicbenefits brought by the intangible assets for the company after the integrationof information in
thesameindustryortherelevantexpertargumentation.
Atthe end of every year, the review should be made for the service life of the intangible assets with the
indefiniteservice life, and the relevant department that uses the intangible assets, shall conduct the basic
reviewby the method from up to down, in order to evaluatethe judgment criteriaof the indefiniteservice
lifeifthereisthechange.
(4)AmortizationMethodofIntangibleAssetsValue
The intangible assets with the finite service life shall be systematically and reasonably amortized
accordingto the expected implementation mode of the economic benefits related to the intangible assets
duringthe servicelife,and the line method shallbe adopted to amortizefor the intangible assetsunable to
reliablyrecognizetheexpectedimplementationmode.Thespecificservicelifeisasfollows:
Items Amortizationlifetime（Year）
Items Amortization life time（Year）
Land use right 50Proprietary technology 15
Software 5
The intangible assets with the indefinite service life shall not be amortized, and the company shall make
the review of the service life of the intangible assets during every accounting period.
(5) If there is the impairment for the intangible assets with the definite service life on the balance sheet
date, the corresponding impairment provision shall be withdrawn according to the difference between the
book value and the recoverable amount. The intangible assets with the indefinite service life and without
the usable condition shall be conducted the impairment test every year whether the impairment exists.
2. Accounting Policy of Internal Research and Development Expenditure
The expenditure for internal research and development project in the study stage shall be recorded into the
current profits and losses when occurring. The expenditure for internal research and development project
in the development stage shall be recognized as the intangible assets when the following requirements are
simultaneously met: (1) the completion of the intangible assets is available for use or sale, and feasible in
the technology. (2) the intention to complete the intangible assets and use or sale. (3) the method for the
economic benefits produced by the intangible assets, including the evidence that shows there exists the
market for the products generated from the intangible assets or the intangible assets have the market. The
intangible assets are used internally which shows the serviceability. (4) there are sufficient technology,
financial resources and other resources to support the completion of the development of the intangible
assets, and there is ability to use or sell the intangible assets. (5) the expenditure belong to the
development stage of the intangible assets can be reliably measured.
The specific criteria for the division of the internal research and development projects at the research stage
and the development stage of the company is as follows: (1) the investigation stage planned to obtain the
new technology and knowledge, shall be recognized as the research stage, which has the features of
planning and exploration. (2) before the commercial manufacture and use, the research results or other
knowledge should be applied for the plan or design, in order to produce the new or improved stages with
substantial materials, devices and products, which should be recognized as the development stage, and this
stage has the features of pertinence and more possibility to create the achievement.
21.Long-term amortizable expenses
Deferred charges represent expenses incurred that should be borne and amortized over the current and
subsequent period (together of more than one year).
The long-term unamortized expense shall be bookkept as per the actual amount occurred, and shall be
averagely amortize within the benefit period or the specified period. If the long-term unamortized expense
can’t make the benefits for the future accounting period, the amortized value of the unamortized project
shall all be transferred into the current profits and losses.
22.Long-term Assets Impairment
The company shall make judgment of the long-term assets including the long-term equity investment, the
investment property measured by the cost mode, the fixed assets and the projects under construction if
there is possible impairment on the balance sheet date. If there exists the evidence shows that the
long-term assets have the impairment, the impairment test should be conducted, and the recoverable
amount should be estimated. The impairment shall be confirmed if there exists after the comparison of the
estimated recoverable amount of the assets and its book value, and if the assets impairment provision shall
be withdrawn to recognize the corresponding impairment losses. The estimation of the recoverable amount
of assets should be confirmed according to the higher one between the net amount of the fair value minus
the 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 the
business combination and the intangible assets with the indefinite service life whether there exists the
impairment.
The impairment loss of long-term assets after recognized shouldn’t be reversed in the future accounting
period.
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-term
compensation as the liability and record into the current profits and losses or the relevant assets cost as per
the 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 plan
according 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 the
balance sheet date during the accounting period, shall be recognized as the liability, and recorded into the
current 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 contribution
plans.
1) Based on the expected cumulative welfare unit method, the company shall adopt unbiased and mutually
consistent 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 relevant
obligations. The company shall discount all the defined benefit plan obligations, including the obligation
within twelve months after the end of the annual report during the expected services provision of
employee. The discount rate adopted in discounting shall be recognized according to the bonds matched
with the defined benefit plan obligation term and the currency at the balance sheet date or the market
return of high-quality corporate bonds in the active market.
2) If there exist the assets for the defined benefit plan, the deficit or surplus arising from the present value
of the defined benefit plan obligations minus the fair value of the defined benefit plan assets are
recognized as the net liability or the net assets of the defined benefit plan. If there exists the surplus of the
defined benefit plan, the lower one between the surplus of the define benefit plan and the upper limit of
assets 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 the
reduction of deposit funds of future defined benefit plans.
3) At the end of period, the employee’s payroll costs arising from the defined benefit plan are recognized
as the service costs, the net interests on the net liabilities or the net assets of the defined benefit plan, and
the changes caused by the net liabilities and the net assets of the defined benefit plan that re-measured. Of
which, the service costs and the net interests on the net liabilities or the net assets of the defined benefit
plan shall be recorded into the current profits and losses or the relevant assets costs, the changes caused by
the net liabilities and the net assets of the defined benefit plan that re-measured shall be recorded into other
comprehensive incomes, which should not be switched back to the profits and losses during the
subsequent accounting period, but the amount recognized from other comprehensive incomes can be
transferred within the scope of the rights and interests.
4) The profit or loss of one settlement shall be recognized when settling the defined benefit plan.
3. Accounting Treatment Method of Demission Welfare
The employee compensation liabilities generated by the demission welfare shall be recognized on the early
date and recorded into the current profits and losses: (1) when the company can’t withdraw the demission
welfare provided due to the rundown suggestion or the termination of labor relations plans. (2) when the
company recognizes the costs or the expenses related to the reorganization of demission welfare payment.
The earlier one between when the company can’t withdraw the rundown suggestion or the termination of
labor relations plans at its side and when the costs relevant to the recombination of dismission welfare
payment, shall be recognized as the liabilities arising from the compensation due to the termination of
labor relations with staff and shall be recorded into the current profits and losses. Then company shall
reasonably predict and recognize the payroll payable arising from the dismission welfare. The dismission
welfare, which is expected to finish the payment within twelve months after the end of the annual report
recognized, 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 report
recognized, shall apply to the relevant provisions of short-term compensation, shall apply to the provisions
related 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 the
defined contribution plan, the accounting treatment shall be made in accordance with the defined
contribution plan. Except for these, other long-term benefits shall be made the accounting treatment
according to the defined benefit plan, but the changes arising from the re-measurement of net liabilities or
net assets of other long-term employee benefits shall be recorded into the current profits and losses or the
relevant assets costs.
24. Estimated Liabilities
1. Recognition Criteria of Estimated Liabilities
The liabilities shall be recognized when external guarantee, pending litigation or arbitration, product
quality assurance, staff reduction plan, loss contract, recombination obligation, disposal obligation of the
fixed assets and other pertinent businesses all meet the following requirements:
(1) The obligation is the current obligation borne by the company.
(2) The implementation of the obligation may cause the economic benefits out of the enterprise.
(3) The amount of the obligation can be measured reliably.
2. Measurement Method of Estimated Liabilities
The estimated liabilities shall be made the initial measurement according to the best estimate of the
expenditure required to settle the present obligation. There is the continuous scope for the required
expenditure, and the best estimate with the same possibilities resulted from various outcomes within the
scope shall be recognized as per the intermediate value. The best estimate should be recognize according
to the following methods:
(1) The best estimate shall be recognized as per the most possible amount if there are matters involved in
the single item.
(2) The best estimate shall be calculated and recognized as per the possible amount if there are matters
involved in the multiple item.
If the company pays all the expenses for paying off the estimated liabilities, or partial estimates are
compensated by the third party or other parties, the compensation amount should be separately recognized
as the assets when the receipt of the compensation amount is basically determined. Meanwhile, the
determined compensation amount shall not exceed the book value of the estimated liabilities recognized.
The company shall make review of the book value of estimated liabilities at the balance sheet date. If there
is conclusive evidence that the book value cannot really reflect the current best estimate, the adjustment
shall 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 equity
instrument. 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 optimum
estimations according to the newly-obtained subsequent information after the changes occurred in the
number of employees who exercise rights so as to modify the predicted number of the equity instrument of
exercising rights. The influence from above-mentioned estimations will be counted into relevant costs and
expenses 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 by
equities which is used for exchanging the service of other parties will be measured according to that fair
value on date of acquisition. If not, but the fair value of the equity instrument can be reliably measured, the
payment 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 increased
correspondingly.
(2) Share Payment settled by CashThe share payment settled by cash will be measured according to the fair value of the liability confirmedbasing 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 ofthe 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 met
simultaneously: the transfer of main risks and rewards on ownership of the goods to the buyers, the
continual management rights related to ownership no longer retained by the company and the effective
control of the sold goods no longer implemented, the reliable measurement of the revenue amount, the
possible inflow of the relevant economic benefits, and the reliable measurement of the relevant costs
incurred or to be incurred.
(2) The Service Provision
If the provided services transaction results can be reliably estimated at the balance sheet date (the reliable
measurement of the revenue amount, the possible inflow of the relevant economic benefits, the reliable
recognition of the completion schedule of transaction, and the reliable measurement of the relevant costs
incurred or to be incurred in the transaction), the company shall recognize the relevant service incomes
according to the completion percentage method and recognized the completion schedule of the provided
service transaction according to the proportion of the costs occurred accounting for the total estimated
costs. If the provided services transaction results cannot be reliably estimated at the balance sheet date and
the occurred service costs can be expected to have compensation, the company shall recognize to provide
the service revenue according to the occurred service cost amount and transfer the service costs as per the
same amount. If the occurred service costs cannot be expected to have compensation, the occurred service
costs 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 right
to use assets meets the requirements of the possible inflow of the relevant economic benefits and the
reliable measurement of revenue amount. The interest income shall be calculated and determined
according to time and actual interest rate of the monetary capital of the company used by others, and the
royalty revenue shall be measured and determined in accordance with the charging time and method
appointed 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 in
domestic market shall be recognized after the following requirements are met: The company has agreed to
deliver the goods to the purchaser under the contract and the revenue amount of product sales has been
determined, the payment for goods has been withdrawn or the payment vouchers has been obtained and
related economic benefits are likely to inflow, and the costs related to the products can be measured
reliably. The revenue of the sale of products in foreign market shall be recognized after the following
requirements are met: The company has made customs clearance and departure from port under the
contract, the bill of landing has obtained and the revenue of the sale of products has been recognized, the
payment for goods has been withdrawn or the payment vouchers has been obtained and related economic
benefits 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-relatedgovernment 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 tax
basis, and the difference of the book value and the tax basis that no confirmation of assets and liabilities
but able to confirm the tax basis as per the provisions of tax law. The temporary difference can be
classified 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 shall
recognize the deferred tax assets arising from the future taxable income that obtained to deduce the
deductible temporary difference, the deductible loss and the tax payment offset.
The deferred tax assets with the following features and arising from the initial recognition of assets or
liabilities 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 difference
related to the investment of subsidiaries, cooperative enterprises and joint ventures if the following
requirements are simultaneously met: (1) the temporary difference is possible to be reversed in the
foreseeable future. (2) the taxable income used to offset the deductible temporary difference is possible to
be 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 recognition
of assets or liabilities arising from the transactions with the following features: this transaction is not the
business combination, and the transaction doesn’t influence the accounting profits and the taxable
incomes (or the deductible losses).
The company shall recognize the corresponding deferred tax liabilities for the taxable temporary
difference related to the investment of subsidiaries, cooperative enterprises and joint ventures. Except that
the following requirements are simultaneously met: (1) the investment enterprise can control the reversal
time of the temporary difference. (2) the temporary difference is possible to not be reversed in the
foreseeable 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 not
possible to obtain sufficient taxable income for the reduction of the benefit of the deferred tax assets in the
future, the book value of the deferred tax assets shall be deduced. Except that the deferred tax assets and
the reduction amount are recorded into the owner’s equity when the original recognition, others shall be
recorded into the current income tax expense. The book value of the deferred tax assets reduced can be
recovered 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 the
transactions and items directly recorded into the stockholders’ equity, shall be recorded into other
comprehensive incomes or the stockholders’ equity, and the book value of goodwill shall be adjusted by
the deferred income tax arising from the business combination, but the rest of the current income tax and
the 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 relevant
assets cost or recognized as the current profits and losses as per the line method, and the initial direct
expense occurred shall be directly recorded into the current profit and loss. The contingent rental shall be
recorded into the current profit and loss once the actual occurrence.
When the company is as the leaser, the rental within the lease term shall be recognized as the current
profits and losses as per the line method, and the initial direct expense occurred shall be directly recorded
into the current profit and loss, except that the large amounts are capitalized and recorded into the profit
and loss by stages. The contingent rental shall be recorded into the current profit and loss once the actual
occurrence.
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 of
leasing assets and the present value of minimum lease payment at the lease commencement date as the
book value of rented assets, recognize the minimum lease payment as the book value of the long-term
payables, and the undetermined fiancé expense of the difference and the initial direct costs occurred shall
be recorded into the leasing asset value. During each lease period, the current financing charges shall be
measured and recognized by the effective interest method.
Whenthe company is as the leaser, the company shall recognize the sum of minimum lease receivables
andinitial 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 difference
betweenthe sums of minimum lease receivables, minimum lease receivables and unguaranteed minus the
sum of the present value as the unrealized financing income. During each lease period, the current
financingchargesshallbemeasuredandrecognizedbytheeffectiveinterestmethod.
30.Changeofmainaccountingpoliciesandestimations
(1)Changeofmainaccountingpolicies
(I) Accountingpolicychangescausedbyimplementationofnewfinancialinstrumentstandards
In2017, the Ministry of Finance revised and promulgated the Accounting Standards for Business
Enterprises No.22-Recognition and Measurement of Financial Instruments, Accounting Standards for
BusinessEnterprises No.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises
No.24-Hedge Accounting and Accounting Standards for Business Enterprises No.37-Presentation of
FinancialInstruments (the above four standards are collectively referred to as "New Financial Instrument
Standards"),which are required to come into force on January 1, 2019 for domestic listed enterprises.
Accordingto the regulations, the Company will implement the new financial instrument standards from
January1,2019andadjusttherelevantcontentsofaccountingpolicies.TheCompanybegantoimplement
thenew financial instrument standards at the time required by the Ministry of Finance after adopting a
proposalatthe18thmeetingofthe7thboardofdirectorsoftheCompanyonApril25,2019.
TheCompany 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 the cumulative impact of the first implementation of this standard, the Company adjusted
theretained earnings or other comprehensive earnings at the beginning of 2019 and the amount of other
relateditemsinthefinancialstatements,whichwerenotrestatedinthefinancialstatementsof2018.
Themain changes and impacts of the implementation of the new financial instrument guidelines on
ourCompanyareasfollows:
-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
lossesonorafterJanuary1,2019,andreportedastransactionalfinancialassets;
-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
reportedthemasinvestmentsinotherequityinstruments;
-Inits 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 Company
reclassified these bills receivable into financial asset categories measured at fair value with changes
includedin other comprehensiveincomeand reportedthem as receivablesfinancingon or after January1,
2019.
① ImpactoffirstexecutiondateonBalanceSheetitemsonJanuary1,2019
a.Impactonconsolidatedstatements
Items December31,2018 Reclassific Re-measur January1,2019（After
（Beforechange） ation ement change）
Assets：
Items December31,2018 Reclassific Re-measur January1,2019（After
（Beforechange） ation ement change）
Othercurrentassets 639,797,959.30 -540,000,0 99,797,959.30
00.00
TransactionalFinancialAssets 540,000,00 540,000,000.00
0.00
Notesreceivable 886,432.06 -886,432.0
6
Receivablesfinancing 886,432.06 886,432.06
Financial assets available for sale 45,373,784.87 -45,373,78
(originalguidelines) 4.87
Other equity instruments 45,373,784 279,187,33 324,561,120.30
investment .87 5.43
Deferredincometaxassets 6,036,198.23 -66,663.75 5,969,534.48
Liabilities：
Deferredincometaxliabilities 68,465,593 68,465,593.36
.36
Shareholder'sequity：
OtherComprehersiveincome 1,339,208.41 170,899,57 172,238,780.59
2.18
Surpluspublic 80,004,803.23 3,975,550. 83,980,353.84
61
Undistributedprofit -57,774,473.41 35,779,955 -21,994,517.88
.53
B.Impactonparentcompanyfinancialstatements
Items December31,2018 Reclassification Re-measurement January1,2019（Afterchange）
（Before change）
Assets：
Othercurrentassets 500,000,000.00 -500,000,000.00
Transactional FinancialAssets 500,000,000.00 500,000,000.00
Notesreceivable 15,373,784.87 -15,373,784.87
Receivables financing 15,373,784.87 267,222,341.34 282,596,126.21
Financialassetsavailableforsale(originalguidelines) 5,818,069.48 -66,663.75 5,751,405.73
Other equityinstrumentsinvestment
Deferredincometaxassets 65,474,344.84 65,474,344.84
Equity：
OtherComprehersiveincome 1,339,208.41 161,925,826.61 163,265,035.02
Surpluspublic 80,004,803.23 3,975,550.61 83,980,353.84
Undistributedprofit 483,666,452.70 35,779,955.53 519,446,408.23
②Comparisonoffinancialassetclassificationandmeasurementbeforeandafterthefirstimplementationdate
A.Impactonconsolidatedstatements
December 31,2018（Beforechange） January1,2019（Afterchange）
Items Cassification Bookvalue Items Cassification Bookvalue
Measured at fair
Other current Transactional value and
assets-Structure Amortizedcost 540,000,000.00 FinancialAssets recorded in 540,000,000.00
Deposit current profit and
loss
Measured at fair
value and its
Notes receivable Amortizedcost 886,432.06 Receivable changes are 886,432.06
financing included in other
comprehensive
income
Measured at fair
value and its
changes are Measured at fair
Available for included in other 5,119,896.46 Other Equity value and its
sale of financial comprehensive instrument changes are 324,561,120.30
assets income （ Equity investment included in other
instrument） comprehensive
income
Cost measurement 40,253,888.41
(equity instrument)
B.Impactonparentcompanyfinancialstatements
December 31,2018（Beforechange） January1,2019（Afterchange）
Items Cassification Bookvalue Items Cassification Bookvalue
Other current Measured at fair
assets-Structure Amortizedcost 500,000,000.00 Transactional value and recorded 500,000,000.00
Deposit FinancialAssets in current profit
andloss
Measured at fair
value and its
changesareincluded Measured at fair
Available for in other 5,119,896.46 Other Equity value and its
sale of financial comprehensive instrument changes are 282,596,126.21
assets income （ Equity investment included in other
instrument） comprehensive
income
Cost measurement 10,253,888.41
(equityinstrument)
③Impactonretainedearningsandothercombinedearningsasat1January2019
Items Consolidatedretained Consolidatedsurplus Consolidationofother
earnings reserves consolidatedincome
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 170,899,572.18
instruments andremeasurethem
2. Aremeasurement of the impairment of 35,779,955.53 3,975,550.61
a financialassetavailableforsale
January 1,2019 -21,994,517.88 83,980,353.84 172,238,780.59
2. Otheraccountingpolicychanges
1.The Company prepared 2019 annual financial statements in accordance with the requirements of
the Ministry of Finance's Notice on Revising and Issuing the Format of General Enterprise Financial
Statements for 2019 (CK [2019] No.6), Notice on Revising and Issuing the Format of Consolidated
FinancialStatements (2019 Edition) (CK [2019] No.16) and the Accounting Standards for Enterprises.
Retroactiveadjustmentmethodisadoptedforsuchaccountingpolicychanges.
TheimpactofthischangeinaccountingpolicyontheCompanyasat31December2018:：
No Name Amount(December31,2018)
Notesreceivableandaccountreceivable -529,340,447.65
1 Notesreceivable 886,432.06
Accountreceivable 528,454,015.59
Notesreceivableandaccountreceivable -180,239,452.90
2 Notesreceivable
Accountreceivable 180,239,452.90
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
BusinessEnterprises No.12-Debt Restructuring from June 17, 2019. The accounting policy change shall
behandledbythefutureapplicablemethod. ?
II.Changesinaccountingestimates
Nosignificantchangesinaccountingestimateshaveoccurredinthecurrentperiod.
VI. TaxesoftheCompany
1.Maintaxescategoriesandtaxrate
Taxes Applicabletaxrates
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%
The applicable tax rates for VAT sales or imported goods in our company during the period fromJanuary to March 2019 are 16.00%. According to the Announcement of the Ministry of Finance, the StateAdministration of Taxation and the General Administration of Customs on the Policies for Deepening theReform of VAT (Announcement [2019] No. 39 of the Ministry of Finance, the State Administration ofTaxation and the General Administration of Customs), the applicable tax rate has been adjusted to 13.00%since April 1, 1919.
Name of taxpayer Income tax rates
Shenzhen Textile (Holdings) Co., Ltd 25.00%
SAPO Photoelectric Co., Ltd. 15.00%
Shenzhen Beauty Century Garment 20.00%
Co., Ltd.
Shenzhen Huaqiang Hotel 25.00%
Shenfang Property Management Co., 20.00%
Ltd.
Shenzhen Lisi Industrial Co., Ltd. 20.00%
2. Tax preference and approval fileIn accordance with relevant provisions of the Notice of Ministry of Finance, General Administration of Customs and State Taxation Administration Regarding Tax Preference Policies for Further Supporting the Development of New-type Display Device Industry (Cai Guan Shui (2018) No. 60), SAPO
Photoelectric manufactured key materials and parts for the upstream industry of new-type display devices i
ncluding colorful light filter coating and polarizer sheet that comply with the planning for independent dev
elopment of domestic industries may enjoy the preferential policies of exemption from import tariff for the
import of raw materials and consumables for the purpose of self use and production that can not be produc
ed domestically from January 1, 2016 and December 31, 2020.
SAPO Photoelectric, the subsidiary company of our company, has been qualified as national high-tech
enterprise since 2019 ,High-tech and enterprise certificate No.: GR201944205666 ,The certificate is valid for
three years, The enterprise income tax rate of this year is 15%.
According to the Notice of the Ministry of Finance and the State Administration of Taxation on
Further Expanding the Scope of Preferential Income Tax Policies for Small-scale Low-profit Enterprises
(CK [2018] No.77) and the Notice of the State Administration of Taxation on Implementing and
Implementing Issues Concerning Collection and Administration of Further Expanding the Scope of
Preferential Income Tax Policies for Small-scale Low-profit Enterprises (Announcement of the State
Administration of Taxation No.40 of 2018), Shenzhen Meibainian Garment Co., Ltd., Shenzhen Shenfang
Property Management Co., Ltd. and Shenzhen Lishi Industrial Development Co., Ltd., subsidiaries of the
Company, are qualified small profit-making enterprises. In 2019, the enterprise income tax was levied at a
reduced rate of 20.00%. Meanwhile, the portion of the corresponding taxable income not exceeding RMB
1 million will be included in the taxable income at a reduced rate of 25.00%. If the annual taxable income
exceeds 1 million yuan but does not exceed 3 million yuan, it shall be included in the taxable income by
50.00%.
VII.Notesofconsolidatedfinancialstatement
1.MonetaryCapital
Items December31,2019 December2018
Cashathand 11,091.94 13,559.60
Bankdeposit 272,366,495.29 1,137,431,239.39
Othermonetaryfunds 137,187,260.29 4,314,575.61
Total 409,564,847.52 1,141,759,374.60
Including:Thetotalamountofdepositabroad 3,272,384.31 9,294,408.13
Note:① As of December 31, 2019, other monetary funds was 136,975,844.72 yuan And deposit an
investmentof211,415.57yuan.
②AsofDecember31,2019，Thefixed-termdepositbalanceofmoneyfundis140,918,259.34yuan,thispart
willnotbetreatedasclosingcashorclosingcashequivalentinpreparingcashflowstatement.
2.Transactionalfinancialassets
In RMB
Items December31,2019 December31,2018
Financialassetsmeasuredattheirfairvaluesandwiththevariationincluded 830,000,000.00 —
inthecurrentprofitsandlosses
Including：Structure deposit 830,000,000.00 —
Total 830,000,000.00 —
Including： Partreclassifiedtoothernon-currentfinancialassets —
3.Notesreceivable
(1)Notesreceivablelistedbycategory
In RMB
Items December31,2019 December31,2018
Bank acceptance 40,424,601.97 886,432.06
.Commercial acceptancebill
Subtotal 40,424,601.97 886,432.06
Less：Bad debtprovision
Items December31,2019 December31,2018
Total 40,424,601.97 886,432.06
1.ThecompanyhasnoNotesreceivablepledged.
2.Notesendorsementordiscountandundueonbalancesheetdate
Items Amountderecognizingatperiod – Amountderecognizingatperiod-end
end
Bank acceptance 75,102,771.75
.Commercial acceptancebill
Total 75,102,771.75
4.At the end of the year,bills receivable were all bank acceptance bills. As there was no significant
creditrisk,noprovisionforcreditimpairmentwasmade.
5.Therearenobillsreceivableactuallywrittenoffthisyear.
4.Accountreceivable
(1)Classificationaccountreceivables.
Age December31,2019
Within1year 382,065,942.05
1-2years 813,122.40
2-3years 1,076.93
3-4years 6,728.70
4-5years 4,636,402.32
Over5years 7,930,426.56
Subtotal 395,453,698.96
Less：Baddebtprovision 30,128,669.58
Total 365,325,029.38
(2)Accrualofbaddebtprovision
December31,2019
Category Bookbalance Baddebtprovision
Bookvalue
Amount Proportion（%） Amount Proportion（%）
December31,2019
Category Bookbalance Baddebtprovision
Bookvalue
Amount Proportion（%） Amount Proportion（%）
Accrual of bad
debt provision by 12,753,137.41 3.22 10,823,862.18 84.87 1,929,275.23
singleitem
Accounts
receivable subject
to impairment
assessment by 382,700,561.55 96.78 19,304,807.40 5.04 363,395,754.15
credit risk
characteristicsof a
portfolio
Total 395,453,698.96 100.00 30,128,669.58 7.62 365,325,029.38
（Continuous）
December31,2018
Category Bookbalance Baddebtprovision
Book value
Amount Proportion Amount Proportion（%）
Accounts receivable of individual （%）
significance and subject to individual 6,300,455.84 1.11 3,998,201.79 63.46 2,302,254.05
impairment assessment
Accounts receivable subject to
impairment assessment by credit risk 552,278,688.56 97.66 27,621,586.89 5.00 524,657,101.67
characteristics ofaportfolio
Accounts receivable of individual
insignificance but subject to individual 6,933,008.49 1.23 5,438,348.62 78.44 1,494,659.87
impairment assessment
Total 565,512,152.89 100.00 37,058,137.30 6.55 528,454,015.59
(1)Accountsreceivableofindividualsubjecttoindividualimpairmentassessment.
Accountreceivable December31,2019
（Unit） Accountreceivable Baddebtprovision Proportion(%) Reasonforallowance
Beyond the credit period
DongguanFairLCDCo.,Ltd. 1,697,342.87 1,697,342.87 100.00 for a long time, uncertain
recovered.
Guangdong Ruili Baolai Technology Beyondthecreditperiod
Co.,Ltd. 1,298,965.36 649,482.68 50.00 foralongtime,uncertain
recovered.
Accountreceivable December31,2019
（Unit） Accountreceivable Baddebtprovision Proportion(%) Reasonforallowance
DongguanYaxing Semiconductor Co., Beyond the credit period
Ltd. 2,797,016.81 1,650,239.92 59.00 for a long time, uncertain
recovered.
ShenzhenGulida Microelectronics Co., Beyondthecreditperiod
Ltd. 1,029,587.20 978,107.84 95.00 foralongtime,uncertain
recovered.
Beyondthecreditperiod
Other 6,959,812.37 6,826,796.71 98.09 foralongtime,uncertain
recovered.
Total 12,753,137.41 10,823,862.18 84.87
（2）Accountreceivableonwhichbaddebtprovisionsareprovidedonagebasisinthegroup
December31,2019
Items
Accountreceivable Baddebtprovision Proportion(%)
Within 1year 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
(3)Accrualofbaddebtprovision
Amount ofchangeinthecurrentperiod
Category December31,2018 Reversedorcollected December31,2019
Accrual Write-off Other
amount
Accrualofbaddebtprovision 9,436,550.41 1,856,782.38 469,470.61 10,823,862.18
bysingleitem:
Accrualofbaddebtprovision 27,621,586.89 8,316,779.49 19,304,807.40
by portfolio:
Total 37,058,137.30 1,856,782.38 8,786,250.10 30,128,669.58
Including：Accountsreceivablewithdraw,reversedorcollectedduringthereportingperiod
Name Amount Way
DongguanYaxingSemiconductorCo.,Ltd. 458,525.94 Cash
Total 458,525.94 ——
(4)Thecompanyhasnoaccountreceivableswrittenoffthisperiod.
(5)Theendingbalanceofreceivableowedbytheimputationofthetopfiveparties
December Proportion(%) Baddebtprovision
Name Nature 31,2019 Aging
First Goods 117,965,861.15 Within1year 29.83 5,898,293.06
Second Goods 53,893,840.80 Within1year 13.63 2,694,692.04
Third Goods 41,487,571.67 Within1year 10.49 2,074,378.58
Fourth Goods 23,781,168.18 Within1year 6.01 1,189,058.41
Fifth Goods 22,135,123.42 Within1year 5.60 1,106,756.17
Total 259,263,565.22 65.56 12,963,178.26
（6）Noaccountreceivablewhichterminatetherecognitionowningtothetransferofthefinancialassets
(7)Theamountoftheassetsandliabilitiesformedbythetransferandthecontinuesinvolvementof
accountsreceivable
5.Receivablefinancing
Items December31,2019 December31,2018
Notes receivable 17,933,597.98
Account receivable
Total 17,933,597.98
AsofDecember31,2019, The Company's receivables financingare all bank acceptancebills. As there is
nosignificantcreditrisk,noprovisionforassetimpairmenthasbeenmade.
6.Prepayments
(1)Disclosurebyage
December 31,2019 December31,2018
Aging
Amount Proportion（%） Amount Proportion（%）
Within1year 18,234,600.87 98.86 226,726,744.30 98.99
1-2years 188,517.78 1.02 2,263,886.85 0.99
2-3years 9,530.00 0.05
Over3years 13,208.88 0.07 38,160.00 0.02
Total 18,445,857.53 100.00 229,028,791.15 100.00
OnDecember31,2019，Thereisnolargeamountofprepaymentswithanagingofmorethan1yearin
theprepaymentbalance.
（2）The endingbalanceofPrepaymentsowedbytheimputationofthetopfiveparties
Name December31,2019 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
7.Otherreceivable
Items December31,2019 December31,2018
Interestreceivable 7,610,043.19 5,589,704.44
Otherreceivable 4,830,717.94 9,257,192.06
Total 12,440,761.13 14,846,896.50
（1）Interest receivable
1) Categoryofinterestreceivable
Items December31,2019 December31,2018
Fixeddeposit 109,425.24 1,302,963.56
Structuredeposit 7,500,617.95 4,286,740.88
Subtotal 7,610,043.19 5,589,704.44
Less：Baddebtprovision
Total 7,610,043.19 5,589,704.44
(1)AsofDecember31,2019,Nooverdueinterest
(2)Bad-debtprovision
December31,2019
Category Bookbalance Baddebtprovision
Proportion
Amount Proportion（%） Amount Proportion（%）
December31,2019
Category Bookbalance Baddebtprovision
Proportion
Amount Proportion（%） Amount Proportion（%）
Firststage 7,610,043.19 7,610,043.19
Total 7,610,043.19 7,610,043.19
2.Other receivable
(1)Category ofOtherreceivable
Aging December31,2019
Within1year 2,250,037.41
1-2years 1,213,773.48
2-3years 647,494.79
3-4years 1,837,174.29
4-5years 1,015,782.04
Over5years 13,835,408.91
Subtotal 20,799,670.92
Less：Baddebtprovision 15,968,952.98
Total 4,830,717.94
(2)Other accountsreceivableclassifiedbythenatureofaccounts
Nature December31,2019 December31,2018
Customsbond 326,628.25 101,758.24
Exportrebate 1,191,949.50 3,140,110.71
Unitaccount 15,674,175.33 15,451,643.71
Deposit 2,109,061.49 1,875,008.00
Reservefundandstaffloans 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：Baddebtprovision 15,968,952.98 16,045,376.19
Total 4,830,717.94 9,257,192.06
(3）Bad-debtprovision
In RMB
Stage1 Stage2 Stage3
Bad DebtReserves Expectedcredit ExpectedcreditlossesforExpectedcreditlossover Total
losses overthenext life(nocreditimpairment) theentireduration(credit
12 months impairmentoccurred)
BalanceasatJanuary1, 1,652,090.82 14,393,285.37 16,045,376.19
2019
BalanceasatJanuary1, 1,652,090.82 14,393,285.37 16,045,376.19
2019incurrent
——TransfertostageII
——TransfertostageIII
——TransfertostageII
——TransfertostageI
Provision in the current
period
Turn back in the current 76,423.21 76,423.21
period
Reseller in the current
period
Write- off in the current
period
Other
Balance as at December 1,575,667.61 14,393,285.37 15,968,952.98
31,2019
(4)Bad-debtprovision
Amount ofchangeinthecurrentperiod
Category December31,2018 Reversedor December31,2019
Accrual collected Write-off Other
amount
Accrual of bad
debt provision by 14,393,285.37 14,393,285.37
single item
Accrual of bad
debt provision by 1,652,090.82 76,423.21 1,575,667.61
portfolio
Total 16,045,376.19 76,423.21 15,968,952.98
(5)Otheraccountreceivablesactuallycancelafterwrite-off:Nil
(6)Top5oftheclosingbalanceoftheotheraccountsreceivablecollectedaccordingtothearrearsparty
Name Nature Year-end Age Portion in total other Baddebtprovisionof
balance receivables(%) year-endbalance
First Unit 11,389,044.60 Over5years 54.76 11,389,044.60
account
Second Unit 1,800,000.00 3-4years 8.65 1,800,000.00
account
Third Unit 1,018,295.37 Within1year,1-3 4.90 181,045.68
account years
Fourth Deposit 980,461.06 Over5yeras 4.71 490,230.53
Fifth Deposit 592,420.00 Over5years 2.85 592,420.00
Total 15,780,221.03 75.87 14,452,740.81
(7) Accountsreceivableinvolvedwithgovernmentsubsidies
Name Nameofgovernmentsubsidyproject endofyear Year-end Estimatedtime,amountandbasis
balance aging
Recovered in January 2020, the amount is 427,900
Shenzhen MunicipalCommissionofScience,Technology, ShenzhenIndustrialandCommercial 427,896.00 Within1 yuan,
Industry, TradeandInformationTechnology ElectricityCostReductionProject year 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 financial
assets
(9) Theamountoftheassetsandliabilitiesformedbythenotransferandthecontinuesinvolvementof
other accountsreceivable
8.Inventory
1）Inventoriestypes
December 31,2019
Items
Bookbalance Provisionforbaddebts Bookvalue
Rawmaterials 212,371,911.48 31,148,714.05 181,223,197.43
Processingproducts 5,962,105.18 5,962,105.18
Finishedproduct 135,636,148.29 53,692,060.27 81,944,088.02
Semi-finishedproduct 130,209,635.92 36,196,938.50 94,012,697.42
Goodsintransit 1,618,894.41 48,491.27 1,570,403.14
Commissionedmaterials 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
（Continuous）
December 31,2018
Items
Bookbalance Provisionforbaddebts Bookvalue
Rawmaterials 164,096,057.16 14,452,368.67 149,643,688.49
Processingproducts 3,895,184.01 3,895,184.01
Finishedproduct 129,671,772.49 44,801,099.13 84,870,673.36
Semi-finishedproduct 139,867,237.30 28,508,834.52 111,358,402.78
Goodsintransit 80,839,399.33 937,486.83 79,901,912.50
Commissionedmaterials 10,082,857.63 10,082,857.63
Total 528,452,507.92 88,699,789.15 439,752,718.77
（2）InventoryImpairmentprovision
Increasedincurrentperiod Decreasedincurrentperiod
Items December31,2018 Provision Other Transferredback Other December31,2019
Rawmaterials 14,452,368.67 27,212,118.08 10,515,772.70 31,148,714.05
Increasedincurrentperiod Decreasedincurrentperiod
Items December31,2018 Provision Other Transferredback Other December31,2019
Finished 44,801,099.13 32,684,166.66 23,793,205.52 53,692,060.27
pSreomdiu-cfitnished28,508,834.52 33,589,791.03 25,901,687.05 36,196,938.50
pGroooddusctintransit 937,486.83 48,491.27 937,486.83 48,491.27
Commissioned 3,637,965.67 3,637,965.67
materials
Total 88,699,789.15 97,172,532.71 61,148,152.10 124,724,169.76
(3)Basisforwithdrawalofprovisionforinventoryandreasonforrecoveryorwrite-offinthisyear
Reason for
recovery of
Specific basis for withdrawal of Reasonforwrite-offofprovisionfor
Items provision for
provision forinventory inventoryinthisyear
inventory in this
year
Due toadeclineinthemarketprice
of polarizer products in this period,
Rawmaterials the realizable net value of relevant Useofrelevantmaterials
materials was lower than their
inventory cost.
Due toadeclineinthemarketprice
of polarizer products in this period,
Finishedproduct the realizable net value of relevant Sellingrelatedfinishedgoods
materials was lower than their
inventory cost.
Semi-finishedproduct Duetoadeclineinthemarketprice
of polarizer products in this period,
Sellingrelatedsemi-finished
the realizable net value of relevant
products
materials was lower than their
inventory cost.
Goodsintransit Duetoadeclineinthemarketprice Sellingrelatedfinishedgoods
of polarizer products in this period,
Reason for
recovery of
Specific basis for withdrawal of Reasonforwrite-offofprovisionfor
Items provision for
provision forinventory inventoryinthisyear
inventory in this
year
the realizable net value of relevant
materials was lower than their
inventory cost.
9.Othercurrentassets
Items December31,2019 December31,2018
StructuralDeposit — 540,000,000.00
AfterthedeductionofinputVAT 140,821,609.72 99,797,959.30
Total 140,821,609.72 639,797,959.30
10.Available-for-salefinancialassets
December31,2019 December31,2018
Items Bookbalance Baddebtprovision Bookvalue Bookbalance Baddebtprovision Bookvalue
Measuredbyfairvalue — — — 5,119,896.46 5,119,896.46
Measuredbycost — — — 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 equityinvestment
Increase/decrease
Closing
InvesteesDecember31,2018 Additional Negative Investmentprofit Adjuostthmeerntof Changesof Cashbonusor Withodfrawal December31,2019 balanceof
andloss comprehensive otherequity profitsannounced impairment Other impairment
investment investment recognizedunder income toissue provision provision
I. Jointventure theequitymethod
Shenzhen Haohao
Property Leasing Co., 5,641,139.93 4,916,674.82 1,275,534.89 2,000,000.00
Ltd.
Anhui HuapengTextile 11,784,626.51 -1,685,792.74 10,098,833.77
Co.,Ltd.
Shenzhen Guanhua
Printing &DyeingCo., 133,363,685.79 -3,740,613.10 129,623,072.69
Ltd.
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. AffiliatedCompany
Shenzhen Changlianfa
Printing &dyeing 2,234,057.19 216,618.95 2,450,676.14
Company
Jordan GarmentFactory 2,363,614.70 -1,488,111.17 26,765.66 902,269.19
Hongkong Yehui 10,928,647.33 -1,981,720.10 188,150.70 9,135,077.93
International Co.,Ltd.
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
Note1:OnNovember4,2019,aftertheSecondExtraordinaryGeneralMeeting oftheCompanydeliberatedandpassedtheProposalonTransferof50%Equity
of Shenzhen Haohao Property Leasing Co., Ltd., the Company transferred 50% equityof Haohao Property held by the Company through public listing at Shenzhen
United Property and Share Rights at a price not lower than the appraised value of 60,554,100 yuan approved by the state-owned asset management department. On
December 19, 2019, the Company and Shenzhen Urban Construction and Development (Group) Co., Ltd. (hereinafter referred to as "Urban Construction Group"),
the only intended transferee during the listing period, signed the Property Rights Transaction Contract, with a transaction price of 60,554,100 yuan. The single
shareholder of Urban ConstructionGroup is the controlling shareholder of the company and the associated legal person of the company.This transactionconstitutes
an associatedtransaction.As of December31, 2019, the transactionhadbeen completed,and thetransferincomeof 55,481,800yuanwas includedin the investment
income of2019.
Note 2: After the board of directors of Shenzhen Guanhua Printing and Dyeing Co., Ltd. was re-elected on April 4, 2019, the Company are able to exert a
significant influence on its businessdecisions.The initialrecognition cost of long-termequity investmentis 133,363,685.79yuan,which is the sum of the fair value
of theoriginalotherequityinstrumentsinvestmentattheconversiondateof83,143,210.08yuanandtheadditionalinvestmentcostof50,220,475.71yuan.
12. Otherequityinstrumentsinvestment
(1)Otherequityinstrumentsinvestment
Items Investmentcost December31,2019 January1,2019
FUAO（000030） 8,940,598.31 6,568,923.76 5,119,896.46
ShenzhenGuanhuaPrinting&DyeingCo.,Ltd(Note) 83,143,210.08
ShenzhenDailishiUnderwearCo.,Ltd. 2,559,856.26 12,315,939.61 12,315,939.61
UnionDevelopmentGroupCo.,Ltd. 2,600,000.00 152,469,200.00 152,469,200.00
ShenzhenXiangjiangTradeCo.,Ltd. 160,000.00 7,474,900.00 1,559,890.79
ShenzhenXinfangKnittingCo.,Ltd. 524,000.00 2,227,903.00 2,227,903.00
JintianIndustry（Group）Co.,Ltd. 14,831,681.50
ShenzhenJiafengTextileIndustryCo.,ltd. 16,800,000.00
ShenzhenXieliAutoCo.,Ltd. 4,243,705.44 25,760,086.27 25,760,086.27
ShenzhenSouthTextileCo.,Ltd. 1,500,000.00 13,464,994.09 13,464,994.09
ChangxingJunyingInvestmentPartnership 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
Note: On April 4, 2019, Shenzhen Guanhua Printing and Dyeing Co., Ltd. was converted to
long-termequityinvestmentaccounting.Fordetails,pleaserefertoNoteVII(11).
(2)Itemizeddisclosureofthecurrentnon-tradingequityinstrumentinvestment
Recogni Amountofother Reasonsforbeingmeasured Reasonsforother
zed Accumu Accumulating comprehensive atfairvalueandwhose comprehensive
Name dividend lating losses incometransferred changesareincludedin incometransferredto
income income toretained othercomprehensive retainedearning
earnings income
Fuaoautoparts 207,003
co.,Ltd. .90 2,371,674.55 Long-termholding —
（000030）
Shenzhen
Dailishi 943,396 9,756,0 Long-termholding —
UnderwearCo., .23 83.35
Ltd.
Recogni Amountofother Reasonsforbeingmeasured Reasonsforother
zed Accumu Accumulating comprehensive atfairvalueandwhose comprehensive
Name dividend lating losses incometransferred changesareincludedin incometransferredto
income income toretained othercomprehensive retainedearning
earnings income
Union —
Development 208,000 149,869 Long-termholding
GroupCo.,Ltd. .00 ,200.00
Shenzhen —
Xiangjiang 7,314,9 Long-termholding
TradeCo.,Ltd. 00.00
Shenzhen —
XinfangKnitting 200,000 1,703,9 Long-termholding
Co.,Ltd. .00 03.00
JintianIndustry —
（Group）Co., 14,831,681.50 Long-termholding
Ltd.
—
Shenzhen
Jiafeng Textile 16,800,000.00 Long-termholding
IndustryCo.,ltd.
—
ShenzhenXieli 21,516, Long-termholding
AutoCo.,Ltd. 380.83
ShenzhenSouth 944,666 11,964, —
TextileCo.,Ltd. .14 994.09 Long-termholding
Changxing
Junying 2,150,9 Long-termholding —
Investment 43.4
Partnership
Recogni Amountofother Reasonsforbeingmeasured Reasonsforother
zed Accumu Accumulating comprehensive atfairvalueandwhose comprehensive
Name dividend lating losses incometransferred changesareincludedin incometransferredto
income income toretained othercomprehensive retainedearning
earnings income
Transfertothe
accountingof
Shenzhen long-termequity
Guanhua 77,651, 58,238,941.03 — investment,and
Printing& 921.37 transfertheother
DyeingCo.,Ltd. comprehensive
incomeof
58,238,941.03yuan
4,654,0 279,777 duringtheholding
Total 09.67 ,382.64 34,003,356.05 58,238,941.03 — periodtoretained
earnings
13.Investmentrealestate
(1)Investmentrealestateadoptedthecostmeasurementmode
Items House,Building Landuseright Constructionin Total
I.Originalprice process
1. Balanceatperiod-beginning 309,234,260.74 309,234,260.74
2.Increase inthecurrentperiod
(1) Purchase
3.Decreasedamountoftheperiod 52,051,000.00 52,051,000.00
（1）Dispose 52,051,000.00 52,051,000.00
4.Balanceatperiod-end 257,183,260.74 257,183,260.74
II.Accumulatedamortization
1.Openingbalance 141,236,318.76 141,236,318.76
2.Increasedamountoftheperiod 7,120,445.96 7,120,445.96
(1)Withdrawal 7,120,445.96 7,120,445.96
3.Decreasedamountoftheperiod 3,903,824.88 3,903,824.88
（1）Dispose 3,903,824.88 3,903,824.88
4. Balanceatperiod-end 144,452,939.84 144,452,939.84
III.Impairmentprovision
1.Balanceatperiod-beginning
Items House,Building Landuseright Constructionin Total
process
2.Increased amountoftheperiod
4.Balanceatperiod-end
IV.Bookvalue
1.Bookvalueatperiod-end 112,730,320.90 112,730,320.90
2.Book valueatperiod-beginning 167,997,941.98 167,997,941.98
Note:this year, the Company increased capital to Shenzhen Guanhua Printing and Dyeing Co., Ltd.
withtherealestateofGuanhuaMansion.Theoriginalbookvalueoftherelevantassetswas52,051,000.00
yuan, and the accumulated depreciation was 3,903,824.88 yuan. Please refer to Note XII (5) 4(2) for
detailsofthismatter.
14.Fixedassets
Items December31,2019 December31,2018
Fixedassets 903,229,077.83 987,876,247.55
Liquidationoffixedassets
Total 903,229,077.83 987,876,247.55
1.Fixedassets
Items Houses&buildings Machineryequipment TransportationsOtherequipment Total
I.Originalprice
1.Openingbalance 548,584,026.60 1,011,061,597.26 9,997,715.53 30,466,523.80 1,600,109,863.19
2.Increasedamountoftheperiod 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) Transferredfromconstructionin 10,236,241.34 10,236,241.34
p（ro3g）reOssther
3.Decreasedamountoftheperiod 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）Othertransfer
4.Balanceatperiod-end 554,790,414.11 1,019,329,690.87 10,160,884.32 32,219,076.82 1,616,500,066.12
II.Accumulateddepreciation
1.Openingbalance 130,575,792.68 459,920,510.02 3,719,028.75 17,008,251.34 611,223,582.79
2.Increasedamountoftheperiod 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 Machineryequipment TransportationsOtherequipment Total
3.Decrease inthereportingperiod 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.Closingbalance 146,482,472.12 545,861,440.05 2,841,269.42 17,965,170.04 713,150,351.63
III.Impairmentprovision
1.Openingbalance 1,004,032.85 6,000.00 1,010,032.85
2.Increaseinthereportingperiod
3.Decreasein
883,396.19 6,000.00 889,396.19
thereportingperiod
4.Closingbalance 120,636.66 120,636.66
IV.Bookvalue
1.Bookvalueoftheperiod-end 408,187,305.33 473,468,250.82 7,319,614.90 14,253,906.78 903,229,077.83
2.Bookvalueoftheperiod-begin 417,004,201.07 551,141,087.24 6,278,686.78 13,452,272.46 987,876,247.55
Note:Currentdepreciationis113,151,593.51yuan.
15.Constructioninprogress
Items December31,2019 December31,2018
IndustrializationprojectofpolaroidforsuperlargesizeTV 839,443,318.50 9,080,815.92
(Line7)
Other 422,957.42 6,540,470.72
Total 839,866,275.92 15,621,286.64
(1)Listofconstructioninprogress
December 31,2019 December31,2018
Items Bookbalance Provisionfor BookNetvalue Bookbalance Provisionfor BookNetvalue
devaluation devaluation
Industrialization project
of polaroid for super 839,443,318.50 839,443,318.50 9,080,815.92 9,080,815.92
largesizeTV
(Line7)
Other 422,957.42 422,957.42 6,540,470.72 6,540,470.72
December 31,2019 December31,2018
Items Bookbalance Provisionfor BookNetvalue Bookbalance Provisionfor BookNetvalue
devaluation devaluation
Total 839,866,275.92 839,866,275.92 15,621,286.64 15,621,286.64
（2）Changesofsignificantconstructioninprogress
Name Budget Amountatyear Increaseatthis Transferredto Otherdecrease Balanceinyear-end
beginning period fixedassets
Industrialization projectofpolaroid
1959.50 million 9,080,815.92 830,362,502.58 839,443,318.50
for superlargesizeTV(Line7)
Total 9,080,815.92 830,362,502.58 839,443,318.50
（Continuous）
Items Proportion(%) Progressofwork Capitalisationofinterest Including：Currentamount Capitalisationofinterestratio（%) Sourceoffunds
accumulatedbalance ofcapitalizationofinterest
Industrializationprojectofpolaroid
42.84% Themainbuildinghasbeencapped Self
forsuperlargesizeTV(Line7)
Total —— —— ——
16. Intangibleassets
(1) Information
Items Landuseright Patentright Software Total
I.Originalprice
1.Balanceatperiod-beginning 48,822,064.61 11,825,200.00 2,936,607.54 63,583,872.15
2.Increaseinthecurrentperiod
(1)Purchase
（2）InternalR&D
3.Decreasedamountoftheperiod 563,825.61 563,825.61
（1）Disposal
（1）DisposalSubsidiary
（3）Transfertoinvestmentrealestate
（4）Othertransfer 563,825.61 563,825.61
4.Balanceatperiod-end 48,258,239.00 11,825,200.00 2,936,607.54 63,020,046.54
II.Accumulatedamortization
1.Balanceatperiod-beginning 12,243,972.52 11,825,200.00 1,633,883.78 25,703,056.30
2.Increaseinthecurrentperiod 911,604.36 451,215.15 1,362,819.51
(1) Withdrawal 911,604.36 451,215.15 1,362,819.51
（2）BusinesscombinationIncrease
（3）Other
3.Decreasedamountoftheperiod 563,825.61 563,825.61
（1）Disposal
（1）DisposalSubsidiary
（3）Transfertoinvestmentrealestate
（4）Othertransfer 563,825.61 563,825.61
4.Balanceatperiod-end 12,591,751.27 11,825,200.00 2,085,098.93 26,502,050.20
III.Impairmentprovision
1.Balanceatperiod-beginning
2.Increaseinthecurrentperiod
Items Landuseright Patentright Software Total
(1)Withdrawal
3.Decreasedamountoftheperiod
（1）Disposal
4.Balanceatperiod-end
4.Bookvalue
1.Bookvalueatperiod-end 35,666,487.73 851,508.61 36,517,996.34
2.Bookvalueatperiod-beginning 36,578,092.09 1,302,723.76 37,880,815.85
17.Goodwill
(1)Originalbookvalueofgoodwill
Nameoftheinvesteesortheeventsformedgoodwill December31,2018 Increase Decrease December31,2019
ShenzhenBeautyCenturyGarmentCo.,Ltd. 2,167,341.21 2,167,341.21
ShenzhenShenfangImportandExportCo.,Ltd. 82,246.61 82,246.61
SAPOPhotoelectric 9,614,758.55 9,614,758.55
Total 11,864,346.37 11,864,346.37
（2）Impairmentofgoodwill
Investee December31,2018 Increasedatthisperiod .Decreasedatthisperiod December31,2019
Shenzhen BeautyCenturyGarmentCo.,Ltd. 2,167,341.21 2,167,341.21
Shenzhen ShenfangImportandExportCo.,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
18.Longtermamortizeexpenses
Items December31,2018 Increase in this Amortized Otherloss December31,2019
period expenses
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.Deferredincometaxassets/deferredincometaxliabilities
（1）Detailsoftheun-recognizeddeferredincometaxassets
December 31,2019 December31,2018
Items Deductibletemporary Deferredincometax Deductibletemporary Deferredincometax
difference assets difference assets
Assetsdepreciationreserves 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 3,820,701.85 955,175.46
assets
Changes in fair value of
investments in other equity 2,371,674.55 592,918.64
instruments
Restricted stock repurchase 686,670.00 171,667.50 571,844.26 142,961.06
interest
Total 23,494,029.67 5,618,026.43 25,181,407.47 6,036,198.23
(2)Detailsoftheun-recognizeddeferredincometaxliabilities
December31,2019 December31,2018
Items Deductibletemporary Deferredincome Deductibletemporary Deferredincometax
difference taxliabilities difference liabilities
The difference between the
initialrecognition cost and tax
base of long-term equity 77,651,921.36 19,412,980.34
investment of Guanhua
Company
Changesinfairvalueof
investmentsinotherequity 202,125,461.26 50,531,365.32
instruments
Total 279,777,382.62 69,944,345.66
(3)Detailsofincometaxassetsnotrecognized
Items December31,2019 December31,2018
Deductibletemporarydifference 156,410,415.69 128,283,915.49
Deductibleloss 605,506,184.05 508,608,727.20
Items December31,2019 December31,2018
Total 761,916,599.74 636,892,642.69
(4)Deductiblelossesoftheun-recognizeddeferredincometaxassetwillexpireinthefollowingyears
Year December31,2019 December31,2018 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
20.Othernon-currentassets
December31,2019 December31,2018
Items
Bookbalance Provisionfordevaluation BookNetvalue Bookbalance Provisionfordevaluation BookNetvalue
Advance paymentfor 3,079,321.10 3,079,321.10 152,688,087.18 152,688,087.18
Adevqaunicpempeanytmfuentdfor 176,764,571.83 176,764,571.83
technicTaoltaselrvices 3,079,321.10 3,079,321.10 329,452,659.01 329,452,659.01
21.Short-termborrowings
Items December31,2019 December31,2018
Credit borrowings 411,522,111.40
Total 411,522,111.40
22.Accountspayable
(1)Listofaccountspayable
Items December31,2019 December31,2018
Within1years 238,370,055.75 177,140,118.37
Items December31,2019 December31,2018
1-2years 196,392.86 2,059,842.85
2-3years 1,691,830.35 37,402.40
3-4years 37,402.40 35,075.05
4-5years 35,075.05 281,166.48
Over5years 967,014.23 685,847.75
Total 241,297,770.64 180,239,452.90
NoSignificantaccountspayablethatagedoveroneyear
23.Advanceaccount
（1）Advanceaccount
Items December31,2019 December31,2018
Within1years 29,824,350.33 119,293,518.44
1-2years 16,004.11 560,077.61
2-3years 30,171.98 210,330.74
Over3years 659,591.20 639,024.58
Total 30,530,117.62 120,702,951.37
AccountspayablewithmajoramountandNotagingofoveroneyear
24.PayableEmployeewage
（1）PayableEmployeewage
Increaseinthis Decreaseinthis
Items December31,2018 period period December31,2019
I.Short-termemployeebenefits 32,506,267.08 161,658,957.04 155,609,043.92 38,556,180.20
II.Post-employmentbenefits 11,119,425.46 11,119,425.46
III.Terminationbenefit
Total 32,506,267.08 172,778,382.50 166,728,469.38 38,556,180.20
（2）Short-termremuneration
Items December31,2018 Increaseinthis Decreaseinthis December31,2019
1.Wages,bonuses,allowancesand period period
subsidies 30,794,253.21 142,377,416.49 136,420,140.80 36,751,528.90
Items December31,2018 Increaseinthis Decreaseinthis December31,2019
2.Employeewelfare 7p,e3r0io8d,878.08 7p,e3r0io8d,878.08
3.Socialinsurancepremiums 3,389,773.79 3,389,773.79
Including：Medicalinsurance 2,946,127.59 2,946,127.59
Workinjuryinsurance 155,195.94 155,195.94
Maternityinsurance 288,450.26 288,450.26
4.Publicreservesforhousing 5,602,480.79 5,602,480.79
5.Unionfundsandstaffeducationfee 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
（3）Defined contributionplanslisted
Items December31,2018 Increaseinthis Decreaseinthis December31,2019
1.Basicold-ageinsurancepremiums 8p,e8r8io5d,794.40 8p,e8r8io5d,794.40
2.Unemploymentinsurance 212,521.77 212,521.77
3.Annuitypayment 2,021,109.29 2,021,109.29
Total 11,119,425.46 11,119,425.46
25.TaxPayable
Items December31,2019 December31,2018
VAT 2,992,712.57 793,392.58
CityConstructiontax 209,489.81 54,516.12
EnterpriseIncometax 18,567,808.63 6,198,704.39
IndividualIncometax 441,485.02 160,823.58
HousepropertyTax 127,685.17 204,941.07
Educationsurcharge 149,635.58 37,825.82
Other 56,733.55 294,925.43
Total 22,545,550.33 7,745,128.99
26.Otherpayable
Items December31,2019 December31,2018
Interestpayable 39,044,044.39
Otherpayable 152,645,780.14 189,971,235.59
Items December31,2019 December31,2018
Total 152,645,780.14 229,015,279.98
1. Interestpayable
Items December31,2019 December31,2018
Paytheinterestforlong-termloansbyinstallments. 37,220,662.08
Paytheinterestforshort-termloansbyinstallments. 1,823,382.31
Total 39,044,044.39
2.Otherpayable
（1）Disclosure bynature
Items December31,2019 December31,2018
EngineeringEquipmentfund 36,025,975.90 62,574,657.07
Unitaccount 51,891,693.06 53,935,705.78
Deposit 27,258,145.87 25,481,743.17
Restrictivestockrepurchaseobligation 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
27.Non-currentliabilitiesduewithin1year
Items December31,2019 December31,2018
Long-termborrowingsduewithin1year 40,000,000.00
Total 40,000,000.00
28.Long-termborrowings
Items December31,2019 December31,2018
Creditborrowings 40,000,000.00
Less：Long-termborrowingsduewithin1year 40,000,000.00
Total
29.Deferredincome
Items December31,2018 Increaseatthis Decreaseatthis December31,2019 Reason
period period
Items December31,2018 Increaseatthis Decreaseatthis December31,2019 Reason
period period
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
DetailsofGovemmentsubsidy：
Newgrants Profitandloss
Items December31,2018 amountofthis amount Othertransfer Othber December Incomerelated
period recordedinthe amount change 31,2019 toassets
currentperiod
Textilespecialfunds 571,428.57 142,857.16 428,571.41 Relatedto
assets
High-techIndustrializationdemonstrationprojects 200,000.00 200,000.00 Relatedto
assets
Nationalgrantfundsfornewflatpaneldisplayindustry 1,000,000.00 1,000,000.00 Relatedto
assets
GrantfundsforTFT-LCDpolarizerindustryproject 4,333,333.34 1,300,000.00 3,033,333.34 Relatedto
assets
Grantfunds for TFT-LCD polarizer narrow line (line 5) 2,000,000.00 500,000.00 1,500,000.00 Relatedto
project assets
Purchaseofimportedequipmentandtechnology 677,016.78 175,090.20 501,926.58 Relatedto
assets
Innovationand venture capital for TFT-LCD polarier I 200,000.00 50,000.00 150,000.00 Relatedto
project assets
ShenzhenpolarizingmaterialsandTechnologyEngineering 312,500.00 50,000.00 262,500.00 Relatedto
Laboratoryinnovationventurecapital assets
ShenzhenEngineering laboratory polarizing material and 3,125,000.00 500,000.00 2,625,000.00 Relatedto
technicalengineering assets
Newgrants Profitandloss
Items December31,2018 amountofthis amount Othertransfer Othber December Incomerelated
period recordedinthe amount change 31,2019 toassets
currentperiod
CapitalfundingforTechnologyCenter 1,875,000.00 300,000.00 1,575,000.00 Relatedto
assets
Subsidyfundstosupporttheintroductionofadvancedtech 57,552.41 14,388.10 43,164.31 Relatedto
nology assets
Localsupporting funds for TFT-LCD polarizer Phase II 14,250,000.00 1,500,000.00 12,750,000.00 Relatedto
Project(line6) assets
Innovation and venture capital for TFT-LCD polarizer 475,000.00 50,000.00 425,000.00 Relatedto
PhaseIIProject(line6) assets
keytechnology researchanddevelopment projects of 4,125,000.00 500,000.00 3,625,000.00 Relatedto
opticalcompensationfilmforpolarizer assets
StatesubsidyforTFT-LCDpolarizerPhaseIIProject(line 9,500,000.00 1,000,000.00 8,500,000.00 Relatedto
6) assets
StrategicindustriesDevelopmentfundofGuangdong 23,750,000.00 2,500,000.00 21,250,000.00 Relatedto
Province assets
GrantsofPurchaseequipmentofTFT-LCDpolarizingfilm 28,500,000.00 3,000,000.00 25,500,000.00 Relatedto
phaseIIproject assets
Energysavingtransformationgrantfunds 86,458.56 29,642.93 56,815.63 Relatedto
assets
Oldelevatorrenovationfundsubsidies 1,147,008.67 142,255.72 1,004,752.95 Relatedto
assets
Newgrants Profitandloss
Items December31,2018 amountofthis amount Othertransfer Othber December Incomerelated
period recordedinthe amount change 31,2019 toassets
currentperiod
PolarizationIndustrializationProjectforSuperLarge-sized 30,000,000.00 30,000,000.00 Relatedto
TVs(Line7)CentralBudgetInvestment assets
Research&developmentsubsidyforkeytechnologiesof 2,000,000.00 2,000,000.00 Relatedto
ultra-thinIPSpolarizerforsmartphoneterminals assets
FinancecommitteeofShenzhenmunicipality(R&Dofkey Relatedto
technologyofhigh-performancepolarizerforlargesize 5,000,000.00 5,000,000.00 assets
displaypanelof2018N007)
SpecialSubsidy for Improving Atmospheric Environment 1,033,507.00 1,033,507.00 Relatedto
QualityinShenzhen assets
2018Discount on Imports of Special Funds for the 715,274.00 715,274.00 Relatedto
DevelopmentofForeignTradeandEconomicCooperation assets
FirstPremiumSubsidyforNewMaterials 4,806,400.00 4,806,400.00 Relatedto
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 "The
Office of the State Development and Reform Commission on the Reply of New Flat-Panel Display
Industrialization Special Project” (Development and Reform Office High-Tech【2008】No. 2104), the
company obtained the state subsidies RMB 10,000,000.00 from the State Development and Reform
Commission New Flat-Panel Display Industrialization Special Project for the construction of“The Project
of Polaripiece Industrialization for TFT-LCD”. On June 2009, December 2009 and April 2010, the
company received the special subsidies of State Development and Reform Commission RMB
10,000,000.00. Our company will use 10 years as asset depreciation period for amortization. The
non-operating income in current period is RMB1,000,000.00, the balance amount of unfinished final
amortization is RMB0.00.
(4) In accordance with the Notice of Forwarding the Reply of General Office of State Development and
Reform Commission Regarding Special Plan for Strategic Transformation and Industrialization of Color
TV 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 of
polarizer sheet for TFT-LCD of SAPO Photoelectric into the special plan for strategic transformation and
industrialization of color TV industry in 2010 and appropriated national aid of RMB 10,000,000.00 to
SAPO Photoelectric for the research and development in the process of the project of industrialization and
the purchase of required software and hardware equipment. On June 2012 and September 2013, the
company received the national grants of RMB 10,000,000.00.. According to the Notice of Issuing the
Governmental Investment Plan for 2011 Regarding Demonstration Project of High-tech Industrialization
Including Specialized Services Such As Disaster Recovery of Financial Information System issued by
Shenzhen Development and Reform Commission (Shen Fa Gai (2012) No. 3), the Company received
subsidy of RMB 3,000,000.00 for the project of industrialization of polarizer sheet for TFT-LCD in April
2012. Our company will use 10 years as asset depreciation period for amortization in current period.The
non-operating income in current period is RMB1,300,000.00. and the balance amount of unfinished final
amortization 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) of
phase-I project of polarizer sheet for TFT-LCD on February 2012. The Company planned to amortize the
subsidy over 10 years according to the depreciation period of relevant assets. The non-operating income in
current period is RMB500,000.00 and the balance amount of unfinished final amortization is
RMB1,500,000.00.
(6) On October 2013, The company received the grants for the purchase of imported equipment and
technology in 2012 of RMB 1,750,902.00, the Company planned to amortize the subsidy over 10 years
according to the depreciation period of relevant assets.The non-operating income in current period is
RMB175,090.20 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-LCD
polarizing project from Pingshan New District Development and Finance Bureau of RMB
500,000.00(matching funding category),the Company planned to amortize the subsidy over 10 years
according to the depreciation period of relevant assets. The non-operating income in current period is
RMB50,000.00 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-LCD
polarizing project from Pingshan New District Development and Finance Bureau of RMB
500,000.00(matching funding category),the Company planned to amortize the subsidy over 10 years
according to the depreciation period of relevant assets. The non-operating income in current period is
RMB50,000.00 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 Shenzhen
Polarization Material and Technology Engineering Laboratory (Shen Fa Gai (2012) No. 1385), Shenzhen
Polarization Material and Technology Engineering Laboratory was approved to be established on the
strength of SAPO Photoelectric with total project investment of RMB 24,390,000.00. As approved by
Shenzhen Municipal People's Government, this project was included in the plan for supporting the fourth
group 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 of
Enterprises with Special Fund for Development of Strategic New Industries in Shenzhen in 2012 (Shen Fa
Gai (2012) No. 1241), the Company received subsidy of RMB 5,000,000.00 on December 2012 for
purchasing instruments and equipment and improving existing technological equipment and test conditions.
The fund gap will be filled by the Company through raising funds by itself. the Company planned to
amortize the subsidy over 10 years according to the depreciation period of relevant assets. The
non-operating income in current period is RMB500,000.00 and the balance amount of unfinished final
amortization is RMB2,625,000.00 .
(10) According to the “Announcement on the Identification of Technology Centers of 24 Enterprises
including Shenzhen Yuanwanggu Information Technology Joint Stock Company Limited as the Municipal
Research and Development Centers (Technical Center)” (SJMXXJS [2013] No.137), the research and
development 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 technical
center. the Company planned to amortize the subsidy over 10 years according to the depreciation period of
relevant assets. The non-operating income in current period is RMB300,000.00 and the balance amount of
unfinished final amortization is RMB1,575,000.00.
(11)On March 2014 the company received the introduction of advanced technology import subsidy funds
of RMB 143,881.00 from Shenzhen Finance Committee, the Company planned to amortize the subsidy
over 10 years according to the depreciation period of relevant assets. The non-operating income in current
period 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 SAPO
application for local matching funds of TFT-LCD polarizing film II project (Line 6) " (Shenzhen DRC
[2013]No. 1771), the company obtained TFT-LCD polarizing film II project (line 6) local matching funds
of RMB 15,000,000.00 in April 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 period of 10 years in
depreciation of relevant assets, RMB1,500,000.00 was included into other incomes in the current period and
the 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 (2nd 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 andthe 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 RMB148,416.28.
(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
allocatethe relevant assets according to their depreciation years in January 2020, with an unamortized
amountof1,033,507.00yuanattheendoftheperiod.
(24).According to the relevant provisionsof the Notice of the Ministryof Financeand the Ministry
ofCommerceontheKeyWorkofSpecialFundsfortheDevelopmentofForeignTradein2018(CH[2018]
No.91)and the Catalogue of Technologiesand ProductsEncouraged for Import (2016 Edition), In August
2019, the Company received a special interest subsidy of 715,274.00 yuan from Shenzhen Municipal
BureauofCommerceforthecentralforeigntradedevelopmentfund in2018,andappliedfor3,809,994.77
yuanas the imported interestsubsidy equipmentamount, 715,274.00 yuan as the amortizedamount in the
currentperiodand0.00yuanastheunamortizedamountattheendoftheperiod.
(25).Compliance with the document spirit of the Notice of Ministry of Industry and Information
Technology,Ministry of Finance and China Insurance Regulatory Commission on Piloting an Insurance
CompensationMechanism 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 RMB
4,806,400.00 from the Ministry of Industry,In April and July 2019, the Company paid the relevant
premium of 5,988,205.00 yuan, and amortized the premium subsidy of 4,806,400.00 yuan, with an
unamortizedamountof0.00yuanattheendoftheperiod.
30.Stockcapital
Changed（+，-）
Items December31,2018 Issuanceofnew Bonusshares Capitalizationof Other Subtotal December31,2019
Totalshares 511,274,149.00 share publicreserve -1,935,720.00 -1,935,720.00 509,338,429.00
Note:On September 12, 2019, the Company repurchased and cancelled the restricted stocks that did
notmeet the conditions for lifting the restriction on sale in phase I and the restricted stocks held by the
incentive objects who left the company, totaling 1,935,720 shares, with the share capital reduced by
1,935,720.00yuan.
31.Capitalreserve
Items December31,2018 Increaseinthecurrent Decreaseinthecurrent December31,2019
Sharepremium 1,848,960,987.54 period pe9r,i1o5d5,955.60 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
Note1: this year, SAPO Photoelectric, the controlling subsidiary of the Company, received the full
compensation for 2018 performance and included it in its equity, increasing its capital reserve (other
capitalreserves)by118,361,200yuan.SeenotesXVI(2)fordetails.
Note2: The Company's capital reserve (capital premium) was reduced by 9,155,900 yuan due to
repurchaseandcancellationofrestrictedstock.
32.Treasurystock
Items December31,2018 Increaseinthecurrent Decreaseinthecurrent December31,2019
Treasury stock period period27,230,679.0011,091,675.60 16,139,003.40
Total 27,230,679.00 11,091,675.60 16,139,003.40
Note:In 2017, the Company implemented equity incentive, granting 4,752,300 restricted shares at a
grantprice of 5.73 yuan/share. This year, 1,935,720 shares were canceled through repurchase, reducing
stocksharesby11,091,675.60yuan.
33.Other Comprehensiveincome
Amount ofcurrentperiod
Less：Prior
period
Changes in Less：Amounttransferred includedin
December accounting Amount intoprofitandlossinthe other Less： After-tax After-tax December
Items 31,2018 policies January1,2019 incurred currentperiodthat composite Incometax attributetothe attributeto 31,2019
affecting before recogniedintoother income parent minority
amounts incometax comprehensiveincomein transferto expenses company shareholder
prior period retained
income inthe
currentperiod
1.Other
comprehensive
incomethat
cannotbe 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
reclassifiedinthe
lossandgainin
thefuture
Changesinfair
valueof
investmentsin 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
otherequity
instruments
2.Other 1,339,208.41 1,339,208.41 214,916.36 214,916.36 1,554,124.77
comprehensive
Amount ofcurrentperiod
Less：Prior
period
Changes in Less：Amounttransferred includedin
December accounting Amount intoprofitandlossinthe other Less： After-tax After-tax December
Items 31,2018 policies January1,2019 incurred currentperiodthat composite Incometax attributetothe attributeto 31,2019
affecting before recogniedintoother income parent minority
amounts incometax comprehensiveincomein transferto expenses company shareholder
prior period retained
income inthe
currentperiod
income
reclassifiable to
profit or loss in
subsequent
periods
Translation
differences
offinancial 1,339,208.41 1,339,208.41 214,916.36 214,916.36 1,554,124.77
statements
denominated
Total of other
comprehensive 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
income
Note: On January 1, 2019, due to the first implementation of the new financial instrument standard, the other comprehensive income on January 1, 2019 was
adjusted to170,899,572.18yuan.Fordetails,pleaserefertoNotesIII(30).
34.Surplusreserve
Items December31,2018 Changesin January1,2019 Increaseinthe Decreasein December
accounting currentperiod thecurrent 31,2019
policies period
affecting
amounts
Statutory 80,004,803.23 83,980,353.84 6,616,569.55 90,596,923.39
surplus
reserve
Total 80,004,803.23 83,980,353.84 6,616,569.55 90,596,923.39
Note:On January 1, 2019, due to the first implementation of the new financial instrument standard,
the surplus reserve on January 1, 2019 was adjusted to 3,975,550.61 yuan. For details, please refer to
NotesV(30).
35.Retainedprofits
Items Amountofthisperiod Amountoflastperiod
Beforeadjustments:Retainedprofitsattheperiodend -57,774,473.41 -32,266,087.44
Adjustment:Totalunappropriatedprofitsatthebeginningof 35,779,955.53
theyear
Afteradjustments:Retainedprofitsattheperiodbeginning -21,994,517.88 -32,266,087.44
Add:NetprofitattributabletoownersoftheCompanyforthe 19,679,910.43 -22,980,624.93
period
Otherconsolidatedearningscarriedforwardtoretained 58,238,941.03 —
earningsattributabletoownersoftheCompanyfortheperiod
Less:Appropriationtostatutorysurplusreserve 6,616,569.55 2,527,761.04
Retainedprofitsattheperiodend 49,307,764.03 -57,774,473.41
Note:On January 1, 2019, due to the first implementation of the new financial instrument standard,
the surplus reserve on January 1, 2019 was adjusted to 3,975,550.61 yuan. For details, please refer to
NotesV(30).
36.Businessincome,Businesscost
（1）Businessincome,Businesscost
Items Amountofcurrentperiod Amountofpreviousperiod
Income Cost Income Cost
Mainbusinesscost 2,099,197,694.45 1,915,880,730.30 1,266,481,655.09 1,136,768,017.37
Otherbusinesscost 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
（2）Mainbusiness（Industry）
Amountofcurrentperiod Amountofpreviousperiod
Name
Business income Businesscost Businessincome Businesscost
Domesticandforeigntrade 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
Propertymanagement,leasing 106,372,055.25 24,128,173.53 98,327,018.46 25,838,344.67
Glycolbulktrade 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
（3）Mainbusiness（Production）
Amountofcurrentperiod Amountofpreviousperiod
Name
Businessincome Businesscost Businessincome Businesscost
Propertyandrentalincome 106,372,055.25 24,128,173.53 98,327,018.46 25,838,344.67
Textileincome 46,047,351.10 39,166,964.15 47,188,632.17 41,092,884.63
Polaroidincome 1,429,757,296.56 1,368,981,862.95 832,221,198.11 798,322,156.37
Tradeincome 517,020,991.54 483,603,729.67 278,139,524.35 271,514,631.70
Glycolbulktrade 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
（4）MainBusiness（Area）
Amount ofcurrentperiod Amountofpreviousperiod
Name
Business income Businesscost Businessincome Businesscost
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
（5）Operatingincomefromtopfiveclients
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
37.Businesstaxandsubjoin
Items Amountofcurrentperiod Amountofpreviousperiod
Urbanconstructiontax 665,327.79 645,044.28
Educationsurcharge 477,821.51 462,140.55
Housetaxes 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
38.Salesexpenses
Items Amountofcurrentperiod Amountofpreviousperiod
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 andproductloss 708,859.57 659,642.03
Insuranceexpenses 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
39.Administrativeexpenses
Items Amountofcurrentperiod Amountofpreviousperiod
Items Amountofcurrentperiod Amountofpreviousperiod
Wage 57,632,391.81 52,311,665.52
Including ：Equityincentivefee -356,400.00
Depreciationoffixedassets 11,714,741.86 11,005,866.31
Waterandelectricity 2,736,839.25 3,749,739.12
Agencyexpenses 6,188,892.57 3,857,237.09
Intangibleassetsamortization 1,362,819.51 1,334,685.09
Travelexpenses 1,506,687.67 1,606,997.78
Officeexpenses 878,072.35 926,011.06
Businessentertainment 922,668.63 1,067,901.96
Lawsuitexpenses 327,254.72 158,490.57
Repaircharge 2,030,445.26 2,883,879.67
Propertyinsurance 483,245.82 424,962.59
Lowconsumablesamortization 110,298.00 26,694.80
Boardfees 65,020.00
Other 10,976,484.92 9,171,287.74
Total 96,870,842.37 88,590,439.30
40.R&Dcosts
Items Amountofcurrentperiod Amountofpreviousperiod
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
Travelexpenses 356,165.02 460,801.83
Other 323,197.83 465,316.09
Total 53,178,714.33 41,951,786.15
41.FinancialExpenses
Items Amountofcurrentperiod Amountofpreviousperiod
Interestexpenses 4,893,018.58 14,179,121.73
Items Amountofcurrentperiod Amountofpreviousperiod
Interestincome -8,593,894.58 -27,438,299.41
Exchangeloss 16,760,131.65 10,070,501.67
Feesandother 2,803,543.99 2,217,014.64
Total 15,862,799.64 -971,661.37
42.Other income
Items Amountofcurrentperiod Amountofpreviousperiod
Govemment Subsidy 27,547,902.92 17,228,202.21
Total 27,547,902.92 17,228,202.21
Governmentsubsidyprojects：
Items Amountofthis Amountoflast Assets-related/i
period period ncome-related
Subsidy amortization of the project of TFT-LCD polarizer 1,300,000.00 1,300,000.00 Relatedto
industrialization assets
Nationalgrantfundsfornewflatpaneldisplayindustry 1,000,000.00 1,000,000.00 Relatedto
assets
GrantfundsforTFT-LCDpolarizernarrowline(line5)project 500,000.00 500,000.00 Relatedto
assets
Shenzhenpolarizingmaterialandtechnicalengineering 500,000.00 500,000.00 Relatedto
assets
Amortizationof funds for the Development of key Technology of 500,000.00 500,000.00 Relatedto
OpticalcompensationFilmforPolarizer assets
Subsidyfundstosupporttheintroductionofadvancedtechnology 300,000.00 300,000.00 Relatedto
assets
OldElevatorRenovationFundSubsidy 142,255.72 120,168.00 Relatedto
assets
Nationalgrantfundsfornewflatpaneldisplayindustry 200,000.00 200,000.00 Relatedto
assets
Importedequipmentandtechnologydiscountfunds 175,090.20 175,090.20 Relatedto
assets
Textilespecialfunds 142,857.16 142,857.16 Relatedto
assets
Innovationentrepreneurship fund amortization of TFT-LCDpolarizer
periodI project for Pingshan New District Development and Finance 50,000.00 50,000.00 Relatedto
Bureau assets
Shenzhen Engineering laboratory polarizing material and technical 50,000.00 50,000.00 Relatedto
engineering assets
Energysavingtransformationgrantfundsamortization 29,642.93 29,642.93 Relatedto
assets
Financingaidamortizationofintroducingadvancedtechnique 14,388.10 14,388.10 Relatedto
assets
Amortization of supporting funds for TFT-LCD polarizer phase II 1,500,000.00 750,000.00 Relatedto
project(line6) assets
Amortizationofproductionplantandequipmentsubsidyforline6 4,000,000.00 2,000,000.00 Relatedto
assets
Pingshannew Area development and finance bureau special support 50,000.00 25,000.00 Relatedto
fundamortization assets
Shenzhenfinance committee second batch of enterprise research and 2,500,000.00 1,250,000.00 Relatedto
developmentsubsidyfunds assets
Costreduction subsidy for industrial and commercial electricity in 6,486,248.28 4,613,272.07 Relatedto
Shenzhenin2018 income
Shenzhenstandardspecialfund 360,000.00 965,000.00 Relatedto
income
Pingshanscienceandtechnologyinnovationservicedepartment 30,000.00 Relatedto
nationalhighenterpriseaward income
Taxofficialfeerefund 416,818.25 Relatedto
income
FirstPremiumSubsidyforNewMaterials 4,806,400.00 Relatedto
income
Other 25,087.51 38,872.35 Relatedto
income
ShenzhenPingshanDistrictFinanceBureauPingshanDistrict2019 360,000.00 Relatedto
foreigntradesteadygrowthspecialfunding income
CuizhuStreet2018OldResidentialPropertyManagementSupport 30,000.00 Relatedto
ProjectQualifiedPropertyTianbeiCompound income
StablePostSubsidy 174,114.77 237,911.40 Relatedto
income
SecondEnterpriseR&DSubsidyFundofShenzhenFinance 1,935,000.00 2,430,000.00 Relatedto
Committee income
Patentgrants 6,000.00 Relatedto
income
Total 27,547,902.92 17,228,202.21
43.Investmentincome
Items Amountofthisperiod Amountoflastperiod
Long-termequityinvestmentreturnsaccountedforbyequitymethod -7,404,083.27 1,260,154.95
Investmentincomefromthedisposaloflong-termequityinvestment 55,481,817.13
Items Amountofthisperiod Amountoflastperiod
Holdtheinvestmentincomeduringfromavailable-for-sale financial assets — 4,264,611.76
Disposeofproceedsfrominvestmentsavailableforsaleoffinancialassets — -6,002,923.49
Dividendincomeearnedduringinvestmentholdingsinotherequityinstruments 4,654,009.67 —
structureddepositinterest 25,306,786.72 —
Trustincome 52,271,862.25
Total 78,038,530.25 51,793,705.47
44.Creditimpairmentloss
Items Amountofthisperiod Amountoflastperiod
Lossofbaddebtsinotherreceivables 6,929,467.72 —
Lossofbadaccountsreceivable 76,423.21 —
Total 7,005,890.93 —
45.Lossesfromassetimpairment
Items Amountofthisperiod Amountoflastperiod
Lossesonbaddebt -17,594,190.59
Lossofinventoryprice -97,172,532.71 -86,870,737.13
Lossonimpairmentoffinancialassetsavailableforsale -873,360.18
Lossonimpairmentoffixedassets -1,010,032.85
Total -97,172,532.71 -106,348,320.75
46.Assetdisposalincome
Amountincludedin
Items Amountofcurrent Amountofprevious non-recurrentgains
period period andlossesforthe
year
Gains &lossesonforeigninvestmentinfixedassets 3,967.97 3,967.97
Gains& lossesonthedisposaloffixedassets 3,967.97 3,967.97
Total 3,967.97 3,967.97
47.Non-Operationincome
Amountincludedin
Items Amountofcurrentperiod Amountofpreviousperiod non-recurrentgainsand
losses fortheyear
Gainsfromdisposalof 39,823.01 39,823.01
noInn-ccluurdreinngt：assFeitxsedassets 39,823.01 39,823.01
Returninsurancesettlementincome 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
48.Non-currentexpenses
Items Amountofcurrentperiod Amountofpreviousperiod Amountincludedinnon-recurrent
gains andlossesfortheyear
Non-currentassetDispositionloss 414,453.28 97,477.14 414,453.28
Fineexpenses 6,000.00 6,000.00
Other 121.79 121,626.64 121.79
Total 420,575.07 219,103.78 420,575.07
49.Incometaxexpenses
(1)Incometaxexpenses
Items Amountofcurrentperiod Amountofpreviousperiod
Currentincometaxexpense 28,069,828.99 12,440,996.95
Deferredincometaxexpense -10,748.77 -3,561,401.84
Total 28,059,080.22 8,879,595.11
(2)Reconciliationofaccountprofitandincometaxexpenses：
Items Amountofcurrent
period
Totalprofits 9,532,401.59
Incometaxcomputedinaccordancewiththeapplicabletaxrate 2,383,100.40
EffectofdifferenttaxrateapplicabletothesubsidiaryCompany 9,445,356.09
Influenceofincometaxbeforeadjustment 178,201.63
Influenceofnontaxableincome 3,471,893.40
Impactofnon-deductiblecosts,expensesandlosses 221,237.56
Affecttheuseofdeferredtaxassetsearlyunconfirmeddeductiblelosses -775,053.15
The current period does not affect the deferred tax assets recognized deductible temporary 19,522,497.03
differencesordeductibleloss
Taxrateadjustments resultin changesin thebalanceofdeferred incometax assets/liabilitiesatthe 5,458.59
beginningoftheyear
ImpactofadditionaldeductionsforR&Dexpense -5,982,605.36
Impactofincometaxreliefpreferences -411,005.97
Incometaxexpense 28,059,080.22
50.Othercomprehensiveincome
RefertothenotesVII(33)
51.Supplementaryinformationtocashflowstatement
(1)Othercashreceivedrelevanttooperatingactivities
Items Amountofcurrentperiod Amountofprevious
period
LetterofCreditDeposit 32,712,277.24
Interestincomeandother 21,399,077.97 28,377,924.90
GovernmentSubsidy 7,584,936.53 20,452,835.82
Customsbonds 1,454,781.62
Ethyleneglycolbulktrade 249,057,800.00
Total 61,696,291.74 299,343,342.34
(2).Othercashpaidrelatedtooperatingactivities
Othercash related to business activities paid in the current period amounted to 96,360,918.39 yuan,
mainlyincludingletterofcreditguaranteeanddepositof42,928,583.04yuanandcashforexpenses.
(3)OtherCashreceivedrelatedtoinvestmentactivities
Items Amountofcurrentperiod Amountofpreviousperiod
Structureddeposits,financialproducts,principalandincome 4,093,427,051.70 4,170,920,804.54
L/Cmarginforpurchaseofline7equipment 71,030,367.00
Items Amountofcurrentperiod Amountofpreviousperiod
Total 4,164,457,418.70 4,170,920,804.54
(4).Cashpaidrelatedtootherinvestmentactivities
Items Amountofcurrentperiod Amountofpreviousperiod
Structureddeposits,financialproducts,principalandincome 4,360,000,000.00 3,625,700,000.00
L/Cmarginforpurchaseofline7equipment 196,430,000.00
Total 4,556,430,000.00 3,625,700,000.00
（5）Othercashreceivedinrelationtofinancingactivities
Items Amountofcurrentperiod Amountofpreviousperiod
Performancecompensation 197,268,700.00
Borrowingfunds 6,506,454.17
Total 203,775,154.17
Note: Other cash received related to fund-raising activities mainly refers to the performance
compensation of 197,268,700.00 yuan paid by Jinjiang Group and received by SAPO Photoelectric, a
subsidiaryof theCompany.For details,please refer toNoteXVI (2).Other importantmattersthat have an
impactoninvestors'decision-making.
（6）Cashpaidrelatedwithfinancingactivities
Items Amountofcurrentperiod Amountofpreviousperiod
Restrictedstockofstockrepurchaseincentiveobject 11,091,675.60
Borrowingfunds 2,700,000.00
Total 13,791,675.60
52.SupplementInformationforcashflowstatement
（1）SupplementInformationforcashflowstatemen
Supplement Information Amountofcurrentperiod Amountofprevious
period
I. Adjustingnetprofittocashflowfromoperatingactivities
Net profit -18,526,678.63 -62,302,707.38
Supplement Information Amountofcurrentperiod Amountofprevious
period
Add: Impairmentlossprovisionofassets 35,134,984.42 56,159,345.95
Creditimpairmentlosses -7,005,890.93 —
Depreciation offixedassets,oilandgasassetsandconsumable 120,272,039.47 99,629,480.53
biological assets
Amortization ofintangibleassets 1,362,819.51 1,334,685.09
Amortization ofLong-termdeferredexpenses 505,932.97 285,940.05
Loss ondisposaloffixedassets,intangibleassetsandother -3,967.97
long-term deferredassets
Loss onscrapoffixedassets 374,630.27 97,477.14
Loss onfairvaluechanges
Financial cost 4,734,103.39 -727,282.72
Loss oninvestment -78,038,530.25 -51,793,705.47
Decrease indeferredincometaxassets -10,748.77 -3,561,401.84
Increased ofdeferredincometaxliabilities
Decrease ofinventories 12,010,403.04 -200,819,304.94
Decease ofoperatingreceivables 289,069,889.61 -394,843,085.92
Increased ofoperatingPayable 23,266,802.37 96,402,638.36
Other -356,400.00
Net cashflowsarisingfromoperatingactivities 383,145,788.50 -460,494,321.15
II. Significantinvestmentandfinancingactivitiesthatwithout
cash flows:
Debt-to-capital conversion
Convertible loanduewithin1year
Fixed assetsacquiredunderfinanciallease
3．Movement ofcashandcashequivalents：
Ending balanceofcash 268,646,588.18 1,133,574,235.22
Less: Beginningbalanceofcashequivalents 1,133,574,235.22 1,161,240,139.33
Add：Ending balanceofcashequivalents
Less: Beginningbalanceofcashequivalents
Net increaseofcashandcashequivalents -864,927,647.04 -27,665,904.11
(2)Compositionofcashandcashequivalents
Items Year-endbalance Year-beginningbalance
I.Cash 268,646,588.18 1,133,574,235.22
Including：Cashathand 11,091.94 13,559.60
Demandbankdeposit 268,424,080.67 1,133,556,630.43
Demandothermonetaryfunds 211,415.57 4,045.19
II.Cashequivalents
III.Balanceofcashandcashequivalentsattheperiodend 268,646,588.18 1,133,574,235.22
Inlduding：Useof restricted cash and cash equivalents by parent
companiesorsubsidiarieswithingrou
53.Theassetswiththeownershiporuserightrestricted
Items Bookvalueattheend Restrictedreason
oftheperiod
Monetaryfund 136,975,844.72 Deposit
Total 136,975,844.72
54.Foreigncurrencymonetaryitems
(1)Foreigncurrencymonetaryitems
Items Closingforeigncurrency Exchangerate ClosingconverttoRMB
balance 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
VIII.Changeinconsolidationscope
Nochangeofscopeofconsolidationfromlastyear.
IX.Equityinotherentity
1.Equityinsubsidiary
（1）Constitute ofenterprise
Share-holdin
Subsidiary Main Registered Businessnature DiregcraItinodireAcquired
operation place way
tly ctly
ShenzhenLishiIndustry 100.0 EstablishShenzhenShenzhen Domestictrade,PropertyManagement
DevelopmentCo.,Ltd 0
ShenzhenHuaqiangHotel Shenzhen Shenzhen Accommodation,restaurants,business 100.0 Establish
center; 0
ShenfangPropertyManagement 100.0 Establish
Co.,Ltd. Shenzhen Shenzhen PropertyManagement 0
ShenzhenBeautyCentury Shenzhen Shenzhen Productionoffullyelectronicjacquard 100.0 Establish
GarmentCo.,Ltd. knittingwholeshape 0
SAPOPhotoelectricCo.,Ltd Shenzhen Shenzhen Operatingimportandexportbusiness 60.00 Purchase
ShenzhenShenfangImport& 100.0 Establish
exportCo.,Ltd. Shenzhen Shenzhen Operatingimportandexportbusiness 0
Shengtou(Hongkong)Co.,Ltd. Hongkong Hongkong Productionandsalesofpolarizer 100.0 Establish
0
(3).Equity injointventurearrangementorassociatedenterprise
1．Jointventureorassociatedenterprise
Jointventureorassociated Placeof Placeof Nature Holdingproportion(%) Theaccounting
enterprise operation registration Directly treatmentof
investment in
ShenzhenChanglianfa Shenzhen Shenzhen Propertyleasing 40.25 Equitymethod
PrintinganddyeingCompany
JordanGarmentFactory Jordan Jordan Manufacturing 35.00 Equitymethod
YehuiInternationalCo.,Ltd. Hongkong Hongkong Manufacturing 22.75 Equitymethod
AnhuiHuapengTextileCo., Anhui Anhui Manufacturing 50.00 Equitymethod
Ltd.
ShenzhenGuanhuaPrinting& Equitymethod
Shenzhen Shenzhen Propertyleasing 50.16
DyeingCo.,Ltd.
2.Keyfinancialinformationofsignificantjointventureorassociatedenterprise
Items Year-endbalance/Amountof Year-beginningbalance/Amount
current period ofpreviousperiod
Jointventure：
Totalbookvalueoftheinvestment 139,721,906.46 17,425,766.44
Totalamountoftheproratacalculationofthe
followingitems
--Netprofit -4,150,870.95 671,689.37
--OtherComprehensiveincome
--Totalcomprehensiveincome -4,150,870.95 671,689.37
Dividendsreceivedfromjointventuresthisperiod 2,000,000.00 400,000.00
Associatedenterprise：
Totalbookvalueoftheinvestment 12,488,023.26 15,526,319.22
Totalamountoftheproratacalculationofthe
followingitems
--Netprofit -3,253,212.32 588,465.58
--OtherComprehensiveincome 214,916.36 621,283.04
--Totalcomprehensiveincome -3,038,295.96 1,209,748.62
Dividendsreceivedfromjointventuresthisperiod 694,713.40
X.RisksRelatedtoFinancialInstruments
The company has the main financial instruments, such as bank deposits, receivables and payables,
investments,loans and so on. Please refer to the relevant disclosure in Notes for the details. The risks
associatedwith these financial instruments mainly include credit risk, market risk and liquidity risk. The
company’smanagement shall manage and monitor these risks and ensure above risks to be controlled
withincertainscope.
（I）CreditRisk
Thecredit risk of the company is primarily attributable to bank deposits and receivables. Of which, the
bank deposits are mainly deposited in the medium and large commercial banks with strength, high
credibility.For the receivables,the company has developed the relevant policies to control the credit risk,
andset up the corresponding debt and credit limit after the credit status of debtor is evaluated based on
financialcondition of debtor, credit history, external ratings, possibility of guarantee obtained from the
thirdparty.Meanwhile,thecompanyshallregularlymonitorthedebtor’scredithistory.Withregardtothe
badcredit record for the debtor, the company shall adopt the written reminder, shortening or cancel of
creditperiodtoensuretheoverallcreditriskswithinthecontrollablescope.
（II）Marketrisk
Market risk of financial instrument arises from changes in fair value or future cash flow of financial
instrumentsaffectedbymarketprice.Marketrisksincludesforeignexchangeriskandinterestrisk.
(1)InterestRateRisk
Theinterestrateriskfacedbythecompanyismainlyfromthebankborrowings.Thecompanyisfacedthe
interestrate risk of the cash flow due to the financial liability of the floating interest rate, and faced the
interestrate risk of the fairvalue due to the financial liabilityof the fixed interest rate. The companyshall
determinetherelativeproportioninthefixedandfloatinginterestratecontracts.
(2)ForeignExchangeRisk
Theforeignexchangerisksfacedbythecompanyaremainlyfromthefinancialassetsandliabilitiesbased
onthe price of US dollarand JPY. The company matchesthe incomeand expenditureof foreigncurrency
asfaraspossibleinordertoreducetheforeignexchangerisk.
（III）Liquidityrisk
Liquidityriskreferstofundshortageproblemswhenfulfillingobligationssettledincashorotherfinancial
assets.The companyshallguaranteetohavethesufficientfundstorepaythedebtsthrough monitoringthe
cashbalance, the marketable securities available to be cash and the rolling forecast for the future cash
flow.
XI.Thedisclosureofthefairvalue
(I)Closingfairvalueofassetsandliabilitiescalculatedbyfairvalue
Closingfairvalue
Items Firvalue Firvalue Firvalue
measurement measurement measurement Total
items atlevel1 itemsatlevel2 itemsatlevel3
I.Consistentfairvalue
measurement
1.Transactionalfinancialassets 830,000,000.00 830,000,000.00
Financial assets measured at fair value 830,000,000.00 830,000,000.00
throughchangesincomprehensiveincome
2.Receivablefinancing 17,933,597.98 17,933,597.98
3.Otherequityinstrumentinvestment 8,940,598.31 239,841,348.42 248,781,946.73
Closingfairvalue
Items Firvalue Firvalue Firvalue
measurement measurement measurement Total
items atlevel1 itemsatlevel2 itemsatlevel3
TotalofConsistentfairvaluemeasurement 8,940,598.31 1,087,774,946.4 1,096,715,544.71
(II)Marketpricerecognitionbasisforconsistentandinconsistentfairvaluemeasurementitemsatlevel1
Thefair value of the Fuao Stoke held by the Company at the end of the period is measured based on
theclosingpriceofShenzhenStockExchangeonDecember31,2019.
(III)Thevaluation techniques adopted and the qualitative and quantitative information of important
parametersforcontinuousandnon-continuouslevel3fairvaluemeasurementitems
1.Financialassets measuredat fair value andwhose changes are includedin the profitsand losses of
thecurrent period are bank structured deposits held by the Company, which are measured at fair value
basedontheprincipalamountduetotheirshortmaturity;
2.Accounts receivable financing is a bank acceptance bill with a short face value and a face value
closetothefairvalue,whichismeasuredatthefacevalueasthefairvalue;
3.InvestmentinotherequityinstrumentsisheldbytheCompany Investment in non-tradable
equity instruments is mainly valued and measured by market method, asset-based method and income
method.Among them: Shenzhen Jiafeng TextileIndustry Co., Ltd. and Jintian Industry(Group) Co., Ltd.
facedwith a operating environment and operating conditions and financial status, so the Company uses
zeroyuan as a reasonable estimate of fair value for measurement; Changxing Junying Equity Investment
Partnership (Limited Partnership) has no significant changes in its operating environment, operating
conditionsand financial status, so the Company measures the investment cost as a reasonable estimate of
fairvalue.
(IV)Theunobservableparametersandvaluationtechniqueshavenotbeenchangedthisyear.
XII.Relatedpartiesandrelated-partytransactions
1.Parent companyinformationoftheenterprise
Registered Theparent Theparent
Name Registeredaddress Nature capital companyofthe companyofthe
（RMB10,000 Company's Company’svote
) shareholdingratio ratio
Registered Theparent Theparent
Name Registeredaddress Nature capital companyofthe companyofthe
（RMB10,000 Company's Company’svote
) shareholdingratio ratio
Equity
18/F,Investment
Shenzhen Investment Building,Shennan investment,
HoldingsCo.,Ltd. Real-estate 27,649million 45.96 45.96
Road,Futian
Development
District, Shenzhen
and Guarantee
Thecompanyisauthorizedandapprovedtobestate-ownedindependentcompanybyShenzhen
Government,anditExecutesfinancialcontributorfunctiononstate-ownedenterprisewithinauthorization
scope.
2.SubsidiariesoftheCompany
DetailsrefertotheNoteVII-1,Interestinthesubsidiary
3.InformationonthejointventuresandassociatedenterprisesoftheCompany
DetailsrefertotheNoteVII-2,Interestsinjointventuresorassociates
Informationon other joint venture and associated enterprise of occurring related party transactions with
theCompanyinreportingperiod,orformbalanceduetorelatedpartytransactionsinpreviousperiod:
Name RelationofotherRelatedpartieswiththecompany
ShenzhenGuanhuaPrinting&DyeingCo.,Ltd. SharingCompany
4.OtherRelatedpartiesinformation
Other relatedparty RelationshiptotheCompany
ShenzhenShenchaoTechnologyInvestmentCo.,Ltd. Subjecttothesamepartycontrols
ShenzhenTianmaMicroelectronicsCo.,Ltd. ChairmanoftheBoardIstheViceChairmanoftheCompany
Shengbo （HK）Co.,Ltd. TheCompanyExecutivesareDirectorofthecompany
HangzhouJinjiangGroupCo.,Ltd.
ThecontrollingpartyofSAPOPhotoelectricShareholder
LanXiJinxinInvestmentManagementCo.,Ltd. AsubsidiaryofHangzhouJinjiangGroupCo.,Ltd.
ZhejiangHengjieIndustryCo.,Ltd. AsubsidiaryofHangzhouJinjiangGroupCo.,Ltd.
KunshanZhiqimeiMaterialTechnologyCo.,Ltd. SharingCompanyofHangzhouJinjiangGroupCo.,Ltd.
Other relatedparty RelationshiptotheCompany
ShenzhenXinfangKnittingCo.,Ltd. SharingCompany
ShenzhenDailishiUnderwearCo.,Ltd. SharingCompany
ShenzhenGuanhuaPrinting&DyeingCo.,Ltd. SharingCompany
ShenzhenCityConstructionDevelopment （Group）Subjecttothesamepartycontrols
Co.,Ltd.
5.Relatedtransactions.
1.Relatedtransactionsonpurchasinggoodsandreceivingservices
(1)Relatedtransactionsonsalegoodsandreceivingservices
Related parties Contentofrelatedtransaction Amountofcurrentperiod Amountofprevious
period
Shenzhen Tianma Microelectronics Salespolarizersheet 1,444,346.74 2,463,750.30
Co.,Ltd.
KunshanZhiqimeiMaterial Salespolarizersheet 141,106,466.92 87,524,774.55
TechnologyCo.,Ltd.
②Acquisitionofgoodsandreceptionoflaborservice
Related parties Contentofrelatedtransaction Amountofcurrentperiod Amountofprevious
KunshanZhiqimeiMaterial period
TechnologyCo.,Ltd. Supportfilm 143,888,209.10 48,771,009.61
2. Entrustedloansofrelatedparty
Inorder to carry out TFT-LCD polarizer project construction, the company signed an entrusted loan
contract with Shenzhen Shenchao Technology Investment Co., Ltd. and Shenzhen Jiangsu Building
Branchof Ping An Bank in 2010. The contract stipulates that Shenzhen Shenchao Science & Technology
InvestmentCo., Ltd. entrustsShenzhen JiangsuBuildingBranch of Ping An Bank to loan 200,000,000.00
yuanto the Company. The term of the loan was 108 months from the date the first entrusted loan was
issuedto the company's account. The entrusted loan interest rate was lowered by 2% based on the 5-year
commercialloan interestrate announcedand issued by the People'sBank ofChina. Incase of adjustments
tothe 5-year commercial loan interest rate of the People's Bank of China, from the first day of the next
monthof the benchmark interest rate adjustment, the entrusted loan interest rate will be lowered by two
percentagepointsaccordingtotheadjusted5-yearcommercialloaninterestrate.
In2019, the Company repaid the remaining loan of 40 million yuan and paid the loan interest of
37,755,384.30yuan.AsofDecember31,2019,theCompanyhadpaidofftheloan.
3Inter-banklendingofcapitalofrelatedparties：
Relatedparty Amount Startdate Expiringdate Note
Relatedparty Amount Startdate Expiringdate Note
Borrowingfund：
ShenzhenGuanhua Printing & 3,806,454.17 2019.07.30 2020.07.30 The annual lending rate is
DyeingCo.,Ltd. 0.30%
Shenzhen Dailishi Underwear The annual lending rate is
Co.,Ltd. 2,700,000.00 2019.04.08 2019.10.31 0.4.35；Principal and interest
repaidatmaturity
4.Relatedpartyassettransferanddebtrestructuring
(1)The SecondExtraordinaryGeneralMeetingoftheCompanydeliberatedandpassedtheProposal
onTransfer of 50% Equity of Shenzhen Haohao Property Leasing Co., Ltd. in November 3, 2019, and it
wasagreed that the Company transferred 50% equity of Haohao Property held by the Company through
publiclisting at Shenzhen United Property and Share Rights at a price not lower than the appraised value
of60,554,100yuanapprovedbythestate-ownedassetmanagementdepartment.
OnDecember19, 2019, theCompany andShenzhenUrban Constructionand Development(Group)
Co.,Ltd. (hereinafter referred to as "Urban Construction Group"), the only intended transferee during the
listingperiod, signed the Property Rights Transaction Contract, with a transaction price of 60,554,100
yuan.The single shareholder of Urban Construction Group is the controlling shareholder of the company
andthe associated legal person of the company.This transaction constitutes an associated transaction. As
ofDecember 31, 2019, the transaction had been completed, and the transfer income of 55,481,800 yuan
wasincludedintheinvestmentincomeof2019.
(2)The 17th meeting of the 7th Board of Directors of the Company deliberated and passed the
Proposalon Capital Increase and Related Party Transactionsfor Shenzhen Guanhua Printing and Dyeing
Co., Ltd., a Joint Venture Company, and agreed to jointly sign the Capital Increase Agreement for
ShenzhenGuanhua Printing and Dyeing Co., Ltd. on February 28, 2019. All parties agreed unanimously.
The Company and Qiaohui Textile Industrial Co., Ltd will increase the capital of Guanhua in
non-monetaryform according to the par value according to the assessment amount determined according
tothe state-owned assets supervision regulations for the construction, installation, exterior wall and other
project funds and other expenses invested in the construction of Guanhua Mansion. Among them, the
Companyincreased the capital of Guanhua in proportion to the actual assessment amount by 49,935,100
yuan;Qiaohui Textile Industrial Co., Ltd increased its capital by 49,616,600 yuan in proportion to the
actual assessment amount. After the capital increase is completed, the shareholding ratio of each
shareholderin Guanhua will remain unchanged. As of December 31, 2019, the capital increase has been
completed.The annual interest rate for lending is 4.35%. The principal and interest have been repaid on
theduedate.
5.Rewardsforthekeymanagementpersonnel
Items Amountofcurrentperiod Amountofpreviousperiod
Rewardsforthekeymanagementpersonnel 6.1638million 6.056million
6.Receivablesandpayablesofrelatedparties
（1）Receivables
December31,2019 December31,2018
Name Relatedparty
Balance ofBook BaddebtProvisionBalanceofBook BaddebtProvision
Accountreceivable ShenzhenTianmaMicroelectronics 733,038.52 36,651.93 894,474.64 44,723.73
Accountreceivable KCou.n,sLhtadn.ZhiqimeiMaterial 53,893,840.80 2,694,692.04 84,062,627.96 4,203,131.40
OtherAccountreceivable ATenchhunioHlougaypeCnog.,TLetxdt.ileCompany 1,800,000.00 1,800,000.00 1,800,000.00 1,800,000.00
OtherAccountreceivable ShenzhenDailishiUnderwearCo.,Ltd. 404,780.23 20,239.01 416,464.86 20,823.24
（2）Payables
Name Relatedparty December31,2019 December31,2018
Accountpayable KunshanZhiqimeiMaterialTechnologyCo.,Ltd. 56,245,028.58 17,405,753.46
Otherpayable ShenzhenXinfangKnittingCo.,Ltd. 244,789.85 244,789.85
Otherpayable ShenzhenChanglianfaPrintinganddyeingCo.,Ltd. 1,580,949.95 1,178,449.95
Otherpayable YehuiInternationalCo.,Ltd. 1,216,719.38 1,190,070.22
Otherpayable SAPO （Hongkong）Co.,Ltd. 315,000.00 315,000.00
Otherpayable ShenzhenGuanhuaPrinting&DyeingCo.,Ltd. 3,811,053.20
Interestpayable ShenzhenShenchaoTechnologyInvestmentCo.,Ltd. 37,220,662.08
XIII.Sharepayment
1. Overallsituationofsharepayment
Items Relatedcontent
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 127,900 shares
have expired in the current period
The scope of executive price of the company’s
outstanding share options at the end of the period and the remaining term of the contract
The scope of executive price of the company’s other equity instruments
5.73yuan/share，1 year
at the end of the period and the remaining term of the contract
On December 14, 2017, the company's 3rd Extraordinary General Meeting of Shareholders in 2017passed the Proposal on ‘Shenzhen Textile (Group) Co., Ltd. 2017 Restricted Stock Incentive Plan (Draft)and Abstract’; on December 14, 2017, the board of directors of the company reviewed and passed theProposal on Adjusting the List of Incentive Objects of Restricted Stock Incentive Plans and the Number ofEquity Granted of 2017, and the Proposal on Granting Restrictive Shares to Incentive Objects. OnDecember 14, 2017, the company granted 4,752,300 restricted shares to the incentive object, the grantprice was 5.73 yuan/share. Restrictions shall be lifted at the rate of 40%, 30%, and 30% respectively after12 months, 24 months, and 36 months after the first transaction date of 24 months after the completion ofthe registration. The company's performance assessment for the restricted shares granted each period is asfollows:
Restriction lifting period Performance assessment goals
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
The first restriction lifting
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
period
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 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
period 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 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
period 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 closing price of the company's stock on grant date -
the grant date grant price
On each balance sheet date of the waiting period, it is
Determination basis of the number of vesting equity instruments determined based on the latest information such as the
change in the number of people that can be released from
The reasons for the significant difference between the current restrictions and the completion of performance indicators
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
The earnings per share after deduction of non-recurring profit and loss was RMB -0.08/share in 2019,which was lower the performance assessment target in the second period of lifting restrictions on sales;besides, the Company's 2020 budget rolling operation plan show that the Company is not expected tocomplete the performance assessment targets in the second period of lifting restrictions on sales and thirdperiod of lifting restrictions ,In the current period, Company's Unconfirmed Share Payment Fee in theformer recognized share payment disbursement in interests from occupation of funds by the interest rate of2.10% for two-year deposits set by the People's Bank of China for restricted stock investment sum.
XIV.Commitments
Nil
XV.Eventsafterbalancesheetdate
Nil
XVI.Othersignificantevents
(I)Divisionalinformation
(1)Basisfordeterminingreportingdivisionsandaccountingpolicies
The Company determines its operating divisions based on its internal organizational structure,
managementrequirements and internal reporting system. Based on the operating divisions, the Company
confirmsfourreportingdivisions,namelytextiles,polarizer,tradeandpropertyleasing.
Divisional reporting information is disclosed in accordance with the accounting policies and
measurementstandards adopted by each division when reporting to the management. These measurement
basisareconsistentwiththeaccountingandmeasurementbasisforfinancialstatementpreparation.
(2)Financialinformationofthereportdivision In10,000yuan
Items Polarizer Trade Textile Property Offset between Total
lease divisions
Main business 142,975.7 51,702.1 4,616.4 10,652.21 -26.73 209,919.7
income 3 0 6 7
Mainbusinesscost 136,898.1 48,360.3 3,916.7 2,421.66 -8.85 191,588.0
9 7 0 7
Totalassets 324,283.7 16,578.2 3,602.0 110,274.72 -1,598.75 453,139.9
7 1 4 9
Totalindebtedness 43,495.72 2,917.36 1,969.3 21,107.26 -1,811.22 67,678.43
1
(II)Otherimportantmattersaffectinginvestors'decision-making
Atthe endof 2016, theCompanyintroducedHangzhouJinjiangGroupCo., Ltd.(hereinafterreferred
to as "Jinjiang Group") as a strategic investor for the capital increase and stock expansion of SAPO
Photoelectric., establishedbytheCompany,SAPOPhotoelectric,JinjiangGroupandHangzhouJinhang
Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Jinhang
Investment"),a limited partnership with Jinjiang Group as the actual controller,jointly signed the Capital
IncreaseAgreement of Shenzhen SAPO Photoelectric TechnologyCo., Ltd., with Jinhang Investment as
the capital increase subject to subscribe for 40% equity of SAPO Photoelectric with a capital increase
amountof1,352.64millionyuan.
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
GuozhongAcceptance No. 452-2 "Arbitration Notice" and the "Application for Arbitration" submitted by
JinjiangGroup as the applicant. Jinjiang Group's arbitration request made the following changes to the
"CooperationAgreement": (1) the original Article 3.1 of the "Cooperation Agreement" was deleted, and
therelevantoutstandingrightsandobligationswerenolongerperformed;(2)theoriginalArticle6.4ofthe
"CooperationAgreement"wasdeleted,andUnfulfilledrightsandobligationsarenolonger fulfilled.As of
thedate of this report,the above arbitrationhas not yet been heard. In view of the company'sinvolvement
in the above arbitration matters and the uncertainty of the arbitration results, there is uncertainty in
JinjiangGroup'sperformanceofShengboOptoelectronics'2019annualperformancecommitments..
XVII.Notessofmainitemsinfinancialreportsofparentcompany
(1)Accountreceivable
1.Agingdisclosure
Aging December31,2019
Within 1year 550,453.73
Less：Bad debtprovision 27,522.69
Total 522,931.04
2.Thewithdrawalamountofthebaddebtprovision：
December31,2019
Book balance baddebtprovision
Category
Proportion Bookvalue
Amount Amount Proportion（%）
（%）
Accounts receivable of individual
significance and subject to individual
impairmentassessment
Accounts receivable subject to
impairment assessment by credit risk 550,453.73 100.00 27,522.69 5.00 522,931.04
characteristicsofaportfolio
Total 550,453.73 —— 27,522.69 —— 522,931.04
（Continuous）
December31,2018
Book balance baddebtprovision
Category
Proportion Bookvalue
Amount Proportion（%）
（%）
December31,2018
Book balance baddebtprovision
Category
Proportion Bookvalue
Amount Proportion（%）
（%）
Accounts receivable of individual
significance and subject to individual
impairmentassessment
Accounts receivable subject to
impairment assessment by credit risk 570,471.80 100.00 28,523.59 5.00 541,948.21
characteristicsofaportfolio
Accounts receivable of individual
insignificance but subject to individual
impairmentassessment
Total 570,471.80 100.00 28,523.59 5.00 541,948.21
(3)Accrualofbaddebtprovision
Amountofchangeinthecurrentperiod
Category December Reversedor December
31,2018 Accrual Write-off Other 31,2019
collected
amount
Accounts
receivable subject
to impairment
assessment by 28,523.59 1,000.90 27,522.69
credit risk
characteristics of
aportfolio
Total 28,523.59 1,000.90 27,522.69
(4)Theendingbalanceofreceivableowedbytheimputationofthetopfiveparties
Thetotal amount of the top five accounts receivable collected by the Company according to the
arrearageparty was 536,942.76 yuan, accountingfor 97.55%of the total year-end balance of accounts
receivable,andallthetopfivearrearswererentalofhouses.
（5）Noaccountreceivablewhichterminatetherecognitionowningtothetransferofthefinancialassets
(6)Theamountoftheassetsandliabilitiesformedbythetransferandthecontinuesinvolvementof
accountsreceivable
2.Otheraccountreceivable
Items December31,2019 December31,2018
Interestreceivable 7,329,228.31 4,974,799.47
Dividendreceivable
Otheraccountreceivable 9,710,277.69 8,881,582.55
Total 17,039,506.00 13,856,382.02
(1).Interestreceivable
1)Categoryofinterestreceivable
Items December31,2019 December31,2018
Fixeddeposit 884,141.92
Structuredeposit 7,329,228.31 4,090,657.55
Subtotal 7,329,228.31 4,974,799.47
Less：Baddebtprovision
Total 7,329,228.31 4,974,799.47
(1)AsofDecember31,2019,Nooverdueinterest
③ Interest receivable has no risk of credit loss in the current period, excluding provision for bad
debts.
(2).Otherreceivable
(1)CategoryofOtherreceivable
Aging December31,2019
Within1year 5,143,593.73
1-2years 3,828,819.36
2-3years 1,830,359.77
3-4years 1,810,047.30
4-5years
Over5years 12,476,252.43
Subtotal 25,089,072.59
Less：Baddebtprovision 15,378,794.90
Total 9,710,277.69
(2)Classifiedbythenatureofaccounts
Nature December31,2019 December31,2018
Internalcurrentaccount 9,366,582.51 8,578,542.00
Unitaccount 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：Baddebtprovision 15,378,794.90 15,183,303.17
Total 9,710,277.69 8,881,582.55
③Bad-debtprovision
Stage1 Stage2 Stage3
Expectedcreditlosses
Bad DebtReserves Expectedcredit Expectedcredit fortheentireduration Total
lossesoverthe lossoverlife(no (creditimpairment
next12months creditimpairment) occurred)
Balance asatJanuary1,2019 1,090,352.22 14,092,950.95 15,183,303.17
Balance asatJanuary1,2019
in current
——Transfer tostageII
——Transfer tostageIII
——Transfer tostageII
——Transfer tostageI
Provision inthecurrentperiod 195,491.73 195,491.73
Turn back in the current
period
Reseller inthecurrentperiod
Write - off in the current
period
Other
Balance as at December 31, 1,285,843.95 14,092,950.95 15,378,794.90
2019
(4)Bad-debtprovision
Amount ofchangeinthecurrentperiod
Category December Reversedor December
31,2018 Accrual collected Write-off Other 31,2019
amount
Accrual of bad
debt provision by 14,092,950.95 14,092,950.95
singleitem
Accrual of bad
debt provision by 1,090,352.22 195,491.73 1,285,843.95
portfolio
Total 15,183,303.17 195,491.73 15,378,794.90
(5)Nootheraccountreceivablesactuallycancelafterwrite-off
(6)Top 5oftheclosingbalanceoftheotheraccountsreceivablecollectedaccordingtothearrearsparty
Portion in total Baddebtprovision
Name Nature Year-endbalance Age other ofyear-end
receivables(%) balance
First Unitaccount 11,389,044.60 Over5years 45.39 11,389,044.60
Second Internalcurrent 7,875,600.00 Within1year,1-3 31.39 912,680.00
account years
Third Unitaccount 1,800,000.00 3-4years 7.17 1,800,000.00
Fourth Internalcurrent 1,490,982.51 Within1year 5.94 74,549.13
account
Fifth Unitaccount 1,018,295.37 Within1year,1-3 4.06 181,045.68
years
Total 23,573,922.48 93.96 14,357,319.41
(7)Noaccountsreceivableinvolvedwithgovernmentsubsidies
(8)No other account receivable which terminate the recognition owning to the transfer of the financial
assets
(9) Theamountoftheassetsandliabilitiesformedbythenotransferandthecontinuesinvolvementof
otheraccountsreceivable
3.Long-termequityinvestment
(1)Classificationoflong-termequityinvestments
Items December31,2019 December31,2018
Book balance Baddebtprovision Bookvalue Bookbalance Baddebtprovision Bookvalue
Investment tothe 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
sInuvbessidtmiaerynttojointventuresand 152,209,929.72 152,209,929.72 32,952,085.66 32,952,085.66
associatedentTeorptarlises 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
（2）Investment tothesubsidiary
Withdrawnimpairmentprovision Closingbalanceofimpairment
Name December31,2018 Increase Decrease December31,2019
inthereportingperiod provision
SAPO Photoelectric 1,924,663,070.03 1,924,663,070.03 14,415,288.09
Shenzhen LisiIndustrialDevelopmentCo.,Ltd. 8,073,388.25 8,073,388.25
Shenzhen BeautyCenturyGarmentCo.,Ltd. 30,867,400.00 14,003,184.45 16,864,215.55 2,167,341.21
Shenzhen HuaqiangHotel 15,489,351.08 15,489,351.08
Shenfang PropertyManagementCo.,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
Note: On May 23, 2019, the capital of Shenzhen Beauty Century Garment Co., Ltd., a wholly-owned subsidiary, was reduced by 12 million yuan and its
long-term equity investment was reduced by 12 million yuan; On August 31, 2019, Shenzhen Beauty Century Garment Co., Ltd. transferred the assets and
liabilitiesrelated to the business of the Storage and TransportationDepartment to the Company.The Company reduced its investment in Shenzhen Meibainian
GarmentsCo.,Ltd.by2,003,184.45yuan.
（3）Investment tojointventuresandassociatedenterprises
Increase/decreaseinreportingperiod Closing
Withdra balance
December Adjustment Other Declarationof wn December ofName
31,2018 Add Decreased Gain/lossof ofother equity cashdividends impairm Other 31,2019 impairme
investment investment Investment comprehens changes orprofit ent nt
ive income provisio provision
n
I.Jointventures
ShenzhenHaohaoProperty 5,641,139.93 4,916,674.82 1,275,534.89 2,000,000.00
LeasingCo.,Ltd.
AnhuiHuapengTextile 11,784,626.51 -1,685,792.74 10,098,833.77
Co.,Ltd.
ShenzhenGuanhuaPrinting& 133,363,685.79 -3,740,613.10 129,623,072.69
DyeingCo.,Ltd.
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.Associatedenterprises
Shenzhen Changlianfa
PrintinganddyeingCompany 2,234,057.19 216,618.95 2,450,676.14
JordanGarnentFactory 2,363,614.70 -1,488,111.17 26,765.66 902,269.19
YehuiInternationalCo.,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
Note: FordetailsoftheCompany'sadditionalinvestmentinShenzhenGuanhuaPrintingandDyeingCo.,Ltd.,pleaserefertoNoteVII(11).
4.Business income,Businesscost
（1）Business income,Businesscost
Amount ofcurrentperiod Amountofpreviousperiod
Items
Income Cost Income Cost
Main businesscost 71,861,233.77 8,340,126.19 63,874,796.19 10,026,643.42
Other businesscost 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
（2）Main business（Industry）
Amountofcurrentperiod Amountofpreviousperiod
Name
Businessincome Businesscost Businessincome Businesscost
Rental industry 71,861,233.77 8,340,126.19 63,874,796.19 10,026,643.42
（3）Main business（Production）
Amountofcurrentperiod Amountofpreviousperiod
Name
Businessincome Businesscost Businessincome Businesscost
Rental industry 71,861,233.77 8,340,126.19 63,874,796.19 10,026,643.42
（4）Main Business（Area）
Amount ofcurrentperiod Amountofpreviousperiod
Name
Businessincome Businesscost Businessincome Businesscost
Shenzhen 71,861,233.77 8,340,126.19 63,874,796.19 10,026,643.42
（5）Operating incomefromtopfiveclients
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 Amountofcurrentperiod Amountofpreviousperiod
Income fromlong-termequityinvestmentmeasuredby -7,404,083.27 1,260,154.95
adopting theequitymethod
Investment incomefromthedisposaloflong-termequity 55,481,817.13
investment
Hold theinvestmentincomeduringfrom — 1,215,316.98
available-for-sale financialassets
Dividend incomeearnedduringinvestmentholdingsin 1,558,400.13 —
oTthheereqeuqiutiytyofinAstnruhmuieHntusapengtextileco.,ltd.isincluded -6,002,923.49
in theprofitandlossoflong-termequityinvestment
rSetmruecatusureredddaetpfoasiirtvinatleureest 18,417,333.36 —
Total 68,053,467.35 -3,527,451.56
XVIII. Supplementinformation
1. Particularsaboutcurrentnon-recurringgainsandloss
Items Amount Notes
Mainlyduetothe
Non-current assetdisposalgain/loss(includingthewrite-offpartforwhichassets 54,895,878.65 disposalof
impairment provisionismade) long-termequity
investments.
Mainlydueto
recognizeother
Govemment subsidyrecognizedincurrentgainandloss(excludingthosecloselyrelated 27,547,902.92 incomefrom
to theCompany’sbusinessandgrantedunderthestate’spolicies)
government
subsidiesrelatedto
Gain/loss fromchangeoffairvalueoftransactionalfinancialassetandliabilities,and themainbusiness.
investment gainsfromdisposaloftransactionalfinancialassetsandliabilitiesandsellable
financial assetsotherthanvalidperiodvalueinstrumentsrelatedtotheCompany’s
common businesses.
Switch backofprovisionfordepreciationofaccountreceivablewhichwassinglytaken 469,470.61
depreciation test.
Items Amount Notes
Mainlyduetothe
Net amountofnon-operatingincomeandexpenseexcepttheaforesaiditems 4,582,973.27 returnofnew
material
Other non-recurringGains/lossitems
Subtotal 87,496,225.45
Less:Amount ofinfluenceofincometax 13,886,055.96
Amount ofinfluenceofminorityinterests 12,750,409.50
Total 60,859,759.99
2. Returnonnetassetandearningspershare
Profit ofreportperiod Weightedaverage Earningspershare
returneeequity(%) Basicearningsper Dilutedearnings
Net profitattributabletotheCommonstockshareholders 0.75 share(RMB/sha0re.0）4 per 0.04
of Company. share(RMB/share)
Net profitattributabletotheCommonstockshareholders -1.58 -0.08 -0.08
of Companyafterdeductingofnon-recurringgain/loss.
XIII．Documents AvailableforInspection
1.Financial statements bearing the seal and signature of legal representative, General Manaager and financial
controller;
2.The original of the auditor’s report bearing the seal of the certified public accountants and the signature of
C.P.A.
3.The originals of all the Company’s documents and the original manuscripts of announcements publicly
disclosed onthenewspapersdesignatedbyChinaSecuritiesRegulatoryCommissioninthereportperiod.
The above documents were completely placed at the Office of Secretaries of the Board of Directors of the
Company.
TheBoardofDirectorsofShenzhenTextile(Holdings)Co.,Ltd.
March14,2020
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