Stock Code: 688007 Stock Short Name: Appotronics
Appotronics Corporation Limited
2020 Semiannual Report
Important NoteI. The Board of Directors, the Board of Supervisors, directors, supervisors and senior officers ofthe Company hereby warrant that the information contained in this Semiannual Report istrue, accurate and complete and this Semiannual Report is free from any misrepresentation,misleading statement or material omission, and agree to assume joint and several liability forthis Semiannual Report.
II. Alert of significant risks
During the reporting period, there has been no extremely significant risk that may have a materialeffect on the production and operation of the Company. The Company has described in detail the risksthat may exist. Please refer to Section IV “Discussion and Analysis of Business Situations” for therelevant risks.
III. All directors of the Company attended the meeting of the Board of Directors.
IV. This semiannual report has not been audited.
V. BO Lianming, Principal of the Company, ZHAO Ruijin, Person in Charge of the Accounting
Body and WEI Yanlin, Chief Accountant, hereby represent that the financial statements
contained in this Semiannual Report are true, accurate and complete.
VI. Profit distribution proposal or proposal for capitalization of capital reserve approved by the
Board of Directors during the reporting periodNone
VII. Isthereanymaterialeventconcerninganyspecialarrangementofcorporategovernance?
□ Applicable√ N/A
VIII. Risk statement regarding forward-looking statements
√ Applicable□ N/A
The forward-looking statements contained herein regarding the future plans, development strategies orother matters of the Company do not constitute any substantive covenant made by the Company to theinvestors. The investors should be aware of the risk of investment.
IX. Is there any non-operational occupation of funds by the controlling shareholder or its
affiliates?No
X. Is there any external guarantee provided in contravention of the stipulateddecision-making procedure?No
XI. Others
□ Applicable√ N/A
Table of Contents
Section I.Definitions ........................................................................................................................... 5
Section II.Company Profile and Financial Highlights ......................................................................... 5Section III.Operational Highlights ........................................................................................................ 9Section IV.Discussion and analysis of business situations .................................................................. 23Section V.Significant Matters ............................................................................................................ 35Section VI.Changes in Shares and Shareholders ................................................................................. 97Section VII.Preferred Shares .............................................................................................................. 103Section VIII.Directors, Supervisors, Senior Officers and Employees ......................................... 104Section IX.Corporate Bonds .............................................................................................................. 104Section X.Financial Report .............................................................................................................. 104Section XI.List of Documents Available for Inspection .................................................................... 234
Section I. DefinitionsFor purpose of this report, unless the context otherwise requires, the following terms shall have themeanings indicated below:
TermsCompany or Appotronics means Appotronics Corporation LimitedAppotronics Ltd. means Appotronics Corporation Ltd., the former name of the
CompanyCINEAPPO means CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd.Fengmi means Fengmi (Beijing) Technology Co., Ltd.Appotronics HK means Appotronics Hong Kong LimitedAppotronics Holdings means Shenzhen Appotronics Holdings Co., Ltd.CINIONIC means Cinionic Limited (previously known as Barco Cineappo
Limited) and its wholly-owned subsidiariesGDC means GDC Technology Limited (British Virgin Islands)China Film means China Film Co., Ltd.CFEC means China Film Equipment Co., Ltd.Xiaomi means Xiaomi Group, a Hong Kong listed company (1810.HK),
and its affiliatesTianjin Jinmi means Tianjin Jinmi Investment Partnership (LP)Shunwei Technology means Suzhou Industrial Park Shunwei Technology Venture
Capital Partnership (LP)Xiaomi Communications means Xiaomi Communications Technologies Co., Ltd. and its
affiliatesDonView means Beijing DonView Digital Technology Co., Ltd., Beijing
DonView Education Technology Co., Ltd., and their
controlled subsidiariesOrient Appotronics means Beijing Orient Appotronics Technology Co., Ltd.
Section II. Company Profile and Financial Highlights
I. Company profile
Chinese name深圳光峰科技股份有限公司Short name in Chinese光峰科技English name Appotronics Corporation LimitedShort name in English AppotronicsLegal representative BO LianmingRegistered address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road,
Yuehai Street, Nanshan District, ShenzhenPostal code of registered address 518052Office address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road,
Yuehai Street, Nanshan District, ShenzhenPostal code of office address 518052Website http://www.appotronics.comEmail ir@appotronics.cnReference to changes during the reportingperiod
N/A
II. Contact person and contact informationBoard Secretary (Domestic representative for information
disclosure)Name YAN LiAddress 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu Road,
Yuehai Street, Nanshan District, ShenzhenTelephone 0755-32950536Facsimile 0755-86186299Email ir@appotronics.cn
III. Description of changes to the media for information disclosure and place for keeping
semiannual reportsDesignated newspaper for informationdisclosure
China Securities Journal, Shanghai Securities News,Securities Times, Securities DailyWebsites designated by the China SecuritiesRegulation Commission for publishing thesemiannual reports
www.sse.com.cnPlace for keeping the semiannual reports Office of the Board of DirectorsReference to changes during the reportingperiod
N/A
IV. Stock and depository receipts of the Company(I) Stock of the Company
√ Applicable□ N/A
Stock of the CompanyType of stock Stock exchange
and board
Stock short name Stock code Former stock short
nameA-shares Shanghai Stock
Exchange, STARMarket
Appotronics 688007 N/A
(II) Depository receipts of the Company
□ Applicable√ N/A
V. Other related information
□ Applicable√ N/A
VI. Main accounting data and financial highlights of the Company in the past three years(I) Main accounting data
Unit: Yuan Currency: RMBMain accounting data
During thereporting period(Jan. - Jun.)
Prior period
Change over theprior period (%)Operating income 716,025,207.34853,356,964.84 -16.09Net profits attributable to shareholdersof the listed company
14,327,442.9666,579,574.06 -78.48Net profits attributable to shareholdersof the listed company after deduction ofnon-recurring profit or loss
-30,232,495.1341,604,643.75 -172.67Net cash flow from operating activities 63,006,061.80-14,543,413.52 N/A
At the end of thereporting period
At the end of theprior year
Changes at theend of thereporting periodfrom the end ofthe prior year(%)Net assets attributable to shareholdersof the listed company
1,973,397,952.691,974,559,837.64 -0.06Total assets 3,082,777,641.243,099,508,090.85 -0.54
(II) Financial highlights
Financial highlights
During the
reporting
period
(Jan. - Jun.)
Prior period
Change over theprior period (%)Basic earnings per share (RMB/share) 0.030.17 -82.35Diluted earnings per share(RMB/share)
0.030.17 -82.35Basic earnings per share afterdeduction of non-recurring profit orloss (RMB/share)
-0.070.11 -163.64Weighted average return on net assets(%)
0.728.89 -8.17 percentage
pointsWeighted average return on net assetsafter deduction of non-recurring profitor loss (%)
-1.525.60
-7.12 percentage
pointsProportion of R&D investments tooperating income
12.1910.47 +1.72 percentage
points
Explanation about the main accounting data and financial highlights in the past three years
√ Applicable□ N/A
1. The decrease in the operating income by 16.09% year on year was primarily due to the shut-down of
cinemas under the impact of COVID-19, leading to the decrease of the Company’s cinema services andsales; meanwhile, the decrease in demand both in and outside of China under the impact of COVID-19also affected the expansion of large venue, business education, and other To-B operations;
2. The decrease in the net profit attributable to the shareholders of the listed company by 78.48% was
primarily due to the decrease in the incomes during the period, the decline in the profitability caused bythe changed income structure, and losses suffered by major subsidiaries under the impact of COVID-19;
3. The decrease in the net profit attributable to shareholders of the listed company after deduction of
non-recurring profit or loss by 78.48% was primarily due to the decrease in the incomes during theperiod and the decline in the profitability caused by the changed income structure;
4. The net cash flows from operating activities turned from negative to positive primarily due to the
increase in payment by bank's acceptance bills during the period, leading to the decrease in cashpayment for actual procurement, and to the reduction in taxes paid during the period given the decreasein the income and profit.
5. The decrease in the basic earnings per share and diluted earnings per share by 82.35% was primarily
due to the decrease in the net profit attributable to the shareholders of the listed company and theincrease in the IPO share capital of the Company.
VII. Differences in accounting data under Chinese Accounting Standards and Oversea
Accounting Standards
□ Applicable√ N/A
VIII. Items and amounts of non-recurring profit or loss
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem of non-recurring profit or
loss
AmountNote (if applicable)Gain or loss on disposal ofnon-current assets
45,940.33Government grants recognizedin profit or loss other than grantswhich are closely related to theCompany's business and areeither in fixed amounts ordetermined under quantitativemethods in accordance with thenational standard
29,851,687.48
Net profit or loss of subsidiariesfrom the beginning of the periodup to the business combinationdate recognized as a result ofbusiness combination ofenterprises involving enterprisesunder common control
11,655,728.28Profit or loss on changes in thefair value of held-for-tradingfinancial assets, derivativefinancial assets, held-for-tradingfinancial liabilities andderivative financial liabilitiesand investment income ondisposal of held-for-tradingfinancial assets, derivativefinancial assets, held-for-tradingfinancial liabilities, derivativefinancial liabilities and otherdebt investments, other thanthose used in the effectivehedging activities relating tonormal operating business
10,824,793.71
Other non-operating income andexpenses other than the above
-366,405.89Effects attributable to minorityinterests
-1,938,077.23Effect of income tax-5,513,728.59Total44,559,938.09
IX. Others
□ Applicable√ N/A
Section III. Operational HighlightsI. Main business, business model, and status of industry during the reporting period(I) Main business and main products or services
1. Main business
We are a leading laser display technology enterprise in the world owning proprietarytechnologies and core patents and having core device research, development andmanufacturing capability. In the reporting period, we were mainly engaged in the researchand development, production and sale of core laser display devices and complete laserdisplay equipment, and provision of laser film cinema services.
2. Main products and services
Our products may be classified into core laser display devices and complete laserdisplay equipment. The core devices can be further classified into laser light source(cinema light source and large venue light source), light generator and laser projectionscreen, and complete laser display equipment can be further classified into laser cinemaprojector, large venue laser projector, laser video wall, laser education projector, laser TVand smart mini projector, of which, the former four products fall within the field of To B,while the latter two fall within the field of To C.
(II) Main business modelWe are mainly engaged in the R&D, production, sale of core laser display devices andcomplete laser display equipment, and provision of customized R&D and manufacturingservices to customers, and have an independent and complete R&D, procurement, sales,production and service system.
1. R&D mode
We mainly adopt the independent R&D mode. Our technology development focuseson creating and mastering core and key technologies. When a kind of technology becomesrelatively mature, it will be applied in product development. Our product development isdriven by product planning. We set up product lines and product development teams bymarket segment, and develop series products based on product platform.
2. Procurement mode
Our Resources Development Department and Supply Chain Center PlanningManagement Department are responsible for procurement, of which, the ResourcesDevelopment Department is responsible for the selection of suppliers, determination ofpurchasing prices, building of business system and supply platform and other front-endaffairs, and the Planning Management Department is responsible for the preparation andimplementation of procurement plans and other back-end procurement affairs.
3. Production mode
Our production mode relies on own production, supplemented by OEM, mainlybecause of the different production capacity required by different manufacturing processesand modes and consideration of cost-effectiveness. Our core devices sold or offered tocustomers are manufactured by us. Laser TV and smart mini projector products areassembled by OEMs. Other complete equipment products are also manufactured by us.
4. Sales mode
Our sales mode is mainly classified into product sales and cinema service, asdescribed below:
(1) Product sales mode
Our products include core laser display devices and complete laser display equipment.
① The sale of core devices is implemented in the mode of customized development
and direct sale.
② The sale of complete equipment has three modes, which are customized direct sale,
non-customized direct sale and distribution. Including:
Xiaomi, DonView, CVTE, VAVA, Haier, ViewSonic and other companies purchasecustomized complete equipment products developed by us for them.Large venue laser projectors are sold mainly using the off-line direct sale mode, whileFengmi branded laser TV and smart mini projector products are sold both at the onlineretail stores on Tmall, JD, Youpin, Pinduoduo and other platforms, and off-line physicalstores.Other complete equipment products are sold mainly through distributors.
(2) Mode of cinema service
We established CINEAPPO jointly with CFEC, a wholly owned subsidiary of ChinaFilm. CINEAPPO purchases laser cinema light source from Appotronics, and then providescinema services to downstream cinema customers (“Laser as a service”).
Such mode of cinema service was a first in the industry, under which CINEAPPOcharges service fees according to the length of use of light source by the cinemas (the feesare charged by the hour or a certain period of time), while the cinemas do not need topurchase light source equipment, thereby effectively easing their capital pressure andreducing their labor and maintenance costs. CINEAPPO connects the light sourceequipment with its remote information platform, provide remote license and smart timerservices in respect of such light source, and gives support to day-to-day operation of suchlight source, such as asset monitoring and tracking, inspection and maintenance order.
(III) Industry in which the Company operates
1. Development stage, basic characteristics and main technical barriers of the industry
1.1 Industry
According to the Industrial Classification for National Economic Activities(GB/T4754-2017) published by the National Bureau of Statistics, we are classified into the“display device manufacturing” industry (industrial code: C3974) of the “computer,communication and other electronic equipment manufacturing” industry (industrial code:
C39). According to the Guidelines on the Industrial Classification for the Listed Companiespublished by the China Securities Regulatory Commission, we are classified into the“computer, communication and other electronic equipment manufacturing” industry(industrial code: C39).
1.2 Development stage of the industry
(1) Laser display To B market: Growth stage in which the performance of mature
products is improved and the products are continuously upgraded
On the To B market, laser display technology is mainly applied in cinema projectionand large venue display, including cinema projection, security and surveillance, commandand control, theater performance, exhibition and display, artificial and virtual reality andother scenarios. In recent years, due to its remarkable advantages such as stableperformance, long service life and rich color, laser display technology has been rapidlyreplacing the traditional light source technology used in cinema projection and large venuedisplay equipment.
Since the launch of the first ALPD? laser cinema projector jointly developed byAppotronics, China Film and Barco in 2014, ALPD? laser light source has been widelyapplied in the cinemas throughout the country, and entered the overseas projector market,making Appotronics a leader on the laser cinema projector market. In addition, the laserdisplay technology is rapidly penetrating into the large venue display market.
Though the growth of laser display on To B market is temporarily hindered by theepidemic situation, laser display has great growth potentials due to its unique advantages.We expect that as the epidemic situation is put under control gradually, the demands forlaser display technologies and products on To B market will grow continuously andsteadily, and the laser display technologies and products for To B market will providebetter performance and more functions through continuous innovation.
(2) Laser display To C market: As an emerging industry, it is at the early stage of
rapid development
The application of laser display technology in TV and other household products is awholly new creation. Based on the long-term accumulation of ALPD? technology,Appotronics has made a breakthrough in the application of core devices and imagingsolutions of laser display and achieved superiority in the field of household display,including lower cost, higher efficiency and smaller size, among others, which created laserTVs.
Since Appotronics launched the first 100 inch laser TV in the world and introducedthe concept of laser TV based on “ultra short throw front laser projector with anti-ambientlight screen” in 2013 in cooperation with LG, HiSense, Xiaomi, Changhong, Haier andother well-known companies have been engaged in R&D, production and marketing oflaser TV products, promoting the rapid growth of the market size of laser TV and otherrelated household products.
Household laser display products have three unique advantages, which are large size,eye care and portability. Along with the continuous development of the industry chain, thecosts of core materials and devices will be further lowered and their performance will befurther improved. It is expected that household laser display products will develop towardlower price, smaller size and better display effect in the next few years, and becomecommon household products.
1.3 Analysis of the position of the Company in the industry and changes therein
At the beginning of the industrialization of laser display technology, as one of theleading companies in the field of laser display, Appotronics has mastered core technologies.We have not only created the fundamental key architecture for laser phosphor displaytechnology, but also built a proprietary IP protection system through patent layout in China,the United States, Japan, Europe and other countries.
1.4 Development of new technologies, new industries, new types of operation and new
modes during the reporting period and future trend
(1) Projectors are expanding into the household consumer market at a rapid growth
rate in the market segment
Given the rapid technical advancement and high household demand on large-screendisplays, smart projector devices have become the largest market segment for projectordevices in China on the basis of the rapid increase in sales thanks to their cost effectivenessand portability compared with large-screen TVs. In the Guidelines for Myopia Preventionin Children and Adolescents during COVID-19 Epidemic (Updated Version) released bythe National Health Commission, projectors are recommended as the first choice of devicesfor use during the teaching sessions. Compared with conventional liquid crystal screens,some projectors equipped with advanced laser technologies can protect consumers duringlong-time online work and study and reduce the harm due to eye fatigue. According to IDC,it is expected that the projector device market of China will grow at the compound growthrate of 14% between 2020 and 2024.
(2) The accelerated technical upgrade in the smart mini projector industry leads to a
promising prospect for the application of laser light sources
The projector light sources are gradually evolving from bulbs to semiconductor solidlight sources. The Report of Market Research and Investment Forecast Analysis of ChinaProjector Industry released by Forward Industry Research Institute revealed the rapidgrowth of projectors within the range of 1500-2000 lumens with a rapidly increasing share
of smart projectors, and the development trend of high-definition, high-brightness, andsmart projects. With respect to market demands, it is expected that projectors within therange of 1500-2000 lumens will gain increasing shares in projectors, which may furtherreducing the survival space of low-brightness projectors. In the future, on the basis of thedevelopment in fundamental hardware technologies such as light sources, lightingtechnologies, and lens technologies, the optimization of overall device design, and thedevelopment of software technologies such as smart sensing capabilities and image qualityoptimization technologies, the smart projector market will further expand thanks to thegreatly improved display performance and use experience of projector devices, technicalupgrade, and reduced costs.
1.5 The core technology of the Company is the mainstream technical route for the
laser projector industryWith respect to the laser phosphor display technology, the Summary Report onChinese Laser Projector Market for 2020Q2 issued by AVC showed that the blue laser +phosphor powder technology architecture, represented by ALPD?, was still themainstream light source technology.
II. Core technologies and progress in R&D of technologies
1. Core technologies and their advancement, and changes during the reporting period
We have been committed in the breakthroughs, innovations, commercialization andindustrialization of laser display technology, and created technology reserves and patentportfolios covering the whole technology chain of laser display from key systemarchitecture, core devices to key algorithm. ALPD? technology architecture has beenupgraded to the fourth generation. The performance of each generation of architectureplatform has been improved in an all-round way as compared to the previous generation,thereby enabling us to maintain the technical and performance advantages in the industry.As a Leader Level Member of the Laser Illuminated Projector Association (LIPA), we haveparticipated in and led the preparation of the international laser display standard.During the reporting period, we have poured substantial R&D resources in thepreparation and processing of thin film materials, micro- & nano- optical structuretechnology, light source architecture, dynamic control, complete equipment structure,machine perception and miniaturization of laser display system. The big data, algorithmand design solutions accumulated by us over the years will enable us to rapidly developproducts and solutions meeting the requirements of different application scenarios, such as
cinema projection, home entertainment, outdoor exhibition, ultra large-sized display, andimmersive display.In addition, we are developing laser display technology with high dynamic contrastand high dynamic color gamut, battery-powered high-performance mini laser projectortechnology and other technologies. Such new technologies have been continuouslyvalidated and will be applied in our future products.
2. R&D achievements during the reporting period
(1) Achievements of product R&D
For software, Fengmi, a controlled subsidiary of the Company, released the FengOSoperating system, which upgraded the experience in page performance by employing theindependently developed browser and core standard components on the basis of theindependently developed Feng Dynamic Page (FDP) technical architecture, henceenhanced the flexibility in content operation, improved the capability of continuousdelivery in agile operation, and realized more complex interaction functions.For products, we developed high-, medium-, and low-end laser TV products to caterfor different user demands on the household market. Having the highest brightness of 4,000lumens, covering the REC.709, DCI, and REC.2020 color gamuts, and with the maximumcolor gamut area of 158% NTSC, our products are at the highest level in the industry. In thebusiness field, we developed the ultra-high bright large venue projector S4K60, which canreach the highest brightness of 60,000 lumens in the industry; we continuously improvedthe performance of ultra short throw business education projector devices on the basis ofthe previous generation of light generators and released the 4K resolution ultra short throwbusiness education device with the brightness improved by 50% and screen size increasedfrom 100 inch to 150 inch, which further improved the application scope andcompetitiveness of the products; and we released economic light sources suitable formedium- and small-sized cinemas covering the brightness of 5,000 to 25,000 lumens forscreen sizes of 6 meter to 8 meter, which further optimized light source costs whileensuring the brightness and image quality, hence are more suitable for use in medium- andsmall-sized cinemas.
(2) Patent acquisition
By the end of the period, the Company obtained 88 new patents at home and abroad,including 41 patents for invention granted at home and abroad, and filed 156 new patentapplication in and outside of China, including 80 applications for invention patent in and
outside of China. By the end of the period, we have obtained 996 patents throughout theworld, including 747 domestic patents and 249 foreign patents, had 824 domestic andforeign patents pending and 259 PCT patents pending, obtained 57 software copyrights,and owned 608 domestic and foreign trademarks.
3. R&D expenses
Unit: YuanR&D expenses expensed in the currentperiod
87,295,450.75R&D expenses capitalized in the currentperiod
-Total R&D expenses 87,295,450.75Proportion of R&D expenses to operatingincome (%)
12.19
Proportion of R&D expenses capitalized(%)
-
4. R&D projects
√ Applicable□ N/A
Unit: YuanNo.
Item
Estimated total
investment
Investment inthe currentperiod
Aggregateinvestment
Progress
orinterimresults
Goals
Technological
level
Applicationscenario1 Key Enterprise
Laboratory forLaser Display inGuangdongProvince
34,000,000.003,688,412.879,913,384.52
Labortrial
Development of laserphosphor display opticalengine, high-performancefluorescent materials andfluorescent components,portable laser displaytechnology, and laserdisplay technology withhigh contrast and highcolor reproduction
The developmentof key laserdisplay technologyand devices basedon laser phosphortechnology takesthe lead in theindustry.
Throughtransformation oflab R&D results,develop multiplelaser displayterminal products,and promote thedevelopment ofthe entire displayindustry chain.2 Trichromatic Laser
Display CompleteEquipmentProductionDemonstration Line
102,840,000.005,425,895.7914,829,614.56
Labortrial
This project will researchthe industrialization of thetechnology of RGBtrichromatic laser withphosphor to satisfy themarket demands for RGBtrichromatic laser display,build a mass productionline for trichromatic laserdisplay completeequipment, acquireproprietary IP, and realizelarge-scale application oftrichromatic laser displayproducts.
This project willgreatly promotethe industrialupgrading oftrichromatic laserdisplaytechnology, andgain internationalcompetitive edgefor proprietarytrichromatic laserdisplaytechnology.
This project willestablish atrichromatic laserdisplay completeequipmentproductiondemonstrationline.
3 Core devices
28,850,535.0814,242,356.6614,242,356.66
Labortrial
By employing the fourthgeneration of light
Take the lead inthe industry; the
Upgrading of lightsource for
generator technologiesand making use of theadvantages of the APLDtechnology, create a newgeneration of high-end butinexpensive trichromaticlight generator products,so as to reduce the cost,improve the color gamutbrightness, hence improvethe cost effectiveness ofcinema light sources.
cost effectiveness,color gamut, lighteffect, and otherperformance aregreatly improved,to better satisfythe demands ofcustomers.
small-sizedcinema projectors,trichromatic laserTV and otherfields.
4 High-performance
mini projector
36,861,102.9811,886,775.4811,886,775.48
Labortrial
New generation of miniprojector products withgreatly improved costeffectiveness byemploying a newgeneration of platformdisplay technology.
Smart miniprojector takes thelead in theindustry.
Household miniprojector market.
5 Laser cinema
projector
46,686,367.0711,033,536.3411,033,536.34
Labortrial
DCI-compliant overseassmall cinema projectormeeting overseasstandards.
The firstproprietary DCIcompliantprojector in Chinato cater fordemands on theoverseas market.
DCI-compliantsmall cinemaprojector toexpand theoverseas market.6 Laser TV
67,071,461.8123,738,663.4523,738,663.45
Labortrial
4K trichromatic laser TVwith a new generation oflight generatortechnologies, with theindependently developedFengOS system, achievesgreat improvement incolor gamut, brightness,cost effectiveness, and
The 4Ktrichromatic laserTV equipped withthe FengOSsystem suitable forlarge screens takesthe lead in theindustry.
4K householdlaser TV
ease of use.7 Other complete
equipment (largevenue + businesseducation)
38,415,018.2917,279,810.1717,279,810.17
Labortrial
High-lumen, large-size,
and wide-color gamut
large venue projectors and
business projectors with
higher brightness and cost
effectiveness, which are
models for expanding the
high-end market in the
large venue and business
education fields.
The high-end largevenue projectorand businesseducationprojector take thelead in theindustry.
High-end largevenue projector,business educationprojector andother fields.
Total
/ 354,724,485.2387,295,450.75102,924,141.18/ / / /
Remark
□ Applicable√ N/A
5. R&D staff
Unit: Yuan Currency: RMBBasic informationNumber of R&D staff (persons) 336Proportion of R&D staff to total employees of the
Company (%)
Total compensation of R&D staff (RMB) 54,917,336.45Average compensation of R&D staff (RMB) 163,444.45
Education
Academic background Number Proportion (%)Doctor 247.14Master 7722.92Undergraduate 17652.38College or below 5917.56Total 336100.00
Age structureAge Number Proportion (%)≤30 14944.3531≤X≤40 15345.5341≤X≤50 267.74>50 82.38Total 336100.00Note: The average compensation of R&D staff shown in the table above was the average compensationfor the first half of 2020.
6. Other information
□ Applicable√ N/A
III. Material changes in the main assets during the reporting period
√ Applicable□ N/A
Please see “Section IV Discussion and Analysis of Business Situations - Main business activities duringthe reporting period - Analysis of assets and liabilities”.
Wherein, the overseas assets were RMB 409,708,787.31, representing 13.29 of the total assets.
IV. Analysis of core competitiveness during the reporting period
(I) Analysis of core competitiveness
√ Applicable□ N/A
1. Advantage in proprietary technologies
Since we invented ALPD? technology, the fundamental key technology architecturehas been gradually formed and improved. On the basis of this technology, we haveestablished rich product lines, which have a remarkable substitution effect on the traditionalproducts in cinema, TV, business education, large venue and other fields. ALPD?technology has become the mainstream technical route for laser display. By relying ontechnical innovation rather than consumption of resources, we have realized rapid
development, continuously improved the performance and cost-performance ratio of ourproducts, and maintained the competitive advantages in the industry.
2. Sound IP protection system
With our core patents covering laser phosphor display technologies, we have graduallybuilt up a patent system containing the largest number of patents covering the widest scopewith the highest quality in the industry. With key core patent at the center, we have built aunited whole patent system, and is hard to be simulated or broken by the competitors. Inaddition to patented technologies, we also own multiple know-how accumulated includingcore algorithms through R&D efforts over the years.
3. Advantage in product performance
Through more than ten years of R&D efforts, our technical advantages have beengiven full play in cinema, household, large venue and other fields. Our products showsuperior performance in luminance, service life, color gamut, removal of speckle and otheraspects. Through sufficient validation at R&D and quality labs and on-site use for a longtime, all types of our products have become mature. Since its installation in June 2014, thefirst set of ALPD? cinema light source has been stably operating for nearly six years. Ourproducts in other fields have also won trust on the market with their outstandingperformance and reliable quality.
4. Advantage in multiple product series
At present, our ALPD? technology has certain demonstration effect in the field oflaser display, and its application covers professional market and mass market, and high-endmarket and low-end market. Our multiple product series can satisfy the demands of variousscenarios. In addition, we have adopted the differential development strategy and upgradedALPD? technology from multiple angles to satisfy the demands of different marketsegments and applications.
5. Advantage in talents and teams
Our founder and Chairman, Dr. LI Yi, is a well-known expert in the field of laserdisplay. Our President, Dr. BO Lianming is a well-known leader in the display industry.Under the leadership of our outstanding management team, we now have a sound corporategovernance system and strong internal controls, and have greatly improved ourmanagement level and risk prevention capability. In addition, we have a group ofhigh-quality R&D personnel, including a lot of doctors graduated from famous domesticand foreign universities. Our R&D team has taken the lead in the research of laser display
technology in the industry. Through the combination of technology and management, weare able to precisely catch the development trend of the display industry.
6. Advantage in business model
For the To C market, we developed the FengOS system - an open operating systemcustomized for laser TVs and smart projectors. This system can integrate every smart laserTV terminal into the content ecology industry chain, hence implementing in-depthintegration of hardware and software by integrating the innovative, concise, and smartoperating system into advanced hardware. The Company also became the only player in thelaser display industry with the capability of manufacturing core devices and completeequipment and the capability of designing and developing the operating system.
For the cinema projector market, based on our advanced technology and stableproducts, we took the lead in releasing the “cinema service mode” for cinema laser lightsources in the industry. Under this mode, a cinema only needs to pay for the duration in useinstead of purchasing a light source. This not only effectively reduced their fund pressureand maintenance cost, but also protected the cinema from the depreciation of cinema lightsources upon the occurrence of material adverse effects, such as COVID-19. This modepresents the Company with stable incomes for a long period of time and promotes the rapidapplication of the ALPD? technology.
7. Comprehensive capability of product development
In the laser display field, as the core device, the light generator is the most expensiveand most highly technical part in laser display equipment, and is the most critical part in thecomplete equipment. With the capability of manufacturing core devices based on ourfundamental key technologies, we have built up the unique advantage in the laser displayindustry. Along with the constant upgrade in technologies and products, we haveaccumulated precious technologies and experience in system development and keyalgorithms, which lead to our comprehensive capability of product development.
(II) Events occurred during the reporting period that have a material effect on the Company’s
core competitiveness, analysis of the effect and countermeasures
□ Applicable√ N/A
Section IV. Discussion and analysis of business situationsI. Discussion and analysis of business situationsThe year 2020 is a year for Appotronics to take our initiative in addressing the crisisand challenge - the spread of COVID-19 throughout the world caused in-depth impact onthe world, and the complicated international conditions also brought more uncertainties.Appotronics, as a corporate citizen, is not immune to the condition, especially its cinemaservices.In the past three years, our cinema services increased at the compound growth rate of
83.32%, reaching the income of RMB 398 million in 2019, increased by 30.78% year on
year and accounting for 20.11% in our total incomes at the gross margin rate of 66.01%. Asour business platform of cinema services, the controlled subsidiary CINEAPPO realized thenet profit of RMB 145 million in 2019, but suffered the loss of RMB 34.6384 million fromJanuary to June 2020. During the reporting period, the Company made the provision fordepreciation expenses of RMB 36,60 million for equipment for cinema services, and madeshare-based payment of RMB 17.5765 million for implementing incentives of restrictedshares. The performance of the Company declined sharply in the first half year under theimpact of cinema shut-down, equipment depreciation, and share-based payment.To address this crisis and seize the opportunity of demand recovery, we activelyadjusted our services, improved operation quality, implemented the scheme of “broadeningsources of incomes and reducing expenses”, improved operating efficiency, reducedexpenses and costs, and responded to the market rapidly to minimize our losses. With theefforts of all our employees, we realized the operating income of RMB 716 million and thenet profit attributable to shareholders of the listed company of RMB 14.3274 million. Onthe background that China Film Administration released the announcement for orderlyreopening of cinemas in July, it is expected that our incomes from cinema services willrecover gradually.We completed the following main tasks during the reporting period:
1. The operation in the form of business units went on well, and the information-based
corporate operation became more healthyThe Company set up the Large Venue, Education, Overseas, and Household ODMbusiness units according to the business maturity in October 2019. During the reportingperiod, all the business units operated well with improved independent decision-making
and accelerate market response capabilities; our business expanded via the online channelby enhancing online promotion, training, and channel certification; we released industrialstandards and solutions to build our position as a professional expert; and proactively tookopportunities of recovery to show the resilience of our business under the impact ofCOVID-19. Meanwhile, we intensified informatization efforts. For example, the CRMsystem was employed to start sales process management for all To-B business, off-linecustomers of To-C business were recorded on the online CRM system, and online businesswas connected with e-commerce warehouse to eliminate blind spot in warehouse storage.In addition, we also initiated information-based budget management and control in allaspect to improve operating efficiency, making the corporate operation more healthy.
2. Focused on our strategy and business to proactively explore patent operation modes
While making our best efforts to keep the stability of our “fundamental business”, themanagement insisted on ensuring the investment in R&D. The R&D expenses of the firsthalf year were RMB 87 million, accounting for 12.19% of our income. With the continuousimprovement and expansion of the core industrial chain, we further focused on thedevelopment strategy of “core technology + core patent + ecology” and built up acomprehensive patent protection system on this basis. Through the global patent layout, weproactively safeguarded our rights in patents and explored patent operation modes to seekand realize our patent value. On one hand, we protected our investment in R&D bysafeguarding our rights in patents; on the other hand, we realized product innovationthrough constant technical upgrade, which result in new patents in an attempt to drive thedevelopment of the entire industry by our leading core devices.
3. The household business realized growth despite the adverse environment, and
FengOS supported service offering by integrating software with hardware
On the background of COVID-19, the household large-screen demands explored,leading to the rapid development of the content industry and accelerated implementation ofultra-definition content. Given the rapid development of the smart mini projector industry,we realized the growth of 59.72% for our smart mini projector business, which effectivelyfilled up the gap left by the decline in other businesses. During the reporting period, wereleased the independently developed FengOS operating system, and opened the FengOSsystem for cooperation with large-screen hardware and projector manufacturers. Under thePro theme, we also released two hardware products - the 4K laser TV product Cinema Proand high-brightness smart projector Vogue Pro. The Cinema Pro product was equipped
with a brand new ALPD laser light source to improve the brightness by over 40%, whileVogue Pro was equipped with the FengOS system to achieve more functions andentertainment options, hence implementing in-depth integration of hardware and the smartoperating system.
4. Incubation of new business was almost completed, which may become a new
growth driver
On the professional cinema application market, the DCI-compliant digital filmprojector C5 - the first one in China and the smallest one with the lowest noise on the world- was put into trial production, and we invested in GDC as expected in the first half year. Inconsideration of the post-COVID-19 development of the cinema industry, we will carry outour layout of the cinema solution business. For the household market, the laser projectionscreen product working with laser TVs was almost completed, and our independentlydeveloped flexible anti-ambient light screen with the thickness of 500 micrometer, whichwas convenient for installation and transportation, will gradually realize mass productionand sale. The new business is taking shape after the efforts for three years, and is expectedto become a new growth driver in the future.
5. New product series was released to enrich the product portfolio
During the reporting period, we released new products to cater for more consumerscenarios. In the education field, we continuously improved the performance of ultra shortthrow business education projector devices on the basis of the previous generation of lightgenerators and released the 4K resolution ultra short throw business education projectorswith the brightness improved by 50% and screen size increased from 100 inch to 150 inch,which further improved the application scope and competitiveness of the products. In thehousehold field, we developed high-, medium-, and low-end laser TV products to cater fordifferent user demands on the household market. Having the highest brightness of 4,000lumens, covering the REC.709, DCI, and REC.2020 color gamuts, and with the maximumcolor gamut area of 158% NTSC, our products are at the highest level in the industry. Forcinemas, we successfully developed the economic light source suitable for medium- andsmall-sized cinemas, which further optimized light source costs while ensuring thebrightness and image quality, hence are more suitable for use in medium- and small-sizedcinemas.
II. Risk factors
√ Applicable□ N/A
Risk of the technology R&D falling short of expectationsThe core of our development is technical innovation. If we fail to effectively judge thedirection of technical innovations, or to make continuous technical innovations, or to makeeffective R&D investments due to limited funds, or to successfully commercialize thetechnologies developed by us, our core competitiveness in technical innovation may beimpaired, and we may encounter technological risks in future development.Risk of unsustainability of rapid growth driven by the mode of cooperationWe adopt the business strategy of joint venture and cooperation, which combines theadvantages and resources of all partners. If our technical and product innovations slowdown and cannot satisfy the market demands, or our innovation capability decreasescontinuously as a result of which our products are surpassed by our competitors, suchcooperation may bring lower benefits, or become unable to drive our rapid growth orunable to continue.Risks related to tax benefits and government grantsDuring the reporting period, we have received certain VAT reduction and governmentgrants pursuant to the applicable policies of the country. Generally, along with the growthof our operating performance, though the effect of tax benefits and government grants onour current net profit decreases, and our operating results do not rely on tax benefits andgovernment grants, such tax benefits and government grants still have certain effect on ouroperating results. The decrease in our revenue from tax benefits and government grantsmay affect our profit.Risk related to the management of light sourceIn our light source service, we enter into an agreement with a customer, pursuant towhich, we charge a service fee on the customer based on the duration of use of the lightsource, while the customer uses the light source and pays fees therefor, and is responsiblefor the day-to-day safekeeping and maintenance of the light source and damages thereto,but we do not collect any deposit or other similar fees for the light source. The cinemas willuse their best endeavors to maintain the light source in good condition in order to ensurenormal projection of films and continuity of their business operation. However, we stillface the risk of impairment of assets due to damage or loss of light source caused byimproper safekeeping on the part of the cinemas. In particular, due to the effect of the
outbreak of Covid-19, most cinemas have closed down. If such situation persists, somecinemas may go bankrupt, as a result of which our assets may face additional risks.Risk of business development on the overseas marketAs the outbreak of Covid-19 has not been effectively put under control in the world,the stagnation of economic activities abroad will have certain effect on our export, thebusiness development of Cinionic and GDC on the overseas market, and the operation andmarketing of our subsidiaries in Hong Kong and the United States. If the COVID-19 is outof control throughout the world for a long period of time, or the intense internationalcondition persists, the Company faces risks of failing to meet its expectation of theexpansion speed of overseas business.Risk related to the supply of important raw materialsThe key components of our products include laser devices, chips and lenses, which aremainly purchased from some key suppliers of the United States and Japan. If such supplierssignificantly change the prices for such components, or are unable to supply suchcomponents in a timely manner with both quality and quantity guaranteed, or fall intodifficulties in operation, or are unable to supply such components in a normal manner dueto trade dispute between the relevant countries, COVID-19 or any other reason, it may havean adverse effect on our production and operation.
Risk of impairment of inventoriesOur inventories mainly comprise raw materials and goods in stock. As of the end ofthe reporting period, the carrying amount of our inventories was RMB 403 million. If anysignificant change in the competition pattern of the industry, material innovation in laserdisplay technology and products or the change in the macro environment results in a largequantity of unsalable products, the recoverable amount of the inventories will be lower thantheir carrying amount. The impairment of inventories will have a negative effect on ourearnings.
Risk of IP litigationIP protection and management includes protection of our proprietary and coretechnologies, and prevention of infringement on third-party IP. On the one hand, theprocess of patent application often lasts a long time and requires continuous and hugeinvestment. If any proprietary IP in the process of patent application is infringed by anythird party, it may have an adverse effect on our production and operation. On the otherhand, due to the increasingly fierce competition in the industry, many manufacturers wish
to gain competitive advantages through developing core laser phosphor display technology.If we fail to effectively prevent infringement on our proprietary IP, or inadvertentlyinfringe on any IP of others during the development of products, we may face IP litigationsor disputes, which may have an adverse effect on our business development and financialcondition.Risk of increasingly fierce market competitionLaser display is a new and thriving field in the display device industry. A lot ofinternational and domestic companies have entered the field, further heating up the marketcompetition. If we cannot maintain our competitive advantages in technology, product, cost,service and other areas, or the competitors combine their advantages and resources throughacquisition and merger, or the top technology companies in the world increase theirinvestment in the field of laser display, we may face the risks of decrease in the amount orgrowth rate of operating income, gross margin, profitability and market share.Risk of macro-environmentThanks to the high efficiency and quick response of the Chinese government,COVID-19 was under proper control in China, and cinemas reopened gradually from July
20. However, COVID-19 is still very serious throughout the rest of the world. In addition,
the deterioration of the relationship between China and the United States created moreuncertainty in the global economy. If the global economic declines continuously, resultingin less consumer demands, our product lines will be affected to different degrees.Risk of loss on external investmentsWe attempt to expand our scale of operation through merger, acquisition or otherwiseaccording to the development situation of the industry, to continuously improve our overallcompetitiveness. If the environments or policies in respect of the industry in which theinvestee operates undergo any material change, or the technological level of the investeefalls short of our expectation, or the operating performance of the investee decreasessharply due to poor management, the returns on investment in the investee may fall short ofexpectation and we may need to recognize an impairment loss on the long-term equityinvestment. If we fail to achieve a synergy effect through acquisition of the investee, ourstrategic plan may be unable to be implemented as scheduled.III.Main business activities during the reporting periodPlease refer to “I. Discussion and analysis of business situations” in this section for details.
(I) Analysis of main business1 Analysis of changes in the lines of financial statements
Unit: Yuan Currency: RMBItem Amount of the current
period
Amount of the prior
period
% ChangeOperating income 716,025,207.34
853,356,964.84
-16.09
Operating costs 529,787,789.94
511,757,903.12
3.52
Sales expenses 50,833,894.50
60,585,489.84
-16.10
Administration expenses 77,813,657.09
58,777,738.22
32.39
Financial expenses 8,037,691.04
17,357,639.69
-53.69
R&D expenses 87,295,450.75
89,309,489.80
-2.26
Net cash flow from operatingactivities
63,006,061.80
-14,543,413.52
N/A
Net cash flows from investmentactivities
-92,315,802.97
-18,809,408.04
N/A
Net cash flows from financingactivities
-115,291,912.69
79,108,521.49
-245.74Description of reasons for changes in the operating income: The decrease in the operatingincome by 16.09% year on year was primarily due to the shut-down of cinemas under theimpact of COVID-19, leading to the decrease of the Company’s cinema light source servicesand sales; meanwhile, the decrease in demand both in and outside of China under the impactof COVID-19 also affected the expansion of large venue, business education, and otherTo-B operations.Description of reasons for changes in the sales expenses: The decrease in the salesexpenses by 16.10% year on year was primarily due to the intensified expense controlimplemented by the Company under the impact of COVID-19, which reduced the expendituresin remuneration, travel expenses, and entertainment expenses relating to sales personnel,and the marketing and advertising expenses.Description of reasons for changes in the administration expenses: The increase in theadministrative expenses by 32.39% year on year was primarily due to the increase inshare-based payment and service fees relating to litigations during the period.Description of reasons for changes in the financial expenses: The decrease in thefinancial expenses by 53.69% year on year was primarily due to the reduction of long-termloans of the Company and the reduced capital costs.Description of reasons for changes in the R&D expenses: The R&D expenses decreased by
2.26% year on year, which were almost same as the prior period. The main reasons were
the stable R&D team and slightly increased depreciation and amortization, which were setoff by the slight decrease in material consumed in R&D and third-party service and testduring the period.Description of reasons for changes in the net cash flows from operating activities: The
increase in the net cash flows from operation activities was primarily due to the increasedsettlement by using notes, which reduced the needs of cash payment for procurement, andthe decrease in taxes paid given the decline in the overall income and profit.Description of reasons for changes in the net cash flows from investment activities: Thechange was primarily caused by the buy-back of financial products and differences inredemption amounts during the period.Description of reasons for changes in the net cash flows from financing activities: Thenet cash flows from financing activities changed from net inflows to net outflows, whichwas primarily due to the reduction of new loans year on year because the Company graduallyreduced long-term loans bearing high interest rates.2 Others
(1) DetaileddescriptionofmajorchangesintheprofitcompositionorprofitsourcesoftheCompany
□ Applicable√ N/A
(2) Others
□ Applicable√ N/A
(II) Explanation about material change in profit due to non-main business
□ Applicable√ N/A
(III) Analysis of assets and liabilities
√ Applicable□ N/A
1. Statusofassetsandliabilities
Unit: YuanItem
Balance at the end
of the period
% of total assetsat the end of theperiod
Balance at the endof the prior periodlast year
% of totalassets at theend of the priorperiod last year
% Change RemarkCash and bankbalances
729,447,665.39 23.66522,897,380.6523.72 39.50
Primarily due to the increase in theworking capital of the CompanyHeld-for-tradingfinancial assets
495,000,000.00 16.06N/A
Primarily due to the purchase of wealthmanagement products by the CompanyContract assets 3,914,909.70 0.13N/A
Primarily due to the implementation ofnew standard on incomes, which lead tochanges in the items presentedOther currentassets
35,547,978.31 1.1564,705,623.812.93-45.06Primarily due to the decrease in the input
VAT to be deductedLong-term equityinvestments
268,154,993.87 8.70134,030,375.316.08100.07
Primarily due to the investment in GDC
and adjustment of gains/losses on
long-term equity investment recognized
during this periodConstruction inprogress
30,992,866.46 1.0119,921,502.98 0.9055.57
Primarily due to the increase in the
investment for the construction in
progress of the headquarters building of
Appotronics during this periodLong-termprepaid expenses
14,996,204.71 0.49
4,288,337.270.19249.70
Primarily due to the increase in
decoration expenses of newly leased
propertiesShort-termborrowings
115,636,028.30 3.75242,000,000.00 10.98 -52.22
Primarily due to the decrease of
short-term borrowings of the CompanyNotes payable 126,525,026.22 4.1031,926,388.581.45296.30
Primarily due to the increase in payment
by bank's acceptance bills for
procurement during this period
Contract liabilities19,442,085.20 0.63N/A
Primarily due to the implementation ofnew standard on incomes, which lead tochanges in the items presentedEmployee benefitspayable
16,524,638.79 0.5433,990,627.071.54 -51.38
Primarily due to the decrease in thenumber of staff during the period, leadingto reduced bonuses and remunerationTaxes payable 8,453,167.47 0.2729,022,599.441.32-70.87
Primarily due to the decreased paymentof enterprise income tax for the previousyear and the decline in taxes payable inthe current periodOther payables 42,106,615.24 1.37187,575,802.838.51-77.55
Primarily the land-transferring fees notpaid by the end of the prior period lastyearNon-currentliabilities duewithin one year
144,769,488.72 4.7091,354,110.004.1458.47
Primarily due to the increase in thelong-term borrowings due within oneyearOther currentliabilities
1,667,826.54 0.05N/A
Primarily due to the implementation ofnew standard on incomes, and the taxescorresponding to contract liabilitiesLong-termborrowings
79,892,744.86 2.59322,571,733.3014.63-75.23
Primarily due to the transfer of long-termborrowings to non-current liabilities duewithin one yearProvisions 33,664,528.96 1.0913,936,139.890.63141.56
Primarily due to the provision of “threeguarantee” service expenses that have notbe actually incurredNo other description.
2. Encumbrancesonassetsasoftheendofthereportingperiod
√ Applicable□ N/A
Item Amount ReasonOther cash and bank balances -security deposit
23,151,615.78Security deposit for notes and
letters of creditBank deposits - frozen funds 20,000,000.00Funds frozen in connection with
litigationsNote: As of the date of this report, among the frozen funds stated above, RMB 20 million has beenreleased.
3. Otherinformation
□ Applicable√ N/A
(IV) Analysis of investments
1. Overallanalysisofexternalequityinvestments
√ Applicable□ N/A
At the end of the reporting period, the Company holds the long-term equity investment of RMB
268.1550 million, RMB 128.6206 million more than the opening amount, which is primarily due to the
additional investment in GDC Technology Limited (British Virgin Islands).
(1) Materialequityinvestments
√ Applicable□ N/A
In the twentieth session of the First Board of Directors held on December 6, 2019, the Proposal onProposed Additional Capital Contribution to the Wholly-owned Subsidiary and Foreign Investments inGDC was discussed and approved, according to which it was agreed to make additional capitalcontribution of USD 18.2 million to the Company’s wholly-owned subsidiary APPOTRONICS HONGKONG LIMITED for acquisition of 36% shares of GDC Technology Limited (British Virgin Islands).Please refer to the Announcement No. 2019-029 issued by the Company on www.sse.com.cn and thedesignated media for information disclosure on December 7, 2019. In March 2020, the Companycompleted the approval and filing procedures for overseas investments by National Development andReform Commission and Ministry of Commerce. After meeting the precedent closing conditions of thisacquisition, on April 9, 2020, the Company paid the total consideration of approximately USD 18.11million by its own funds. During the reporting period, the Company holds 36% equity interests in GDC,namely, 93,071,822 shares of GDC.According to the report from KPMG, the net after-tax profit after deduction of non-operatinggains/losses realized by GDC in 2019 exceeded the promised performance covenant, hence completedthe performance covenant for 2019.
(2) Materialnon‐equityinvestments
□ Applicable√ N/A
(3) Financialassetsatfairvalue
√ Applicable□ N/A
As of June 30, 2020, the balance of held-for-trading financial assets was RMB 495,000,000.00,which was structured deposits; the balance of investment in other equity instruments was RMB11,975,419.38, which was investment in equity instruments not held for trading. The change in fair valueof such financial assets was RMB 0 in the reporting period.
(V) Sale of material assets and equities
□ Applicable√ N/A
(VI) Analysis of major investees
√ Applicable□ N/A
Unit: In RMB 0’000 RMBCompany
Main business
Registered
capital
Shareho
ldingpercenta
ge
Total assets Net assets
Operating
income
Net profitCINEAPPO
Provision ofcinema laser lightsource service andsales of projectors
10,000.0055.20%89,516.0434,032.987,852.89 -3,463.84Fengmi
R&D and sale ofhousehold displayproducts
5,000.0055.00%43,183.20-3,907.3739,633.59 -1,041.86AppotronicsHK
R&D and sale oflaser light source 16,357.75
100.00
%
40,989.2135,550.597,300.72 -300.61
(VII) Structured entities controlled by the Company
□ Applicable√ N/A
IV. Other disclosures(I) Warningoftheestimatethattheaccumulatednetprofitsfromthebeginningoftheyeartothe
endofthenextreportingperiodwillbenegativeorwillchangesignificantlycomparingwiththesameperiodofthepreviousyear,anddescription
√ Applicable□ N/A
Due to the impact of this epidemic, businesses in the movie industry where the Company's cinemalight source service belongs have also suspended, causing the Company stops its cinema servicebusiness. Meanwhile, the shrink of consumption demand as the result of the macro environment has alsoaffected the Company's other businesses to a certain extent. As GDC invested by the Company belongsto the cinema projection equipment industry, it is also affected by the discontinued operation of cinemas,so that it may fail to achieve the expected results, which will increase the Company’s externalinvestment risks. Therefore, the Company is exposed to the risk that the Company's performance fromthe beginning of the year to the end of the next reporting period will be lower than that of the sameperiod of the previous year.
(II) Otherdisclosures
□ Applicable√ N/A
Section V. Significant MattersI. General meetings of shareholders held
Session Date of meeting
Reference to resolutionspublished on thedesignated website
Date of disclosure ofresolutionsAnnual general meetingof shareholders in 2019
May 22, 2020 www.sse.com.cn May 23, 2020
Explanation about the general meetings of shareholders
□ Applicable√ N/A
II. Proposals for profit distribution and capitalization of the capital reserve(I) Profit distribution proposal or proposal for capitalization of capital reserve during thereporting periodWhether to implement profit distribution orcapitalization of capital reserve
NoNumber of bonus shares distributed per 10 shares 0Cash dividends distributed per 10 shares (inclusiveof tax)
Number of shares distributed out of the capitalreserve
Description of the proposal for profit distribution on ordinary shares and capitalization of the capital
reserveNone
III. Fulfillment of covenants(I) Covenants made by the actual controller, shareholders, affiliates and acquirer of the
Company, the Company itself and other related parties during the reporting period or theoutstanding covenants made by them in the prior periods
√ Applicable□ N/A
Background ofcovenant
CovenantType
Covenantor
CovenantContent
Validityperiod ofcovenant
Whetherthere’s atimelimit forthefulfillment of thecovenant
Whether thecovenant hasbeenstrictlyfulfilled ontime
Reasonforfailure tofulfillthecovenanton time(ifapplicable)
Actionplan iffailingtofulfillthecovenant ontime
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby thecontrollingshareholderregardingrestrictionon the saleof sharesheld by
Note 1 36 months
aftercompletion of theIPO andtheextendedperiodstated
Yes Yes N/A N/A
him,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
below
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theactualcontrollerregardingrestrictionon the saleof sharesheld byhim,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 2 36 months
aftercompletion of theIPO andtheextendedperiodstatedbelow,and 6monthsaftertermination ofemployment withtheCompany
Yes Yes N/A N/A
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theconcertparties ofthe actualcontrollerregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention to
Note 3 36 months
aftercompletion of theIPO andtheextendedperiodstatedbelow
Yes Yes N/A N/A
hold anddispose ofshares andotherissues
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby thedirectorsregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 4 12 months
aftercompletion of theIPO andtheextendedperiodstatedbelow
Yes Yes N/A N/A
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby thesupervisorsregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 5 12 months
aftercompletion of theIPO
Yes Yes N/A N/A
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby HU Fei,as a seniorofficer andmember ofkeytechnicalstaff,
Note 6 12 months
aftercompletion of theIPO andtheextendedperiod
Yes Yes N/A N/A
regardingrestrictionon the saleof sharesheld byhim,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
statedbelow,and 6monthsaftertermination ofemployment withtheCompany
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theseniorofficersBOLianming,WU Bin,LI Lu,ZHAORuijin andXIAOYangjianregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 7 12 months
aftercompletion of theIPO andtheextendedperiodstatedbelow
Yes Yes N/A N/A
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby the keytechnicalstaff YUXin, WUXiliang,WANG
Note 8 12 months
aftercompletion of theIPO andlisting ofstock and
Yes Yes N/A N/A
Lin andGUOZuqiangregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
theextendedperiodstatedbelow
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theholders ofmore than5% sharesregardingrestrictionon the saleof sharesheld bythem,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 9 12 months
aftercompletion of theIPO andlisting ofstock
Yes Yes N/A N/A
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theothershareholders regardingrestrictionon the saleof sharesheld bythem,voluntary
Note 1012 months
aftercompletion of theIPO andlisting ofstock
Yes Yes N/A N/A
lock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Covenantrelating toIPO
Restriction on thesale ofshares
Covenantby theseniorofficersand keyemployeesparticipating in thestrategicallotment,LI Yi, BOLianming,WU Bin,LI Lu,GAOLijing,CHENXuxiang,LAIYongsaiand GAOXiaohong,regardingrestrictionon the saleof sharesheld byhim,voluntarylock-up ofsuchshares,extensionof lock-upperiod,intention tohold anddispose ofshares andotherissues
Note 11At least
12 monthsaftercompletion of theIPO andlisting ofstock
Yes Yes N/A N/A
Covenantrelating toIPO
Others Issuer’s
plan forstabilizingthe
Note 1236 months
aftercompletion of the
Yes Yes N/A N/A
Company’sstock priceandcovenantregardingsharerepurchasemeasureswithinthree yearsafter thelisting
IPO andlisting ofstock
Covenantrelating toIPO
Others Controlling
shareholderand theactualcontroller’splan forstabilizingtheCompany’sstock priceandcovenantregardingsharerepurchasemeasureswithinthree yearsafter thelisting
Note 1336 months
aftercompletion of theIPO andlisting ofstock
Yes Yes N/A N/A
Covenantrelating toIPO
Others Directors
and seniorofficers’plan forstabilizingtheCompany’sstock priceandcovenantregardingsharerepurchasemeasureswithinthree yearsafter thelisting
Note 1436 months
aftercompletion of theIPO andlisting ofstock
Yes Yes N/A N/A
Covenantrelating toIPO
Others Issuer’s
covenantregardingmeasuresagainstfraud inIPO
Note 15Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Controlling
shareholder, actualcontrollerand theirconcertparties’covenantregardingmeasuresagainstfraud inIPO
Note 16Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Directors,
supervisorsand seniorofficers’covenantregardingmeasuresagainstfraud inIPO
Note 17Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Issuer’s
covenantregardingremedialmeasuresfor dilutedearnings inthe currentperiod
Note 18Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Controlling
shareholder, actualcontrollerand theirconcertparties’covenantregardingremedialmeasuresfor dilutedearnings inthe currentperiod
Note 19Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Directors,
supervisorsand seniorofficers’covenantregardingremedialmeasuresfor dilutedearnings in
Note 20Term of
office
No Yes N/A N/A
the currentperiodCovenantrelating toIPO
Others Issuer’s
covenantregardingprofitdistributionpolicy
Note 21Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Issuer’s
covenantregardingrestraintmeasuresandliability forcompensation in theevent offailure tofulfill itscovenants
Note 22Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Controlling
shareholder, actualcontrollerand theirconcertparties’covenantregardingrestraintmeasuresandliability forcompensation in theevent offailure tofulfill theircovenants
Note 23Permanen
t
No Yes N/A N/A
Covenantrelating toIPO
Others Directors,
supervisorsand seniorofficers’covenantregardingrestraintmeasuresandliability forcompensation in theevent offailure tofulfill theircovenants
Note 24Term of
office
No Yes N/A N/A
Covenant Resolve Controlling Note 25PermanenNo Yes N/A N/A
relating toIPO
horizontalcompetition issues
shareholder’s covenantonavoidinghorizontalcompetition andregulatingandreducingrelated-partytransactions
t
Resolverelated-partytransaction issues
Actualcontroller’scovenantonavoidinghorizontalcompetition andregulatingandreducingrelated-partytransactions
Note 26Permanen
t
No Yes N/A N/A
Covenantrelated toshareincentives
Others Covenant
by thegrantee ofshareincentivesregardinginformationdisclosuredocuments
Note 27Permanen
t
No Yes N/A N/A
Others Company’s
covenantonrefrainingfromprovidingfinancialassistance
Note 28Permanen
t
No Yes N/A N/A
Note 1:
Appotronics Holdings, as the controlling shareholder of the Company, hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, we undertake:
(1) within 36 months after completion of the IPO and the extended period stated below (“Lock-up
Period”), not to transfer or appoint any other person to manage the shares held by us in the Company
directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request theCompany to repurchase such Pre-IPO Shares; and
(2) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange and other business rules of the ShanghaiStock Exchange regarding share transfer by the controlling shareholder and the actual controller of alisted company.The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or isunder common control with the transferor within 12 months after completion of the IPO.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six monthsafter completion of the IPO, the Lock-up Period for the shares held by us in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if we dispose of any shares held by us in the Company, we
will do so in strict accordance with the applicable laws, rules, regulations and normative documents,through call auction on the secondary market, private transfer, allotment, block trade or otherwise.
4. After the expiration of restriction on the sale of shares, if we dispose of any Pre-IPO Shares, we will
ensure that the Company continues to operate stably. If we transfer our control over the Company, wewill ensure that such transfer is conducted on an arm’s length basis, without prejudice to the legitimaterights and interests of the Company and other shareholders. We are free from the followingcircumstances upon the transfer of our control over the Company:
(1) any illegal occupation by us of the funds of the Company;
(2) any obligation owed by me to the Company’s debt or any outstanding guarantee offered by the
Company for me;
(3) any outstanding covenant made by us to the Company or any other shareholder; or
(4) any other circumstance on our part that has a material adverse effect on the interests of the Company
or the minority shareholders.
5. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve or rights issue by the Company during theperiod from the date of listing of the Company’s stock to the date of such disposal pursuant to theapplicable rules of the Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years afterthe expiration of the Lock-up Period, the selling price shall be determined according to the market priceof the Company’s stock then.
6. We will strictly comply with the applicable laws, rules, regulations and normative documents, and
regulatory requirements, and will not dispose of any shares held by us in the Company during theLock-up Period. After the expiration of the Lock-up Period, we will formulate the share disposal plan ina prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, taking
into consideration the situations of the stock market, movement of the Company’s stock price, and therelevant public information, subject to the applicable laws, rules, regulations and normative documents.
7. If we dispose of any shares held by us in the Company within two years after the expiration of the
Lock-up Period, we will do so in accordance with the provisions of the China Securities RegulatoryCommission and the Shanghai Stock Exchange regarding disposal of shares by a shareholder and therelevant information disclosure.
8. If the Company meets the criteria for delisting due to any serious violation as set forth below, we will
not dispose of any shares held by us in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
9. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a shareholder.
10. We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 2：
LI Yi, as the actual controller of the Company, hereby undertakes:
“1. With respect to the shares directly or indirectly held by me in the Company, I undertake:
(1) within 36 months after completion of the IPO and the extended period stated below, and 6 months
after termination of my employment with the Company (“Lock-up Period”), not to transfer or appointany other person to manage the shares held by me in the Company directly or indirectly issued prior tothe IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase such Pre-IPOShares;The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or isunder common control with the transferor within 12 months after completion of the IPO;
(2) within four years after the expiration of restriction on the sale of Pre-IPO shares, not to transfer more
than 25% of the total Pre-IPO Shares held by me in aggregate every year;
(3) so long as I remain a director of the Company, not to transfer more than 25% of the total shares held
by me in the Company;
(4) within half a year after I retire from my post as director of the Company, not to transfer any shares
held by me in the Company; and
(5) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange and other business rules of the ShanghaiStock Exchange regarding share transfer by the actual controller, directors or key technical staff of alisted company.I will comply with foregoing covenants notwithstanding any change in my shareholding in the Companydue to any equity distribution made by the Company or otherwise.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six monthsafter completion of the IPO, the Lock-up Period for the shares held by me in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if I dispose of any shares held by me in the Company, I
will do so in strict accordance with the applicable laws, rules, regulations and normative documents,through call auction on the secondary market, private transfer, allotment, block trade or otherwise.
4. After the expiration of restriction on the sale of shares, if I dispose of any Pre-IPO Shares, I will
ensure that the Company continues to operate stably. If I transfer my control over the Company, I willensure that such transfer is conducted on an arm’s length basis, without prejudice to the legitimate rightsand interests of the Company and other shareholders. I am free from the following circumstances uponthe transfer of my control over the Company:
(1) any illegal occupation by us of the funds of the Company;
(2) any obligation owed by me to the Company’s debt or any outstanding guarantee offered by the
Company for me;
(3) any outstanding covenant made by us to the Company or any other shareholder; or
(4) any other circumstance on our part that has a material adverse effect on the interests of the Company
or the minority shareholders.
5. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve or rights issue by the Company during theperiod from the date of listing of the Company’s stock to the date of such disposal pursuant to theapplicable rules of the Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years afterthe expiration of the Lock-up Period, the selling price shall be determined according to the market priceof the Company’s stock then.
6. I will strictly comply with the applicable laws, rules, regulations and normative documents, and
regulatory requirements, and will not dispose of any shares held by me in the Company during theLock-up Period. After the expiration of the Lock-up Period, I will formulate the share disposal plan in aprudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, taking into
consideration the situations of the stock market, movement of the Company’s stock price, and therelevant public information, subject to the applicable laws, rules, regulations and normative documents.
7. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company).
8. If I dispose of any shares held by me in the Company within two years after the expiration of the
Lock-up Period, I will do so in accordance with the provisions of the China Securities RegulatoryCommission and the Shanghai Stock Exchange regarding disposal of shares by the actual controller,directors or key technical staff and the relevant information disclosure.
9. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will
not dispose of any shares held by me in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
10. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of the actual controller, directors and key technical staff.
11. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 3：
Each of the concert parties of the actual controller of the Company hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, we undertake:
(1) within 36 months after completion of the IPO and the extended period stated below (“Lock-up
Period”), not to transfer or appoint any other person to manage the shares held by us in the Companydirectly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request theCompany to repurchase such Pre-IPO Shares; and
(2) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange and other business rules of the ShanghaiStock Exchange regarding share transfer by the controlling shareholder and the actual controller of alisted company.
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or isunder common control with the transferor within 12 months after completion of the IPO.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six monthsafter completion of the IPO, the Lock-up Period for the shares held by us in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if we dispose of any shares held by us in the Company, we
will do so in strict accordance with the applicable laws, rules, regulations and normative documents,through call auction on the secondary market, private transfer, allotment, block trade or otherwise.
4. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve or rights issue by the Company during theperiod from the date of listing of the Company’s stock to the date of such disposal pursuant to theapplicable rules of the Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years afterthe expiration of the Lock-up Period, the selling price shall be determined according to the market priceof the Company’s stock then.
5. We will strictly comply with the applicable laws, rules, regulations and normative documents, and
regulatory requirements, and will not dispose of any shares held by us in the Company during theLock-up Period. After the expiration of the Lock-up Period, we will formulate the share disposal plan ina prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, takinginto consideration the situations of the stock market, movement of the Company’s stock price, and therelevant public information, subject to the applicable laws, rules, regulations and normative documents.
6. If we dispose of any shares held by us in the Company within two years after the expiration of the
Lock-up Period, we will do so in accordance with the provisions of the China Securities RegulatoryCommission and the Shanghai Stock Exchange regarding disposal of shares by a shareholder and therelevant information disclosure.
7. If the Company meets the criteria for delisting due to any serious violation as set forth below, we will
not dispose of any shares held by us in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
8. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a shareholder.
9. We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 4：
Each director of the Company, who is also a shareholder, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months aftercompletion of the IPO and the extended period stated below (“Lock-up Period”), I will not transfer orappoint any other person to manage the shares held by me in the Company directly or indirectly issuedprior to the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase suchPre-IPO Shares.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six monthsafter completion of the IPO, the Lock-up Period for the shares held by me in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company).
4. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve, issuance of new shares or rights issue bythe Company during the period from the date of listing of the Company’s stock to the date of suchdisposal pursuant to the applicable rules of the Shanghai Stock Exchange. If the Company hasdistributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue duringthe period from the date of listing of the Company’s stock to the date of such disposal, the minimumselling price and number of shares salable shall be adjusted accordingly.
5. If I retire from my post as director of the Company prior to the expiration of my term of office, I will
comply with the following restrictive provisions:
(1) so long as I remain a director of the Company, I will not transfer more than 25% of the total shares
held by me in the Company; and
(2) within half a year after I retire from my post as director of the Company, I will not transfer any
shares held by me in the Company.I will comply with foregoing covenants notwithstanding any change in my shareholding in the Companydue to any equity distribution made by the Company or otherwise.
6. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will
not dispose of any shares held by me in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
7. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effect.
8. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in
the Company, I will strictly comply with, and cooperate with the Company to comply with, allapplicable information disclosure provisions and requirements regarding the dealings in the Company’sshares.I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connectiontherewith. If I fail to perform my duties and obligations under the covenants set forth above, I willindemnify the Company and other shareholders or stakeholders of the Company for the losses arisingtherefrom according to law, and surrender my gains from illegal disposal of the Company’s shares (ifany) to the Company. ”
Note 5:
Each supervisor of the Company, who is also a shareholder, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months aftercompletion of the IPO (“Lock-up Period”), I will not transfer or appoint any other person to manage theshares held by me in the Company directly or indirectly issued prior to the IPO of the Company(“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company).
3. If I retire from my post as supervisor of the Company prior to the expiration of my term of office, I
will comply with the following restrictive provisions:
(1) so long as I remain a supervisor of the Company, I will not transfer more than 25% of the total shares
held by me in the Company; and
(2) within half a year after I retire from my post as supervisor of the Company, I will not transfer any
shares held by me in the Company.I will comply with foregoing covenants notwithstanding any change in my shareholding in the Companydue to any equity distribution made by the Company or otherwise.
4. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will
not dispose of any shares held by me in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
5. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a supervisor.
6. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in
the Company, I will strictly comply with, and cooperate with the Company to comply with, allapplicable information disclosure provisions and requirements regarding the dealings in the Company’sshares.
7. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith. ”
Note 6:
HU Fei, as the deputy general manager and member of key technical staff of the Company, herebycovenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, I undertake:
(1) within 12 months after listing of the Company’s stock and the extended period stated below, and 6
months after termination of my employment with the Company (“Lock-up Period”), not to transfer orappoint any other person to manage the shares held by me in the Company directly or indirectly issuedprior to the IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase suchPre-IPO Shares;
(2) within four years after the expiration of restriction on the sale of Pre-IPO shares, not to transfer more
than 25% of the total Pre-IPO Shares held by me in aggregate every year;
(3) so long as I remain a senior officer of the Company, not to transfer more than 25% of the total shares
held by me in the Company;
(4) within half a year after I retire from my post as senior officer of the Company, not to transfer any
shares held by me in the Company; and
(5) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange and other business rules of the ShanghaiStock Exchange.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six monthsafter completion of the IPO, the Lock-up Period for the shares held by me in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve, issuance of new shares or rights issue bythe Company during the period from the date of listing of the Company’s stock to the date of suchdisposal pursuant to the applicable rules of the Shanghai Stock Exchange. If the Company hasdistributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue duringthe period from the date of listing of the Company’s stock to the date of such disposal, the minimumselling price and number of shares salable shall be adjusted accordingly.
4. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will
not dispose of any shares held by me in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
5. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effect.
6. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company). If I acquire any additionalshares of the Company or become eligible to sell any shares held by me in the Company, I will strictlycomply with, and cooperate with the Company to comply with, all applicable information disclosureprovisions and requirements regarding the dealings in the Company’s shares.
7. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith. ”
Note 7:
Each of the senior officers of the Company other than HU Fei, who is also a shareholder, herebycovenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months aftercompletion of the IPO and the extended period stated below (“Lock-up Period”), I will not transfer orappoint any other person to manage the shares held by me in the Company directly or indirectly issuedprior to the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase suchPre-IPO Shares.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20
consecutive trading days within six months after completion of the IPO, or on the date that is six months
after completion of the IPO, the Lock-up Period for the shares held by me in the Company shall beextended by an additional six months after the expiration of the initial Lock-up Period.
3. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company).
4. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve, issuance of new shares or rights issue bythe Company during the period from the date of listing of the Company’s stock to the date of suchdisposal pursuant to the applicable rules of the Shanghai Stock Exchange. If the Company hasdistributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue duringthe period from the date of listing of the Company’s stock to the date of such disposal, the minimumselling price and number of shares salable shall be adjusted accordingly.
5. If I retire from my post as senior officer of the Company prior to the expiration of my term of office, I
will comply with the following restrictive provisions:
(1) so long as I remain a director of the Company, I will not transfer more than 25% of the total shares
held by me in the Company; and
(2) within half a year after I retire from my post as director of the Company, I will not transfer any
shares held by me in the Company.I will comply with foregoing covenants notwithstanding any change in my shareholding in the Companydue to any equity distribution made by the Company or otherwise.
6. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will
not dispose of any shares held by me in the Company from the date that the relevant administrationpenalty or judicial judgment is imposed or made, till the date of delisting of the Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information
disclosure or otherwise seriously disrupted the order of stock market, as a result of which its listingstatus is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security,
ecological security, production safety or public health, and such violation is of a serious nature, hasseriously damaged the national interest or public interest, or seriously undermined its listing status.
7. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effect.
8. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in
the Company, I will strictly comply with, and cooperate with the Company to comply with, allapplicable information disclosure provisions and requirements regarding the dealings in the Company’sshares.
9. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith. ”
Note 8:
Each of the members of key technical staff of the Company other than LI Yi and HU Fei, who is also ashareholder, hereby covenants that:
“1. Within 12 months after completion of the IPO and listing of stock (“the IPO”) and the extendedperiod stated below (“Lock-up Period”), I will not transfer or appoint any other person to manage theshares held by me in the Company directly or indirectly issued prior to the IPO of the Company(“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. Within four years after the expiration of the Lock-up Period, I will not transfer more than 25% of the
total Pre-IPO Shares held by me in aggregate every year. If the Company has distributed any dividendsor bonus shares, capitalized the capital reserve or made any rights issue during such period, the numberof shares salable shall be adjusted accordingly.
3. During my employment with the Company, I will truthfully report the shares held by me in the
Company and changes therein to the Company on a regular basis (other than changes arising from anydividend distribution or capitalization of the capital reserve by the Company). If I acquire any additionalshares of the Company or become eligible to sell any shares held by me in the Company, I will strictlycomply with, and cooperate with the Company to comply with, all applicable information disclosureprovisions and requirements regarding the dealings in the Company’s shares.
4. I will strictly comply with the applicable laws and regulations, the Rules Governing the Listing of
Stocks on the Sci-tech Innovation Board of the Shanghai Stock Exchange and other business rules of theShanghai Stock Exchange, and the Articles of Association of Appotronics Corporation Limited in effect.
5. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection
therewith. ”
Note 9：
Each of the holders of more than 5% of the shares of the issuer hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, within 12 months aftercompletion of the IPO (“Lock-up Period”), we will not transfer or appoint any other person to managethe shares held by us in the Company directly or indirectly issued prior to the IPO of the Company(“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. After the expiration of the Lock-up Period, if we dispose of any shares held by me/us in the Company,
we will do so in strict accordance with the applicable laws, rules, regulations and normative documents,through call auction on the secondary market, private transfer, allotment, block trade or otherwise.
3. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the
selling price shall not be lower than the offering price of the IPO, as adjusted for any distribution ofdividends or bonus shares, capitalization of the capital reserve or rights issue by the Company during theperiod from the date of listing of the Company’s stock to the date of such disposal pursuant to theapplicable rules of the Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years after
the expiration of the Lock-up Period, the selling price shall be determined according to the market priceof the Company’s stock then.
4. We will strictly comply with the applicable laws, rules, regulations and normative documents, and
regulatory requirements, and will not dispose of any shares held by us in the Company during theLock-up Period. After the expiration of the Lock-up Period, we will formulate the share disposal plan ina prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, takinginto consideration the situations of the stock market, movement of the Company’s stock price, and thepublic information, subject to the releavnt laws, rules, regulations and normative documents.
5. If we dispose of any shares held by us in the Company within two years after the expiration of the
Lock-up Period, we will do so in accordance with the provisions of the China Securities RegulatoryCommission and the Shanghai Stock Exchange regarding disposal of shares by a shareholder and therelevant information disclosure.
6. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a shareholder.We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connectiontherewith. ”
Note 10:
Each of the other corporate shareholders hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, within 12 months aftercompletion of the IPO (“Lock-up Period”), we will not transfer or appoint any other person to managethe shares held by us in the Company directly or indirectly issued prior to the IPO of the Company(“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a shareholder.
3. If we acquire any additional shares of the Company or become eligible to sell any shares held by us in
the Company, we will strictly comply with, and cooperate with the Company to comply with, allapplicable information disclosure provisions and requirements regarding the dealings in the Company’sshares.We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connectiontherewith. ”Each of the other natural-person shareholders hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months aftercompletion of the IPO (“Lock-up Period”), I will not transfer or appoint any other person to manage theshares held by me in the Company directly or indirectly issued prior to the IPO of the Company(“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations
and normative documents, and the Articles of Association of Appotronics Corporation Limited in effectregarding the duties and obligations of a shareholder.
3. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in
the Company, I will strictly comply with, and cooperate with the Company to comply with, allapplicable information disclosure provisions and requirements regarding the dealings in the Company’sshares.I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connectiontherewith. ”
Note 11:
Each of the senior officers and key employees participating in the strategic allotment, namely LI Yi, BOLianming, WU Bin, LI Lu, GAO Lijing, CHEN Xuxiang, LAI Yongsai and GAO Xiaohong, herebycovenants that:
“1. I am the actual holder of the asset management plan, and have not participated in the strategicallotment on behalf of any other investor or appointed any other investor to participate in the strategicallotment on my behalf;
2. I use my own funds to participate in the strategic allotment;
3. I believe in the long-term investment value of the Company, and agree with the asset management
plan to subscribe for the shares available to it through the strategic allotment at such offering price asfinally determined;
4. I agree to accept such number of shares available through the strategic allotment as finally determined
by the issuer and the lead underwriter, subject to the number/amount of share that the asset managementplan undertakes to subscribe for;
5. I will not participate in the online or off-line offering in connection with the IPO of the Company;
6. I will hold the shares acquired through the strategic allotment for a period of not less than 12 months,
calculated from the date of listing of the shares publically offered this time;
7. I will not transfer any shares held by me under the asset management plan during the Lock-up Period
in any manner;
8. There isn’t any illegal benefit transfer between me and the Company or any other stakeholder. ”
Note 12:
The issuer hereby covenants:
“I. Conditions for triggering and stopping the stock price stabilization measures(I) Condition for triggering the measuresIf, within 36 months after completion of the IPO and listing of the Company’s RMB-denominatedordinary shares (A-shares) on the STAR Market (“IPO”), the closing price of the Company’s stock hasbeen lower than its most recently audited net assets per share (as adjusted for any distribution of
dividends or bonus shares, capitalization of the capital reserve, issuance of new shares or rights issue bythe Company) for 20 consecutive trading days (“Trigger Condition” or “Trigger Condition forStabilization of Stock Price”), except for any event of force majeure, the Company and the relatedpersons shall take the following measures to stabilize the Company’s stock price subject to theprovisions of the China Securities Regulatory Commission (“CSRC”) and the Shanghai Stock Exchange(“SSE”) regarding share repurchase, acquisition of additional shares and information disclosure andother applicable provisions:
(1) repurchase of shares by the Company;
(2) acquisition of additional shares of the Company by the controlling shareholder and the actual
controller;
(3) acquisition of additional shares of the Company by the directors and senior officers;
(4) other measures permitted by the applicable laws, rules, regulations and normative documents, and
the CSRC and the SSE.If the Company intends to repurchase shares upon satisfaction of the Trigger Condition, the Companyshall hold a meeting of the Board of Directors within 10 days and a general meeting of shareholderswithin 30 days, to review the specific proposal for stabilizing the stock price and the period forimplementing such proposal, and implement such proposal within five trading days after the same hasbeen approved by the general meeting of shareholders.
(2) Condition for stopping the measures
If, prior to or during the implementation of the stock price stabilization measures, the closing price of theCompany’s stock has been higher than its most recently audited net assets per share for 20 consecutivetrading days, the Company shall stop the stock price stabilization measures to the extent permitted by theapplicable laws, rules, regulations and normative documents.After the stock price stabilization measures have been completed or stopped, if the Trigger Condition issatisfied again, the Company shall implement the stock price stabilization plan again.II. Measures for stabilizing the stock price of the CompanyUpon satisfaction of the Trigger Condition, the Company and its controlling shareholder, actualcontroller, directors and senior officers shall promptly take all or part of the following measures tostabilize the stock price of the Company:
(I) Repurchase of shares by the Company
1. Any share repurchase by the Company for purpose of stabilizing its stock price shall comply with the
Contract Law of the People’s Republic of China, the Securities Law of the People’s Republic of China,the Administrative Measures for Repurchase by the Listed Companies of their Public Shares (Tentative),the Supplementary Provisions on Repurchase by the Listed Companies of their Public Shares throughCall Auction, the Opinion on Supporting Repurchase by the Listed Companies of their Public Shares,the Rules of the Shanghai Stock Exchange for Implementation of Share Repurchase by the ListedCompanies, and other applicable laws, rules, regulations and normative documents.
2. Any share repurchase by the Company for purpose of stabilizing its stock price shall meet the
following conditions:
(1) the Company’s stock has been listed for at least one year;
(2) after the completion of such share repurchase, the Company shall be solvent and have the ability to
continue as a going concern;
(3) after the completion of such share repurchase, the shareholding structure of Company shall continue
to meet the listing conditions; and
(4) such other conditions as may be set forth by the CSRC.
If the Company repurchases shares for purpose of stabilizing its stock price and reduces its registeredcapital accordingly, the Company may do so even if its stock has been listed for less than one year.
3. The share repurchase proposal requires the approval of the shareholders representing more than two
thirds of the total votes present at the general meeting of shareholders. The controlling shareholder andthe actual controller of the Company undertake to vote for such share repurchase proposal.
4. The general meeting of shareholders may authorize the Board of Directors to decide on the share
repurchase proposal, provided that the relevant resolution of the general meeting of shareholders shallspecify the specific powers delegated to the Board of Directors and the delegation period. The resolutionof the Board of Directors on the share repurchase proposal requires the approval of more than two thirdsof the directors present at the meeting of the Board of Directors. The non-independent directors of theCompany undertake to vote for the share repurchase proposal (to the extent that they have the votingpower).
5. After the share repurchase proposal has been approved by the general meeting of shareholders, the
Company shall notify its creditors and submit the relevant documents and go through the applicableapproval or filing procedures with the CSRC, the SSE and other competent authorities according to law, ,and may implement the share repurchase proposal only after the applicable approval, filing, informationdisclosure and other procedures have been completed. If the share repurchase proposal fails to beapproved by the general meeting of shareholders, the Company shall procure the controlling shareholderand the actual controller to perform their obligations to acquire additional shares of the Company aspromised by them.
6. In addition to the requirements of the applicable laws, rules, regulations and normative documents,
any share repurchase by the Company for purpose of stabilizing its stock price shall also comply withthe following provisions:
(1) the Company shall repurchase its shares on the secondary market through call auction or tender offer;
(2) the total amount used by the Company in the share repurchase shall not exceed 80% of its IPO net
proceeds;
(3) the total number of shares repurchased by the Company within 12 consecutive months shall not
exceed 2% of the total shares of the Company as of the end of the preceding year; and
(4) the total amount used by the Company under a share repurchase plan shall not be lower than 5% and
not be more than 10% of its audited net profit attributable to the shareholders of the parent company for
the preceding accounting year, or such other higher ratio may be applied as approved by the Board ofDirectors;In case of any conflict between the provisions of Paragraph (3) and Paragraph (4) above, Paragraph (3)shall prevail.
(5) the Company may use its own funds, proceeds from issuance of preferred shares or bonds, the excess
funds raised through issuance of ordinary shares beyond what is actually required, the surplus funds ofthe projects in which the funds raised invest, the funds raised that have been permanently applied toreplenish working capital according to law, loans from financial institutions and other legal funds torepurchase its shares.
7. The Board of Directors of the Company shall pay close attention to the Company’s capital position,
solvency and ability to continue as a going concern, draw up and implement the share repurchase planprudently, and ensure that the number and amount of the shares repurchased are appropriate for theactual financial condition of the Company.The Company shall establish sound and effective internal controls in respect of share repurchase, drawup the detailed operation plans, prevent insider trading and other unfair transactions, and shall notmanipulate its stock price or make any illegal benefit transfer to any of its directors, supervisors, seniorofficers, controlling shareholder or actual controller through any share repurchase.(II) Acquisition of additional shares of the Company by the controlling shareholder and the actualcontroller
1. Upon satisfaction of the Trigger Condition, if the Company is unable to make share repurchase, the
controlling shareholder and the actual controller shall acquire additional shares of the Company, subjectto the Administrative Measures for the Acquisition of the Listed Companies and other applicable laws,rules, regulations and normative documents, provided that such transaction will not cause theshareholding structure of Company to cease to meet the listing conditions and/or trigger obligation tomake a tender offer by the controlling shareholder.
2. Subject to Paragraph 1 above, the controlling shareholder and the actual controller of the Company
shall, within 10 trading days after satisfaction of the Trigger Condition, notify the Company in writing oftheir plan to acquire additional shares, which shall specify, among others, the scope of number of sharesto be acquired, upper limit of the purchase price and time limit for such acquisition. The Company shallannounce such plan within 3 trading days prior to the implementation of such plan.
3. The controlling shareholder and the actual controller shall acquire additional shares of the Company
on the secondary market through call auction or otherwise legally.
4. The stock price stabilization plan implemented by the controlling shareholder and the actual controller
shall also comply with the following provisions:
(1) the amount used by the controlling shareholder and the actual controller in the acquisition of
additional shares under a single plan shall not be lower than 20% of the aggregate cash dividends (aftertax) received by them from the Company after the listing of the Company;
(2) the total amount used by the controlling shareholder and the actual controller in the acquisition of
additional shares under a single plan or within 12 consecutive months shall not exceed 50% of theaggregate cash dividends (after tax) received by them from the Company after the listing of theCompany;
(3) the total number of additional shares acquired by the controlling shareholder and the actual controller
under a single plan shall not exceed 2% of the total shares of the Company; and
(4) the purchase price paid by the controlling shareholder and the actual controller for the additional
shares shall not exceed 100% of the most recently audited net assets per share of the Company.In case of any conflict between the provisions of Paragraph (1) and Paragraph (3) above, Paragraph (3)shall prevail.
5. The controlling shareholder and the actual controller shall be jointly and severally liable for such
acquisition of additional shares.(III) Acquisition of additional shares of the Company by the directors and senior officers
1. Upon satisfaction of the Trigger Condition, if the Company is unable to make share repurchase, and
the controlling shareholder and the actual controller are unable to acquire additional shares of theCompany, or fail to put forward or implement the plan to acquire additional shares of the Company, thedirectors and senior officers shall acquire additional shares of the Company, subject to theAdministrative Measures for the Acquisition of the Listed Companies, the Management Rules forShareholding by Directors, Supervisors and Senior Officers of Listed Companies in the Companies andChanges in such Shareholding and other applicable laws, rules, regulations and normative documents,provided that such transaction will not cause the shareholding structure of Company to cease to meet thelisting conditions.
2. Subject to Paragraph 1 above, the directors and senior officers of the Company shall, within 10
trading days after satisfaction of the Trigger Condition, notify the Company in writing of their plan toacquire additional shares, which shall specify, among others, the scope of number of shares to beacquired, upper limit of the purchase price and time limit for such acquisition. The Company shallannounce such plan within 3 trading days prior to the implementation of such plan.
3. The stock price stabilization plan implemented by the directors and senior officers shall also comply
with the following provisions:
(1) the amount used by any director or senior officer in the acquisition of additional shares under a single
plan shall not be lower than 20% of the aggregate cash dividends, remunerations and subsidies (in eachcase, if any and after tax) received by such director or senior officer from the Company in the precedingyear;
(2) the total amount used by any director or senior officer in the acquisition of additional shares under a
single plan or within 12 consecutive months shall not exceed 50% of the aggregate cash dividends,remunerations and subsidies (in each case, if any and after tax) received by such director or seniorofficer from the Company in the preceding year; and
(3) the purchase price paid by the directors and senior officers for the additional shares shall not exceed
100% of the most recently audited net assets per share of the Company.
4. The Company shall request each new director or senior officer appointed within three years after
completion of the IPO to sign a letter of undertaking, warranting that he will fulfill the covenants madeby the existing directors and senior officers in the IPO.(IV) Other measures permitted by the applicable laws, rules, regulations and normative documents, andthe CSRC and the SSEThe Company and the related persons may take one or more measures to stabilize the Company’s stockprice according to the situations of the Company and the market, provided that such measures shall betaken for purpose of safeguarding the listing status of the Company and protecting the interests of theCompany and the investors, and comply with the applicable laws, rules, regulations and normativedocuments, and the relevant provisions of the SSE, and shall perform the relevant obligation ofinformation disclosure.III. Restraint mechanisms for stock price stabilization planUpon satisfaction of the Trigger Condition, if the Company or any controlling shareholder, actualcontroller, director or senior officer fails to take the stock price stabilization measures stated above, theCompany and such person shall be bound by the following restraint mechanisms:
1. The Company or such controlling shareholder, actual controller, director or senior officer (as
applicable) shall publicly explain the reason for failure to take the stock price stabilization measures tothe general meeting of shareholders of the Company and on the media for information disclosuredesignated by the CSRC, and apologize to the shareholders of the Company and the investors, and theCompany shall assume the relevant legal liabilities.
2. If any controlling shareholder, actual controller, director or senior officer fails to fulfill his covenant
regarding acquisition of additional shares, the issuer may defer the payment of cash dividends (if any)for the year in which the obligation to acquire additional shares is triggered and the following year and50% of the total remuneration and subsidies for such year payable to him, and prohibit him fromtransferring the shares held by him in the Company, until he has taken and completed the relevant stockprice stabilization measures.
3. The Company shall remind and procure the directors and senior officers newly appointed in the future
to fulfill the covenants made by the existing directors and senior officers in the IPO regarding the stockprice stabilization measures.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares) on the STAR Market. ”
Note 13:
Appotronics Holdings, as the controlling shareholder of the Company, hereby covenants that:
“We will seriously perform our duties in accordance with the requirements of the Plan of AppotronicsCorporation Limited on Stabilizing the Stock Price of the Company if the Stock Price is Lower than the
Net Assets per Share of the Company within Three Years after Completion of the IPO and Listing of theCompany’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure theimplementation of the Plan through the restraint mechanisms set forth therein, to maintain the stability ofthe Company’s stock price and protect the interests of the investors.We will actively support the Company in repurchasing shares according to law, and will not engage inany abuse of rights, insider trading, market manipulation or other illegal acts to the detriment of theinterests of the Company and other shareholders in connection with the share repurchase by theCompany.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”LI Yi, as the actual controller of the Company, hereby covenants that:
“I will seriously perform my duties in accordance with the requirements of the Plan of AppotronicsCorporation Limited on Stabilizing the Stock Price of the Company if the Stock Price is Lower than theNet Assets per Share of the Company within Three Years after Completion of the IPO and Listing of theCompany’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure theimplementation of the Plan through the restraint mechanisms set forth therein, to maintain the stability ofthe Company’s stock price and protect the interests of the investors.I will actively support the Company in repurchasing shares according to law, and will not engage in anyabuse of rights, insider trading, market manipulation or other illegal acts to the detriment of the interestsof the Company and other shareholders in connection with the share repurchase by the Company. I willbe honest, keep my promise, be assiduous in my duties, and safeguard the interests of the Company andthe legitimate rights and interests of the shareholders and creditors of the Company in the sharerepurchase by the Company. I covenant that the share repurchase by the Company will not prejudice theCompany’s solvency and ability to continue as a going concern.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 14:
Each of the directors and senior officers of the Company hereby covenants that:
“I will seriously perform my duties in accordance with the requirements of the Plan of AppotronicsCorporation Limited on Stabilizing the Stock Price of the Company if the Stock Price is Lower than theNet Assets per Share of the Company within Three Years after Completion of the IPO and Listing of theCompany’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure theimplementation of the Plan through the restraint mechanisms set forth therein, to maintain the stability ofthe Company’s stock price and protect the interests of the investors.I will be honest, keep my promise, be assiduous in my duties, and safeguard the interests of theCompany and the legitimate rights and interests of the shareholders and creditors of the Company in the
share repurchase by the Company. I covenant that the share repurchase by the Company will notprejudice the Company’s solvency and ability to continue as a going concern.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 15:
The issuer hereby covenants:
“1. If the competent securities regulatory authority or any other competent authority finds that theCompany’s IPO prospectus contains any misrepresentation or misleading statement or omits anymaterial fact, which has a material and substantial effect on the determination of whether the Companymeets the conditions for IPO and listing set forth in the applicable laws, regulations and normativedocuments, the Company undertakes to take the following measures to repurchase all new shares issuedin the IPO according to law:
(1) subject to the applicable laws, regulations and normative documents, if such event occurs after
completion of the IPO but prior to the listing of the new shares of the Company, within 30 working daysafter the competent securities regulatory authority or any other competent authority makes the relevantdecision, the Company shall repurchase all new shares issued in the IPO from the investors who havesuccessfully subscribed for the new shares on line and the investors who have received the new sharesallotted off the line at the offering price plus interest at the bank deposit rate for the same period; and
(2) subject to the applicable laws, regulations and normative documents, if such event occurs after
completion of the IPO and the listing of the new shares of the Company, within 5 working days after thecompetent securities regulatory authority or any other competent authority makes the relevant decision,the Company shall prepare a share repurchase plan and submit the same to the general meeting ofshareholders for approval, and after the plan has been approved by the general meeting of shareholders,repurchase all new shares issued in the IPO to the extent practicable. The repurchase price shall bedetermined on the basis of the offering price, taking into account the relevant market factors. If theCompany has distributed any dividends or bonus shares, capitalized the capital reserve or made anyrights issue after the listing of the Company, the price and number of shares repurchased shall beadjusted accordingly.
2. If the Company’s IPO prospectus contains any misrepresentation or misleading statement or omits
any material fact, the Company shall indemnify the investors for the losses incurred in dealings in thestock of the Company resulting therefrom in the following manner according to law: after the competentsecurities regulatory authority has found that the Company violated the law and issued an officialdecision on administrative penalty, the Company shall arrange for registration of the investors whoclaim compensation from the Company, and after verifying their qualifications and amount of losses,pay compensation to such investors in a timely manner. ”
Note 16:
The controlling shareholder Appotronics Holdings, the actual controller LI Yi and their concert partieshereby covenant that:
“The Company’s IPO prospectus is free from any misrepresentation, misleading statement or materialomission. If the prospectus contains any misrepresentation or misleading statement or omits any materialfact, which has been found to have a material and substantial effect on the determination of whether theCompany meets the conditions for IPO set forth in the applicable laws, we/I and the related persons willpromptly put forward proposals for compensation and conduct share repurchase according to law, votefor such proposals at the meeting of the Board of Directors or general meeting of shareholders, andindemnify the investors for the losses incurred in dealings in the stock of the Company resultingtherefrom according to law.Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20working days after the competent securities regulatory authority or any other competent authority findsthat the Company’s IPO prospectus contains any misrepresentation or misleading statement or omits anymaterial fact, the procedures for compensating the losses of the investors shall be commenced. Thelosses of the investors shall be determined through consultation with the investors, or in such manner asrequired by the competent securities regulatory authority or judicial authority. ”
Note 17:
Each of the directors, supervisors and senior officers of the Company hereby covenants that:
“The Company’s IPO prospectus is free from any misrepresentation, misleading statement or materialomission. If the prospectus contains any misrepresentation or misleading statement or omits any materialfact, I will indemnify the investors for the losses incurred in dealings in the stock of the Companyresulting therefrom according to law.Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20working days after the competent securities regulatory authority or any other competent authority findsthat the Company’s IPO prospectus contains any misrepresentation or misleading statement or omits anymaterial fact, the procedures for compensating the losses of the investors shall be commenced. Thelosses of the investors shall be determined through consultation with the investors, or in such manner asrequired by the competent securities regulatory authority or judicial authority. ”
Note 18:
The issuer’s covenant regarding remedial measures for diluted earnings in the current period:
“(I) Focus on technology R&D and product innovations, and continuously improve the IP protectionsystemThe Company will focus on technology R&D and product innovations relying on its technology R&Dcapabilities. Since its establishment, the Company has obtained a lot of domestic and foreign patents inrespect of laser display and related fields. In the future, the Company will continue to consolidate andenhance its market competitive advantages through conforming to the development law of the industry,
increasing R&D investments, improving product functions and quality, optimizing product portfolio andother measures. In addition, the Company will continue to improve its IP protection system, apply forpatents in respect of its core technologies throughout the world, reasonably use legal means to protect itsproprietary IP, and promote the establishment of industrial technical standards and the harmonious andhealthy development of the laser display industry.(II) Enhance the building of marketing system and improve profitabilityThe Company will, based on the current marketing system, give full play to the advantages of themulti-level and all-round marketing mode combining online sales with off-line sales, agent mode withdirect sale mode, and sales on the domestic market with exploitation of overseas market, to expand themarket layout, and continuously optimize the sales service system and enhance brand influence relyingon the advantages of technologies and products, to realize synchronous and sound development of thebase and quality of customers. In addition, the Company will actively cultivate and develop overseasmarket, promote its laser display products with proprietary IP in the world based on its leadingtechnologies and outstanding products, and giving full play to the synergy effect with its strategicpartners, to realize the continuous growth of sales and improvement of profitability.(III) Enhance internal controls and team building of talents, and improve management and operationalefficiency in an all-round wayThe Company has established relatively sound internal controls and management system, and willcontinue to improve its management and operation level, revise and improve internal controls, controlmanagement and operating risks, and ensure the continuous and effective implementation of internalcontrols. In addition, the Company will enhance the building of IT system and budget management,control costs and expenses meticulously, improve the use efficiency of funds, and realize reduction ofcosts and improvement of efficiency. The Company will also continuously improve the compensationand incentive mechanisms, recruit outstanding talents, motivate the employees to the maximum extent,and give full play to the employees’ creative power and maximize their potentials. Through suchmeasures, the Company will improve its management and operational efficiency in an all-round way,and realize long-term, steady and healthy development.(IV) Enhance management over the funds raised and strive to yield the desired results as soon aspracticableThe projects in which the funds raised will invest orient on the main business of the Company andcomply with the applicable industrial policies of the country, and after being completed, will improvethe Company’s technological level, increase its production scale and market share, and improve itsprofitability, core competitiveness and sustainability.After completion of the IPO, the Company will strictly manage the use and ensure the full and efficientuse of the funds raised in accordance with the Company Law, the Securities Law, the Rules Governingthe Listing of Stocks on the Sci-tech Innovation Board of the Shanghai Stock Exchange, theAdministrative Measures of the Shanghai Stock Exchange for Fund-raising by the Listed Companies,and other applicable laws, rules, regulations and normative documents, and the Measures of Appotronics
Corporation Limited for Management and Use of Funds Raised. In addition, the Company will,according to the use and amount of the offering proceeds as promised, actively push forward thebuilding and implementation of the relevant projects, and have the projects yield the desired results assoon as practicable, to safeguard the interests of all shareholders of the Company.After receipt of the offering proceeds, the Company will actively push forward the investment in andbuilding of the relevant projects, and fully mobilize R&D, procurement, production, sales,administrative and other resources of the Company, to promptly and efficiently complete the projects. Inaddition, the Company will ensure the availability of the relevant personnel, provide thorough andcomprehensive skill trainings to new employees, and through active market exploitation and soundcommunications with the customers, ensure that the products of the newly built projects will be launchedon the market successfully. Through these all-round measures, the Company will procure the relevantinvestment projects to reach the designed production capacity and yield the desired results as soon aspracticable.(V) Improve the profit distribution policy and enhance the mechanism of returns to investorsThe general meeting of shareholders of the Company has adopted the Articles of Association ofAppotronics Corporation Limited (draft) for the IPO, which further specifies and improves theCompany’s profit distribution principles and approaches, the respective conditions and proportion ofcash dividends and stock dividends, and improves the Company’s decision-making procedures andmechanisms with respect to profit distribution, and decision-making procedures for the adjustment of theprofit distribution policy.In addition, the Company has formulated the Plan of Appotronics Corporation Limited on theShareholder Returns within Three Years after Completion of the IPO and Listing of the Company’sShares on the STAR Market, to make specific arrangements for profit distribution within three yearsafter completion of the IPO. The Company will maintain the consistency and stability of its profitdistribution policy, attach importance to the reasonable returns to investors, enhance the protection of theinvestors’ rights and interests, and take into account both the overall interest of all shareholders and thesustainable development of the Company.The Company reminds the investors to be aware that the remedial measures for diluted earnings statedabove do not mean any warranty made by the Company as to its earnings in the future. After beingapproved by the general meeting of shareholders of the Company, this proposal will take effect from thedate of completion of the IPO and listing of the Company’s RMB-denominated ordinary shares(A-shares) on the STAR Market.(VI) Covenants of the directors and senior officers regarding the serious implementation of the remedialmeasures for diluted earnings of the CompanyPursuant to the relevant provisions of the CSRC, each of the directors and senior officers of theCompany hereby covenants as follows with respect to the remedial measures for diluted earnings of theCompany:
1. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or
otherwise damage the interest of the Company;
2. To exercise self-discipline in consumption in performing his duties;
3. Not to use the assets of the Company to engage in any investment or consumption activities not in
connection with his duties;
4. To link the compensation system adopted by the Board of Directors or the Compensation Committee
with the implementation of the Company’s remedial measures for diluted earnings in the current period;
5. If the Company implements any share incentive plan in the future, to link the conditions to exercise
rights under such share incentive plan with the implementation of the Company’s remedial measures fordiluted earnings in the current period; and
6. To indemnify the Company or shareholders of the Company for the losses arising from any breach of
or refusal to fulfill the covenants by him according to law.(VII) Controlling shareholder, actual controller and their concert parties
Note 19:
Each of controlling shareholder, actual controller and their concert parties hereby covenants as followswith respect to the serious implementation of the remedial measures for diluted earnings of theCompany:
1. Not to interfere with management and operation of the Company beyond its/his powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or
otherwise damage the interest of the Company; and
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of
or refusal to fulfill the covenants by it/him according to law.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
2. Covenants of the controlling shareholder and the actual controller regarding the remedial measures for
diluted earnings in the current periodEach of the concert parties of the controlling shareholder Appotronics Holdings and the actual controllerhereby undertakes:
“1. Not to interfere with management and operation of the Company beyond its powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or
otherwise damage the interest of the Company; and
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of
or refusal to fulfill the covenants by it according to law.As one of the persons responsible for the remedial measures for diluted earnings, if we breach or refuseto fulfill the covenants set forth above, we agree that the CSRC, the SSE and other securities regulatory
authorities may mete out punishments on or take other administrative actions against us pursuant to therelevant provisions and rules established or published by them.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). The covenants and warranties stated aboveshall remain in effect so long as we remain a concert party of the controlling shareholder or the actualcontroller of the Company. ”LI Yi, as the actual controller of the Company, hereby undertakes:
“1. Not to interfere with management and operation of the Company beyond his powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or
otherwise damage the interest of the Company;
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of
or refusal to fulfill the covenants by him according to law;
5. To exercise self-discipline in consumption in performing his duties;
6. Not to use the assets of the Company to engage in any investment or consumption activities not in
connection with his duties;
7. To link the compensation system adopted by the Board of Directors or the Compensation Committee
with the implementation of the Company’s remedial measures for diluted earnings in the current period;and
8. If the Company implements any share incentive plan in the future, to link the conditions to exercise
rights under such share incentive plan with the implementation of the Company’s remedial measures fordiluted earnings in the current period.As one of the persons responsible for the remedial measures for diluted earnings, if I breach or refuse tofulfill the covenants set forth above, I agree that the CSRC, the SSE and other securities regulatoryauthorities may mete out punishments on or take other administrative actions against me pursuant to therelevant provisions and rules established or published by them.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). The covenants contained in Paragraphs 1through 4 above shall remain in effect so long as I remain the actual controller of the Company, and thecovenants contained in Paragraphs 3 through 8 above shall remain in effect so long as I remain a directorof the Company. ”
Note 20:
Each of the directors and senior officers of the Company hereby covenants that:
“1. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, orotherwise damage the interest of the Company;
2. To exercise self-discipline in consumption in performing his duties;
3. Not to use the assets of the Company to engage in any investment or consumption activities not in
connection with his duties;
4. To link the compensation system adopted by the Board of Directors or the Compensation Committee
with the implementation of the Company’s remedial measures for diluted earnings in the current period;
5. If the Company implements any share incentive plan in the future, to link the conditions to exercise
rights under such share incentive plan with the implementation of the Company’s remedial measures fordiluted earnings in the current period; and
6. To indemnify the Company or shareholders of the Company for the losses arising from any breach of
or refusal to fulfill the covenants by him according to law.As one of the persons responsible for the remedial measures for diluted earnings, if I breach or refuse tofulfill the covenants set forth above, I agree that the CSRC, the SSE and other securities regulatoryauthorities may mete out punishments on or take other administrative actions against me pursuant to therelevant provisions and rules established or published by them.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 21:
The issuer hereby covenants as follows with respect to the profit distribution policy of the Company:
“I. Considerations in the preparation of the shareholder returns planThe Company focuses on the long-term and sustainable development, and in preparing the plan, hastaken into consideration its strategic development plan, actual business situation, development objectives,future profitability, status of cash flows, shareholder returns, cost of social capital, external financingenvironment and other relevant factors, and established a clear profit distribution mechanism on thebasis of the balance between the reasonable returns on investment for shareholders and its sustainabledevelopment, to ensure the consistency and stability of the profit distribution policy and that theCompany is able to operate continuously and healthily in the long run.II. Principles observed in the preparation of the shareholder returns plan(I) To strictly observe the basic principles for profit distribution set forth in the Articles of Associationof Appotronics Corporation Limited (“AOA”);(II) To give full consideration and listen to the opinions of the shareholders (especially the minorityshareholders) and the independent directors;(III) To strike a balance between the short-term interest and long-term development, and ensure that theprofit distributions made by the Company will not undermine its ability to continue as a going concern;and(IV) To give priority to the distribution of cash dividends, attach importance to the provision ofreasonable returns to investors, and ensure that the profit distributions are made continuously and stablyand comply with the applicable laws, rules, regulations and normative documents, and the AOA.III. Detailed shareholder returns plan within three years following completion of the IPO
(I) Intervals of profits distributionThe Company shall make profit distributions at least once a year to the extent there are distributableprofits. The annual profit distributions shall be made within two months following the relevant annualgeneral meeting of shareholders. The Company may make interim profit distributions in cash accordingto its production and business situations and capital requirements. Such interim profit distributions shallbe proposed by the Board of Directors according to the capital position of the Company, and madewithin two months after the same have been approved by the general meeting of shareholders.(II) Form of profit distributionThe Company may distribute its profits in the form of cash dividends, stock dividends or a combinationof cash dividends and stock dividends or otherwise permitted by the applicable laws, rules, regulationsand normative documents, provided that cash dividends shall take precedence over stock dividends. TheCompany shall distribute its profits in cash to the extent that the conditions for distribution of cashdividends are satisfied.The cash dividends shall be distributed once every year in principle, but the Board of Directors maypropose the distribution of interim cash dividends according to the earnings and capital position of theCompany.(III) Conditions for distribution of cash dividendsThe Company shall distribute cash dividends for a year if:
(1) the Company has earned a distributable profit in such year (after making up for the losses in prior
years and appropriating public reserves), has sufficient cash flows, and will be able to continue as agoing concern after such distribution of cash dividends;
(2) the Company’s accumulated distributable profit is positive;
(3) the Company’s auditor has issued a standard unqualified opinion on the Company’s financial report
for such year;
(4) the Company does not have any material investment plan or material capital expenditures (except the
projects in which the offering proceeds invest);Material capital expenditures mean: (1) the aggregate amount of expenditures on external investments,acquisition of assets, purchase of equipment or land or other transactions that the Company plans toconduct in the next 12 months is equal to or exceeds 50% of the most recently audited net assets of theCompany; or (2) the aggregate amount of expenditures on external investments, acquisition of assets,purchase of equipment or land or other transactions that the Company plans to conduct in the next 12months is equal to or exceeds 30% of the most recently audited total assets of the Company.
(5) there isn’t any special circumstance that makes the profit distribution unsuitable as approved by the
general meeting of shareholders. If the conditions set forth above are not satisfied, the Board ofDirectors shall determine whether or not to distribute cash dividends according to the actualcircumstances.(IV) Ratio of cash dividends
Subject to the satisfaction of the conditions for distributing cash dividends, we will distribute not lessthan 10% of the distributable profit made in each year in cash.A subsidiary shall prepare its distribution plans on the basis of the distributable profit reported in thefinancial statements of the parent company. The Company shall determine the specific profit distributionratio on the basis of the lower of the distributable profits reported in the consolidated financialstatements and the financial statements of the parent company, to avoid excess profit distribution.If the Company has repurchased any shares by cash through tender offer or call auction in a year, therepurchase price paid by the Company shall be deemed as the cash dividends already distributed by theCompany, and taken into account in the calculation of the cash dividend ratio for such year.(V) Differential cash dividend policyThe Board of Directors will adopt the following differential cash dividend policy according to theprocedures set forth in the AOA, giving comprehensive consideration to the characteristics of theindustry in which the Company operates, its development stage, business model and earnings, materialcapital expenditure arrangements and other relevant factors:
(1) If the Company is at the mature stage and does not have any material capital expenditure
arrangement, at least 80% of the distributable profit will be distributed in cash;
(2) If the Company is at the mature stage and has certain material capital expenditure arrangements, at
least 40% of the distributable profit will be distributed in cash; or
(3) If we are at the growth stage and have certain material capital expenditure arrangements, at least 20%
of the distributable profit will be distributed in cash.If it is hard to determine the development stage but there are certain material capital expenditurearrangements, the policy set forth above may apply.We will formulate or adjust the shareholder returns plan subject to the profit distribution policy set forthabove, according to our actual situations and the opinions of the shareholders (in particular, the minorityshareholders) and the independent directors.(VI) Conditions for distribution of stock dividendsThe Company may distribute profits in the form of stock dividends according to its earnings and cashflows in a given year and on the premise of full distribution of cash dividends, to the extent that theCompany maintains the minimum cash dividend ratio and reasonable share capital and shareholdingstructure, and ensures that the increase in share capital keeps pace with the growth of its operatingperformance.IV. Cycle for drawing up the shareholder returns plan and the relevant decision-making mechanism(I) The Company shall review the shareholder returns plan at least once every three years, makeappropriate and necessary amendments to its profit distribution policy and decide on the shareholderreturns plan for the giving period according to the opinions of the shareholders (in particular, holders ofpublic shares), the independent directors and supervisors, subject to the applicable laws, rules,regulations and normative documents.
(II) The Board of Directors shall draw up the specific profit distribution proposal for each year accordingto the AOA, earnings, capital requirements and shareholder returns plan of the Company, thoroughlydiscuss the reasonableness of such profit distribution proposal, seriously analyze and discuss the timing,conditions, minimum ratio, conditions for adjustment, decision-making procedures and other issues inrespect of distribution of cash dividends, adopt a special resolution thereon, and submit the same to thegeneral meeting of shareholders for consideration. The independent directors shall explicitly expresstheir opinions on such profit distribution proposal, and may solicit the opinions of minority shareholders,and then directly submit a profit distribution proposal to the Board of Directors for consideration.(III) In considering a specific cash dividend distribution proposal, the general meeting of shareholdersshall actively communicate and exchange with shareholders, in particular minority shareholders invarious ways, including without limitation online voting and inviting minority shareholders toparticipate in the general meeting of shareholders, fully listen to the opinions and claims of minorityshareholders, and promptly answer the questions raised by minority shareholders. The dividenddistribution proposal requires the approval of the shareholders representing a majority of the total votespresent at the general meeting of shareholders in person or by proxy.(V) The Board of Supervisors shall supervise the implementation of the Company’s profit distributionpolicy and shareholder returns plan by the Board of Directors and the management of the Company andthe relevant decision-making procedures, and if the Company makes a profit in a year and does notintend to distribute profits, make an explanation and issue an opinion about the implementation of therelevant policies and plans.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 22:
The issuer hereby covenants:
“The Company will strictly perform all duties and obligations under all covenants made by it publicly inconnection with the IPO (“Covenants”). If the Company fails to perform all duties and obligations underthe Covenants, the Company shall make a public explanation and apologize to the shareholders andinvestors of public shares at the general meeting of shareholders and on the media for informationdisclosure designated by the CSRC, disclose the reasons for failure to fulfill the relevant Covenants,make supplementary or alternate covenants, or put forward other solutions, and assume the relevant legalliabilities and liability for compensation according to law. The shareholders and investors of publicshares shall have the right to take legal actions to request the Company to fulfill the Covenants.The Company shall not increase the salaries or subsidies of the directors, supervisors and senior officerswho assume personal liability for failure of the Company to fulfill the Covenants in any manner until theCompany has fully removed the adverse effect of its failure to fulfill the Covenants.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). ”
Note 23:
The controlling shareholder Appotronics Holdings, the actual controller LI Yi and their concert partieshereby covenant that:
“1. We/I will strictly perform all duties and obligations under all covenants made by us/me publicly inconnection with the IPO (“Covenants”).
2. If we/I fail to perform, or actually become unable to perform, or become unable to perform as
scheduled all duties and obligations under the Covenants (except those resulting from any change in theapplicable laws, regulations and policies, natural disaster, event of force majeure or any other objectivecircumstances beyond our/my control), we/I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as
scheduled the relevant Covenants through the Company, and make a public apology to othershareholders of the Company;
(2) make supplementary or alternate covenants to the Company and other shareholders of the Company,
to protect their rights and interests to the maximum extent practicable.
(3) submit such supplementary or alternate covenants to the general meeting of shareholders for
consideration; and
(4) surrender all gains (if any) obtained from failure to perform the relevant Covenants to the Company,
and indemnify the Company and other shareholders of the Company for the losses arising therefromaccording to law.
3. If we/I fail to perform, or actually become unable to perform, or become unable to perform as
scheduled the duties and obligations under the Covenants due to any change in the applicable laws,regulations and policies, natural disaster, event of force majeure or any other objective circumstancesbeyond our/my control, we/I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as
scheduled the relevant Covenants through the Company; and
(2) make supplementary or alternate covenants to the Company and other shareholders of the Company,
to protect their rights and interests to the maximum extent practicable.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). The covenants set forth above shall remainin effect so long as we/I remain the controlling shareholder/actual controller/concert party of the actualcontroller (as applicable) of the Company. ”
Note 24:
Each of the directors, supervisors and senior officers of the Company hereby covenants that:
“1. I will strictly perform all duties and obligations under all covenants made by me publicly inconnection with the IPO (“Covenants”).
2. If I fail to perform, or actually become unable to perform, or become unable to perform as scheduled
all duties and obligations under the Covenants (except those resulting from any change in the applicablelaws, regulations and policies, natural disaster, event of force majeure or any other objectivecircumstances beyond my control), I agree to surrender the gains obtained from breach of the Covenantsto the Company, and indemnify the Company or the investors for the losses arising therefrom accordingto law.
3. If I fail to perform, or actually become unable to perform, or become unable to perform as scheduled
the duties and obligations under the Covenants due to any change in the applicable laws, regulations andpolicies, natural disaster, event of force majeure or any other objective circumstances beyond my control,I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as
scheduled the relevant Covenants through the Company; and
(2) make supplementary or alternate covenants to the Company and the shareholders of the Company, to
protect their rights and interests to the maximum extent practicable.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theCompany’s RMB-denominated ordinary shares (A-shares). The covenants and warranties set forth aboveshall remain in effect so long as I remain a director/supervisor/senior officer (as applicable) of theCompany.” ”
Note 25:
Appotronics Holdings, as the controlling shareholder of the issuer, hereby covenants that:
“I. We acknowledge that as of the date of this Letter of Undertaking, we and our subsidiaries have not,directly or indirectly, engaged in any business or activity competing with the main business presentlyconducted by Appotronics in or outside China in any manner.II. We covenant and warrant that so long as we remain the controlling shareholder of Appotronics, weand our subsidiaries will not engage in any competing business that might have a material adverse effecton the main business of Appotronics.III. We and our subsidiaries will avoid and reduce related-party transactions with Appotronics to themaximum extent practicable.IV. With respect to the related-party transactions that are unavoidable or conducted with good reason:
1. We will abstain from the review of and voting on related-party transactions involving us in strict
accordance with the applicable laws, rules, regulations and normative documents, and the Articles ofAssociation, the Policy on Related-party Transaction and other regulations of Appotronics;
2. We will enter into contracts or agreements with Appotronics in respect of such related-party
transactions according to the general commercial principle of “fairness, free will and valuableconsideration”, and ensure that the price for such related-party transactions is fair and does notmaterially differ from the price or rate that will be offered by or to an independent third party on themarket;
3. We will duly perform the applicable approval procedures and the obligation of information disclosure
in connection with such related-party transactions in accordance with the applicable laws, rules,regulations and normative documents; and
4. We will not transfer any profits or benefits through any related-party transaction or take advantage of
our decision-making power over the management of Appotronics to damage the legitimate rights andinterests of Appotronics and the other shareholders of Appotronics.V. We undertake to exercise the relevant rights and perform the relevant obligations in strict accordancewith the applicable laws, rules, regulations and normative documents, and the Articles of Association ofAppotronics, and not to take advantage of our position and influence as the controlling shareholder toseek illegal gains or damage the legitimate rights and interests of Appotronics and the other shareholdersof Appotronics.VI. We will procure our subsidiaries to comply with the covenants set forth above, and indemnifyAppotronics and the other shareholders of Appotronics for damages to their legitimate rights andinterests resulting from any breach by us or any of our subsidiaries of the covenants set forth above.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theRMB-denominated ordinary shares (A-shares) of Appotronics Corporation Limited. The covenants andwarranties set forth above shall remain in effect so long as we remain the controlling shareholder ofAppotronics. ”
Note 26:
LI Yi, as the actual controller of the issuer, hereby covenants that:
“I. I acknowledge that as of the date of this Letter of Undertaking, I and my subsidiaries have not,directly or indirectly, engaged in any business or activity competing with the main business presentlyconducted by Appotronics in or outside China in any manner.II. I covenant and warrant that so long as I remain the actual controller of Appotronics, I and mysubsidiaries will not engage in any competing business that might have a material adverse effect on themain business of Appotronics.III. I and my subsidiaries and other business or economic entities in which I hold the post of director orsenior officer (each an “Employer”) will avoid and reduce related-party transactions with Appotronics tothe maximum extent practicable.IV. With respect to the related-party transactions that are unavoidable or conducted with good reason:
1. I will abstain from the review of and voting on related-party transactions involving me in strict
accordance with the applicable laws, rules, regulations and normative documents, and the Articles ofAssociation, the Policy on Related-party Transaction and other regulations of Appotronics;
2. I will enter into contracts or agreements with Appotronics in respect of such related-party transactions
according to the general commercial principle of “fairness, free will and valuable consideration”, andensure that the price for such related-party transactions is fair and does not materially differ from theprice or rate that will be offered by or to an independent third party on the market;
3. I will duly perform the applicable approval procedures and the obligation of information disclosure in
connection with such related-party transactions in accordance with the applicable laws, rules, regulationsand normative documents; and
4. I will not transfer any profits or benefits through any related-party transaction or take advantage of my
decision-making power over the management of Appotronics to damage the legitimate rights andinterests of Appotronics and the other shareholders of Appotronics.V. I undertake to exercise the relevant rights and perform the relevant obligations in strict accordancewith the applicable laws, rules, regulations and normative documents, and the Articles of Association ofAppotronics, and not to take advantage of my position and influence as the actual controller to seekillegal gains or damage the legitimate rights and interests of Appotronics and the other shareholders ofAppotronics.VI. I will procure my subsidiaries and the Employers to comply with the covenants set forth above, andindemnify Appotronics and the other shareholders of Appotronics for damages to their legitimate rightsand interests resulting from any breach by me or any of my subsidiaries or the Employers of thecovenants set forth above.This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of theRMB-denominated ordinary shares (A-shares) of Appotronics Corporation Limited. Unless otherwiseagreed, the covenants and warranties set forth above shall remain in effect so long as I remain the actualcontroller of Appotronics. ”
Note 27:
Each of the grantees of share incentives of the Company hereby covenants that if the relevantinformation disclosure documents of the Company contain any misrepresentation or misleadingstatement or omit any material fact, as a result of which that the grantee becomes ineligible for theequities granted to him or the relevant equity attribution arrangement, the grantee shall surrender allbenefits received by him under the incentive plan to the Company after the relevant informationdisclosure documents of the Company have been found to contain any misrepresentation or misleadingstatement or omit any material fact.
Note 28:
The Company undertakes not to provide loans or any other financial assistance to any grantee ofrestricted shares under the incentive plan, including guarantee for any loan obtained by such grantee.
IV. Appointment and termination of appointment of accounting firmExplanation about the appointment and termination of appointment of accounting firm
□ Applicable√ N/A
Explanation about re-appointment of accounting firm during the audit period
□ Applicable√ N/A
Explanation about the modified audit opinion issued by the accounting firm
□ Applicable√ N/A
Explanation about the modified audit opinion issued by the accounting firm on the financial statemetnsin the semiannual report
□ Applicable√ N/A
V. Matters relating to bankruptcy and reorganization
□ Applicable√ N/A
VI. Material litigations and arbitrations
√ The Company was involved in material litigations or arbitration during the reporting period
□ The Company was not involved in material litigations or arbitration during the reporting period
(I) Litigations and arbitrations already disclosed in interim announcements about which no new information is available
√ Applicable□ N/A
Summary and type of case ReferenceI. Cases of dispute over infringement on patents for invention [2019] Yue 73 Zhi Min Chu No. 663 and No. 664
1. Plaintiff: Delta Electronics, Inc.
Defendant 1: Appotronics Corporation LimitedDefendant 2: Futian SPN Projector & Video System Firm of Shenzhen
2. Background
The Plaintiff alleges that the production, sale and offer for sale of “Appotronics Laser Projector AL-LX410UST”by Defendant 1 and Defendant 2 for purpose of production and operation has infringed on the Plaintiff’s patentfor invention and caused economic losses to the Plaintiff.
3. Amount claimed: RMB 16.1453 for each case
4. The Guangzhou IP Court has issued Civil Rulings [2019] Yue 73 Zhi Min Chu No. 663 and No. 664, ordering
the seizure and freeze of an aggregate of RMB 10 million of deposit or other properties in the equivalent amountof the Company.
Please refer to the Announcement No.2019-005 issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on July 30, 2019.
II. Cases of dispute over infringement on patents for invention [2019] Yue 03 Min Chu No.s 2942-2951
1. Parties
Plaintiff: Appotronics Corporation LimitedDefendant 1: Delta Electronics Business Management (Shanghai) Co., Ltd.Defendant 2: Delta Video Display System (Wujiang) LimitedDefendant 3: Shenzhen Super Network Technology Co., Ltd.
2. Background: The Plaintiff alleges that it is the owner of the patents for invention ZL200810065225.X “a
phosphor-based light source structure for improving the efficiency of light conversion”, and ZL200880107739.5“a multi-color lighting apparatus using moving pattern plate containing wavelength conversion material, and theproduction, sale and offer for sale of a variety of laser projector products by Defendant 1, Defendant 2 andDefendant 3 for purpose of production and operation has infringed on such patents for invention owned by thePlaintiff and caused economic losses to the Plaintiff.
3. Amount claimed: 56.00 million.
Please refer to the Announcement No.2019-006 issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on July 31, 2019.
III. Case for changing the inventor of patent 19-cv-00466-RGD-LRL in the United States District Court for theEastern District of Virginia
Please refer to the Announcement No.2019-012 issued by the Company on
1. Parties
Plaintiff: Appotronics Corporation LimitedDefendant: Delta Electronics, Inc.
2. Background
The Company brings a suit against Delta in the United States District Court for the Eastern District of Virginiafor breach of non-disclosure agreement, wrongful appropriation of the technical solutions actually invented bythe Company’s employees LI Yi and HU Fei, and filing for patent application in the United States withoutauthorization, and petitions the court to order that the inventors of the patent-in-suit US 9,024,241 shall bechanged from WANG Bo, ZHANG Kesu and HUA Jianhao into LI Yi and HU Fei.
www.sse.com.cn and the designated media forinformation disclosure on September 9, 2019.
IV. Cases of dispute over infringement on patents for invention [2019] Jing 73 Min Chu No. 1275 and No. 1276
1. Parties
Plaintiff: Delta Electronics, Inc.Defendant 1: Fengmi (Beijing) Technology Co., Ltd.Defendant 2: Appotronics Corporation Limited
2. Background: The Plaintiff alleges that it is the owner of the patents for invention ZL201410249663.7
“manufacturing method of light source module and color wheel” and ZL201610387831.8 “phosphor color wheeland its applicable light source system”, and the joint production and sale of Mijia Laser Projector TV“MJJGTYDS01FM” by Defendant 1 and Defendant 2 has infringed on such patents for invention owned by thePlaintiff and caused economic losses to the Plaintiff.
3. Amount claimed: 32.02 million.
Please refer to the Announcement No.2019-014 issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on September 21, 2019.
V. Case of dispute over title to patents [2019] Yue 03 Min Chu No. 4309
1. Parties
Plaintiff: Appotronics Corporation LimitedDefendant: Delta Electronics, Inc.
2. Background
The Plaintiff brings a suit in the Shenzhen Intermediate People’s Court, alleging that the Defendant filed a patentapplication in respect of the technical solution owned by the Plaintiff and named WANG Bo, ZHANG Kesu andHUA Jianhao as the inventors of such technical solution without authorization, thereby infringed on the technicalachievements made by the Plaintiff and the right of authorship of LI Yi and HU Fei, the actual inventors, andpetitions the court to declare that Plaintiff 1, Appotronics Corporation Limited owns the patentZL201610387831.8 “phosphor color wheel and its applicable light source system”, and that Plaintiff 2, HU Feiand Plaintiff 3, LI Yi are the first and second inventors of the patent ZL201610387831.8 “phosphor color wheeland its applicable light source system”.
Please refer to the Announcement No.2019-028 issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on November 8, 2019.
VI. Case of dispute over infringement on patents for invention (2020) Jin 03 Zhi Min Chu No. 159
1. Parties
Please refer to the Announcement No.2020-021 issued by the Company on
Plaintiff: Fengmi (Beijing) Technology Co., Ltd.Defendant 1: Chengdu XGIMI Technology Co., Ltd.Defendant 2: Chengdu XGIMI Vision E-commerce Co., Ltd. Tianjin Second Branch
2. Background
According to the investigation, the Plaintiff detected that Defendant 2 sold and offered for sale the productaccused of infringement that were manufactured by Defendant 1. The product accused of infringement - Z6series projector - adopted the technical solution falling within the protection scope of the claims in the patent No.ZL201110086731.9 “High-brightness excitation method and light-emitting device based on optical wavelengthconversion”, hence constituted infringement. The Plaintiff held that the two defendants implemented the patentat issue for business purposes without permission, hence violated the provisions of Article 11 of the Patent Lawof the People’s Republic of China, and should be held legally liable for stopping infringement and makingcompensation for losses.
3. Amount claimed: 46.00 million.
www.sse.com.cn and the designated media forinformation disclosure on June 3, 2020.
VII. Cases of dispute over infringement on patents for invention [2019] Jing 73 Min Chu No. 1277 and No. 1278
1. Parties
Plaintiff: Delta Electronics, Inc.Defendant 1: Fengmi (Beijing) Technology Co., Ltd.Defendant 2: Appotronics Corporation Limited
2. Background: The Plaintiff alleges that it is the owner of the patents for invention ZL201310017478.0 “Optical
system” and ZL201010624724.5 “Light source system and projecting device comprising same”, and the jointproduction and sale of Mijia Laser Projector TV “MJJGTYDS01FM” by Defendant 1 and Defendant 2 hasinfringed on such patents for invention owned by the Plaintiff and caused economic losses to the Plaintiff.
3. Amount claimed: 32.02 million.
Please refer to the Announcement No.2020-022 issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on June 13, 2020.
Note: The Guangzhou IP Court has issued Civil Rulings [2019] Yue 73 Zhi Min Chu No. 663 and No. 664, ordering the freeze of an aggregate of RMB 20 millionof deposit of the Company. As of the date when this Report is released, this amount has been released.(II) Litigations and arbitrations that have not been disclosed in interim announcements or about which there’s new information available
√ Applicable□ N/A
Unit: Yuan Currency: RMBDuring the reporting period:
Plaintiff/claimant
Defendant/respondent
Party jointlyand severally
liable
Type oflitigation/arbitration
Background
Amountclaimed
Whether
anyprovision
isrecognized
Status
Result and
effect
Enforcementof judgment/
award
and theamountDeltaElectronics,Inc.
AppotronicsCorporation Limited
Futian SPNProjector &VideoSystem Firmof Shenzhen
Infringementon patent forinvention
In the case of disputeover infringement onpatents for invention[2019] Yue 73 ZhiMin Chu No. 662, thePlaintiff alleges that itis the owner of thepatent for inventionZL201610387831.8“phosphor colorwheel and itsapplicable light sourcesystem”, and theproduction, sale andoffer for sale of“Appotronics LaserProjectorAL-LX410UST” byDefendant 1 andDefendant 2 forpurpose of productionand operation hasinfringed on suchpatent for invention ofthe Plaintiff andcaused economiclosses to the Plaintiff.
1,614.53No Stayed,
RMB 10millionhas beenreleased
Stayed RMB 10
million hasbeenreleased
AppotronicsCorporationLimited, andShenzhenYLXTechnology
Dehao ElectronicTechnology Ltd.
ShenzhenSuperNetworkTechnologyCo., Ltd.
Infringementon patent forinvention
In the cases of disputeover infringement onpatents for invention[2018] Yue 03 MinChu No.s 1899-1907,the Plaintiff alleges
2,081.52No Pending
secondtrial
Judgment offirstinstance:
TheDefendantshould stop
Pendingsecond trial
DevelopmentCo., Ltd.
that the production,sale and offer for saleof a variety ofprojector products byDefendant 1 andDefendant 2 forpurpose of productionand operation hasinfringed on thePlaintiff’s patent forinvention and causedeconomic losses to thePlaintiff.
its act ofinfringementand pay thePlaintiff fortheeconomiclosses andreasonableexpenses,RMB 17.80million intotal.AppotronicsCorporationLimited
Dehao ElectronicTechnology Ltd.
ShenzhenSuperNetworkTechnologyCo., Ltd.
Infringementon patent forinvention
In the cases of disputeover infringement onpatents for invention[2018] Yue 03 MinChu No.s 1891-1898and 1940, the Plaintiffalleges that theproduction, sale andoffer for sale of avariety of projectorproducts byDefendant 1 andDefendant 2 forpurpose of productionand operation hasinfringed on thePlaintiff’s patent forinvention and causedeconomic losses to thePlaintiff.
2,081.52No Pending
secondtrial
Judgment offirstinstance:
TheDefendantshould stopits act ofinfringementand pay thePlaintiff fortheeconomiclosses andreasonableexpenses,RMB 17.80million intotal.
Pendingsecond trial
CasioComputer
AppotronicsCorporation Limited
AV Design(Beijing)
Infringementon patent for
In the cases of disputeover infringement on
2,049.95No The
Parties
Judgment offirst
Thewithdrawing
Co., Ltd. Technology
DevelopmentCo., Ltd.
invention patents for invention
[2016] Jing 73 MinChu No.s 59-60, thePlaintiff alleges that itis the owner of thepatents for invention201210334155.X and201010293730.7, andthe production, saleand offer for sale ofLaser TVAPUS-20(S) byDefendant 1 andDefendant 2 forpurpose of productionand operation hasinfringed on suchpatents for inventionof the Plaintiff andcaused economiclosses to the Plaintiff.
enteredinto amediationagreementin March2020.
instance: Allclaims madeby CasioComputerCo., Ltd.weredismissed.The Partiesentered intoa mediationagreement inMarch 2020.
ruling hasbeenreceived
AppotronicsCorporationLimited
Casio Computer Co.,Ltd.
Casio(China) Co.,Ltd. andBeijingHongyangJiyeTechnologyCo., Ltd.
Infringementon patent forinvention
In the cases of disputeover infringement onpatents for invention[2018] Jing 73 MinChu No.s 1239 and1240, the Plaintiffalleges that it is theowner of the patentfor inventionZL200810065225.X,and the production,sale and offer for saleof two laser projectorproducts by
760No The
Partiesenteredinto amediationagreementin March2020.
The Partiesentered intoa mediationagreement inMarch 2020.
Thewithdrawingruling hasbeenreceived
Defendant 1,Defendant 2 andDefendant 3 forpurpose of productionand operation hasinfringed on suchpatent for invention ofthe Plaintiff andcaused economiclosses to the Plaintiff.
(III) Other information
√ Applicable□ N/A
As of June 30, 2020, the cases of petition for invalidation involving the Company that were pending trial by the State Intellectual Property Office are as follows:
1. Cases of petition for invalidation brought against the Company as the patent assignee
No. Case No. Current
patentassignee
Patent No. at issue Title of patent at
issue
Petitionerforinvalidation
Background Remark1 4W108668 Appotronics
CorporationLimited
ZL200810065225.XA phosphor-based
light sourcestructure forimproving theefficiency of lightconversion
DehaoElectronicTechnologyLtd.
On March 27, 2019, the petitioner for
invalidation filed a petition for invalidation of
the patent for invention 200810065225.X titled
“a phosphor-based light source structure for
improving the efficiency of light conversion”
owned by the Company, which was found to
comply with the relevant provisions of the
Patent Law, the Rules for Implementation of
the Patent Law and the Guidelines for
Examination according to prima facie
examination, and was accepted by the State
Intellectual Property Office on April 4, 2019.
The StateIntellectualProperty Officedecided that thepatent at issue isvalid. Pleaserefer to ourInterimAnnouncementNo. 2020-026on July 8, 2020for details.2 4W108847 Appotronics
CorporationLimited
ZL200810065225.XA phosphor-based
light sourcestructure forimproving theefficiency of light
WEI Qun On May 9, 2019, the petitioner for invalidation
filed a petition for invalidation of the patent for
invention 200810065225.X titled “a
phosphor-based light source structure for
improving the efficiency of light conversion”
The StateIntellectualProperty Officedecided that thepatent at issue is
conversion owned by the Company, which was found to
comply with the relevant provisions of thePatent Law, the Rules for Implementation ofthe Patent Law and the Guidelines forExamination according to prima facieexamination, and was accepted by the StateIntellectual Property Office on June 5, 2019.
valid. Pleaserefer to ourInterimAnnouncementNo. 2020-026on July 8, 2020for details.3 4W110041 Appotronics
CorporationLimited
ZL200810065225.XA phosphor-based
light sourcestructure forimproving theefficiency of lightconversion
DeltaElectronicsBusinessManagement(Shanghai)Co., Ltd.
On February 5, 2020, the petitioner forinvalidation filed a petition for invalidation ofthe patent for invention 200810065225.X titled“a phosphor-based light source structure forimproving the efficiency of light conversion”owned by the Company, which was found tocomply with the relevant provisions of thePatent Law, the Rules for Implementation ofthe Patent Law and the Guidelines forExamination according to prima facieexamination, and was accepted by the StateIntellectual Property Office on February 20,2020.
The StateIntellectualProperty Officedecided that thepatent at issue isvalid. Pleaserefer to ourInterimAnnouncementNo. 2020-026on July 8, 2020for details.4 4W110045 Appotronics
CorporationLimited
ZL200880107739.5A multi-color
lighting apparatususing movingpattern platecontainingwavelengthconversionmaterial
DeltaElectronicsBusinessManagement(Shanghai)Co., Ltd.
On February 12, 2020, the petitioner forinvalidation filed a petition for invalidation ofthe patent for invention 200880107739.5 titled“a multi-color lighting apparatus using movingpattern plate containing wavelength conversionmaterial” (“Patent 7739”) owned by theCompany, which was found to comply with therelevant provisions of the Patent Law, the Rulesfor Implementation of the Patent Law and theGuidelines for Examination according to primafacie examination, and was accepted by theState Intellectual Property Office on March 5,2020.
Pending trial
5 4W110558 Appotronics
Corporation
ZL201110086731.9High-brightness
excitation method
ChengduXGIMI
On June 3, 2020, the petitioner for invalidationfiled a petition for invalidation of the patent for
Pending trial
Limited and light-emitting
device based onopticalwavelengthconversion
TechnologyCo., Ltd.
invention 201110086731.9 titled“High-brightness excitation method andlight-emitting device based on opticalwavelength conversion” owned by theCompany, which was found to comply with therelevant provisions of the Patent Law, the Rulesfor Implementation of the Patent Law and theGuidelines for Examination according to primafacie examination, and was accepted by theState Intellectual Property Office on June 12,2020.
2. Cases of petition for invalidation brought by the Company
No. Case No. Current patent
assignee
Patent No. at issue Title of patent at
issue
Petitionerforinvalidation
Background Remark1 4W109295Delta
Electronics,Inc.
ZL201610387831.8 Phosphor color
wheel and itsapplicable lightsource system
AppotronicsCorporationLimited
On July 29, 2019, the Company filed a petition
for invalidation of the patent for invention
201610387831.8 titled “phosphor color wheel
and its applicable light source system” owned
by Delta Electronics, Inc. with the State
Intellectual Property Office, which was found to
comply with the relevant provisions of the
Patent Law, the Rules for Implementation of the
Patent Law and the Guidelines for Examination
according to prima facie examination, and was
accepted by the State Intellectual Property
Office on July 30, 2019.
On December 9,2019, the StateIntellectualProperty Officedecided tosuspend the trialfrom November7, 2019 toNovember 7,2020.2 4W109538Delta
Electronics,Inc.
ZL201410249663.7 Manufacturing
method of lightsource moduleand color wheel
AppotronicsCorporationLimited
On September 20, 2019, the Company filed a
petition for invalidation of the patent for
invention 201410249663.7 titled
“manufacturing method of light source module
and color wheel” owned by Delta Electronics,
Inc. with the State Intellectual Property Office,
Pending trial
which was found to comply with the relevantprovisions of the Patent Law, the Rules forImplementation of the Patent Law and theGuidelines for Examination according to primafacie examination, and was accepted by theState Intellectual Property Office on September23, 2019.3 4W110623Delta
Electronics,Inc.
ZL201010624724.5 Light source
system andprojecting devicecomprising same
AppotronicsCorporationLimited
On June 15, 2020, the Company filed a petitionfor invalidation of the patent for invention201010624724.5 titled “Light source systemand projecting device comprising same” ownedby Delta Electronics, Inc. with the StateIntellectual Property Office, which was found tocomply with the relevant provisions of thePatent Law, the Rules for Implementation of thePatent Law and the Guidelines for Examinationaccording to prima facie examination, and wasaccepted by the State Intellectual PropertyOffice.
Pending trial
3. During the reporting period, the National Intellectual Property Administration examined and declared that the following patents held by the Company are valid,
namely patent for invention 200880107739.5 titled “A multi-color lighting apparatus using moving pattern plate containing wavelength conversion material” andpatent for invention 200810065225.X titled “A phosphor-based light source structure for improving the efficiency of light conversion”. Please refer to the InterimAnnouncements 2020-005 and 2020-026 for details.
VII. Penalties imposed on the listed company and its directors, supervisors, senior officers,
controlling shareholder, actual controller and acquirer and rectification of the relevantviolations
□ Applicable√ N/A
VIII. Credit standing of the Company and its controlling shareholder and actual controllerduring the reporting period
□ Applicable√ N/A
IX. Share incentive plan, employee stock ownership plan and other employee incentive measuresof the Company and their effect(I) Equity incentives already disclosed in the interim announcements about which no new
information is available
√ Applicable□ N/A
Summary ReferenceOn September 27, 2019, the Company held the 17thmeeting of the 1st Board of Directors and the 7th meetingof the 1st Board of Supervisors, which reviewed andapproved the Proposal on the 2019 Restricted ShareIncentive Plan (Draft) of the Company and Summary ofthe Plan and other related proposals.
Please refer to the relevant announcementissued by the Company onwww.sse.com.cn and the designated mediafor information disclosure on September28, 2019.On October 14, 2019, the Company held the 6thextraordinary general meeting of shareholders in 2019,which reviewed and approved the Proposal on the 2019Restricted Share Incentive Plan (Draft) of the Companyand Summary of the Plan and other related proposals.
Please refer to the relevant announcementissued by the Company onwww.sse.com.cn and the designated mediafor information disclosure on October 15,2019.On October 14, 2019, the Company held the 18th meetingof the 1st Board of Directors and the 8th meeting of the 1stBoard of Supervisors, which reviewed and approved theProposal on the Adjustment of the 2019 Restricted ShareIncentive Plan and the Proposal on Initial Grant ofRestricted Shares, pursuant to which, the Companyinitially granted 4.4 million shares to 169 persons at theprice of RMB 17.5 per share on October 14, 2019. TheCompany’s independent directors expressed theirindependent opinions on such proposals, and the Board ofSupervisors expressed its opinion after review of suchproposals.
Please refer to the relevant announcementissued by the Company onwww.sse.com.cn and the designated mediafor information disclosure on October 15,2019.
(II) Incentives that have not been disclosed in any interim announcement or about which there’s
new information availableShare incentives
□ Applicable√ N/A
Other description
□ Applicable√ N/A
Employee stock ownership plan
□ Applicable√ N/A
Other incentives
□ Applicable√ N/A
X. Material related-party transactions
(I) Related-party transactions in connection with day-to-day operation
1. Mattersalreadydisclosedintheinterimannouncementsaboutwhichnonew
informationisavailable
√ Applicable□ N/A
Summary ReferenceThe Company expects to engage in routinerelated-party transactions with China FilmEquipment Co., Ltd. and its affiliates, XiaomiCommunications Technologies Co., Ltd. and itsaffiliates, Beijing DonView Education TechnologyCo., Ltd. and its affiliates, and CINIONIC for atotal expected amount of RMB 1,253.1000million.
Please refer to the Announcement No. 2020-014“Announcement on expected routine related-partytransactions in 2020” issued by the Company onwww.sse.com.cn and the designated media forinformation disclosure on April 29, 2020）。
2. Mattersalreadydisclosedintheinterimannouncementsaboutwhichthere’snew
informationavailable
□ Applicable√ N/A
3. Mattersthathavenotbeendisclosedinanyinterimannouncement
□ Applicable√ N/A
(II) Related-party transactions involving acquisition or sale of assets or equities
1. Mattersalreadydisclosedintheinterimannouncementsaboutwhichnonew
informationisavailable
□ Applicable√ N/A
2. Mattersalreadydisclosedinthe
interimannouncementsaboutwhichthere’snewinformationavailable
□ Applicable√ N/A
3. Mattersthathavenotbeendisclosedinanyinterimannouncement
□ Applicable√ N/A
4. Fulfillmentofperformancecovenants(ifany)duringthereportingperiod
□ Applicable√ N/A
(III) Related-party transactions involving joint external investments
1. Mattersalreadydisclosedintheinterimannouncementsaboutwhichnonew
informationisavailable
□ Applicable√ N/A
2. Mattersalreadydisclosedintheinterimannouncements
aboutwhichthere’snewinformationavailable
□ Applicable√ N/A
3. Mattersthathavenotbeendisclosedinanyinterimannouncement
□ Applicable√ N/A
(IV) Accounts receivable from and payable to related parties
1. Mattersalreadydisclosedintheinterimannouncementsaboutwhichnonew
informationisavailable
□ Applicable√ N/A
2. Mattersalreadydisclosedintheinterimannouncementsaboutwhichthere’snew
informationavailable
□ Applicable√ N/A
3. Mattersthathavenotbeendisclosedinanyinterimannouncement
□ Applicable√ N/A
(V) Material related-party transactions
□ Applicable√ N/A
(VI) Others
□ Applicable√ N/A
XI. Material contracts and performance thereof
1 Trusteeship, contracting and lease
□ Applicable√ N/A
2 Guarantees
√ Applicable□ N/A
Unit: In RMB 0’000 RMBExternal guarantees provided by the Company (excluding those provided for the subsidiaries)Guarantor
Relationshipbetween the
guarantor
and thelistedcompany
Obligor
Guaranteedamount
Commencementdate ofguarantee(signing date ofagreement)
Guaranteestart date
Guaranteeexpiry date
Type ofguarantee
Whethertheobligationguaranteedhas beendischarged
Whethertheobligationguaranteedhasbecomeoverdue
Amount ofthe overdueobligationguaranteed
Whetherthere’s acounterguarantee
Whether aguaranteefor arelatedparty
Relate
relations
| d | |
| h | |
Total amount of guarantees provided during the reporting period (excluding thoseprovided for the subsidiaries)Balance of guarantees at the end of the reporting period (excluding those providedfor the subsidiaries) (A)
Guarantees provided by the Company or its subsidiaries for the subsidiaries of the CompanyGuarantor
Relationshipbetween the
guarantorand the listed
company
Obligor
Relationshipbetween theobligor and
the listedcompany
Guaranteed
amount
Commencement
date ofguarantee(signing date of
agreement)
Inception
date ofguarantee
Expiry date
ofguarantee
Type ofguarantee
Whether
theobligationguaranteed
has beendischarged
Whether
theobligationguaranteed
hasbecomeoverdue
Amount of
theoverdueobligationguaranteed
Whetherthere’s acounterguarante
AppotronicsCorporationLimited
Headquarters
CINEAPPOLaserCinemaTechnology(Beijing)Co., Ltd.
Controlledsubsidiary
70,0002020-5-31 2020-5-31
Three yearsafter thedue date fortheobligationsunder themastercontract
Joint andseveralliability
No No No
AppotronicsCorporation
Headquarters
CINEAPPOLaser
Controlledsubsidiary
6,0002019-6-27 2019-6-27 2023-6-26
Joint andseveral
No No No
Limited Cinema
Technology(Beijing)Co., Ltd.
liability
AppotronicsCorporationLimited
Headquarters Fengmi
Controlledsubsidiary
16,5002019-10-21 2019-10-21
Two yearsafter thedue date fortheobligations
Joint andseveralliability
No No No
AppotronicsCorporationLimited
Headquarters Fengmi
Controlledsubsidiary
10,0002018-11-23
Initialutilizationdate oractual dateofutilizationunder thefinancingletter
Two yearsafter thelatest duedate of theloans underthefinancingletter
Joint andseveralliability
No No No
Total amount of guarantees provided for the subsidiaries during the reporting period17,5
Balance of guarantees provided for the subsidiaries at the end of the reportingperiod (B)
41,6
Total amount of guarantees provided by the Company (including those provided for the subsidiaries)Total amount guaranteed (A+B) 41,6
Proportion of total amount guaranteed to the net assets of the Company (%) 19.
Including:
Total amount of guarantees provided for the shareholders, actual controller and theiraffiliates (C)Total amount of debt guarantees directly or indirectly provided for the obligorswhose equity-debt ratio exceeds 70% (D)
26,5
Total amount guaranteed in excess of 50% of the net assets of the Company (E)Total amount guaranteed (C+D+E)26,5
Explanation about outstanding guarantees for which the Company may assume joint
and several liabilityExplanation about guaranteesNote: With respect to the guarantee provided by the Company for Fengmi in the amount of RMB 100 million as of the date of this Report, the guarantee contract hasbeen executed but the relevant bank loan has not been granted, so no liability for guarantee has been incurred.
3 Other material contracts
□ Applicable√ N/A
XII. Poverty alleviation of listed companies
□ Applicable√ N/A
XIII. Convertible corporate bonds
□ Applicable√ N/A
XIV. Environment
(I) Environmental protection information of the Company and its major subsidiaries that are
identified as major polluters by the environmental protection authority
□ Applicable√ N/A
(II) Environmental protection information of the Company that is not identified as a major
polluter
√ Applicable□ N/A
We have not been identified as a major polluter during the reporting period. We attach importance toenvironmental protection and have taken the following environmental protection measures to fulfill oursocial responsibility:
Disposal of solid wastesOur solid wastes include consumer wastes, general industrial solid wastes and hazardous wastes. Theconsumer wastes are collected and then handed over to the environmental sanitation entity forcentralized treatment. The general industrial solid wastes mainly consist of leadless waste scruff andwaste packing materials generated in the production process, which are collected by category and thenhanded over to the relevant resource recycling entities for recycling. The hazardous wastes mainlyconsist of waste active carbon generated in the waste gas treatment process, and wastes containingindustrial alcohol and waste packing materials containing cleaning agents that are generated in theproduction process, which are collected and then handed over to the qualified entities for treatment.Sewage treatmentOur sewage includes domestic sewage and industrial sewage. The domestic sewage is pre-treatedthrough septic tank or otherwise, and after meeting the relevant standard, discharged to the municipalsewage treatment pipelines and sewage treatment plant. The industrial sewage is handed over to thequalified entities for treatment. In addition, we have optimized the technologies currently used to reducethe sewage discharged. We appoint a third party to inspect our domestic sewage every year.Waste gas treatmentOur waste gas mainly includes waste gas containing tin and organic waste gas generated in theproduction process. We have built a waste gas treatment system, comprising UV photolysis, activecarbon adsorption plant, air purification equipment and other equipment. The concentration of tin andNmHc in the waste gas discharged by us to the air meets the local standard for Atmospheric PollutantEmission Limit. We appoint a third party to conduct the relevant inspections every year.Certifications relating to environmental protectionWe passed ISO14001 environmental management system certification in 2008, and has maintained suchcertification to date. In 2019, we passed QC080000 hazardous substance process management systemcertification. All of our products are green products and have passed RoHS, REACH and Chinaenvironmental labeling product certification, among others.
(III) Reason for failure to disclose environmental protection information of the Company that isnot identified as a major polluter
□ Applicable√ N/A
(IV) New information about the environmental protection information disclosed during thereporting period
□ Applicable√ N/A
XV. Other significant matters
(I) Changes, reasons, and impacts of accounting policies, accounting estimates, and accounting
methods compared with the previous accounting period
√ Applicable□ N/A
Please refer to V.44 of Section X Financial Report for details.
(II) Descriptionofretrospectiverestatement,amountofadjustment,reasonsandimpactsofmaterialaccountingerrorsoccurredduringthereportingperiod
□ Applicable√ N/A
(III) Others
□ Applicable√ N/A
Section VI. Changes in Shares and Shareholders(I) Changes in ordinary shares(I) Statement of changes in ordinary shares
1. Statement of changes in ordinary shares
Unit: ShareBefore the change +/- After the change
Number
Proportion
(%)
Newshares
Bonusshares
Capitalizationof capitalreserves
Others Sub-total Number
Proportion(%)I. Non-tradable shares 394,361,49887.33-3,538,402-3,538,402390,823,09686.55
1. Shares held by the State
2. Shares held by state-owned
corporations
3. Shares held by other domestic
investors
243,665,46253.96-3,538,402-3,538,402240,127,06053.18Including: Shares held by domesticnon-stated-owned corporations
233,615,92351.73-3,538,402-3,538,402230,077,52150.95Shares held by domestic naturalpersons
10,049,5392.2310,049,5392.23
4. Shares held by foreign investors 150,696,03633.37150,696,03633.37Including: Shares held by foreigncorporations
135,203,42729.94135,203,42729.94Shares held by foreign naturalpersons
15,492,6093.4315,492,6093.43II. Tradable shares 57,192,91312.673,538,4023,538,40260,731,31513.45
1. RMB-denominated ordinary shares 57,192,91312.673,538,4023,538,40260,731,31513.45
2. Foreign currency-denominated shares
listed domestically
3. Foreign currency-denominated shares
listed overseas
4. OthersIII. Total shares 451,554,411100.00 0 0 451,554,411100.00
2. Explanationaboutchangesinordinaryshares
√ Applicable□ N/A
On January 14, 2020, 3,538,402 off-line allotted shares in IPO were eligible for trading on the market. Please refer to the Announcement No. 2020-001“Announcement of Appotronics Corporation Limited on the circulation of off-line allotted shares in IPO” issued by the Company on www.sse.com.cn on January 14,2020 for details.
3. Effectofthechangesinsharesontheearningspershare,netassetspershareandother
financialindicatorsforthedurationafterthereportingperiodtothedisclosuredateofthesemiannualreport(ifany)
□ Applicable√ N/A
4. OtherinformationdisclosedastheCompanydeemsnecessaryorrequiredbythe
securitiesregulatoryauthority
□ Applicable√ N/A
(II) Changes in non-tradable shares
√ Applicable□ N/A
Unit: ShareShareholder
Balance ofnon-tradableshares at thebeginning ofthereportingperiod
Number ofnon-tradablesharesunlockedduring thereportingperiod
Number ofnon-tradablesharesincreasedduring thereportingperiod
Balance oftradableshares at theend of thereportingperiod
Reason forrestriction
Unlock dateOff-lineallotmentaccount
3,538,402 3,538,40200Non-tradable
off-lineallottedshares inIPO
January 22,
2020Total 3,538,402 3,538,40200/ /
(II) Shareholders(I) Total number of shareholders:
Total number of shareholders of ordinary shares as of theend of the reporting period
16,563Total number of shareholders of preferred shares whosevoting right has been restituted as of the end of thereporting period
Number of holders of depository receipts
□ Applicable√ N/A
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares as of the end of the
reporting period
Unit: ShareShares held by top 10 shareholders
Shareholder(full name)
Changeduring
thereporti
ngperiod
Balance ofshares heldas at the end
of thereporting
period
Proportion (%)
Number ofnon-tradable
shares held
Number ofnon-tradableshares held,including theshares lent outunder therefinancingarrangement
Sharespledged or
frozen
Shareho
ldernatureSharestatus
Numbe
r
ShenzhenAppotronicsHoldingsCo., Ltd.
079,762,67917.6679,762,67979,762,679
None
0 Domest
icnon-statedownedcorporationSAIF IVHongKong(ChinaInvestments) Limited
062,980,67613.9562,980,67662,980,676
None
0 ForeigncorporationCITIC PEInvestment(HongKong)2016Limited
041,774,5629.2541,774,56241,774,562
None
0 Foreign
corporationFuzhouHaixiaAppotronicsInvestmentPartnership (LP)
025,064,7375.5525,064,73725,064,737
None
0 Domesticnon-statedownedcorporationShenzhenYuanshiLaserIndustrialInvestmentConsultingPartnership (LP)
024,139,5005.3524,139,50024,139,500
None
0 Domesticnon-statedownedcorporationShenzhenAppotronics DayeInvestmentPartnership ( LP)
020,430,2504.5220,430,25020,430,250
None
0 Domesticnon-statedownedcorporationGREENFUTUREHOLDINGSLIMITED
016,504,5183.6616,504,51816,504,518
None
0 ForeigncorporationShenzhenAppotronics HongyeInvestmentPartnership (LP)
015,662,3743.4715,662,37415,662,374
None
0 Domesticnon-statedownedcorporation
ShenzhenJinleijingInvestmentLimitedPartnership (LP)
012,353,1062.7412,353,10612,353,106
None
0 Domesticnon-statedownedcorporationChangzhou LishengEquityInvestmentPartnership (LP)
011,667,6352.5811,667,63511,667,635
None
0 Domesticnon-statedownedcorporationShares held by top 10 holders of tradable sharesShareholder
Number oftradable sharesheld
Type and number of
sharesCategory
NumberUBS AG 1,557,640RMB-denomi
nated ordinaryshare
1,557,6
Huatai Securities Co., Ltd. 978,400RMB-denomi
nated ordinary
share
978,40
ZHONG Haidi 834,659RMB-denomi
nated ordinary
share
834,65
National Social Security Fund Portfolio No. 102 700,000RMB-denomi
nated ordinary
share
700,00
LONG Shixue 464,700RMB-denomi
nated ordinaryshare
464,70
GAO Ermei 393,713RMB-denomi
nated ordinaryshare
393,71
China Merchants Bank Co., Ltd. - Pengyang JingxinHybrid Securities Investment Fund
385,157RMB-denomi
nated ordinaryshare
385,15
WANG Danping 329,210RMB-denomi
nated ordinaryshare
329,21
ZHANG Shangmin 317,734RMB-denomi
nated ordinaryshare
317,73
Guotai Junan Securities Co., Ltd. 288,088RMB-denomi
nated ordinaryshare
288,08
Affiliates or concert parties among the shareholders statedabove
1. As of the end of the reporting period,
among our top 10 shareholders,Appotronics Holdings, Yuanshi,Appotronics Daye, Appotronics Hongyeand Jinleijing are concert parties. We havenot received any notice about affiliates orconcert parties among other shareholdersstated above.
2. We are not aware whether there are
affiliates or concert parties as defined in theAdministrative Measures for theAcquisition of the Listed Companies amongthe holders of tradable shares.Holders of preferred shares whose voting right has beenrestituted and the number of shares held by them
N/A
Top 10 holders of non-tradable shares and lock-up period
√ Applicable□ N/A
Unit: ShareNo. Holder of non-tradable shares
Number ofnon-tradableshares held
Unlocking ofnon-tradable shares
Lock-upperiodUnlockdate
Number ofsharesnewlyunlocked1 Shenzhen Appotronics Holdings
Co., Ltd.
79,762,679July 22,
2022
0 36monthsafter thelistingdate2 SAIF IV Hong Kong (China
Investments) Limited
62,980,676July 22,
2020
0 12monthsafter thelistingdate3 CITIC PE Investment (Hong Kong)
2016 Limited
41,774,562July 22,
2020
0 12monthsafter thelistingdate4 Fuzhou Haixia Appotronics
Investment Partnership (LP)
25,064,737July 22,
2020
0 12monthsafter thelistingdate5 Shenzhen Yuanshi Laser Industrial
Investment Consulting Partnership(LP)
24,139,500July 22,
2022
0 36monthsafter thelistingdate6 Shenzhen Appotronics Daye
Investment Partnership ( LP)
20,430,250July 22,
2022
0 36
monthsafter thelistingdate
7 GREEN FUTURE HOLDINGS
LIMITED
16,504,518July 22,
2020
0 12
monthsafter thelistingdate8 Shenzhen Appotronics Hongye
Investment Partnership (LP)
15,662,374July 22,
2022
0 36monthsafter thelistingdate9 Shenzhen Jinleijing Investment
Limited Partnership (LP)
12,353,106July 22,
2022
0 36monthsafter thelistingdate10 Changzhou Lisheng Equity
Investment Partnership (LP)
11,667,635July 22,
2020
0 12monthsafter thelistingdateAffiliates or concert parties among theshareholders stated above
As of the end of the reporting period, among our top 10shareholders, Appotronics Holdings, Yuanshi,Appotronics Daye, Appotronics Hongye and Jinleijingare concert parties. We have not received any noticeabout affiliates or concert parties among othershareholders stated above.
Statement of top 10 holders of domestic depository receipts as of the end of the reporting period
□ Applicable√ N/A
Number of non-tradable depository receipts held by top 10 holders and lock-up period
□ Applicable√ N/A
(III) Statement of top 10 shareholders by number of votes held as of the end of the reportingperiod
□ Applicable√ N/A
(IV) Strategic investors or general corporations that become top shareholders as a result of
allotment of new shares/depository receipts
□ Applicable√ N/A
(III) Changes in the controlling shareholder or actual controller
□ Applicable√ N/A
(IV) Implementation of and changes in arrangements relating to depository receipts during the
reporting period
□ Applicable√ N/A
(V) Shares with special voting rights
Section VII. Preferred Shares
□ Applicable√ N/A
Section VIII. Directors, Supervisors, Senior Officers and EmployeesI. Changes in shareholding
(I) Changes in shareholding of current directors, supervisors, senior officers and key technicalstaff and the former directors, supervisors, senior officers and key technical staff who left theCompany during the reporting period
□ Applicable√ N/A
Other information
□ Applicable√ N/A
(II) Share incentives granted to directors, supervisors, senior officers and key technical staffduring the reporting period
1.Shareoptions
□ Applicable√ N/A
2.TypeIrestrictedshares
□ Applicable√ N/A
3.TypeIIrestrictedshares
□ Applicable√ N/A
II. Changes in directors, supervisors, senior officers and key technical staff
√ Applicable□ N/A
Name Position ChangeZENG Luhai Deputy General Manager Left the CompanyXIAO Yangjian Deputy General Manager & Board
Secretary
Left the Company
Changes in directors, supervisors, senior officers and key technical staff
√ Applicable□ N/A
1. Mr. ZENG Luhai resigned from his position as Deputy General Manager of the Company due to
personal career development reasons, and will act as a consultant of the Company after resigning fromthe Company. The Company issued an announcement regarding this event on January 23, 2020.
2. Mr. XIAO Yangjian resigned from his position as Deputy General Manager & Board Secretary of the
Company due to personal career development reasons, and will hold no position in the Company afterresigning from the Company. The Company issued an announcement regarding this event on May 21,2020.
III. Other information
□ Applicable√ N/A
Section IX. Corporate Bonds
□ Applicable√ N/A
Section X. Financial ReportI. Auditor's report
□ Applicable√ N/A
II. Financial statements
ConsolidatedBalanceSheet
At June 30, 2020Prepared by: Appotronics Corporation Limited
Unit: Yuan Currency: RMBItem Note At June 30, 2020 At December 31, 2019Current Assets:
Cash and bank balances VII. 1 729,447,665.39875,858,784.58Balances with clearingagencies
Placements with banks andother financial institutions
Held-for-trading financialassets
VII. 2 495,000,000.00540,000,000.00
Derivative financial assets
Notes receivable VII. 4 4,181,386.794,042,559.63
Accounts receivable VII. 5 134,035,161.27176,035,155.24
Receivables financing VII. 6 362,600.001,980,500.00
Prepayments VII. 7 39,439,987.0635,070,999.13
Premiums receivable
Amounts receivable underreinsurance contracts
Reinsurer's share ofinsurance contract reserves
Other receivables VII. 8 11,424,632.949,618,750.08
Including: Interest receivable
Dividends receivable
Financial assets purchasedunder resale agreements
Inventories VII. 9 402,722,530.65299,966,170.35
Contract assets VII. 10 3,914,909.70
Held-for-sale assets
Non-current assets due withinone year
Other current assets VII. 13 35,547,978.3144,405,513.30Total Current Assets 1,856,076,852.111,986,978,432.31Non-current Assets:
Loans and advances
Debt investments
Other debt investments
Long-term receivables
Long-term equityinvestments
VII. 17 268,154,993.87139,534,371.94
Other equity instrumentinvestments
VII. 18 11,975,419.3811,975,419.38
Other non-current financialassets
Investment properties
Fixed assets VII. 21 455,164,004.06471,204,340.95
Construction in progress VII. 22 30,992,866.4620,132,004.07
Bearer biological assets
Oil and gas assets
Use right assets
Intangible assets VII. 26 324,969,424.31332,331,324.07Development expenditureGoodwillLong-term prepaid expenses VII. 29 14,996,204.7116,908,070.34Deferred tax asset VII. 30 114,095,667.69109,023,941.85Other non-current assets VII. 31 6,352,208.6511,420,185.94
Total Non-current Assets 1,226,700,789.131,112,529,658.54
Total assets 3,082,777,641.243,099,508,090.85Current Liabilities:
Short-term borrowings VII. 32 115,636,028.3076,765,319.05Loans from the central bankTaking from banks and otherfinancial institutions
Held-for-trading financialliabilities
Derivative financial liabilities
Notes payable VII. 35 126,525,026.2237,335,841.79
Accounts payable VII. 36 198,595,546.20176,624,445.46
Receipts in advance VII. 37 173,963,358.36184,444,643.33
Contract liabilities VII. 38 19,442,085.20
Financial assets sold underrepurchase agreements
Customer deposits anddeposits from banks and otherfinancial institutions
Funds from securities tradingagency
Funds from underwritingsecurities agency
Employee benefits payable VII. 39 16,524,638.7950,586,932.71
Taxes payable VII. 40 8,453,167.4742,924,647.79
Other payables VII. 41 42,106,615.2414,364,076.43
Including: Interest payable
Dividends payable VII. 41 11,279,223.68
Fees and commissionspayable
Amounts payable underreinsurance contracts
Held-for-sale liabilities
Non-current liabilities duewithin one year
VII. 43 144,769,488.7264,968,795.02
Other current liabilities 1,667,826.54Total Current Liabilities 847,683,781.04648,014,701.58Non-current Liabilities:
Insurance contract reserves
Long-term borrowings VII. 45 79,892,744.86279,615,107.27
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term accounts payable VII. 48 3,539,750.003,488,100.00
Long-term employee benefitspayable
Provisions VII. 50 33,664,528.9627,072,676.49
Deferred income VII. 51 16,784,096.2017,108,361.69Deferred tax liabilitiesOther non-current liabilities
Total Non-currentLiabilities
133,881,120.02327,284,245.45Total Liabilities 981,564,901.06975,298,947.03Owners' (or Shareholders')Equity:
Paid-in capital (or sharecapital)
VII. 53 451,554,411.00451,554,411.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve VII. 55 1,224,027,021.211,207,942,318.37
Less: Treasury shares
Other comprehensive income VII. 57 4,300,879.053,287,063.85
Special reserve
Surplus reserve VII. 59 22,800,224.1322,800,224.13
General risk reserve
Retained profits VII. 60 270,715,417.30288,975,820.29
Total owners’ (orshareholders’) equityattributable to owners of theParent Company
1,973,397,952.691,974,559,837.64
Minority interests 127,814,787.49149,649,306.18Total Owners’ (orShareholders’) Equity
2,101,212,740.182,124,209,143.82Total Liabilities andOwners’(or Shareholders’)Equity
3,082,777,641.243,099,508,090.85
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Balance Sheet of the Parent Company
At June 30, 2020Prepared by: Appotronics Corporation Limited
Unit: Yuan Currency: RMBItem Note At June 30, 2020 At December 31, 2019Current Assets:
Cash and bank balances 474,625,994.92570,479,390.49Held-for-trading financialassets
495,000,000.00540,000,000.00Derivative financial assetsNotes receivable 1,518,836.793,542,559.63Accounts receivable XVII. 1 381,316,044.94299,315,776.44Receivables financing 362,600.00442,500.00Prepayments 13,215,986.436,410,257.48Other receivables XVII. 2 32,169,108.0867,227,575.21
Including: Interest receivable
Dividends receivableInventories 157,332,693.76135,617,379.22Contract assets 3,883,882.70Held-for-sale assetsNon-current assets due withinone year
Other current assets 2,946,612.1912,280,164.39
Total Current Assets 1,562,371,759.811,635,315,602.86Non-current Assets:
Debt investmentsOther debt investmentsLong-term receivablesLong-term equityinvestments
XVII. 3 393,643,159.82257,795,276.13Other equity instrumentinvestments
7,075,419.387,075,419.38Other non-current financialassets
Investment propertiesFixed assets 56,384,337.6260,391,512.92Construction in progress 17,253,087.131,385,496.59Bearer biological assetsOil and gas assetsUse right assetsIntangible assets 323,721,801.47330,796,423.87Development expenditureGoodwillLong-term prepaid expenses 11,819,212.9612,771,126.83Deferred tax asset 11,124,507.719,545,438.20Other non-current assets 6,099,956.306,744,453.85
Total Non-current Assets 827,121,482.39686,505,147.77Total assets 2,389,493,242.202,321,820,750.63Current Liabilities:
Short-term borrowings 52,418,795.9210,217,738.36Held-for-trading financialliabilities
Derivative financial liabilitiesNotes payable 20,559,800.2437,335,841.79Accounts payable 182,773,808.53162,596,838.45Receipts in advance 6,672,836.6511,116,659.11Contract liabilities 6,597,357.56Employee benefits payable 9,595,495.8926,985,668.92Taxes payable 2,243,767.431,534,242.70Other payables 72,454,716.0442,599,703.36Including: Interest payable
Dividends payable 11,279,223.68Held-for-sale liabilitiesNon-current liabilities duewithin one year
Other current liabilities 343,217.43
Total Current Liabilities 353,659,795.69292,386,692.69Non-current Liabilities:
Long-term borrowings
Bonds payableIncluding: Preferred shares
Perpetual bondsLeasing liabilitiesLong-term accounts payable 3,539,750.003,488,100.00Long-term employee benefitspayable
Provisions 17,615,667.4314,631,273.00Deferred income 15,571,644.4715,724,174.30Deferred tax liabilitiesOther non-current liabilitiesTotal Non-currentLiabilities
36,727,061.9033,843,547.30Total Liabilities 390,386,857.59326,230,239.99Owners' (or Shareholders')Equity:
Paid-in capital (or sharecapital)
451,554,411.00451,554,411.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 1,328,516,411.301,310,939,867.82
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 21,522,683.4021,522,683.40
Retained profits 197,512,878.91211,573,548.42Total Owners’ (orShareholders’) Equity
1,999,106,384.611,995,590,510.64Total Liabilities andOwners’(or Shareholders’)Equity
2,389,493,242.202,321,820,750.63Legal representative:
BO Lianming
Person in Charge of the Accounting Body
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Consolidated Income Statement
Jan. - Jun. 2020
Unit: Yuan Currency: RMBItem Note Half year of 2020 Half year of 2019I. Total operating income 716,025,207.34 853,356,964.84Including: Operating income VII. 61 716,025,207.34 853,356,964.84
Interest incomePremiums earnedFee and commission incomeII. Total operating costs 756,098,193.88 742,125,211.65Including: Operating costs VII. 61 529,787,789.94 511,757,903.12
Interest expensesFee and commission expenses
SurrendersClaims and policyholderbenefits (net of amounts recoverablefrom reinsurers)
Net withdrawal of insurancecontract reserves
Insurance policyholderdividends
Expenses for reinsuranceaccepted
Taxes and levies VII. 62 2,329,710.56 4,336,950.98
Sales expenses VII. 63 50,833,894.50 60,585,489.84
Administration expenses VII. 64 77,813,657.09 58,777,738.22
R&D expenses VII. 65 87,295,450.75 89,309,489.80
Financial expenses VII. 66 8,037,691.04 17,357,639.69
Including: Interest expense 11,612,825.87 18,267,758.92
Interest income 4,618,971.33 2,986,857.28Add: Other income VII. 67 32,922,034.97 17,417,109.11
Investment income (loss isindicated by “-”)
VII. 68 11,726,688.51 -3,460,616.55
Including: Income frominvestments in associates and jointventures
901,894.80 -3,458,306.31Gains fromderecognition of financial assets atamortized assets (loss is indicated by“-”)
Foreign exchange gains (loss isindicated by “-”)
Gains from net exposurehedges (loss is indicated by “-”)
Gains from changes in fairvalues (loss is indicated by “-”)
Losses of credit impairment(loss is indicated by “-”)
VII. 71 2,170,106.96 -761,760.88
Impairment losses of assets(loss is indicated by “-”)
VII. 72 -12,109,681.09 -1,379,296.10
Gains from disposal of assets(loss is indicated by “-”)
VII. 73 149,620.91III. Operating profit (loss is indicatedby “-”)
-5,214,216.28 123,047,188.77Add: Non-operating income VII. 74 270,615.48 2,330,175.84Less: Non-operating expenses VII. 75 740,701.95 1,031,334.68IV. Total profits (total losses areindicated by “-”)
-5,684,302.75 124,346,029.93Less: Income tax expense VII. 76 2,693,941.42 33,140,213.74V. Net profits (net losses are indicatedby “-”)
-8,378,244.17 91,205,816.19(I) Categorized by the continuity of operation
1. Net profits from continuing
operations (net losses are indicated by"-")
-8,378,244.17 91,205,816.19
2. Net profits from discontinued
operations (net losses are indicated by“-”)
(II) Categorized by the ownership
1. Net profits attributable to
shareholders of the Parent Company(net losses are indicated by "-")
14,327,442.96 66,579,574.06
2. Profits or losses attributable to
minority shareholders (net losses areindicated by “-”)
-22,705,687.13 24,626,242.13VI. Other comprehensive income, netof tax
1,039,650.57 -434,926.03(I) Other comprehensive incomethat can be attributable to owners ofthe Parent Company, net of tax
1,013,815.20 -432,661.21
1. Other comprehensive income
that cannot be reclassifiedsubsequently to profit or loss
(1) Changes from remeasurement of
defined benefit plans
(2) Other comprehensive income that
cannot be reclassified to profit or lossunder the equity method
(3) Changes in fair value of
investments in other equityinstruments
(4) Changes in fair value of
enterprises’ own credit risks
2. Other comprehensive income
that will be reclassified to profit orloss
1,013,815.20 -432,661.21
(1) Other comprehensive income that
will be reclassified to profit or lossunder the equity method
-135,706.31
(2) Changes in fair value of other debt
investments
(3) Amount of financial assets
reclassified to other comprehensiveincome
(4) Provision for credit impairment of
other debt investments
(5) Reserve for cash flow hedges
(6) Exchange differences on
translation of financial statementsdenominated in foreign currencies
1,149,521.51
-432,661.21
(7) Others
(II) Other comprehensive incomethat can be attributable to minorityshareholders, net of tax
25,835.37 -2,264.82VII. Total comprehensive income -7,338,593.60 90,770,890.16
(I) Total comprehensive income thatcan be attributable to owners of theParent Company
15,341,258.16 66,146,912.85
(II) Total comprehensive incomethat can be attributable to minorityshareholders
-22,679,851.76 24,623,977.31VIII. Earnings per share:
(I) Basic earnings per share(RMB/share)
0.03 0.17
(II) Diluted earnings per share 0.03 0.17
(RMB/share)For business combination involving entities under common control occurred during the period, net profitof the acquiree generated before the business combination is nil, and net profit of the acquiree generatedin prior period is nil.
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Income Statement of the Parent Company
Jan. - Jun. 2020
Unit: Yuan Currency: RMBItem Note Half year of 2020 Half year of 2019I. Operating income XVII. 4 384,899,378.41 427,684,505.04
Less: Operating costs XVII. 4 256,660,786.97 290,643,668.97Taxes and levies 1,352,141.01 3,071,754.81Sales expenses 27,526,291.43 40,844,366.05Administration expenses 56,310,385.85 39,125,724.07R&D expenses 51,085,854.54 56,165,426.14Financial expenses -6,218,121.07 -126,392.93Including: Interest expense 354,733.03 2,053,982.09
Interest income 6,827,084.77 4,133,521.27Add: Other income 26,399,900.47 9,867,959.13Investment income (loss isindicated by “-”)
XVII. 5 10,824,793.71 -64,542.33Including: Income frominvestments in associates and jointventures
Gains fromderecognition of financial assets atamortized assets (loss is indicated by“-”)
Gains from net exposurehedges (loss is indicated by “-”)
Gains from changes in fairvalues (loss is indicated by “-”)
Losses of credit impairment(loss is indicated by “-”)
-144,581.15 859,443.66
Impairment losses of assets(loss is indicated by “-”)
-10,600,208.60 -1,501,552.91
Gains from disposal of assets(loss is indicated by “-”)
II. Operating profit (loss is indicatedby “-”)
24,661,944.11 7,121,265.48Add: Non-operating income 253,319.61 2,325,793.95Less: Non-operating expenses 350,387.34 839,436.27III. Total profits (total losses areindicated by “-”)
24,564,876.38 8,607,623.16Less: Income tax expense 4,758,965.06 1,257,976.90IV. Net profits (net losses are indicatedby “-”)
19,805,911.32 7,349,646.26(I) Net profits from continuingoperations (net losses are indicated by
19,805,911.32 7,349,646.26
“-”)
(II) Net profits from discontinuedoperations (net losses are indicated by“-”)
V. Other comprehensive income, net oftax
(I) Other comprehensive incomethat cannot be reclassifiedsubsequently to profit or loss
1.Changes from remeasurement
of defined benefit plans
2. Other comprehensive income
that cannot be reclassified to profit orloss under the equity method
3.Changes in fair value of
investments in other equityinstruments
4.Changes in fair value of
enterprises’ own credit risks
(II) Other comprehensive incomethat will be reclassified to profit orloss
1. Other comprehensive income
that will be reclassified to profit orloss under the equity method
2. Changes in fair value of other
debt investments
3. Amount of financial assets
reclassified to other comprehensiveincome
4. Provision for credit impairment
of other debt investments
5. Reserve for cash flow hedges
6. Exchange differences on
translation of financial statementsdenominated in foreign currencies
7. OthersVI. Total comprehensive income 19,805,911.32 7,349,646.26VII. Earnings per share:
(I) Basic earnings per share(RMB/share)
0.04 0.02
(II) Diluted earnings per share(RMB/share)
0.04 0.02
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Consolidated Cash Flow Statement
Jan. - Jun. 2020
Unit: Yuan Currency: RMB
Item Note Half year of 2020 Half year of 2019I. Cash Flows from OperatingActivities:
Cash receipts from the sale ofgoods and the rendering ofservices
857,080,419.89 958,367,229.40
Net increase in customerdeposits and deposits from banksand other financial institutions
Net increase in loans from thecentral bank
Net increase in taking frombanks and other financialinstitutions
Cash receipts from premiumsunder direct insurance contracts
Net cash receipts fromreinsurance business
Net cash receipts frompolicyholders’ deposits andinvestment contract liabilities
Cash receipts from interest, feesand commissions
Net increase in taking frombanks
Net increase in financial assetssold under repurchasearrangements
Net cash received fromsecurities trading agencies
Receipts of tax refunds 4,632,072.61 2,508,672.80
Other cash receipts relating tooperating activities
VII. 78 81,270,397.72 52,872,028.86Sub-total of cash inflowsfrom operating activities
942,982,890.22 1,013,747,931.06Cash payments for goodspurchased and services received
572,318,784.38 665,098,139.82Net increase in loans andadvances to customers
Net increase in balance with thecentral bank and due from banksand other financial institutions
Cash payments for claims andpolicyholders' benefits underdirect insurance contracts
Net increase in placements withbanks and other financialinstitutions
Cash payments for interest, feesand commissions
Cash payments for insurancepolicyholder dividends
Cash payments to and on behalfof employees
163,925,755.54 143,289,429.46
Payments of various types oftaxes
43,586,182.30 111,587,382.38
Other cash payments relating tooperating activities
VII. 78 100,146,106.20 108,316,392.92Sub-total of cash outflowsfrom operating activities
879,976,828.42 1,028,291,344.58Net cash flow fromoperating activities
63,006,061.80 -14,543,413.52II. Cash Flows from InvestingActivities:
Cash receipts from disposalsand recovery of investments
1,075,000,000.00 3,700,000.00
Cash receipts from investmentincome
10,824,793.71
Net cash receipts fromdisposals of fixed assets,intangible assets and otherlong-term assets
3,600.00 4,467.91
Net cash receipts fromdisposals of subsidiaries and otherbusiness units
Other cash receipts relating toinvesting activities
Sub-total of cash inflowsfrom investing activities
1,085,828,393.71 3,704,467.91Cash payments to acquire orconstruct fixed assets, intangibleassets and other long-term assets
19,930,656.68 22,513,875.95Cash payments to acquireinvestments
1,158,213,540.00Net increase in pledged loansreceivables
Net cash payments foracquisitions of subsidiaries andother business units
Other cash payments relating toinvesting activities
Sub-total of cash outflowsfrom investing activities
1,178,144,196.68 22,513,875.95Net cash flows frominvestment activities
-92,315,802.97 -18,809,408.04III. Cash Flows from FinancingActivities:
Cash receipts from capitalcontributions
Including: Cash receipts fromcapital contributions fromminority shareholders ofsubsidiaries
Cash receipts from borrowings 98,922,683.45 256,260,000.00
Other cash receipts relating tofinancing activities
Sub-total of cash inflowsfrom financing activities
98,922,683.45 256,260,000.00Cash repayments of borrowings 179,644,434.20 156,491,119.70Cash payments for distributionof dividends or profits orsettlement of interest expenses
34,547,574.58 17,090,008.81
Including: Payments fordistribution of dividends or profitsto minority shareholders ofsubsidiaries
Other cash payments relating tofinancing activities
VII. 78 22,587.36 3,570,350.00Sub-total of cash outflowsfrom financing activities
214,214,596.14 177,151,478.51Net cash flows fromfinancing activities
-115,291,912.69 79,108,521.49IV. Effect of Foreign ExchangeRate Changes on Cash and CashEquivalents
1,108,215.61 -519,590.51V. Net Increase in Cash andCash Equivalents
-143,493,438.25 45,236,109.42Add: Opening balance of cashand cash equivalents
829,789,487.86 472,508,550.40VI. Closing Balance of Cash andCash Equivalents
686,296,049.61 517,744,659.82
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Cash Flow Statement of the Parent Company
Jan. - Jun. 2020
Unit: Yuan Currency: RMBItem Note Half year of 2020 Half year of 2019I. Cash Flows from OperatingActivities:
Cash receipts from the sale ofgoods and the rendering ofservices
351,592,568.58 422,086,255.83
Receipts of tax refunds 3,108,523.77
Other cash receipts relating tooperating activities
147,176,514.17 183,663,872.41Sub-total of cash inflowsfrom operating activities
501,877,606.52 605,750,128.24Cash payments for goodspurchased and services received
320,604,308.34 286,971,692.80Cash payments to and onbehalf of employees
98,194,575.75 89,454,762.70Payments of various types oftaxes
4,579,897.88 43,848,346.80Other cash payments relatingto operating activities
87,411,317.15 222,179,859.64Sub-total of cash outflowsfrom operating activities
510,790,099.12 642,454,661.94Net cash flow from operatingactivities
-8,912,492.60 -36,704,533.70II. Cash Flows from InvestingActivities:
Cash receipts from disposalsand recovery of investments
1,075,000,000.00 4,635,457.67
Cash receipts from investmentincome
10,824,793.71
Net cash receipts fromdisposals of fixed assets,intangible assets and otherlong-term assets
3,600.00
Net cash receipts fromdisposals of subsidiaries andother business units
Other cash receipts relating toinvesting activities
Sub-total of cash inflowsfrom investing activities
1,085,828,393.71 4,635,457.67Cash payments to acquire orconstruct fixed assets, intangibleassets and other long-term assets
14,697,925.55 18,327,199.02Cash payments to acquireinvestments
1,161,213,540.00Net cash payments foracquisitions of subsidiaries andother business units
Other cash payments relatingto investing activities
Sub-total of cash outflowsfrom investing activities
1,175,911,465.55 18,327,199.02Net cash flows frominvestment activities
-90,083,071.84 -13,691,741.35III. Cash Flows from FinancingActivities:
Cash receipts from capitalcontributions
Cash receipts from borrowings 52,241,387.30 132,000,000.00
Other cash receipts relating tofinancing activities
Sub-total of cash inflowsfrom financing activities
52,241,387.30 132,000,000.00Cash repayments ofborrowings
10,000,000.00 44,440,000.00Cash payments for distributionof dividends or profits orsettlement of interest expenses
23,000,602.77 2,432,260.06Other cash payments relatingto financing activities
22,587.36 3,570,350.00Sub-total of cash outflowsfrom financing activities
33,023,190.13 50,442,610.06Net cash flows fromfinancing activities
19,218,197.17 81,557,389.94IV. Effect of Foreign ExchangeRate Changes on Cash andCash Equivalents
295,306.01 -607,553.95V. Net Increase in Cash andCash Equivalents
-79,482,061.26 30,553,560.94Add: Opening balance of cashand cash equivalents
524,648,100.62 295,049,085.02
VI. Closing Balance of Cashand Cash Equivalents
445,166,039.36 325,602,645.96
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Consolidated Statement of Changes in Owners’ Equity
Jan. - Jun. 2020
Unit: Yuan Currency: RMBItem Half year of 2020
Equity attributable to owners of the Parent Company
MinorityinterestsPaid-incapital (orshare capital)
Other equity instruments
Capital reserve
Less:
Treasury
shares
Othercomprehensive
income
Specialreserve
Surplusreserve
General
riskreserve
Retainedprofits
Others
Sub-totalPreferred
shares
Perpetual
bonds
Others
I. Closingbalance of thepreceding year
451,554,411.00
1,207,942,318.37
3,287,063.85
22,800,224.13
288,975,820.29
1,974,559,837.64
149,649,306.18
Add: Changes inaccountingpolicies
1,278,734.88
1,278,734.88
-646,507.57
Corrections of priorperiod errors
Businesscombinationinvolvingentities undercommon control
Others
II. Openingbalance of thecurrent year
451,554,411.00
1,207,942,318.37
3,287,063.85
22,800,224.13
290,254,555.17
1,975,838,572.52
149,002,798.61
III. Changesfor the year(decrease isindicated by“-”)
16,084,702.84
1,013,815.20
-19,539,137.87
-2,440,619.83
-21,188,011.12
(I) Totalcomprehensiveincome
1,013,815.20
14,327,442.96
15,341,258.16
-22,679,851.76
(II) Owners’contributionsand reductionin capital
16,084,702.84
16,084,702.84
1,491,840.64
1. Ordinary
sharescontributed byowners
2. Capital
contributionfrom holders ofother equityinstruments
3. Share-based
paymentrecognized inowners' equity
16,084,702.84
16,084,702.84
1,491,840.64
4. Others
(III) Profitdistribution
-33,866,580.83
-33,866,580.83
1. Transfer to
surplusreserve
2. Transfer to
generalreserve
3.Distributionsto owners (orshareholders)
-33,866,580.83
-33,866,580.83
4. Others
(IV) Transferswithinowners’equity
1.Capitalizationof capitalreserve
2.Capitalizationof capitalreserve
3. Loss offset
by surplusreserve
4.Retained
earnings
carriedforward fromchanges indefinedbenefit plans
5.Retained
earningscarriedforward fromothercomprehensiveincome
6.Others
(V) Specialreserve
1. Transfer to
specialreserve in theperiod
2. Amount
utilized in theperiod
(VI) Others
IV. Closingbalance of thecurrent year
451,554,411.00
1,224,027,021.21
4,300,879.05
22,800,224.13
270,715,417.30
1,973,397,952.69
127,814,787.49
ItemHalf year of 2019
Equity attributable to owners of the Parent Company
Minorityinterests
Total Owner's
Paid-in capital(or sharecapital)
Other equity instruments
Capital reserve
Less:
Treasury
shares
Othercomprehensive
income
Specialreserve
Surplusreserve
General
riskreserve
Retained
profits
OthersSub-total
Preferred
shares
Perpetual
bonds
Others
I. Closingbalance of thepreceding year
383,554,411.00 205,995,596.851,044,703.00 12,695,712.93112,623,054.78715,913,478.56110,985,548.13 82
E
Add: Changesin accountingpolicies
Corrections of prior
period errorsBusinesscombinationinvolvingentities undercommoncontrol
OthersII. Openingbalance of thecurrent year
383,554,411.00 205,995,596.851,044,703.00 12,695,712.93112,623,054.78715,913,478.56110,985,548.13 82
III. Changesfor the year(decrease isindicated by“-”)
-432,661.21 66,579,574.0666,146,912.8524,623,977.31 9
(I) Totalcomprehensiveincome
-432,661.21 66,579,574.0666,146,912.8524,623,977.31 9
(II) Owners’contributionsand reductionin capital
1. Ordinary
sharescontributed byowners
2. Capital
contributionfrom holdersof other equityinstruments
3. Share-based
paymentrecognized inowners' equity
4. Others(III) Profitdistribution
1. Transfer to
surplus reserve
2. Transfer to
generalreserve
3.Distributionsto owners (orshareholders)
4. Others
(IV) Transferswithin owners’equity
1.Capitalizationof capitalreserve
2.Capitalizationof capitalreserve
3. Loss offset
by surplusreserve
4.Retained
earningscarriedforward fromchanges indefined benefitplans
5.Retained
earningscarriedforward fromothercomprehensiveincome
6.Others(V) Specialreserve
1. Transfer to
special reservein the period
2. Amount
utilized in theperiod
(VI) OthersIV. Closingbalance of thecurrent year
383,554,411.00 205,995,596.85612,041.79 12,695,712.93179,202,628.84782,060,391.41135,609,525.44 91
Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
Statement of Changes in Owners’ Equity of the Parent Company
Jan. - Jun. 2020
Unit: Yuan Currency: RMB
Item
Half year of 2020
Paid-in capital(or share capital)
Other equity instruments
Capital reserve
Less:
Treasury shares
Othercomprehensiv
e income
Specialreserve
Surplus reserveRetained profits
Total Owner'sEquityPreferred shares
Perpetual bonds
OthersI. Closingbalance of thepreceding year
451,554,411.0
1,310,939,867.8
21,522,683.4
211,573,548.4
1,995,590,510.6
Add: Changesin accountingpolicies
Corrections of priorperiod errors
Others
II. Openingbalance of thecurrent year
451,554,411.0
1,310,939,867.8
21,522,683.4
211,573,548.4
1,995,590,510.6
III. Changesfor the year(decrease isindicated by“-”)
17,576,543.48
-14,060,669.51
3,515,873.97
(I) Totalcomprehensive income
19,805,911.32
19,805,911.32
(II) Owners’contributionsand reductionin capital
17,576,543.48
17,576,543.48
1. Ordinary
sharescontributed byowners
2. Capital
contribution
from holdersof other equityinstruments
3. Share-based
paymentrecognized inowners' equity
17,576,543.48
17,576,543.48
4. Others
(III) Profitdistribution
-33,866,580.8
-33,866,580.83
1. Transfer to
surplusreserve
2.Distributionsto owners (orshareholders)
-33,866,580.8
-33,866,580.83
3. Others
(IV) Transferswithinowners’equity
1.Capitalizationof capitalreserve
2.Capitalizationof capitalreserve
3. Loss offset
by surplusreserve
4.Retained
earningscarriedforward fromchanges indefinedbenefit plans
5.Retained
earningscarriedforward fromothercomprehensive income
6.Others
(V) Specialreserve
1. Transfer to
special reservein the period
2. Amount
utilized in theperiod
(VI) OthersIV. Closingbalance of thecurrent year
451,554,411.00 1,328,516,411.3021,522,683.40197,512,878.911,999,106,384.61
Item
Half year of 2019Paid-in capital(or share capital)
Other equity instruments
Capital reserve
Less:
Treasury
shares
Othercomprehensive
income
Specialreserve
Surplus reserveRetained profits
Total Owner's
EquityPreferred
shares
Perpetual
bonds
OthersI. Closingbalance of thepreceding year
383,554,411.00
308,318,059.21
11,418,172.20
120,632,947.59
823,923,590.00
Add: Changesin accountingpolicies
Correctionsof prior perioderrors
Others
II. Openingbalance of thecurrent year
383,554,411.00
308,318,059.21
11,418,172.20
120,632,947.59
823,923,590.00
III. Changes forthe year(decrease isindicated by“-”)
7,349,646.26
7,349,646.26
(I) Totalcomprehensiveincome
7,349,646.26
7,349,646.26
(II) Owners’contributionsand reduction incapital
1. Ordinary
sharescontributed byowners
2. Capital
contributionfrom holders ofother equityinstruments
3. Share-based
paymentrecognized inowners' equity
4. Others
(III) Profitdistribution
1. Transfer to
surplus reserve
2. Distributions
to owners (orshareholders)
3. Others(IV) Transferswithin owners’equity
1. Capitalization
of capitalreserve
2. Capitalization
of capitalreserve
3. Loss offset by
surplus reserve
4.Retained
earnings carriedforward fromchanges indefined benefitplans
5.Retained
earnings carriedforward fromothercomprehensiveincome
6.Others(V) Specialreserve
1. Transfer to
special reservein the period
2. Amount
utilized in theperiod
(VI) Others
IV. Closingbalance of thecurrent year
383,554,411.00 308,318,059.2111,418,172.20127,982,593.85831,273,236.26Legal representative:
BO Lianming
Person in Charge of the Accounting Body:
WEI Yanlin
Chief Accountant:
ZHAO Ruijin
III. Company profile
1. Profile
√ Applicable□ N/A
Appotronics Corporation Limited (hereinafter referred to as “Company” or “the Company”), formallynamed as Appotronics Corporation Ltd.(hereinafter referred to as “Appotronics Ltd.”), was jointlyinvested and established by LI Yi and XU Yanzheng and registered in Nanshan Branch of MarketSupervision and Regulation Bureau of Shenzhen Municipality on October 24, 2006 with the businesslicense numbered in 4403011245637. Upon establishment, the registered capital of Appotronics Inc. wasRMB 100,000. On May 31, 2018, the benchmark date, Appotronics Inc was changed into a companylimited by shares as a whole. On July 20, 2018, the Company completed the registration in NanshanBranch of Market Supervision and Regulation Bureau of Shenzhen Municipality and headquartered inShenzhen, Guangdong Province. The Company now holds the business license with the unified socialcredit code of 91440300795413991N and has registered capital amounted to RMB 451,554,411.00. TheCompany has 451,554,411 shares in total (with the par value of RMB 1 per share). The Company’sshares were listed for trading on Shanghai Stock Exchange on July 22, 2019.The Company can be classified into the computer, communication and other electronic equipmentmanufacturing industry. It mainly engages in research and development, production, sales and servicesof laser display core devices and complete equipment, and can provide customers with technicalresearch and development services and customized products.This financial statements have been approved by the Company’s twenty-fifth session of the first board ofdirectors on August 25, 2020 for public disclosure.
2. Scopeofconsolidatedfinancialstatements
√ Applicable□ N/A
The Company has included 20 subsidiaries into the consolidated financial statements for the currentperiod, including Appotronics Timewaying (Beijing) Technology Co., Ltd., Shenzhen AppotronicsSoftware Technology Co., Ltd., Shenzhen City Appotronics Xiaoming Technology Co., Ltd., BeijingOrient Appotronics Technology Co., Ltd., Fengmi (Beijing) Technology Co., Ltd., CINEAPPO LaserCinema Technology (Beijing) Co., Ltd., Shenzhen Appotronics Laser Display Technology Co., Ltd.,Shenzhen Appotronics Laser Technology Co., Ltd., Qingda Appotronics (Xiamen) Technology Co., Ltd.,Shenzhen Appotronics Home Line Technology Co., Ltd., Appotronics Hong Kong Limited, AppotronicsUSA, Inc., Fabulus Technology Hong Kong Limited, JoveAI Limited, JoveAI Innovation, Inc.,FORMOVIE TECHNOLOGY INC, WEMAX LLC, JOVEAI ASIA COMPANY LIMITED, ShenzhenAppotronics Display Device Co., Ltd. and other subsidiaries. Refer to descriptions in IX of Section XIfor details.
IV. Basis of preparation of financial statements
1. Basisofpreparation
The Company’s financial statements are prepared on a going-concern basis.
2. Goingconcern
√ Applicable□ N/A
The Company has detected no events or circumstances that may cast significant doubt upon its ability tocontinue as a going concern within 12 months from the reporting period.
V. Significant accounting policies and accounting estimates
Specific accounting policies and accounting estimates:
√ Applicable□ N/A
The Company establishes the specific accounting policies and makes the specific accounting estimateswith respect to the impairment of financial instruments, depreciation of fixed assets, amortization ofintangible assets, recognition of revenues and other transactions and events according to the actualproduction and operation characteristics of the Company.
1. StatementofcompliancewiththeAccountingStandardsforBusinessEnterprises
The financial statements prepared by the Company conform to the requirements of the AccountingStandards for Business Enterprises and truly and completely reflect the Company’s financial position,operating results, changes in shareholders' equity, cash flows and other related information.
2. Accountingperiod
The Company’s accounting year is from January 1 to December 31 of each calendar year.
3. Operatingcycle
√ Applicable□ N/A
The Company has a relatively short operating cycle, and determines the liquidity of assets and liabilitieson the basis of 12 months.
4. Functionalcurrency
The Company adopts RMB as its functional currency.
5. Theaccountingtreatmentofbusinesscombinationsinvolvingentitiesundercommoncontrol
andnotinvolvingentitiesundercommoncontrol
√ Applicable□ N/A
1. Accounting treatment of business combinations involving entities under common control
Assets and liabilities acquired from a business combination by the Company are measured at thecarrying amounts of the assets and liabilities of the acquiree in the consolidated financial statements ofthe ultimate controller at the date of combination. The difference between the carrying amount of theowners’ equity of the acquiree as stated in the consolidated financial statements of the ultimatecontroller and the carrying amount of the total consideration paid or total par value of the shares issuedin connection with the combination is treated as an adjustment to the capital reserve. In case the capitalreserve is not sufficient to absorb the difference, the remaining balance is adjusted against the retainedearnings.
2. Accounting treatment of business combinations not involving entities under common control
Where the cost of combination exceeds the Company’s interest in the fair value of the acquiree’sidentifiable net assets, the difference is recognized as goodwill. Where the cost of combination is lessthan the Company’s interest in the fair value of the acquiree’s identifiable net assets, the Companyfirstly reassesses the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilitiesand the measurement of the cost of combination. If after that reassessment, the cost of combination isstill less than the Company’s interest in the fair value of the acquiree’s identifiable net assets, theacquirer recognizes the remaining difference immediately in profit or loss for the current period.
6. Methodofpreparationofconsolidatedfinancialstatements
√ Applicable□ N/A
The parent company includes all of its controlled subsidiaries in its consolidated financialstatements. The consolidated financial statements are prepared by the parent company in accordancewith the Accounting Standards for Business Enterprises No. 33 -- Consolidated Financial Statements, onthe basis of the respective financial statements of the parent company and its subsidiaries, by referenceto other relevant data.
7. Classificationofjointarrangementsandaccountingtreatmentofjointoperations
√ Applicable□ N/A
1. Joint arrangements are classified into joint operations and joint ventures.
2. When the Company is a party to a joint operation, the Company recognizes the following items
relating to its interest in the joint operation:
(1) the assets individually held by the Company, and the Company’s share of the assets held jointly;
(2) the liabilities incurred individually by the Company, and the Company’s share of the liabilities
incurred jointly;
(3) the Company’s revenue from the sale of its share of output of the joint operation;
(4) the Company’s share of revenue from the sale of assets by the joint operation; and
(5) the expenses incurred individually by the Company, and the Company’s share of the expenses
incurred jointly.
8. Recognitionofcashandcashequivalents
Cash represented in the statement of cash flows comprises cash on hand and deposits that can be readilywithdrawn on demand. Cash represented in the statement of cash flows comprises cash on hand anddeposits that can be readily withdrawn on demand (generally, within three months from the date ofacquisition). Cash equivalents are the Group's short-term, highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
9. Translationoftransactionsandfinancialstatementsdenominatedinforeigncurrencies
√ Applicable□ N/A
1. Transactions denominated in foreign currencies
A foreign currency transaction is recorded in RMB, on initial recognition, by applying the spotexchange rate on the date of the transaction. At the balance sheet date, foreign currency monetary itemsare translated into RMB using the spot exchange rates at the balance sheet date. Exchange differencesarising from such translations are recognized in profit or loss for the current period, except for thoseattributable to foreign currency borrowings that have been taken out specifically for the acquisition orconstruction of qualifying assets and accrued interest. Non-monetary items denominated in foreigncurrencies that are measured at historical cost are translated using the foreign exchange rates ruling atthe transaction dates, without adjusting the amounts in RMB. Non-monetary items denominated inforeign currencies that are measured at fair value are translated using the foreign exchange ratesprevailing at the dates when the fair value was determined, with exchange differences arising from suchtranslations recognized in profit or loss for the current period or other comprehensive income.
2. Translation of financial statements denominated in foreign currencies
Asset and liability items on the balance sheet are translated at the spot exchange rate prevailing atthe balance sheet date; shareholders' equity items other than "retained profits” are translated at the spotexchange rates at the dates on which such items arose; income and expense items in the incomestatement are translated at the exchange rates that approximate the actual spot exchange rates on thedates of the transactions. Exchange differences arising from such translations are recognized in othercomprehensive income.
10. Financialinstruments
√ Applicable□ N/A
1. Classification of financial assets and financial liabilities
On initial recognition, the Company’s financial assets are classified into three categories, including
(1) financial assets at amortized cost; (2) financial assets at fair value through other comprehensive
income; and (3) financial assets at fair value through profit or loss for the current period.
Upon initial recognition, the Company’s financial liabilities are classified into four categories,including (1) financial liabilities at fair value through profit or loss for the current period; (2) financialliabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition orcontinuing involvement in the financial assets transferred; (3) financial guarantee contracts not fallingunder Clauses (1) and (2), and loan commitments not falling under Clause (1) and below market interestrate; and (4) financial liabilities at amortized cost.
2. Recognition, measurement and derecognition of financial assets and financial liabilities
(1) Recognition and initial measurement of financial assets and financial liabilities
When the Company becomes a party to a financial instrument contract, a financial asset or liabilityis recognized. Financial assets and liabilities are initially measured at fair value. Transaction costsrelating to financial assets or liabilities at fair value through profit or loss are directly recognized inprofit or loss for the current period. Transaction costs relating to other kinds of financial assets orliabilities are included in their initially recognized amount. However, the accounts receivable, if do notcontain any significant financing component or are recognized by the Company without taking intoconsideration the financing components under the contracts with a term of less than one year upon initialrecognition, are initially measured at transaction price.
(2) Subsequent measurement of financial assets
1) Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured at amortized cost using the effectiveinterest method. Gains or losses arising from financial assets at amortized cost that do not belong to anyhedging relationship are recognized in profit or loss for the current period upon derecognition,reclassification, amortization using the effective interest method or recognition of impairment.
2) Investments in debt instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are subsequentlymeasured at fair value. Interest, impairment losses or gains and exchange gains or losses calculatedusing the effective interest method are recognized in profit or loss for the current period, and other gains
or losses are recognized in other comprehensive income. Upon derecognition, the aggregate gains orlosses previously recognized in other comprehensive income are transferred to profit or loss for thecurrent period.
3) Investments in equity instruments at fair value through other comprehensive income
Investments in equity instruments at fair value through other comprehensive income aresubsequently measured at fair value. Dividends received (other than those received as recovery ofinvestment cost) are recognized in profit or loss for the current period, and other gains or losses arerecognized in other comprehensive income. Upon derecognition, the accumulated gains or lossespreviously recognized in other comprehensive income are transferred to retained earnings.
4) Financial assets at fair value through profit or loss for the current period
Financial assets at fair value through profit or loss for the current period are subsequently measuredat fair value, with gains or losses arising therefrom, including interest and dividend income, recognizedin profit or loss for the current period, except the financial assets belonging to any hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss for the current period
Financial liabilities at fair value through profit or loss for the current period include financialliabilities held for trading (including derivatives classified as financial liabilities), and financial liabilitiesdirectly designated as at fair value through profit or loss for the current period. Such financial liabilitiesare subsequently measured at fair value. Changes in the fair value of financial liabilities designated as atfair value through profit or loss for the period arising out of changes in the Company’s own credit riskare recognized in other comprehensive income, unless such treatment will result in or increase anyaccounting mismatch in profit or loss. Other gains or losses arising from such financial liabilities,including interest expenses and changes in fair value not arising out of changes in the Company’s owncredit risk, are recognized in profit or loss for the current period, except the financial liabilitiesbelonging to any hedging relationship. Upon derecognition, the accumulated gains or losses previouslyrecognized in other comprehensive income are transferred to retained earnings.
2) Financial liabilities arising as a result of the transfer of financial assets not meeting the criteria
for derecognition or continuing involvement in the financial assets transferred
Such financial liabilities are measured in accordance with the Accounting Standards for BusinessEnterprises No. 23 -- Transfer of Financial Assets.
3) Financial guarantee contracts not falling under Clauses 1) and 2), and loan commitments not
falling under Clause 1) and below market interest rate
Such financial liabilities are subsequently measured at the higher of ① provision for impairmentlosses determined according to the policy for impairment of financial instruments; and ② balance of theinitially recognized amount after deduction of the accumulated amortization determined in accordancewith the relevant policy.
4) Financial liabilities at amortized cost
Financial liabilities at amortized cost are subsequently measured at amortized cost using the
effective interest method. Gains or losses on financial liabilities at amortized cost that do not belong toany hedging relationship are recognized in profit or loss for the current period upon derecognition oramortization using the effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
① the contractual right to receive cash flows from the financial assets has expired; or
② the financial assets have been transferred and such transfer meets the criteria for derecognition
of financial assets as set forth in the Accounting Standards for Business Enterprises No. 23 -- Transfer ofFinancial Assets.
2) A financial liability (or part thereof) is derecognized when all or part of the outstanding
obligations thereon have been discharged.
3. Recognition and measurement of financial assets transferred
When a financial asset of the Company is transferred, if substantially all the risks and rewardsincidental to the ownership of the financial asset have been transferred, the financial asset isderecognized, and the rights and obligations incurred or retained in such transfer are separatelyrecognized as assets or liabilities (as the case may be); if substantially all the risks and rewardsincidental to the ownership of the financial asset have been retained, the financial asset transferredcontinues to be recognized. If the Company neither transferred nor retained a substantial portion of allrisks and rewards incidental to the ownership of the financial asset, then: (1) if the Company does notretain control over the financial asset, the financial asset is derecognized, and the rights and obligationsincurred or retained in such transfer are separately recognized as assets or liabilities (as the case may be);and (2) if the Company retains control over the financial asset, the financial asset continues to berecognized to the extent of the Company’s continuing involvement in the financial asset transferred, anda corresponding liability is recognized.If an entire transfer of a financial asset meets the criteria for derecognition, the difference between
(1) the carrying amount of the financial asset transferred at the date of derecognition; and (2) the sum of
the consideration received from the transfer and the portion of the accumulated amount of changes infair value directly recorded as other comprehensive income originally that corresponds to the partderecognized (where the financial asset transferred is an investment in debt instruments at fair valuethrough other comprehensive income) is recognized in profit or loss for the current period. If part of afinancial asset is transferred and the part transferred entirely meets the criteria for derecognition, thetotal carrying amount of the financial asset immediately prior to the transfer is allocated between the partderecognized and the part not derecognized in proportion to their relative fair value at the date of transfer,and the difference between (1) the carrying amount of the part derecognized; and (2) the sum of theconsideration received from the transfer of the part derecognized and the portion of the accumulatedamount of changes in fair value directly recorded as other comprehensive income originally thatcorresponds to the part derecognized (where the financial asset transferred is an investment in debtinstruments at fair value through other comprehensive income) is recognized in profit or loss for the
current period.
4. Determination of fair value of financial assets and financial liabilities
The Company adopts the valuation techniques applicable to the current situations and withsufficient data available and support of other information, to determine the fair value of financial assetsand financial liabilities. The Company classifies the inputs used by the valuation techniques in thefollowing levels and uses them in turn:
(1) Level 1 inputs: quoted market price (unadjusted) in an active market for an identical asset or
liability available at the date of measurement;
(2) Level 2 inputs: inputs other than inputs included within Level 1 that are observable directly or
indirectly. This category includes quoted prices for similar assets or liabilities in active markets, quotedprices for identical or similar assets or liabilities in inactive markets, observable inputs other than quotedprices (such as interest rate and yield curves observable during regular intervals of quotation), and inputsvalidated by the market;
(3) Level 3 inputs: inputs that are unobservable. This category includes interest rate or stock
volatility that cannot be directly observed or validated by observable market data, future cash flows fromretirement obligation incurred in business combinations, and financial forecasts made using own data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
The Company determines the impairment and assesses provision for impairment losses of financialassets at amortized cost, investments in debt instruments at fair value through other comprehensiveincome, lease receivable, loan commitments other than financial liabilities designated at fair valuethrough profit or loss for the current period, and financial guarantee contracts other than financialliabilities designated at fair value through profit or loss for the current period and financial liabilitiesarising as a result of the transfer of financial assets not meeting the criteria for derecognition orcontinuing involvement in the financial assets transferred, on the basis of expected credit losses.
Expected credit loss is the weighted average of credit losses on financial instruments taking intoaccount the possibility of default. Credit loss is the difference between all contractual cash flowsreceivable under the contract and estimated future cash flows discounted at the original effective interestrate, i.e. the present value of all cash shortage, wherein the Company’s purchased or originated financialassets that have become credit impaired are discounted at their credit-adjusted effective interest rate.
With respect to purchased or originated financial assets that have become credit impaired, at thebalance sheet date, the Company recognizes a loss allowance equal to the accumulated amount ofchanges in lifetime expected credit losses since initial recognition.
With respect to accounts receivable that do not contain any significant financing component or arerecognized by the Company without taking into consideration the financing components under thecontracts with a term of less than one year, the Company uses the simple measurement method andrecognizes a loss allowance equal to the lifetime expected credit loss.
With respect to financial assets not using the measurement methods stated above, at each balancesheet date, the Company assesses whether the credit risk has increased significantly since initialrecognition, and recognizes a loss allowance equal to the lifetime expected credit loss if the credit riskhas increased significantly since initial recognition, or to the expected credit losses within the next 12months if the credit risk has not increased significantly since initial recognition.
The Company uses reasonable and supportable information, including forward-looking information,and compares the possibility of default at the balance sheet date with the possibility of default uponinitial recognition, to determine whether the credit risk of the financial instruments has increasedsignificantly since initial recognition.
At the balance sheet date, if the Company determines that a financial instrument only has low creditrisk, the Company assumes that its credit risk has not increased significantly since initial recognition.
The Company assesses expected credit risk and measures expected credit losses of financialinstruments individually or collectively. When assessing the financial instruments collectively, theCompany includes the financial instruments in different groups according to their common riskcharacteristics.
At each balance sheet date, the Company re-assesses the expected credit losses, with the amount ofincrease in or reversal of loss allowance recognized in profit or loss for the current period as impairmentlosses or gains. With respect to a financial asset at amortized cost, its carrying amount recorded in thebalance sheet is written off against the loss allowance. With respect to an investment in debt instrumentsat fair value through other comprehensive income, the Company recognizes the loss allowance in othercomprehensive income, without reducing its carrying amount.
(2) Financial instruments for which expected credit risk is assessed and expected credit losses are
measured collectively
Item Basis for determining a groupMethod for measuring
expected credit lossesOther receivables - group ofdeposit and security receivable
Nature of receivables
By reference to historic creditloss experience, and takinginto account the currentsituations and prediction offuture economic conditions,calculate the expected creditlosses according to the defaultrisk exposure and 12-month orrate of lifetime expected creditloss.
Other receivables- group ofwithholding receivableOther receivables - group ofreceivables from related partiesin the scope of consolidation
Receivables from related
parties in the scope ofconsolidationOther receivables - groupingby aging
Aging
(3) Accounts receivable for which expected credit losses are measured collectively
1) Groups and method for measuring expected credit losses
Item
Basis for determining a group Method for measuring expected
credit lossesBank acceptance bills receivable
Type of notes
By reference to historic creditloss experience, and taking intoaccount the current situations andprediction of future economicconditions, calculate theCommercial acceptance billsreceivableAccounts receivable - group ofreceivables from related parties
Receivables from related partiesin the scope of consolidation
in the scope of consolidation expected credit losses according
to the default risk exposure andrate of lifetime expected creditloss.
Accounts receivable - groupingby aging
Aging
By reference to historic creditloss experience, and taking intoaccount the current situations andprediction of future economicconditions, prepare a comparisontable of the aging of accountsreceivable and rate of lifetimeexpected credit loss, andcalculate the expected creditlosses.
2) Accounts receivable - comparison table of the age of accounts receivable and rate of lifetime
expected credit loss
Aging
Accounts receivableRate of expected credit loss for accounts
receivable (%)Within 1 year (including, the same below) 5.001-2 years 25.002-3 years 50.00Over 3 years 100.00
6. Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are presented in the balance sheet separately, withoutoffsetting each other. However, the Company may represent the financial assets and financial liabilitieson a net basis in the balance sheet only if: (1) the Company has a legal right that is currently enforceableto set off the recognized financial assets and financial liabilities, and (2) the Company intends either tosettle on a net basis, or to realize the financial asset and settle the financial liability simultaneously.
With respect to the transfer of financial assets not meeting the criteria for derecognition, theCompany does not offset the financial assets transferred against the relevant liabilities.
11. Notesreceivable
Methodforrecognitionofexpectedcreditlossesofnotesreceivableandrelevantaccountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of notes receivable and relevantaccounting treatments are disclosed in V10 of Section X in details.
12. Accountsreceivable
Methodforrecognitionofexpectedcreditlossesofaccountsreceivableandrelevantaccountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of accounts receivable and relevantaccounting treatments are disclosed in V.10 of Section X in details.
13. Receivables financing
√ Applicable□ N/A
The Company's policies on receivables financing are disclosed in V10 of Section X in details.
14. Otherreceivables
Methodforrecognitionofexpectedcreditlossesofotherreceivablesandrelevantaccountingtreatments
√ Applicable□ N/A
The Company's method for recognition of expected credit losses of other receivables and relevantaccounting treatments are disclosed in V10 of Section X in details.
15. Inventories
√ Applicable□ N/A
1. Categories of inventories
Inventories mainly include finished goods or commodities held for sale in the ordinary course ofbusinesses, work in progress in the process of production or materials and supplies consumed in theprocess of production or rendering service.
2. Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted averagemethod.
3. Basis for determining net realizable value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. Ifthe net realisable value is below the cost of inventories, a provision for decline in value of inventories ismade. For inventories directly used for sale, the net realizable value is determined as the estimatedselling price in the ordinary course of business less the estimated costs necessary to make the sale andrelevant taxes. For inventories required for processing, the net realizable value is determined as theestimated selling price of finished goods in the ordinary course of business less the estimated costs ofcompletion, and the estimated costs necessary to make the sale and relevant taxes. As at the balancesheet date, if in the same item of inventories, some are agreed with contractual prices while the othersare not, the net realizable value for such inventories is determined separately, and compared with thecosts of the two parts of inventories distinctively, as to determine the provisions or reversal of provisionsfor decline in value of inventories separately.
4. Inventory count system
The perpetual inventory system is maintained for stock system.
5. Amortization method for low cost and short-lived consumable items and packaging materials
(1) Low cost and short-lived consumable items
Low cost and short-lived consumable items are amortized using the immediate write-off method.
(2) Packaging materials
Low cost and short-lived consumable items are amortized using the immediate write-off method.
16. Contractassets
(1). Recognitionmethodandcriteriaofcontractassets
√ Applicable□ N/A
Contract assets refer to the rights of the Company for collecting the considerations for goods orservices that have been transferred to customers, which rights depend on factors other than the lapse oftime.
(2). Methodforrecognitionofexpectedcreditlossesofcontractassetsandrelevant
accountingtreatments
√ Applicable□ N/A
The Company adopted the simplified model of expected credit losses for contract assets, that is, theloss provision is made according to the amount of expected credit losses during the entire lifetime.
The Company considered all reasonable and supportable information, including forward-lookinginformation, and estimated the expected credit losses of contract assets on the individual or group basis.
17. Held‐for‐saleassets
√ Applicable□ N/A
1. Categories of non-current assets or disposal group classified as held-for-sale
Non-current assets or disposal groups classified as held for sale are required to satisfy the followingconditions: (1) the assets or disposal groups are available for immediate sale in its present conditionsubject only to terms that are usual and customary for sales of such asset or disposal group; (2) the saleis highly probable, i.e. the Company has made a resolution about selling plan and obtained a confirmedpurchase commitment and the sale is expected to be completed within one year.
Non-current assets or disposal groups acquired by the Company for resale only are classified asheld for sale at the acquisition date if the assets or disposal groups can satisfy the condition that“ the saleis expected to be completed within one year” at the acquisition date and are highly probable to meetother conditions for being classified as held for sale in a short term (within 3 months in general).
Despite transactions between unrelated parties not completed within one year, the Companycontinues to classify as held for sale the non-current assets or disposal groups that the Company stillundertakes to sell if the failure in completion is due to one of the following reasons beyond theCompany's control: (1) purchasers or other parties set conditions unexpectedly, which has led to a saledeferral, but the Company has taken measures promptly in response to such conditions and expects tosolve the delay problem within one year from date when conditions leading to the sale deferral are set; (2)there are rare circumstances occurring, as a result of which non-current assets or disposal groupsclassified as held for sale fail to be sold, but the Company has taken necessary measures in the initialyear to address these new circumstances to enable the non-current assets or disposal groups to satisfyclassification criteria of held-for-sale category.
2. Measurement of non-current assets or disposal groups classif
ied as held for sale
(1) Initial and subsequent measurement
When the Company measures the non-current assets or disposal groups classified as held for saleupon initial recognition or re-measures them at the balance sheet date, if their carrying amount is higherthan the net amount of their fair value less costs to sell, the carrying amount should be reduced to the netamount of fair value less costs to sell, and such reduction is recognized in impairment loss of assets and
included in profit or loss for the current period with a provision for impairment loss of held-for-saleassets made.Non-current assets or disposal groups classified as held for sale at the acquisition date are measuredat the lower of their initial amount measured at the assumption of not being classified as held for saleand the net amount of fair value less costs to sell. Except non-current assets or disposal groups acquiredthrough business combination, the balance of non-current assets or disposal groups incurred byrecognizing the net amount of fair value less costs to sell as the initial measurement amount is includedin profit or loss for the current period.Impairment losses recognized in disposal groups classified as held for sale are firstly offset againstthe carrying amount of goodwill in the disposal groups and then offset against the carrying amount ofeach non-current asset in proportion to their shares in the disposal groups.When the non-current assets held for sale or in the disposal groups make no provision ofdepreciation or amortization, the interests incurred by the liabilities and other expenses in the disposalgroups held for sale shall continue to be recognized.
(2) Accounting treatment for reversal of impairment loss of assets
When there is an increase in the net amount of fair value of non-current assets held for sale lesscosts to sell at the balance sheet date subsequently, the original deduction should be reversed inimpairment loss of assets recognized after the classification of held-for-sale category, and the reverseamount is included in profit or loss for the current period. No reversion is made for the impairment lossof assets recognized before the classification of held-for-sale category.When there is increase in the net amount of fair value of disposal groups held for sale less costs tosell at the balance sheet date subsequently, the original deduction should be reversed in impairment lossof non-current assets recognized after the classification of held-for-sale category, and the reverse amountis include in profit or loss for the period. No reversion is made for the carrying amount of goodwill thathas been offset and the impairment loss of non-current assets recognized before the classification ofheld-for-sale category.The reversed amount of impairment loss of assets recognized in disposal groups held for sale isadded to the carrying amount of each non-current asset other than goodwill in proportion to their sharesin the disposal groups.
(3) Accounting treatment for discontinued classification of held for sale and derecognition
When a non-current asset or disposal group ceases to be classified as held for sale since it no longermeets the criteria for classification of held-for-sale category, or when a non-current asset is removedfrom a disposal group classified as held for sale, the non-current asset or disposal group is measured atthe lower of: 1) the carrying amount recognized before classification of held-for-sale category, subject tothe amount adjusted according to depreciation, amortization or impairment that would have beenrecognized if it had not been classified as held for sale; and 2) the recoverable amount.
Gains or losses from derecognized non-current assets or disposal groups classified as held for salethat have not been recognized are included in profit or loss for the current period.
18. Debtinvestments
Methodforrecognitionofexpectedcreditlossesofdebtinvestmentsandrelevantaccountingtreatments
□ Applicable√ N/A
19. Otherdebtinvestments
Methodforrecognitionofexpectedcreditlossesofotherdebtinvestmentsandrelevantaccountingtreatments
□ Applicable√ N/A
20. Long‐termreceivables
Methodforrecognitionofexpectedcreditlossesoflong‐termreceivablesandrelevantaccountingtreatments
□ Applicable√ N/A
21. Long‐termequityinvestments
√ Applicable□ N/A
1. Judgments on joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists onlywhen decisions about the relevant activities of such arrangement require unanimous consent of theparties sharing control. Significant influence is the power to participate in the financial and operatingpolicy making of an entity, but does not control or jointly control over those policies.
2. Determination of investment cost
(1) In case of an equity investment acquired through a business combination involving entities
under common control, if the acquirer pays consideration for the business combination by cash, transferof non-monetary assets, assumption of liabilities or issuance of equity securities, the initial investmentcost of the long-term equity investment is the Company’s share of the carrying amount of theowners’ equity of the acquiree in the consolidated financial statements of the ultimate controller at thedate of combination. The difference between: (i) the initial investment cost of the long-term equityinvestment; and (ii) the carrying amount of the consideration paid for the combination or the total parvalue of the shares issued is treated as an adjustment to the capital reserve. In case the capital reserve isnot sufficient to absorb the difference, the remaining balance is adjusted against the retained earnings.
For a long-term equity investment acquired through business combination involvingenterprises under common control that is achieved through multiple transactions by steps, theCompany shall judge whether such transactions constitute a package deal. If such transactionsconstitute a package deal, the Company accounts for such transactions as one transaction toacquire control. If such transactions do not constitute a package deal, the initial investment costis the Company’s share of the carrying amount of the owners’ equity of the acquiree in theconsolidated financial statements of the ultimate controller at the date of combination. Thedifference between: (i) the initial investment cost of the long-term equity investment at the dateof combination; and (ii) the sum of the carrying amount of long-term equity investment before
the combination and the carrying amount of the consideration paid for acquisition of theadditional shares at the date of combination is adjusted against the capital reserve.In case thecapital reserve is not sufficient to absorb the difference, the remaining balance is adjustedagainst the retained earnings.
(2) In case of an equity investment acquired through a business combination not involving entities
under common control, the initial investment cost is the fair value of the carrying amount of theconsideration paid for the combination at the date of acquisition.For a long-term equity investment acquired through a business combination not involving entitiesunder common control and achieved through multiple transactions by steps, the accounting treatmentthereof in the separate financial statements is different from that in the consolidated financial statementsas stated below:
1) In the separate financial statements, the sum of the carrying amount of the equity investment
originally held in the acquiree and the additional investment cost incurred is recorded as the initialinvestment cost of the equity investment changed into the cost method.
2) In the consolidated financial statements, it is required to judge whether such transactions
constitute a package deal. If such transactions constitute a package deal, the Company accounts for suchtransactions as one transaction to acquire control. If such transactions do not constitute a package deal,the Company re-measures the fair value of the equity held in the acquiree prior to the date of acquisition,and records the difference between the fair value and the carrying amount as investment income for thecurrent period; if the equity held in the acquiree prior to the date of acquisition involves othercomprehensive income under equity method, such other comprehensive income is transferred to theincome of the period in which the date of acquisition falls, except for other comprehensive incomearising from re-measurement of changes in net liabilities or net assets of defined benefit plans.
(3) In the event of no business combination: (3) The initial investment cost is the purchase price
actually paid if it is acquired by cash, or the fair value of the equity securities issued if it is acquiredthrough issuance of equity securities, or determined in accordance with the Accounting Standards forBusiness Enterprises No. 12 -- Debt Restructuring if it is acquired through debt restructuring, ordetermined in accordance with the Accounting Standards for Business Enterprises No. 7 -- Exchange ofNon-monetary Assets if it is acquired through exchange of non-monetary assets.
3. Subsequent measurement and recognition of profit or loss
Long-term equity investments in investees are measured using the cost method. Long-term equityinvestments in associates and joint ventures are measured using the equity method.
4. Disposal of investment in a subsidiary through multiple transactions by steps until loss of control
over the subsidiary
(1) Separate financial statements
The difference between the carrying amount of the equity disposed of and the proceeds of disposalactually received is recognized in profit or loss for the current period. If the remaining equity empowersthe Company to exercise significant influence or joint control over the investee, the remaining equity is
accounted for using the equity method; if the remaining equity does not empower the Company toexercise control, joint control or significant influence over the investee, the remaining equity isaccounted for in accordance with the Accounting Standards for Business Enterprises No. 22 --Recognition and Measurement of Financial Instruments.
(2) Consolidated financial statements
1) Disposal of investment in a subsidiary through multiple transactions by steps until loss of control
over the subsidiary which does not constitute a package dealPrior to the loss of control, the difference between the proceeds from disposal and the share ownedby the Company in the net assets of the subsidiary in relation to the long-term equity investmentdisposed of that is calculated continuously from the date of acquisition or combination is adjustedagainst the capital reserve (capital premium). In case the capital premium is not sufficient to absorb thedifference, the remaining balance is adjusted against the retained earnings.
When losing control over a subsidiary, the remaining equity is re-measured at its fair value at thedate of loss of control. The sum of the consideration received from the disposal of the equity and the fairvalue of the remaining equity, net of the share owned by the Company in the net assets of the subsidiaryin relation to the long-term equity investment disposed of as calculated continuously from the date ofacquisition or combination according to the previous shareholding ratio, is recognized in the investmentincome for the period in which the control is lost, and the goodwill is reduced accordingly. Othercomprehensive income relating to the equity investment in the subsidiary is transferred to the investmentincome for the period in which the control is lost.
2) Disposal of investment in a subsidiary through multiple transactions by steps until loss of control
over the subsidiary which constitutes a package deal
The Company accounts for such transactions as one transaction to dispose of and lose its controlover the subsidiary. However, the difference between the proceeds from each disposal before loss ofcontrol and the share owned by the Company in the net assets of the subsidiary in relation to theinvestment disposed of is recognized in other comprehensive income in the consolidated financialstatements, which is wholly transferred to the profit or loss in the period in which the control is lost.
22. Investmentproperties
N/A
23. Fixedassets
(1). Criteriaforrecognition
√ Applicable□ N/A
Fixed assets are tangible assets held for production of goods, rendering of service, lease oroperation and management with a useful life of more than one accounting year. A fixed asset isrecognized if the economic benefits relating to it are very likely to flow to the Company and its cost canbe reliably measured.
(2). Methodofdepreciation
√ Applicable□ N/A
Category
Method ofdepreciation
Depreciationperiod(years)
Residual value rate
(%)
Annualdepreciation rate(%)Machinery andequipment
Straight linemethod
5 5.00% 19.00%Transportationequipment
Straight linemethod
5 5.00% 19.00%Electronicequipment andothers
Straight linemethod
3-5 5.00% 19.00%-31.67%Operating leasedequipment
Straight linemethod
3、7
5.00%
31.67%、13.57%
(3). Identification basis, valuation method and depreciation method for fixed assets
acquired under finance leases
□ Applicable√ N/A
24. Constructioninprogress
√ Applicable□ N/A
1. A construction in progress is recognized if the economic benefits relating to it are very likely to
flow to the Company and its cost can be reliably measured. A construction in progress is measured at theactual cost incurred before it is completed and ready for intended use.
2. When a construction in progress is ready for intended use, it is transferred to fixed assets at its
actual construction cost. A construction in progress that is ready for intended use but the final settlementof which has not yet been completed is transferred to fixed assets at estimated value first, and after thecompletion of final settlement, the estimated value is adjusted according to the actual cost, but theaccrued depreciation is not adjusted.
25. Borrowingcosts
√ Applicable□ N/A
1. Recognition for capitalization of borrowing costs
Borrowing costs incurred by the Company that are directly attributable to the acquisition,construction or production of a qualifying asset are capitalized as part of the cost of that asset. Otherborrowing costs are recognized as expenses and charged to the current profit and loss.
2. Period for capitalizing borrowing expenses
(1) Borrowing expenses are capitalized when all of the following conditions are met: 1) capital
expenditure has been incurred; 2) borrowing expenses have been incurred; and 3) activities relating tothe acquisition, construction or production of the asset that are necessary to prepare the asset for itsintended use or sale have commenced.
(2) Where acquisition and construction or production of a qualified asset is interrupted abnormally
and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall
be suspended. The borrowing expenses incurred during these periods shall be recognized as expenses forthe current period until the acquisition, construction or production of a qualifying asset is resumed.
(3) Capitalization of borrowing expenses shall be ceased when acquisition, construction or
production of the qualifying asset has prepared for its intended use or sale.
3. Capitalization rate and capitalization amount of borrowing expenses
As for the specific borrowings for the acquisition and construction or production of assetsqualifying for capitalization, the to-be-capitalized amount of interests shall be determined in light of theactual cost incurred on the current specific borrowings (including the amortization of discounts orpremiums determined using the effective interest method) minus the income of interests earned from theunused borrowings by depositing it in the bank or investment income from such borrowing by making itas a temporary investment; where a general borrowing is used for the acquisition and construction orproduction assets qualifying for capitalization, the Company shall calculate and determine theto-be-capitalized amount of interests on the general borrowing by multiplying the weighted averagevalue of the accumulative expenditures to asset minus the specific borrowing by the capitalization rate ofthe general borrowing used.
26. Biologicalassets
□ Applicable√ N/A
27. Oilandgasassets
□ Applicable√ N/A
28. Userightassets
□ Applicable√ N/A
29. Intangibleassets
(1). Measurement,servicelifeandimpairmenttest
√ Applicable□ N/A
1.Intangible assets include land use rights, patents, and software etc. and are measured at cost
initially.
An intangible asset with a finite useful life is amortized over its useful life in a systematical andrational expected realization of economic benefits relative to the intangible asset, or is amortized usingthe straight-line method if it is impossible to determine expected realization reliably. The specific yearsare as follows:
Item Amortization period(years)Land use rights 30Patents 10Software 3-5
(2). Accountingpolicyoninternalresearchanddevelopmentexpenditures
□ Applicable√ N/A
30. Impairmentoflong‐termassets
√ Applicable□ N/A
For long-term equity investments, fixed assets, construction in progress, intangible assets with afinite useful life and other long-term assets, if there’s an indication of impairment at the balance sheetdate, the Company assesses their recoverable amount. Goodwill arising from business combinations andintangible assets with an infinite useful life are tested for impairment every year regardless of whetherthere’s an indication of impairment. Goodwill is tested for impairment together with the relevantgroups of assets or combinations of groups of assets.If the recoverable amount of a long-term asset is less than its carrying amount, the difference ismeasured as impairment loss of the asset and recognized in profit or loss for the current period.
31. Long‐termprepaidexpenses
√ Applicable□ N/A
Long-term prepaid expenses are expenses that have already been incurred but should be amortizedover a period of more than one year (excluding one year). Long-term prepaid expenses are stated as theamount actually incurred and shall be amortized evenly by stages within the benefit period or specifiedperiod. If an item of long-term prepaid expenses will not benefit the subsequent periods, the amortizedvalue of the item that has not yet been amortized is wholly transferred to profit or loss for the currentperiod.
32. Contractliabilities
Recognitionmethodforcontractliabilities
√ Applicable□ N/A
The Company presents contract liabilities as its obligations for transferring goods or providingservices to customers corresponding to considerations that have been received or receivable.
Before goods are transferred to a customer, if the customer has paid the contractual consideration orthe Company has obtained the right of unconditionally receiving the contractual consideration, werecognize the amount received or receivable as contract liabilities at the earlier of the actual payment ofsuch amount by the customer and the due payment date of such amount.
33. Employeebenefits
(1) Accountingtreatmentofshort‐termemployeebenefits
√ Applicable□ N/A
The short-term employee benefits actually incurred are recognized as liabilities in the accountingperiod during which employee services are rendered, and included in profit or loss for the current periodor the cost of related assets.
(2) Accountingtreatmentofpost
‐employmentbenefits
√ Applicable□ N/A
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
(1) In the accounting period during which employee services are rendered, the amount in
contribution as calculated according to the defined contribution plan is recognized as liabilities andincluded in profit or loss for the current period or the cost of related assets.
(2) The accounting treatment of a defined benefit plan generally involves the following steps:
1) According to the projected unit credit method, use the unbiased and consistent actuarial
assumptions to estimate demographic variables and financial variables, measure the obligation arising
from the defined benefit plan and determine the period to which the relevant obligation belongs.Meanwhile, discount the obligation arising from the defined benefit plan, in order to determine thepresent value of the benefit plan obligation and the current service cost.
2) If the defined benefit plan has assets, the deficit or surplus resulting after reducing the present
value of the defined benefit plan obligation by the fair value of the defined benefit plan is recognized asa net liability or asset of the defined benefit plan. If the defined benefit plan has a surplus, the net assetsof the defined benefit plan are measured at the lower of surplus in the defined benefit plan and assetceiling;
3) At the end of the reporting period, the cost of employee benefits arising from the defined benefit
plan is recorded as service cost, net interest on the net liabilities or net assets of the defined benefit plan,and changes arising from re-measurement of the net liabilities or net assets of the defined benefit plan,wherein the service cost and the net interest on the net liabilities or net assets of the defined benefit planare included in profit or loss for the current period or the cost of related assets, and the changes arisingfrom re-measurement of the net liabilities or net assets of the defined benefit plan are included in othercomprehensive income, which will not be reserved to profit or loss in subsequent periods, but may betransferred within the scope of equity.
(3) Accountingtreatmentofterminationbenefits
√ Applicable□ N/A
When the Company can no longer withdraw the offer of termination benefits as a result oftermination of employment or redundancy, or recognizes the restructuring costs or expenses relating topayment of termination benefits, whichever the earlier, the employee benefit liabilities arising fromrecognition of termination benefits are recognized in profit or loss for the current period.
(4) Accountingtreatmentofotherlong‐termemployeebenefits
√ Applicable□ N/A
Other long-term employee benefits are accounted for in accordance with the provisions applicableto defined contribution plans if they are qualified as defined contribution plans, otherwise, are accountedfor in accordance with the provisions applicable to defined benefit plans. In order to simplify theaccounting treatment, the total net amount of the cost of employee benefits arising from the definedbenefit plans that is recorded as service cost, net interest on the net liabilities or net assets of otherlong-term employee benefits, changes arising from re-measurement of the net liabilities or net assets ofother long-term employee benefits and other components is included in profit or loss for the currentperiod or the cost of related assets.
34. Leasingliabilities
□ Applicable√ N/A
35. Provisions
√ Applicable□ N/A
1. An obligation arising from any external guarantee, instigation, product quality warranty, onerous
contract or other contingencies is recognized as a provision if it is a present obligation assumed by the
Company, and it is probable that an outflow of resources embodying economic benefits will be requiredto settle the obligation, and the amount of the obligation can be reliably measured.
2.The amount recognized as a provision is the best estimate of the consideration required to settle
the present obligation. The carrying amount of provisions is reviewed at the balance sheet date.
36. Share‐basedpayments
√ Applicable□ N/A
1. Categories of share-based payments
Share-based payments include equity-settled share-based payments and cash-settled share-basedpayments
2. Accounting treatment for implementation, modification and termination of share-based payment
plan
(1) Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees that can beexecuted immediately upon being granted, are measured at the fair value of the equity instruments at thegrant date, and recognized as related costs or expenses with a corresponding adjustment to capitalreserve. At each balance sheet date during the vesting period, equity-settled share-based payments inexchange for services rendered by employees that cannot be executed until services in the vesting periodare completed or required performance conditions are satisfied, are measured at the fair value of theequity instruments at the grant date based on the best estimate of exercisable numbers of equityinstruments, and recognized as related costs or expenses with a corresponding adjustment to capitalreserve.
For equity-settled share-based payments in exchange for services rendered by other parties, if thefair value of services from other parties can be measured reliably, they are measured at the fair value ofservices from other parties at the date when such services are received. If the fair value of services fromother parties cannot be measured reliably but the fair value of the equity instruments can be measuredreliably, they are measured at the fair value of the equity instruments at the date when such services arereceived. The fair value of the equity instruments are recognized as related costs or expenses, with acorresponding increase in owners' equity.
(2) Cash-settled share-based payments
Cash-settled share-based payments in exchange for services rendered by employees that can beexecuted immediately upon being granted, are recognized as related costs or expenses based on the fairvalue of liabilities assumed by the Company at the grant date, with a corresponding increase in liability.At each balance sheet date during the vesting period, cash-settled share-based payments in exchange forservices rendered by employees that cannot be executed until services in the vesting period arecompleted or required performance conditions are satisfied, are measured at the fair value of liabilitiesassumed by the Company based on the best estimate of exercisable conditions, and recognized as relatedcosts or expenses and relevant liabilities.
(3) Modification and termination of share-based payment plan
In case the Company modifies a share-based payment plan, if the modification increases the fairvalue of the equity instruments granted, the Company will include the incremental fair value of theequity instruments granted in the measurement of the amount recognized for services received. If themodification increases the number of the equity instruments granted, the Company will include the fairvalue of additional equity instruments granted in the measurement of the amount recognized for servicesreceived. If the Company modifies the exercisable conditions of the share-based payment plan in amanner beneficial to the employee, the Company will consider the modified exercisable conditions whendealing with exercisable conditions.If the modification decreases the fair value of the equity instruments granted, the Company willcontinue to measure the amount recognized for services received at the fair value of the equityinstruments at the grant date without including the decremental fair value of the equity instruments. Ifthe modification decreases the number of the equity instruments granted, the Company will treat thedecreased number as the cancelled number of equity instruments granted. If the Company modifies theexercisable conditions in a manner unbeneficial to the employee, the Company will not consider themodified exercisable conditions when dealing with exercisable conditions.If cancellation or settlement of the equity instruments granted occurs (not due to unsatisfaction ofexercisable conditions) during the vesting period, the Company will account for the cancellation orsettlement of the equity instruments granted as an acceleration of vesting, and recognize immediately theamount that otherwise would have been recognized over the remainder of the vesting period.
37. Preferredshares,perpetualbondsandotherfinancialinstruments
□ Applicable√ N/A
38. Revenue
(1). Accountingpoliciesadoptedforincomerecognitionandmeasurement
√ Applicable□ N/A
1. Principles for revenue recognition
The Company recognizes revenue upon the fulfillment of its performance obligations, that is, whenthe customer receives the control over relevant goods or services.
At the beginning date of a contract, the Company assesses the contract to identify individualperformance obligations contained in the contract and determine whether individual obligations are to beperformed during a period of time or at a specific time point, and then separately recognize revenueupon the fulfillment of individual obligations.
An obligation meeting one of the following conditions is one to be performed within a period oftime, and the remaining are obligations to be performed at a specific time point:
1) The customer receives and consumes the economic benefits from the performance of the
Company when the Company performs its obligations;
2) The customer can control the goods in progress during the performance of the Company; or
3) The goods generated during the performance process of the Company have irreplaceable uses,
and the Company is entitled to payment for the portion completed during the entire contract term.
The Company recognizes revenue according to the performance progress during the period of time
for obligations to be performed during a period of time. If the performance progress cannot bedetermined reasonably, and the Company is expected to be paid based on the costs incurred, theCompany recognizes revenue according to the amount of costs incurred until the performance progresscan be determined reasonably.For obligations to be performed at a specific time point, the Company recognizes revenue when thecustomer receives the control over the relevant goods or services. The following will be consideredwhen determining whether the customer has obtained the control over the goods or services:
1) The Company has the present rights of receiving payments for such goods or services;
2) The Company has transferred the physical goods to the customer;
3) The Company has transferred major risks and rewards of the legal title or ownership in the goods
to the customer; and
3) The Customer has accepted such goods or services.
If a contract contains two or more performance obligations, the Company allocates the transactionprice to individual performance obligations according to the relative proportion of the individual saleprices of the goods or services promised under such individual performance obligations, and measuresthe revenue according to the transaction price allocated to individual performance obligations.The transaction price refers to the amount of the consideration expected to be received by theCompany on the basis of transferring goods to the customer. Amounts received by the Company onbehalf of third parties, and amounts expected to be refunded to the customer, are accounted for asliabilities, but are not included in the transaction price. If a contract contains a major financing portion,the Company determines the transaction price as the amount payable in cash when the customer obtainsthe control over the goods or services. The difference between the transaction price and contractconsideration is amortized using the effective interest method during the term of the contract. If theCompany expects that the interval between the acquisition of the goods or services by the customer andthe payment of prices by the customer will not exceed one year from the commencement date of thecontract, no significant financing factor is considered.The rights of the Company for collecting the considerations for goods or services that have beentransferred to customers (which rights depend on factors other than the lapse of time) are presented ascontract assets, for which the provision of impairment is made on the basis of expected credit loss. Therights of the Company for unconditionally collecting payments from customers (depending only on thelapse of time) are presented as receivables. The obligations of the Company for transferring goods orproviding services to customers corresponding to considerations that have been received or receivableare presented as contract liabilities.
2. Specific methods for revenue recognition
(1) Revenue from sales of goods
Goods sold to the domestic market: 1) Under the direct sale model and the distribution mode, theCompany recognizes the revenue when the goods sent have been delivered to customers with customers'receipt given to the Company. For goods sold attached with return conditions, the Company recognizes
the revenue when the validity period of goods return conditions expires; for goods required forinstallment and inspection after sales, the Company recognizes the revenue when such goods have beeninstalled and inspected with customers' acceptance certificate given to the Company; for goods soldthrough a physical store, the Company recognizes the revenue when such goods are delivered tocustomers with payments received. If the Company shares profits from sales of product to customers, theCompany recognizes the revenue at the settlement prices agreed between the parties when customersreceive and inspect the goods. After the customers sold such goods, the Company shares the rewards ofthe incomes from external sales implemented by the customers after deducting relevant costs, andrecognizes the share revenue on this basis. 2) Under the commissioned sales mode, the Companyrecognizes the revenue when it receives the list of commissioned sales from the customer.Goods exported to overseas markets: The Company mainly adopts FCA for export of goods. Underthis mode, the Company recognizes revenue when it delivers goods at the designated location withexport customs clearance procedures completed.
(2) Revenue from light source services
For light source products of laser digital cinema projector leased by the Company with technicalservices to customers, the Company recognizes the revenue by multiplying actual hours in consumptionby the agreed unit price at the end of each month if the rent is charged by actual hours in consumptionpursuant to contract provisions, or by apportioning over the agreed service period at the end of eachmonth (time proportion) if the rent is charged on a monthly, quarterly or annual basis.For other products leased by the Company, the Company recognizes the revenue by apportioningover the service period pursuant to contract provisions.
(3) Other incomes
For installation services provided by the Company, the Company recognizes the revenue when ithas completed the services and received customers’ acceptance certificate; for repair and maintenanceservices provided by the Company, the Company recognizes the revenue when it has completed theservices and received payments; for technology development services provided by the Company, theCompany recognizes the revenue when it has completed the services or when the agreed time point ofservice acceptance is reached.
(2). Descriptionofdifferencesintheaccountingpoliciesinrevenuerecognitiondueto
differentoperatingmodesadoptedforthesamebusinesstype
□ Applicable√ N/A
39. Contractcosts
√ Applicable□ N/A
Contract costs include incremental costs incurred for acquiring the contract and contractperformance costs. The incremental costs incurred for acquiring the contract (“Contract AcquisitionCosts”) refer to costs that would not be incurred if the contract is not acquired. If such costs are expectedto be recovered, such costs are recognized as an asset as Contract Acquisition Costs.
The costs incurred by the Company for performing a contract are recognized as an asset of contractperformance costs if they do not fall within the scope of other Accounting Standards for BusinessEnterprises, like inventories, and meet all the following conditions:
1. The cost is directly related to a present or expected contract, including direct labor, direct
materials, manufacturing expenses (or similar expenses), costs explicitly to be borne by users, and othercosts arising from the contract;
2. The cost leads to the increase in resources of the Company for fulfilling its performance
obligations in the future; and
3. The cost is expected to be recovered.
Assets recognized by the Company from Contract Acquisition Costs and contract performancecosts (hereinafter referred to as “assets related to contract costs”) are amortized on the same basis asrecognizing incomes from goods related to assets, and are recognized in the profit or loss for the currentperiod. If the amortization period of assets recognized from the incremental costs of acquiring a contractis no more than one year, such incremental costs are recognized in the profit or loss for the currentperiod.
When the book value of assets related to contract costs is greater than the difference between thefollowing two items, the Company makes a provision of impairment on the exceeding portion andrecognizes losses of asset impairment:
1. Remaining consideration expected to be collected for transferring the goods related to the assets;
and
2. Costs expected to be incurred for transferring the related goods.
40. Governmentgrants
√ Applicable□ N/A
1. Government grants are recognized if (1) the Company meets the conditions attaching to the
government grants; and (2) the Company will receive the government grants. Government grants in theform of monetary assets are measured at the amount received or receivable. Government grants in theform of non-monetary assets are measured at fair value, or if their fair value is unavailable, at nominalamount.
2. Determination and accounting treatment of government grants related to assets
Government grants related to assets are government grants which are offered for purchasing,constructing or otherwise acquiring long-term assets as provided by the applicable governmentdocuments. In the absence of such express provision in the applicable government documents,government grants related to assets are those with a primary condition that the Company shouldpurchase, construct or otherwise acquire long-term assets. Government grants related to assets are offsetagainst the carrying amount of the relevant assets or recognized as deferred income. Government grantsrelated to assets recognized as deferred income shall be included in profit or loss over the service life ofthe relevant assets on a reasonable and systemic basis. Government grants measured at nominal amountare directly recognized in profit or loss for the current period. In case of sale, transfer, retirement or
damage of the relevant assets before the end of intended service life, the balance of the unallocateddeferred income is transferred to profit or loss for the period in which the assets are disposed of.
3. Determination and accounting treatment of government grants related to income
Government grants related to income are government grants other than those related to assets.Government grants related to both assets and income in which it is difficult to make a distinctionbetween the portion related to assets and the portion related to income are wholly classified asgovernment grants related to income. Government grants related to income as compensation forexpenses or losses to be incurred in subsequent periods are recognized as deferred income and in theperiod for recognizing the relevant costs, expenses or losses, included in profit or loss for the currentperiod or offset against the relevant costs. Government grants related to income as compensation forexpenses or losses already incurred are directly included in profit or loss for the current period or offsetagainst the relevant costs.
4. Government grants related to daily operations of the Company are recognized in other income or
offset against the relevant costs and expenses depending on the nature of economic business.Government grants not related to daily operations of the Company are recognized in non-operatingincome or expenses.
5. Accounting treatment of policy preferential loans and interest subsidies
(1) If the Ministry of Finance appropriates the interest subsidies to the lending bank, who then
grants the loan to the Company at the policy preferential rate, the loan is stated as the amount actuallyreceived, and the borrowing cost is calculated according to the principal of the loan and the policypreferential rate.
(2) If the Ministry of Finance directly appropriates the interest subsidies to the Company, the
interest subsidies are offset against the borrowing cost.
41. Deferredtaxassetsanddeferredtaxliabilities
√ Applicable□ N/A
1. The difference between the tax base of an asset or liability and its carrying amount (or in case of
an item not recognized as asset or liability whose tax base can be determined according to the applicabletax law, the difference between its tax base and carrying amount) is recognized as a deferred tax asset ordeferred tax liability according to the tax rate applicable to the period in which the asset or liability isexpected to be recovered or settled.
2. Deferred income tax assets are recognized to the extent of the amount of income tax payable that
will be available in future periods against which deductible temporary differences are deductible. At thebalance sheet date, deferred tax assets not recognized in prior periods are recognized if there’sconclusive evidence that it is probable that sufficient taxable income will be available in future periodsagainst which the deductible temporary differences are deductible.
3. At the balance sheet date, the carrying amount of deferred income tax assets is reviewed and
reduced to the extent that it is no longer probable that sufficient taxable income will be available infuture periods to allow the benefit of the deferred tax assets to be utilized. If it is probable that sufficient
taxable income will be available, the reduced amount is reversed.
4. The income taxes and deferred income taxes are included in profit or loss for the current period
as income tax expenses or gains, except the income taxes arising from any: (i) business combination; or(ii) transaction or event directly recognized in owners’ equity.
42. Leases
(1). Accountingtreatmentofoperatingleases
√ Applicable□ N/A
If the Company is a lessee, the rents paid by the Company are included in the costs of the relevantassets or in profit or loss for the current period over the whole lease term on a straight line basis. Theinitial direct cost incurred by the Company is directly recognized in profit or loss for the current period.Contingent rents are recognized in profit or loss in the period in which they are incurred.
If the Company is a lessor, the rents received by the Company are recognized in profit or loss forthe current period over the whole lease term on a straight line basis. The initial direct cost incurred bythe Company is directly recognized in profit or loss for the current period. However, if such initial directcost is of a large amount, the initial direct cost is capitalized and recognized in profit or loss byinstallments. Contingent rents are recognized in profit or loss in the period in which they are incurred.
(2). Accountingtreatmentoffinanceleases
√ Applicable□ N/A
If the Company is a lessee, the lower of the fair value of the leased asset at the inception of thelease and the present value of the minimum lease payments is recorded as the carrying amount of therented assets, with the minimum lease payments as the carrying amount of long-term payables and thedifference charged to unrecognized financing fees at the commencement date of the lease term. Theinitial direct cost incurred by the Company is directly recognized in the value of the rented assets. Ineach period of the lease term, the financing fees for the period is recognized by using the effectiveinterest method.
If the Company is a lessor, the aggregate of the minimum lease receivable at the inception of thelease and the initial direct costs is recognized as the carrying amount of the finance lease receivable andthe unguaranteed residual value is recorded at the same time at the commencement date of the lease term;the difference between the aggregate of the minimum lease receivable, the initial direct costs and theunguaranteed residual value, and the aggregate of their present values is recognized as unearnedfinancing income. In each period of the lease term, the financing income for the period is recognized byusing the effective interest method.
(3). Methodfordeterminationandaccountingtreatmentsof
leaseundernewleasestandards
□ Applicable√ N/A
43. Othersignificantaccountingpoliciesandaccountingestimates
□ Applicable√ N/A
44. Changesinsignificantaccountingpoliciesandaccountingestimates
(1). Changesinsignificantaccountingpolicies
√ Applicable□ N/A
Changes in accounting policies and
associated reasons
Approval procedures
Remarks(name and amount ofline items in financial statementsthat have been materially
affected)Implement the Accounting Standard forBusiness Enterprises No. 14 - Revenueamended and released by the Ministry ofFinance
Approved by themanagement of theCompany
See the table belowOther description:
In accordance with the Accounting Standards for Business Enterprises No.14- Revenue(Cai Kuai[2017] No. 2) issued by the Ministry of Finance on July 5, 2017, for enterprises listed in domestic andoversea stock exchange concurrently and enterprises listed overseas with the financial statementsprepared under internal financial reporting standards or accounting standards for business enterprises,the new revenue standard shall be implemented from January 1,2018; and for other enterprises listed indomestically, the revenue standard shall be implemented from January 1, 2020. As a domestic listedcompany, the Company adopted the new revenue standard as at January 1, 2020, and made adjustmenton the opening balance of relevant item recognized in the financial statements, but the data incomparable period can be unadjusted: (1) the goods payments received in advance originally qualifiedfor conditions of “Receipts in advance” were charged to the line item of Contract liability”; (2) the rightsof the Company for collecting considerations of goods that have been transferred to customers arepresented under “contract assets”, which rights are dependent upon factors other than the lapse of time;and (3) for goods sold under the model of “profit distribution”, income from customers received but notrecognized were changed as it satisfied the new revenue standard, with an adjustment on the openingbalance of relevant item recognized.The new revenue standards, when implemented, will mainly bring the following influences to theCompany’s financial statements as at January 1, 2020:
Item
Balance sheetAt December 31, 2019
Adjustment influenceof the new revenue
standards
January 1, 2020Accountsreceivable
176,035,155.2415,587,556.77191,622,712.01Inventories 299,966,170.35-16,355,310.22283,610,860.13Contract assets -3,740,605.963,740,605.96Other currentassets
44,405,513.30-2,340,625.2042,064,888.10Receipts inadvance
184,444,643.33-16,910,443.03167,534,200.30Contractliabilities
15,777,305.8115,777,305.81Other currentliabilities
1,133,137.221,133,137.22Retainedprofits
288,975,820.291,278,734.88290,254,555.17Total equityattributable toowners of the
1,974,559,837.641,278,734.881,975,838,572.52
ParentCompanyMinorityinterests
149,649,306.18-646,507.57149,002,798.61
(2). Changesinsignificantaccountingestimates
□ Applicable√ N/A
(3). Descriptionofadjustmentsinopeningbalancesoflineitemsinfinancialstatementsof
theyearduetoimplementationofnewincomestandardandnewleasestandardsince2020
√ Applicable□ N/A
Consolidated Balance Sheet
Unit: Yuan Currency: RMBItem
At December 31,
2019
January 1, 2020 Adjusted amountCurrent Assets:
Cash and bank balances 875,858,784.58875,858,784.58Balances with clearing agenciesPlacements with banks andother financial institutions
Held-for-trading financial assets 540,000,000.00540,000,000.00Derivative financial assetsNotes receivable 4,042,559.634,042,559.63Accounts receivable 176,035,155.24191,622,712.01 15,587,556.77Receivables financing 1,980,500.001,980,500.00Prepayments 35,070,999.1335,070,999.13Premiums receivableAmounts receivable underreinsurance contracts
Reinsurer's share of insurancecontract reserves
Other receivables 9,618,750.089,618,750.08
Including: Interest receivable
Dividends receivable
Financial assets purchasedunder resale agreements
Inventories 299,966,170.35283,610,860.13 -16,355,310.22
Contract assets 3,740,605.96 3,740,605.96
Held-for-sale assets
Non-current assets due withinone year
Other current assets 44,405,513.3042,064,888.10 -2,340,625.20Total Current Assets 1,986,978,432.311,987,610,659.62 632,227.31Non-current Assets:
Loans and advances
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 139,534,371.94139,534,371.94
Other equity instrumentinvestments
11,975,419.3811,975,419.38
Other non-current financialassets
Investment propertiesFixed assets 471,204,340.95471,204,340.95Construction in progress 20,132,004.0720,132,004.07Bearer biological assetsOil and gas assetsUse right assetsIntangible assets 332,331,324.07332,331,324.07Development expenditureGoodwillLong-term prepaid expenses 16,908,070.3416,908,070.34Deferred tax asset 109,023,941.85109,023,941.85Other non-current assets 11,420,185.9411,420,185.94Total Non-current Assets 1,112,529,658.541,112,529,658.54Total assets 3,099,508,090.853,100,140,318.16 632,227.31Current Liabilities:
Short-term borrowings 76,765,319.0576,765,319.05Loans from the central bankTaking from banks and otherfinancial institutions
Held-for-trading financialliabilities
Derivative financial liabilities
Notes payable 37,335,841.7937,335,841.79
Accounts payable 176,624,445.46176,624,445.46
Receipts in advance 184,444,643.33167,534,200.30 -16,910,443.03
Contract liabilities 15,777,305.81 15,777,305.81
Financial assets sold underrepurchase agreements
Customer deposits and depositsfrom banks and other financialinstitutions
Funds from securities tradingagency
Funds from underwritingsecurities agency
Employee benefits payable 50,586,932.7150,586,932.71
Taxes payable 42,924,647.7942,924,647.79
Other payables 14,364,076.4314,364,076.43
Including: Interest payable
Dividends payable
Fees and commissions payable
Amounts payable underreinsurance contracts
Held-for-sale liabilities
Non-current liabilities duewithin one year
64,968,795.0264,968,795.02
Other current liabilities 1,133,137.22 1,133,137.22Total Current Liabilities 648,014,701.58648,014,701.58Non-current Liabilities:
Insurance contract reserves
Long-term borrowings 279,615,107.27279,615,107.27
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term accounts payable 3,488,100.003,488,100.00Long-term employee benefitspayable
Provisions 27,072,676.4927,072,676.49Deferred income 17,108,361.6917,108,361.69Deferred tax liabilitiesOther non-current liabilitiesTotal Non-current Liabilities 327,284,245.45327,284,245.45Total Liabilities 975,298,947.03975,298,947.03Owners' (or Shareholders') Equity:
Paid-in capital (or share capital) 451,554,411.00451,554,411.00Other equity instrumentsIncluding: Preferred shares
Perpetual bondsCapital reserve 1,207,942,318.371,207,942,318.37Less: Treasury sharesOther comprehensive income 3,287,063.853,287,063.85Special reserveSurplus reserve 22,800,224.1322,800,224.13General risk reserveRetained profits 288,975,820.29290,254,555.17 1,278,734.88Total owners’ (or shareholders’)equity attributable to owners ofthe Parent Company
1,974,559,837.641,975,838,572.52 1,278,734.88Minority interests 149,649,306.18149,002,798.61 -646,507.57Total Owners’ (orShareholders’) Equity
2,124,209,143.822,124,841,371.13 632,227.31Total Liabilities andOwners’(or Shareholders’) Equity
3,099,508,090.853,100,140,318.16 632,227.31Description of adjustments on each line item:
√ Applicable□ N/A
In accordance with the Accounting Standards for Business Enterprises No.14- Revenue(Cai Kuai[2017] No. 2) issued by the Ministry of Finance on July 5, 2017, for enterprises listed in domestic andoversea stock exchange concurrently and enterprises listed overseas with the financial statementsprepared under internal financial reporting standards or accounting standards for business enterprises,the new revenue standard shall be implemented from January 1,2018; and for other enterprises listed indomestically, the revenue standard shall be implemented from January 1, 2020. As a domestic listedcompany, the Company adopted the new revenue standard as at January 1, 2020, and made adjustmenton the opening balance of relevant item recognized in the financial statements, but the data incomparable period can be unadjusted: (1) the goods payments received in advance originally qualifiedfor conditions of “Receipts in advance” were charged to the line item of Contract liability”; (2) the rightsof the Company for collecting considerations of goods that have been transferred to customers arepresented under “contract assets”, which rights are dependent upon factors other than the lapse of time;and (3) for goods sold under the model of “profit distribution”, income from customers received but notrecognized were changed as it satisfied the new revenue standard, with an adjustment on the openingbalance of relevant item recognized.
Balance Sheet of the Parent Company
Unit: Yuan Currency: RMBItem
At December 31,
2019
January 1, 2020 Adjusted amountCurrent Assets:
Cash and bank balances 570,479,390.49570,479,390.49Held-for-trading financialassets
540,000,000.00540,000,000.00Derivative financial assets
Notes receivable 3,542,559.633,542,559.63Accounts receivable 299,315,776.44295,616,359.63 -3,699,416.81Receivables financing 442,500.00442,500.00Prepayments 6,410,257.486,410,257.48Other receivables 67,227,575.2167,227,575.21Including: Interest receivable
Dividends receivableInventories 135,617,379.22135,617,379.22Contract assets 3,699,416.81 3,699,416.81Held-for-sale assetsNon-current assets due withinone year
Other current assets 12,280,164.3912,280,164.39Total Current Assets 1,635,315,602.861,635,315,602.86Non-current Assets:
Debt investmentsOther debt investmentsLong-term receivablesLong-term equity investments 257,795,276.13257,795,276.13Other equity instrumentinvestments
7,075,419.387,075,419.38Other non-current financialassets
Investment propertiesFixed assets 60,391,512.9260,391,512.92Construction in progress 1,385,496.591,385,496.59Bearer biological assetsOil and gas assetsUse right assetsIntangible assets 330,796,423.87330,796,423.87Development expenditureGoodwillLong-term prepaid expenses 12,771,126.8312,771,126.83Deferred tax asset 9,545,438.209,545,438.20Other non-current assets 6,744,453.856,744,453.85Total Non-current Assets 686,505,147.77686,505,147.77
Total assets 2,321,820,750.632,321,820,750.63Current Liabilities:
Short-term borrowings 10,217,738.3610,217,738.36Held-for-trading financialliabilities
Derivative financial liabilitiesNotes payable 37,335,841.7937,335,841.79Accounts payable 162,596,838.45162,596,838.45Receipts in advance 11,116,659.114,387,326.61 -6,729,332.50Contract liabilities 6,485,831.14 6,485,831.14Employee benefits payable 26,985,668.9226,985,668.92Taxes payable 1,534,242.701,534,242.70Other payables 42,599,703.3642,599,703.36Including: Interest payable
Dividends payableHeld-for-sale liabilitiesNon-current liabilities duewithin one year
Other current liabilities 243,501.36 243,501.36
Total Current Liabilities 292,386,692.69292,386,692.69Non-current Liabilities:
Long-term borrowingsBonds payableIncluding: Preferred shares
Perpetual bondsLeasing liabilitiesLong-term accounts payable 3,488,100.003,488,100.00Long-term employee benefitspayable
Provisions 14,631,273.0014,631,273.00Deferred income 15,724,174.3015,724,174.30Deferred tax liabilitiesOther non-current liabilitiesTotal Non-current Liabilities 33,843,547.3033,843,547.30Total Liabilities 326,230,239.99326,230,239.99Owners' (or Shareholders') Equity:
Paid-in capital (or sharecapital)
451,554,411.00451,554,411.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 1,310,939,867.821,310,939,867.82
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 21,522,683.4021,522,683.40
Retained profits 211,573,548.42211,573,548.42Total Owners’ (orShareholders’) Equity
1,995,590,510.641,995,590,510.64Total Liabilities andOwners’(or Shareholders’)Equity
2,321,820,750.632,321,820,750.63Description of adjustments on each line item:
√ Applicable□ N/A
In accordance with the Accounting Standards for Business Enterprises No.14- Revenue(Cai Kuai[2017] No. 2) issued by the Ministry of Finance on July 5, 2017, for enterprises listed in domestic andoversea stock exchange concurrently and enterprises listed overseas with the financial statementsprepared under internal financial reporting standards or accounting standards for business enterprises,the new revenue standard shall be implemented from January 1,2018; and for other enterprises listed indomestically, the revenue standard shall be implemented from January 1, 2020. As a domestic listedcompany, the Company adopted the new revenue standard as at January 1, 2020, and made adjustmenton the opening balance of relevant item recognized in the financial statements, but the data incomparable period can be unadjusted: (1) the goods payments received in advance originally qualifiedfor conditions of “Receipts in advance” were charged to the line item of Contract liability”; and (2) therights of the Company for collecting considerations of goods that have been transferred to customers arepresented under “contract assets”, which rights are dependent upon factors other than the lapse of time.
(4). Descriptionofretrospectiveadjustmentsoncomparabledatainpreviousperiodsupon
thefirstadoptionofthenewrevenuestandardandnewleasestandardfrom2020
□ Applicable√ N/A
45. Others
□ Applicable√ N/A
VI. Taxes
1. Majorcategoriesoftaxesandtaxrates
Description of major categories of taxes and tax rates
√ Applicable□ N/A
Category of tax Basis of tax computation Tax rateValue-added tax (VAT)
Sales of goods or rendering oftaxable services
3%、6%、9%、13%City maintenance andconstruction tax
Turnover tax payable 5%、7%Enterprise income tax Taxable income
8.25%、8.70%、8.84%、12.5%、
15%、16.5%、20%、21%、25%Education surcharges Turnover tax payable 3%Local education surcharges Turnover tax payable 2%
Disclosure of taxpayers with different rates of enterprise income tax:
√ Applicable□ N/A
Taxpayer Rate of enterprise income tax(%)Appotronics Corporation Limited 15.00Fengmi (Beijing) Technology Co., Ltd. 15.00Shenzhen Appotronics Software Technology Co.,Ltd.
12.50
Appotronics Timewaying (Beijing) TechnologyCo., Ltd.
20.00
Shenzhen Appotronics Xiaoming Technology Co.,Ltd.
20.00
Shenzhen Appotronics Laser Technology Co., Ltd. 20.00Qingda Appotronics (Xiamen) Technology Co.,Ltd.
20.00
Shenzhen Appotronics Home Line Technology Co.,Ltd.
20.00
Appotronics Technology (Changzhou) Co., Ltd. 20.00Shenzhen Appotronics Display Device Co., Ltd. 20.00Appotronics Hong Kong Limited 8.25、16.50Beijing Orient Appotronics Technology Co., Ltd. 20.00Fabulus Technology Hong Kong Limited 16.50JoveAI Innovation, Inc. 8.70、8.84、21.00Appotronics USA, Inc. 21.00FORMOVIE TECHNOLOGY INC 21.00JoveAI Limited Tax exemptionWEMAX LLC 21.00JOVEAI ASIA COMPANY LIMITED 20.00Other taxpayers except above 25.00
Note:
1. Appotronics Hong Kong Limited and Fabulus Technology Hong Kong Limited, as domiciled in
Hong Kong, one of which can apply the two-level income tax system, namely, applying the tax rate of
8.25% for the first HKD 2 million taxable income and 16.5% for the remaining taxable income.
2. JoveAI Limited, as domiciled in the Cayman Islands, is exempt from enterprise income tax.
3. Appotronics USA, Inc., as domiciled in the United States, applies the federal enterprise income
tax rate of 21%.
4. JoveAI Innovation, Inc., as domiciled in the United States, applies the federal enterprise income
tax rate of 21%, the California state enterprise income tax rate of 8.84%, and the Delaware stateenterprise income tax rate of 8.70%.
5. FORMOVIE TECHNOLOGY INC, as domiciled in the United States, applies the federal
enterprise income tax rate of 21%.
5. WEMAX LLC, as domiciled in the United States, applies the federal enterprise income tax rate
of 21%.
7. JOVEAI ASIA COMPANY LIMITED, as domiciled in Viet Nam, applies the corporate income
tax rate of 20%.
2. Taxincentives
√ Applicable□ N/A
1. On December 9, 2019, the Company obtained the High-tech Enterprise Certificate (Certificate
No.: GR201944204257) jointly issued by Shenzhen Science and Technology Innovation Commission,Shenzhen Finance Bureau and Shenzhen Tax Service of State Taxation Administration with a valid termof three years. Therefore, the Company can pay the enterprise income tax at a rate of 15% from 2019 to2021.
2. On November 30, 2018, Fengmi (Beijing) Technology Co., Ltd. obtained the High-tech
Enterprise Certificate (Certificate No.: GR201811009590) jointly issued by Beijing Municipal Scienceand Technology Commission, Beijing Finance Bureau and Beijing Tax Service of State TaxationAdministration with a valid term of three years. However, as Fengmi (Beijing) Technology Co., Ltd.failed to complete the registration in competent authorities, it enjoyed no tax incentives in 2018. It canpay the enterprise income tax at a rate of 15% since 2019.
3. In accordance with the Notice of the Ministry of Finance and the State Administration of
Taxation on Enterprise Income Tax Policies for Further Encouraging the Development of Software andIntegrated Circuit Industries (Cai Shui (2012) No.27), commencing from the first year of earning profitsprior to December 31,2017, a qualified company can be exempted from the enterprise income tax for thefirst two years and enjoy a 50% tax reduction on the statutory tax rate of 25% from the third to the fifthyear until the tax incentive period expires. Therefore, the Company’s subsidiary, Shenzhen AppotronicsSoftware Technology Co., Ltd., is qualified for the tax incentive policy of “exemption from income taxfor the first two years and 50% reduction for next three years”, which means, it can be exempted fromenterprise income tax from 2016 to 2017, and pay the enterprise income tax at a rate of 12.5% from2018 to 2020.
4. In accordance with the Notice of the Ministry of Finance and the State Administration of
Taxation on Value-added Tax Policies for Software Products ( Cai Shui [2011] No.100), forself-developed and produced software products sold by general VAT taxpayers, thetax-refund-upon-collection policy is applicable to the part of their actual VAT burden in excess of 3%after the VAT has been collected at a tax rate of 17%. The Company’s subsidiary Shenzhen AppotronicsSoftware Technology Co., Ltd. is qualified for enjoying such tax incentive from January 1, 2015.
5. In accordance with Article 1 (26) of Annex 3 of the Notice of the Ministry of Finance and the
State Administration of Taxation on Implementing the Pilot Program of Replacing Business Tax withValue-Added Tax in an All-round Manner (Cai Shui [2016] No.36), taxpayers are exempted from VATif they provide technology transfer, technology development, and technology consultation and servicesin connection therewith. The Company is qualified for enjoying such tax incentive from January 26,2018.
6. In accordance with the Notice of the Ministry of Finance and the State Administration of
Taxation on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro and SmallEnterprises (Cai Shui [2019] No.13), the annual taxable income of a small low-profit enterprise that isnot more than RMB 1 million shall be levied with the enterprise income tax rate at a discount of 25%,namely, for which the applicable enterprise income tax rate is 20%; for the annual taxable income morethan RMB 1 million but no more than RMB 3 million, the taxable income shall be calculated at adiscount of 50%, namely, for which the applicable enterprise income tax rate is 20%. The followingsubsidiaries are qualified for enjoying such tax incentives: Beijing Orient Appotronics Technology Co.,Ltd., Appotronics Timewaying (Beijing) Technology Co., Ltd., Shenzhen Appotronics XiaomingTechnology Co., Ltd., Shenzhen Appotronics Laser Technology Co., Ltd., Qingda Appotronics (Xiamen)Technology Co., Ltd., Shenzhen Appotronics Home Line Technology Co., Ltd., AppotronicsTechnology (Changzhou) Co., Ltd., and Shenzhen Appotronics Display Device Co., Ltd.
3. Others
□ Applicable√ N/A
VII. Notes to items in the consolidated financial statements
1. Cashandbankbalances
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceCash on hand 3,189.123,348.57Bank deposits 699,310,868.31 857,708,997.58Other monetary funds 30,133,607.96 18,146,438.43
Total 729,447,665.39875,858,784.58Including: Totaloversea deposits
98,559,109.82132,334,643.95Other description:
In other monetary funds, an amount of RMB 23,151,615.78 is restricted for being used as marginswhile in bank deposits, an amount of RMB 20,000,000.00 is restricted for being frozen due to litigation.
2. Held‐for‐tradingfinancialassets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceFinancial assets at fair value throughprofit or loss
495,000,000.00540,000,000.00Including:
Structural deposits 495,000,000.00540,000,000.00
Total 495,000,000.00540,000,000.00Other description:
□ Applicable√ N/A
3. Derivativefinancialassets
□ Applicable√ N/A
4. Notesreceivable
(1). Categoriesofnotesreceivable
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceBank acceptances 2,126,550.003,891,456.00Commercial acceptances 2,054,836.79151,103.63
Total 4,181,386.794,042,559.63
(2). NotesreceivablepledgedbytheCompanyattheendoftheperiod
□ Applicable√ N/A
(3). Notesreceivablewhichareundueasatthebalancesheetdatebutendorsedor
discountedbytheCompanyattheendoftheperiod
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount derecognized at the end
of the period
Amount not derecognized at the
end of the periodBank acceptances 900,000.00Commercial acceptances 324,337.00
Total 1,224,337.00
(4). Notestransferredtoaccountsreceivableduetodrawer'sfailureincashingattheendof
theperiod
□ Applicable√ N/A
(5). Disclosurebycategoriesofprovisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Closing balance Opening balanceCarrying amount
Provision for baddebts
Bookvalue
Carrying amount
Provision for bad
debts
BookvalueAmount
Proportion
(%)
Amount
Proportion
ofprovision
(%)
Amount
Proportion
(%)
Amount
Proportion
ofprovision
(%)Provisionfor baddebts madeindividually
Including:
Provisionfor baddebts madeby group
4,211,325.57 100.00 29,938.780.714,181,386.794,050,512.45100.00 7,952.820.204,042,559.63
Including:
Bankacceptancebills
2,126,550.00 50.50 2,126,550.003,891,456.0096.07 3,891,456.00
Commercialacceptances
2,084,775.57 49.50 29,938.781.442,054,836.79159,056.453.93 7,952.825.00151,103.63
Total4,211,325.57 / 29,938.78/ 4,181,386.794,050,512.45/ 7,952.82/ 4,042,559.63
Provision for bad debts made individually:
□ Applicable√ N/A
Provisionforbaddebtsmadebygroup:
√ Applicable□ N/A
Itembygroup: Commercialacceptances
Unit: Yuan Currency: RMBName
Closing balanceNotes receivable Provision for bad debts
Proportion of provision
(%)Commercialacceptance bills group
2,084,775.5729,938.78
1.44
Total 2,084,775.5729,938.781.44Recognition criterion to make the bad debt provision by group and explanation
□ Applicable√ N/A
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables.
□ Applicable√ N/A
(6). Provisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Openingbalance
Changes for the current period
ClosingbalanceProvision
Recovery orreversal
Write off orcancellationCommercialacceptances
7,952.82 21,985.96 29,938.78Total 7,952.82 21,985.96 29,938.78Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
Other description:
None
(7). Notesreceivableactuallycanceledinthecurrentperiod
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
5. Accountsreceivable
(1). Disclosurebyaging
√ Applicable□ N/A
Unit: Yuan Currency: RMBAging Closing balance of carrying amountWithin 1 yearIncluding: Subitems within 1 yearSub-total of items within 1 year 132,580,489.291 to 2 years 9,833,618.952 to 3 years 1,416,964.56
Total 143,831,072.80
(2). Disclosurebycategoriesofprovisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Closing balance Opening balanceCarrying amount
Provision for baddebts
Bookvalue
Carrying amount
Provision for baddebts
BookvalueAmount
Proportion (%)
Amount
Proportion ofprovision (%)
Amount
Proportion (%)
Amount
Proporti
on ofprovision (%)Provisionfor baddebtsmadeindividually
Including:
Provisionfor baddebtsmade bygroup
143,831,072.
100.00
9,795,911.
6.81
134,035,161.
203,746,783.
100.00
12,124,606.
5.95
191,622,712.
Including:
Accountsreceivablefor whichtheprovisionfor baddebts ismade byaginggroup
143,831,072.
100.00
9,795,911.
6.81
134,035,161.
203,746,783.
100.00
12,124,606.
5.95
191,622,712.
Total
143,831,072.
/9,795,911.
/134,035,161.
203,746,783.
/12,124,606.
/191,622,712.
Provision for bad debts made individually:
□ Applicable√ N/A
Provision for bad debts made by group:
√ Applicable□ N/A
Item by group: Accounts receivable for which the provision for bad debts is made by aging group
Unit: Yuan Currency: RMBName
Closing balanceAccounts receivable Provision for bad debts
Proportion of provision
(%)Within 1 year 132,580,489.296,629,024.515.001-2 years 9,833,618.952,458,404.7425.002-3 years 1,416,964.56708,482.2850.00
Total 143,831,072.809,795,911.536.81Recognition criterion to make the bad debt provision by group and explanation:
√ Applicable□ N/A
Recognition criterion to make the bad debt provision by group and explanation can refer to V.10 ofSection X for details.If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables.
□ Applicable√ N/A
(3). Provisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Openingbalance
Changes for the current period
ClosingbalanceProvision
Recoveryorreversal
Write off orcancellation
Other
changesProvision forbad debtsmade bygroup
12,124,606.71 -2,328,695.18 9,795,911.53
Total12,124,606.71 -2,328,695.18 9,795,911.53Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(4). Accountsreceivableactuallycanceledinthecurrentperiod
□ Applicable√ N/A
(5). Topfiveclosingbalancesofaccountsreceivablecategorizedbydebtors
√ Applicable□ N/A
Entity
Carryingamount
Proportion to the balance of accounts
receivable(%)
Provision for baddebtsCustomer
61,820,725.66 42.98 3,091,036.29Customer
26,341,388.52 18.31 1,317,069.43Customer
10,190,007.00 7.09 509,500.35Customer
6,464,740.91 4.49 1,547,150.28Customer
2,195,500.00 1.53 109,775.00
Sub-total
107,012,362.09
74.40
6,574,531.35
(6). Accountsreceivablederecognizedduetotransferoffinancialassets
□ Applicable√ N/A
(7). Assets and liabilities arising from transfer of accounts receivable and continued
involvement
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
6. Receivablesfinancing
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceBank acceptance bills receivable 362,600.001,980,500.00
Total 362,600.001,980,500.00Changes in amount and fair value of receivables financing:
□ Applicable√ N/A
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables:
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
7. Prepayments
(1). Disclosureofprepaymentsbyaging
√ Applicable□ N/A
Unit: Yuan Currency: RMBAging
Closing balance Opening balanceAmount Proportion (%) Amount Proportion (%)Within 1 year 32,644,779.6682.7734,948,314.45 99.651 to 2 years 6,794,374.0517.23122,684.68 0.352 to 3 years 833.350.00Total 39,439,987.06100.0035,070,999.13 100.00Reasons for overdue settlement of prepayments with significant amounts aged more than 1 year:
None
(2). Topfiveclosingbalancesofprepaymentscategorizedbyreceivers
√ Applicable□ N/A
Entity Carrying amount
Proportion to the balance of
prepayments (%)Supplier 1 13,030,362.8733.04Supplier 2 3,909,472.509.91Supplier 3 2,678,466.276.79Supplier 4 2,270,088.505.76Supplier 5 1,935,509.794.91
Sub-total 23,823,899.9360.41
Other description
□ Applicable√ N/A
8. Otherreceivables
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceInterest receivableDividends receivableOther receivables 11,424,632.949,618,750.08
Total 11,424,632.949,618,750.08Other description:
□ Applicable√ N/A
Interestreceivable
(1). Categoriesofinterestreceivable
□ Applicable√ N/A
(2). Significantinterestsoverdue
□ Applicable√ N/A
(3). Provisionforbaddebts
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
Dividendsreceivable
(1). Dividendsreceivable
□ Applicable√ N/A
(2). Dividendsreceivablewithsignificantamountsagedmorethan1year
□ Applicable√ N/A
(3). Provision for bad debts
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
Otherreceivables
(4). Disclosurebyaging
√ Applicable□ N/A
Unit: Yuan Currency: RMBAging Closing balance of carrying amountWithin 1 yearIncluding: Subitems within 1 yearSub-total of items within 1 year 5,917,632.341 to 2 years 4,959,142.862 to 3 years 441,715.69Over 3 years 675,637.60
Total 11,994,128.49
(5). Categoriesbythenatureofotherreceivables
√ Applicable□ N/A
Unit: Yuan Currency: RMBNature of receivables
Closing balance of carrying
amount
Opening balance of carrying
amountDeposits/margins/petty cash 10,159,405.348,772,420.22Withholding 604,218.291,275,175.63Temporary receivables 1,230,504.8610,289.71
Total 11,994,128.4910,057,885.56
(6). Provisionforbaddebts
√ Applicable□ N/A
Unit: Yuan Currency: RMBProvision for baddebts
Stage I Stage II Stage III
Total12-month ECL
in the future
Lifetime ECL(without creditimpairment)
Lifetime ECL (withcredit impairment)Balance as atJanuary 1, 2020
439,035.48100.00 439,135.48Balance as atJanuary 1, 2020 inthe current period
--transferred toStage II
--transferred toStage III
--reversed to StageII
--reversed to StageI
Provision 130,360.07 130,360.07ReversalWrite-offCancellationOther changesBalance as at June30, 2020
569,395.55100.00 569,495.55
Descriptionofsignificantchangesinthebalanceofotherreceivableswithchangedprovisionsforlossesinthecurrentperiod:
□ Applicable√ N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period:
□ Applicable√ N/A
(7). Provisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Openingbalance
Changes for the current period
ClosingbalanceProvision
Recoveryor reversal
Write off orcancellation
OtherchangesProvision forbad debtsmade by group
439,135.48 130,360.07 569,495.55Total 439,135.48 130,360.07 569,495.55
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(8). Otherreceivablesactuallycanceledinthecurrentperiod
□ Applicable√ N/A
(9). Topfiveclosingbalancesofotherreceivablescategorizedbydebtors
√ Applicable□ N/A
Unit: Yuan Currency: RMBEntity
Nature of other
receivables
Closingbalance
Aging
Proportion to thebalance of otherreceivables (%)
Provision
for bad
debtsClosingbalanceShenzhen MeishengIndustry Co., Ltd.
Margins 3,574,618.001-2 years29.80 178,730.90China SecuritiesDepository andClearing Co., Ltd.Shanghai Branch
Deposits/margins2,000,000.00
Within 1year
16.67 100,000.00
Shenzhen Scienceand TechnologyAssessmentManagement Center
Deposits 1,257,075.20
Within 1year, 1-2years, 2-3
years
10.48 62,853.76
Hong Kong Science& Technology ParksCorporation
Deposits 1,110,223.681-2 years9.26 55,511.21Beijing DongshengBozhan TechnologyDevelopment Co.,Ltd.
Deposits/margins658,584.72
Within 1
year
5.49 32,929.24
Total / 8,600,501.60/71.70 430,025.11
(10). Accountsreceivableinvolvinggovernmentgrants
□ Applicable√ N/A
(11). therreceivablesderecognizedduetotransferoffinancialassets
□ Applicable√ N/A
(12). Assetsandliabilitiesarisingfromtransferofotherreceivablesandcontinued
involvement
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
9. Inventories
(1). Categoriesofinventories
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceCarryingamount
Provision fordecline in value ofinventories/impair
ment of contractperformance cost
Book value
Carryingamount
Provision fordecline in value ofinventories/impairment of contractperformance cost
Book value
Rawmaterials
254,078,688.64
18,429,074.88
235,649,613
.76
169,021,593
.23
18,901,716.15
150,119,877
.08
Work inprogress
14,784,099.
1,478,412.05
13,305,687.
12,337,519.
686,431.07
11,651,087.
Goodson hand
149,723,126.64
23,614,864.89
126,108,261.75
95,889,640.
20,855,142.36
75,034,497.
Goodsupondelivery
17,355,687.
17,355,687.
40,421,349.
40,421,349.
Materials forconsignedprocessing
10,306,931.
3,651.86
10,303,280.
6,405,637.9
21,590.33
6,384,047.6
Total446,248,534
.33
43,526,003.68
402,722,530
.65
324,075,740
.04
40,464,879.91
283,610,860
.13
(2). Provisionfordeclineinvalueofinventoriesandimpairmentofcontractperformance
cost
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Openingbalance
Increase Decrease
ClosingbalanceProvision Others
Reversal or
write-off
Others
Rawmaterials
18,901,716.15
7,274,390.65
7,747,031.92
18,429,074.88
Work inprogress
686,431.07
1,376,044.40
584,063.42
1,478,412.05
Goods onhand
20,855,142.36
11,528,667.49
8,768,944.96
23,614,864.89
Goodsupondelivery
Materialsforconsignedprocessing
21,590.33
17,938.47
3,651.86
Total40,464,879.91
20,179,102.54
17,117,978.77
43,526,003.68
(3). Descriptionofcapitalizedamountofborrowingcostsincludedintheclosingbalanceof
inventories
□ Applicable√ N/A
(4). Descriptionofamortizationofcontractperformancecostduringtheperiod
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
10. Contractassets
(1). Descriptionofcontractassets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceCarryingamount
Provision for
impairment
Book value
Carryingamount
Provision for
impairment
Book valueGoods payment 4,143,457.96 228,548.263,914,909.703,937,479.96196,874.00 3,740,605.96Total 4,143,457.96 228,548.263,914,909.703,937,479.96196,874.00 3,740,605.96
(2). Amountandreasonsofmajorchangesinthebookvalueduringthereportingperiod
□ Applicable√ N/A
(3). Descriptionofprovisionforimpairmentmadeoncontractassetsduringtheperiod
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Provision
Reversal Write-off/cancellation
in the period
ReasonGoods payment 31,674.26
Total 31,674.26 /If a provision for bad debts of accounts receivable is made in accordance with the general model ofECL, please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables.
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
11. Held‐for‐saleassets
□ Applicable√ N/A
12. Non‐currentassetsduewithinoneyear
□ Applicable√ N/A
13. Othercurrentassets
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Closing balance Opening balanceInput VAT to be deducted 35,391,912.9437,976,562.19
repaid enterprise income tax 156,065.374,088,325.91
Total 35,547,978.3142,064,888.10Other description:
None
14. Debtinvestments
(1). Descriptionofdebtinvestments
□ Applicable√ N/A
(2). Debtinvestmentswithsignificantamountsattheendoftheperiod
□ Applicable√ N/A
(3). Description of provision for impairment
□ Applicable√ N/A
15. Other debt investments
(1). Descriptionofotherdebtinvestments
□ Applicable√ N/A
(2). Otherdebtinvestmentswithsignificantamountsattheendoftheperiod
□ Applicable√ N/A
(3). Description of provision for impairment
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
16. Long-term receivables
(1) Description
oflong‐termreceivables
□ Applicable√ N/A
(2) Provisionforbaddebts
□ Applicable√ N/A
(3) Long‐termreceivablesderecognizedduetotransferoffinancialassets
□ Applicable√ N/A
(4) Assetsandliabilitiesarisingfromtransferoflong‐termreceivablesandcontinued
involvement
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
17. Long-term equity investments
√ Applicable□ N/A
Unit: Yuan Currency: RMBInvestees
Openingbalance
Changes for the current period
Closingbalance
Closingbalance ofprovision
forimpairmentAdditionalinvestment
Decreasedinvestmen
t
Investment profit orloss under
equitymethod
Adjustment in
othercomprehensive income
Otherequitychanges
Declared
cashdividends orprofits
Provisionforimpairment
Other
sI. Jointventure
Sub-total
II.Associates
CinionicLimited
139,534,371.9
217,201.2
-1,059,162.87
138,692,410.2
GDCTechnology Limited(BVI)
127,773,820.6
765,306.4
923,456.56
129,462,583.5
Sub-total 139,534,371.9
127,773,820.6
982,507.6
-135,706.31
268,154,993.8
Total
139,534,371.9
127,773,820.6
982,507.6
-135,706.31
268,154,993.8
Other descriptionThe difference between the adjustment for gains/losses of long-term equity investment during the period and the investment returns is the difference from thecombination and set-off of upstream transactions.
18. Otherequityinstrumentinvestments
(1). Descriptionofotherequityinstrumentinvestments
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceShen Zhen Timewaying TechnologyCo., Ltd.
7,075,419.387,075,419.38Shenzhen Bevix Technology Co., Ltd. 4,900,000.004,900,000.00
Total 11,975,419.3811,975,419.38
(2). Descriptionofequityinvestmentsnotheldfortrading
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
19. Othernon‐currentfinancialassets
□ Applicable√ N/A
20. Investment properties
Measurement mode of investment propertiesN/A
21. Fixed assets
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceFixed assets 455,164,004.06471,204,340.95Disposal of fixed assets
Total 455,164,004.06471,204,340.95Other description:
NoneFixedassets
(1). Description of fixed assets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Machinery and
equipment
Transportation
equipment
Electronicequipment and
others
Operating leased
equipment
TotalI. Cost:
1.Opening
balance
82,619,598.35 1,020,400.0531,265,315.39525,597,112.41 640,502,426.20
2. Increase 12,312,206.56 3,674,254.4317,545,660.28 33,532,121.27
(1)Purchas
e
12,312,206.56 3,674,254.43
15,986,460.99(2)Transfer fromconstruction inprogress
17,545,660.28 17,545,660.28(3)Increase due tobusinesscombination
3. Decrease 288,679.29 210,903.033,084,721.48 3,584,303.80
(1)Disposal orretirement
288,679.29 210,903.03 499,582.32
(2)Transfer toinventories
3,084,721.48 3,084,721.48
4.Closing
balance
94,643,125.62 1,020,400.0534,728,666.79540,058,051.21 670,450,243.67II. Accumulateddepreciation
1.Opening
balance
29,391,420.36 292,223.8612,083,558.96127,530,882.07 169,298,085.25
2. Increase 7,815,934.89 87,399.542,841,383.5736,660,302.40 47,405,020.40
(1)Provision
7,815,934.89 87,399.542,841,383.5736,660,302.40 47,405,020.40
3. Decrease 178,134.48 174,820.371,063,911.19 1,416,866.04
(1)Disposal orretirement
178,134.48 174,820.37 352,954.85
(2)Transfer toinventories
1,063,911.19 1,063,911.19
4.Closing
balance
37,029,220.77 379,623.4014,750,122.16163,127,273.28 215,286,239.61III. Provision forimpairment
1.Opening
balance
2. Increase
(1)Provision
3. Decrease
(1)Disposal orretirement
4.Closing
balance
IV. Book value
1. Closing
balance
57,613,904.85 640,776.6519,978,544.63376,930,777.93 455,164,004.06
2. Opening
balance
53,228,177.99 728,176.1919,181,756.43398,066,230.34 471,204,340.95
(2). Temporarily idle fixed assets
□ Applicable√ N/A
(3). Fixed assets rent under finance lease
□ Applicable√ N/A
(4). Fixed assets leased out under operating lease
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance of carrying amountOperating leased equipment 376,930,777.93
(5). Fixed assets of which certificates of title have not been obtained
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
Disposaloffixedassets
□ Applicable√ N/A
22. Construction in progress
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceConstruction in progress 30,992,866.4620,132,004.07
Total 30,992,866.4620,132,004.07Other description:
NoneConstructioninprogress
(1). Description of Construction in progress
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceCarrying
amount
Provisionforimpairment
Book value
Carryingamount
Provision forimpairment
Book valueHeadquarterbuildings
17,253,087.13 17,253,087.131,385,496.59 1,385,496.59Lightsources tobe leased
13,739,779.33 13,739,779.3318,746,507.48 18,746,507.48Total 30,992,866.46 30,992,866.4620,132,004.0720,132,004.07
(2). Changes in significant constructions in progress for the current period
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Budget amount
Openingbalance
Increase
Amounttransferred tofixed assets
Otherdecreases
Closingbalance
Amountinjected
as aproportionof budget
amount
(%)
Construction
progress
Amount ofaccumulatedcapitalized
interest
Including:
Capitalisedinterest forthe period
InterestCapitalization
rate for theperiod (%)
Source of
fundsHeadquarterbuildings
534,635,200.00
1,385,496.59
15,867,590.54
17,253,087.13
3.23
Self-financi
Lightsources tobe leased
n
18,746,507.48
12,538,932.13
17,545,660.28
13,739,779.33
Self-financi
Total 534,635,200.00
n
20,132,004.07
28,406,522.67
17,545,660.28
30,992,866.46
/ /
/ /
(3). Provision for impairment losses for construction in progress in the current period
□ Applicable√ N/A
Other description
□ Applicable√ N/A
Materialsforconstruction
□ Applicable√ N/A
23. Bearer biological assets
(1). Bearer biological assets measured at cost
□ Applicable√ N/A
(2). Bearer biological assets measured at fair value
□ Applicable√ N/A
Other description
□ Applicable√ N/A
24. Oil and gas assets
□ Applicable√ N/A
25. Userightassets
□ Applicable√ N/A
26. Intangible assets
(1). Description of intangible assets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Land use rights Patents Software TotalI. Cost
1.Opening balance 330,630,000.00
23,247,800.00
10,196,548.78
364,074,348.78
2. Increase
303,152.64
303,152.64
(1) Purchase
303,152.64
303,152.64
(2)Internal
R&D
(3) Increase
due to businesscombination
3. Decrease
(1)Disposal
4.Closing balance 330,630,000.00
23,247,800.00
10,499,701.42
364,377,501.42
II. AccumulatedAmortization
1.Opening
balance
16,531,500.06
12,535,490.06
2,676,034.59
31,743,024.71
2. Increase 5,510,500.02
1,162,390.02
992,162.36
7,665,052.40
(1) Provision
5,510,500.02
1,162,390.02
992,162.36
7,665,052.40
3. Decrease
(1)Disposal
4.Closing
balance
22,042,000.08
13,697,880.08
3,668,196.95
39,408,077.11
III. Provision forimpairment
1.Opening
balance
2. Increase
(1) Provision
3. Decrease
(1)Disposal
4.Closing
balance
IV. Book value
1. Closing balance
308,587,999.92
9,549,919.92
6,831,504.47
324,969,424.31
2. Opening balance
314,098,499.94
10,712,309.94
7,520,514.19
332,331,324.07The proportion of intangible assets generated by the Company's internal research and development to thebalance of intangible assets at the end of the period is 0%.
(2). Landuserightsofwhichcertificatesoftitlehavenotbeenobtained
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
27. Development expenditure
□ Applicable√ N/A
28. Goodwill
(1). Originalbookvalueofgoodwill
□ Applicable√ N/A
(2). Impairmentprovisionofgoodwill
□ Applicable√ N/A
(3). Relevantinformationofgroupsofassetsorcombinationsofgroupsofassetswhere
thegoodwillisrecognized
□ Applicable√ N/A
(4). Specifytestprocedure,keyparametersofimpairmentofgoodwill(suchasincrease
rateattheprojectionperiod,increaserateatthesteadyperiod,profitrate,discountrate,andprojectionperiodupontheestimatesofthepresentedvalueoffuturecashflow)aswellasrecognitionmethodforimpairmentloss
□ Applicable√ N/A
(5). Impactsontestofgoodwillimpairment
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
29. Long-term prepaid expenses
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Openingbalance
Increase Amortization
Otherdecreases
Closing balanceRenovationcosts
16,908,070.34 606,210.233,264,991.68 14,249,288.89Service fees 844,339.6297,423.80 746,915.82Total 16,908,070.34 1,450,549.853,362,415.48 14,996,204.71
Other description:
None
30. Deferred tax assets and deferred tax liabilities
(1). Deferredtaxassetsthatarenotoffset
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceDeducibletemporarydifference
Deferred tax
asset
Deducibletemporarydifference
Deferred tax
assetProvision for impairmentof assets
36,194,716.255,864,962.1535,664,470.56 5,836,098.21Unrealized profits forinside transactions
354,219,403.7688,018,859.65382,370,535.17 95,185,982.07Deductible losses 41,067,865.6610,266,966.41Provisions 28,973,907.945,481,910.2425,267,517.71 4,667,623.73Deferred income 16,286,885.412,514,556.9116,475,547.96 2,546,469.56Share-based paymentexpenses
12,301,140.621,948,412.334,987,200.41 787,768.28Total 489,043,919.64114,095,667.69464,765,271.81 109,023,941.85
(2). Deferredtaxassetsthatarenotoffset
□ Applicable√ N/A
(3). Deferredtaxassetsanddeferredtaxliabilitiesthatarepresentedatthenetamount
afteroffset
□ Applicable√ N/A
(4). Detailsofunrecognizeddeferredtaxassets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceDeducible temporarydifference
43,561,465.4830,524,539.70Deductible losses179,388,652.04162,566,621.36Total222,950,117.52193,091,161.06
(5). Deductible losses, for which no deferred tax assets are recognized, will expire
in the following years
√ Applicable□ N/A
Unit: Yuan Currency: RMBYear Closing balance Opening balance Remark2020 9,243,377.139,243,377.132021 9,487,530.319,487,530.312022 11,900,329.0011,900,329.002023 47,115,450.5947,115,450.592024 (Note 1) 84,819,934.3384,819,934.332025 16,822,030.68
Total
179,388,652.04162,566,621.36/
Other description:
√ Applicable□ N/A
Note 1: Due to the implementation of the new revenue standard in the current period, the reparablelosses of subsidiaries decreased in 2019; meanwhile, the deferred tax assets corresponding to unrealizedinternal gains/losses on the consolidated statements decreased.
31. Othernon‐currentassets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceCarryingamount
Provisionforimpairment
Book value
Carryingamount
Provisionforimpairment
Book valuePrepaymentfor purchaseoflong-termassets
6,352,208.65 6,352,208.6511,420,185.94 11,420,185.94Total 6,352,208.65 6,352,208.6511,420,185.94 11,420,185.94Other description:
None
32. Short-term borrowings
(1). Categories of short-term borrowings
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceGuaranteed loans 28,602,306.05 50,000,000.00Credit loans 54,476,763.36 10,000,000.00Guaranteed loans and loansagainst collateral
32,199,672.45 16,337,875.56Interest payable 357,286.44 427,443.49
Total 115,636,028.30 76,765,319.05Description for categories of short-term borrowings:
None
(2). Short-term borrowings overdue but not yet repaid
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
33. Held‐for‐tradingfinancialliabilities
□ Applicable√ N/A
34. Derivativefinancialliabilities
□ Applicable√ N/A
35. Notespayable
√ Applicable□ N/A
Unit: Yuan Currency: RMBCategory Closing balance Opening balanceBank acceptance bills 126,525,026.2237,335,841.79
Total 126,525,026.2237,335,841.79Total notes payable matured but not paid yet is RMB 0 at the end of the period.
36. Accountspayable
(1). Presented by accounts payable
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceAmounts payable for purchase 198,595,546.20176,624,445.46
Total 198,595,546.20176,624,445.46
(2). Accountspayablewithsignificantamountsagedmorethan1year
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
37. Receipts in advance
(1). Presented by receipts in advance
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceReceipts in advance for goodsand cinema services
173,963,358.36167,534,200.30Total 173,963,358.36167,534,200.30
(2). Receiptsinadvancewithsignificantamountsagedmorethan1year
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance
Reasons for not repaid orcarried-forwardJiangsu Happy Blue Sea CinemaDevelopment Co., Ltd.
35,493,335.55Receipts in advance cinema
servicesTotal 35,493,335.55/
Other description:
□ Applicable√ N/A
38. Contractliabilities
(1). Descriptionofcontractliabilities
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceReceipts in advance for goods 19,442,085.2015,777,305.81
Total 19,442,085.2015,777,305.81
(2). Amountandreasonsofmajorchangesinthebookvalueduringthereportingperiod
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
39. Employee benefits payable
(1). Presentedbyemployeebenefitspayable
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Openingbalance
Increase Decrease Closing balance
1. Short-term benefits
50,334,348.08123,101,364.00156,974,389.27 16,461,322.81
2.Post-employment
benefits-definedcontribution plan
240,147.901,150,522.821,327,354.74 63,315.98
3. Termination benefits
12,436.735,021,391.685,033,828.41
Total50,586,932.71129,273,278.50163,335,572.42 16,524,638.79
(2). Presentedbyshort‐termemployeebenefits
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Openingbalance
Increase Decrease Closing balanceI. Wages or salaries,bonuses, allowances andsubsidies
50,091,330.65110,772,242.86144,539,237.15 16,324,336.36
II. Staff welfare3,232,087.893,232,087.89
III. Social securitycontributions
60,144.932,006,273.772,055,913.48 10,505.22
Including: Medicalinsurance
46,782.991,878,771.601,915,871.04 9,683.55
Work injuryinsurance
4,733.5917,286.7821,198.70 821.67
Maternity insurance8,628.35110,215.39118,843.74
IV. Housing funds2,113.006,666,826.306,665,837.30 3,102.00
V.Union running costs andemployee education costs
180,759.50423,933.18481,313.45 123,379.23
VI. Short-term paid leaves
VII.Short-term profitsharing plan
Total50,334,348.08123,101,364.00156,974,389.27 16,461,322.81
(3). Presentedbydefinedcontributionplan
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Openingbalance
Increase Decrease Closing balance
1. Basic pensions 232,248.741,109,469.141,278,506.24 63,211.64
2. Unemployment
insurance
7,899.1641,053.6848,848.50 104.34
3.Enterprise annuity
contribution
Total 240,147.901,150,522.821,327,354.74 63,315.98
Other description:
□ Applicable√ N/A
40. Taxes payable
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceValue-added tax (VAT) 246,070.95776,108.18Enterprise income tax 6,824,644.0839,874,754.97Individual income tax 857,706.751,447,882.44City maintenance andconstruction tax
267,509.52364,569.72Education surcharges 114,646.93156,244.17Local education surcharges 76,431.29104,162.78Stamp duty 66,157.95200,925.53
Total 8,453,167.4742,924,647.79
Other description:
None
41. Otherpayables
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceInterest payableDividends payable 11,279,223.68Other payables 30,827,391.5614,364,076.43
Total 42,106,615.2414,364,076.43Other description:
None
Interestpayable
□ Applicable√ N/A
Dividendspayable
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceDividends on ordinary shares 11,279,223.68
Total 11,279,223.68Other description, including significant dividend payable with ageing of over 1 year, and the reason ofnon-payment shall be disclosed:
None
Otherpayables
(1). Otherpayablespresentedbynature
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Closing balance Opening balanceWithholding 116,156.76145,265.79Deposits/margins 4,187,542.192,626,034.93Withdrawals in advance 17,230,992.6111,539,286.03Temporary receipts payable 9,292,700.0053,489.68
Total 30,827,391.5614,364,076.43
(2). Otherpayableswithsignificantamountsagedmorethan1year
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
42. Held‐for‐saleliabilities
□ Applicable√ N/A
43. Non-current liabilities due within one year
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Closing balance Opening balanceInterest payable 262,155.82127,055.02Guaranteed loans and loansagainst collateral
144,507,332.9064,841,740.00
Total 144,769,488.7264,968,795.02Other description:
None
44. Other current liabilities
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceTaxes to be written off forcontract liabilities
1,667,826.541,133,137.22Total 1,667,826.541,133,137.22
Changes in short-term bonds payable:
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
45. Long-term borrowings
(1). Categories of long-term borrowings
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceGuaranteed loans and loansagainst collateral
79,750,396.00 279,060,423.10Interest payable 142,348.86 554,684.17
Total 79,892,744.86 279,615,107.27Description for categories of long-term borrowings:
NoneOther description, including interest range:
□ Applicable√ N/A
46. Bonds payable
(1). Bondspayable
□ Applicable√ N/A
(2). Changes in bonds payable: (excluding other financial instruments such as
preference shares, perpetual bonds and others classified as financial liabilities)
□ Applicable√ N/A
(3). Descriptionofconvertingtermsandperiodofconvertiblecorporatebonds
□ Applicable√ N/A
(4). Descriptionofotherfinancialinstrumentsclassifiedasfinancialliabilities
Basic information of other financial instruments including outstanding preferred shares and perpetualbonds at the end of the period
□ Applicable√ N/A
Changes in financial instruments including outstanding preferred shares and perpetual bonds at the endof the period
□ Applicable√ N/A
Other financial instruments classified as financial liabilities
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
47. Leasingliabilities
□ Applicable√ N/A
48. Long-term accounts payable
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceLong-term accounts payable 3,539,750.003,488,100.00
Total 3,539,750.003,488,100.00Other description:
NoneLong‐termaccountspayable
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Closing balance Opening balance
Purchase of patent use rights byinstallment
3,539,750.003,488,100.00Total 3,539,750.003,488,100.00Other description:
NoneSpecialpayables
□ Applicable√ N/A
49. Long‐termemployeebenefitspayable
□ Applicable√ N/A
50. Provisions
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Opening balance Closing balance ReasonProducts qualitywarranty
27,072,676.4933,664,528.96Expenses for “three
guarantees” servicesTotal 27,072,676.4933,664,528.96/Other description, including significant assumptions and estimates relative to material provisions:
None
51. Deferred income
Description of Deferred income
√ Applicable□ N/A
Unit:Yuan Currency: RMBItem
Openingbalance
Increase Decrease Closing balance ReasonGovernmentgrants
17,108,361.69 11,083,800.0011,408,065.4916,784,096.20Total 17,108,361.69 11,083,800.0011,408,065.4916,784,096.20 /[Note]: Government grants included in the current profit or loss or offset relevant cost are disclosed inVII.84 of Section X in details.Projects relating to government grants:
√ Applicable□ N/A
Unit: Yuan Currency: RMBProjects withliabilities
Openingbalance
Increasedgovernmentgrants forthe currentperiod
Amountrecognizedinnon-operating income forthe currentperiod
Amountrecognizedin otherincome forthe currentperiod
Otherchange
s
Closingbalance
Related toassets/inco
me8K Ultra HighDefinitionLaser DisplayTechnologyEngineeringResearchCenter
2,000,000.0
17,881.98
1,982,118.0
Governmentgrantsrelated toassetsHighPerformanceResin andCompositeMaterialsPreparation
18,125.06 18,125.06
Governmentgrantsrelated toincome
Technique forAdditiveManufacturingKeyEnterpriseLaboratory forLaser Displayin GuangdongProvince
4,820,417.3
4,345,430.1
474,987.14
Governmentgrantsrelated toincomeUltra-highBrightnessLaser LightSourceEngineeringTechnologyResearchCenter
2,142,818.8
2,142,818.8
Governmentgrantsrelated toincome
TrichromaticLaser DisplayCompleteEquipmentProductionDemonstrationLine
7,694,753.4
8,873,800.0
2,241,562.3
14,326,991.
Governmentgrantsrelated toincomeKeyTechnology ofTrichromaticLaser DisplayCompleteEquipmentIndustrialization
432,247.02
2,210,000.0
2,642,247.0
Governmentgrantsrelated toincome
Total
17,108,361.
11,083,800.
11,408,065.
16,784,096.
Other description:
□ Applicable√ N/A
52. Other non-current liabilities
□ Applicable√ N/A
53. Share capital
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Opening balance
Changes (+, -)
Closing balanceIssueNewshare
Bonusshares
Capitalizationof capitalreserve
OthersSub-totalTotalshares
451,554,411.00 451,554,411.00Other description:
None
54. Other equity instruments
(1) Basicinformationofotherfinancialinstrumentsincludingoutstandingpreferredshares
andperpetualbondsattheendoftheperiod
□ Applicable√ N/A
(2) Changesinfinancialinstrumentsincludingoutstandingpreferredsharesandperpetual
bondsattheendoftheperiod
□ Applicable√ N/A
Changes of other equity instruments in the current period, reasons for such change and basis for relatedaccounting treatments:
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
55. Capital reserve
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Opening balance Increase Decrease Closing balanceCapital premium(Share premium)
1,200,466,394.58 1,200,466,394.58Other capitalreserve
7,475,923.7916,084,702.84 23,560,626.63Total 1,207,942,318.3716,084,702.84 1,224,027,021.21Other description, including changes in the current period and reasons for changes:
On October 14, 2019, the Company held the eighteenth session of the first board of directors andthe eighth session of the first board of supervisors, in which resolutions on matters related to the 2019Restricted Stock Incentive Plan were discussed and approved. As the Company’s implementation of thisincentive plan was approved in the general meeting of shareholders, it was determined that 4.4 millionshares of restricted shares were granted to 169 incentive participants who met the grant conditions at agrant price of RMB 17.5 per share on the grant date of October 14, 2019. The total expense ofequity-settled share-based payments amounted to RMB 17,576,543.48, in which RMB 16,084,702.84were recognized in the capital reserve and RMB 1,491,840.64 were charged to the amount attributable tominority interests.
56. Treasury shares
□ Applicable√ N/A
57. Other comprehensive income
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item
Openingbalance
Amount recognized in the current period
ClosingbalanceAmountincurred forcurrent periodbefore tax
Less: Amount
previouslyincluded inothercomprehensive
income andtransferred toprofit or lossfor the period
Less: Amountpreviouslyincluded in
othercomprehensive
income andtransferred to
retainedearnings for theperiod
Less: Incometax expense
Attributable to
owners of theparent company
after tax
Attributable tominorityshareholdersafter taxI. Othercomprehensiveincome thatcannot bereclassifiedsubsequently toprofit or loss
II. Othercomprehensiveincome thatwill bereclassified toprofit or loss
3,287,063.85 1,013,815.201,013,815.2025,835.374,300,879.05
Including:
Othercomprehensiveincome thatwill bereclassified toprofit or loss
-135,706.31-135,706.31-135,706.31
under theequity methodExchangedifferences ontranslation offinancialstatementsdenominated inforeigncurrencies
3,287,063.85 1,149,521.511,149,521.5125,835.374,436,585.36
Total othercomprehensiveincome
3,287,063.85 1,013,815.201,013,815.2025,835.374,300,879.05Other descriptions, including adjustments on transferring effective portion of cash flow hedges to amount upon initial recognition of the hedged item:
The other comprehensive income that will be reclassified to profit or loss under the equity method is the difference on translation of foreign currency financialstatements on the basis of long-term equity investments of the Hong Kong subsidiary accounted for using the equity method during the period.
58. Special reserve
□ Applicable√ N/A
59. Surplus reserve
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Opening
balance
Increase Decrease Closing balanceStatutory surplusreserve
21,522,683.40 21,522,683.40Surplus reserverecovered throughbusiness combinationinvolving entitiesunder common control
1,277,540.73 1,277,540.73Total 22,800,224.13 22,800,224.13Surplus reserve description, including changes in the current period and reasons for changes:
None
60. Retained profits
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Current period Last yearRetained profits at the end of priorperiod before adjustment
288,975,820.29112,623,054.78Total adjusted retained profits at thebeginning of the period (Add:+; Less:
-)
1,278,734.88Retained profits at the beginning of theperiod after adjustment
290,254,555.17112,623,054.78Add: Net profit attributable to ownersof the Parent Company for the period
14,327,442.96186,457,276.71Less: Appropriation to statutory surplusreserve
10,104,511.20Appropriation to discretionarysurplus reserveAppropriation to general riskreserve
Declaration of dividends onordinary shares
33,866,580.83
Conversion of ordinary shares'dividends into share capitalRetained profits at the end of the period270,715,417.30288,975,820.29Details of adjustments to retained profits at the beginning of the period:
1) As a result of the retrospective adjustment of the Accounting Standards for Business Enterprises and
related new regulations, retained profits at the beginning of the period were affected by RMB1,278,734.88.
2. Retained profits at the beginning of the period were affected by RMB 0 due to changes in accounting
policies.
3. Retained profits at the beginning of the period were affected by RMB 0 due to the correction of
significant accounting errors.
4. Retained profits at the beginning of the period were affected by RMB 0 due to changes in the scope of
consolidation resulting from business combination involving entities under common control.
5. Retained profits at the beginning of the period were affected by RMB 0 in total due to other
adjustments.
61. Operatingincomeandoperatingcosts
(1). Descriptionofoperatingincomeandoperatingcosts
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount for the current period Amount for the prior periodRevenue Cost Revenue CostMain business 716,025,207.34529,787,789.94853,356,964.84 511,757,903.12Total 716,025,207.34529,787,789.94853,356,964.84 511,757,903.12
(2). Descriptionofincomesfromcontracts
□ Applicable√ N/A
(3). Descriptionofperformanceobligations
□ Applicable√ N/A
(4). Descriptionofallocationtoremainingperformanceobligations
□ Applicable√ N/A
Other description:
None
62. Taxes and levies
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current period Amount for the prior periodCity maintenance andconstruction tax
854,951.571,975,668.74Education surcharges 378,217.31854,233.24Local education surcharges 248,054.96561,364.18Others 848,486.72945,684.82
Total 2,329,710.564,336,950.98Other description:
None
63. Sales expenses
√ Applicable□ N/A
Unit:Yuan Currency:RMBItem
Amount for the current
period
Amount for the prior
periodEmployee benefits 23,380,108.0325,006,899.21Business travel expenses 650,816.902,972,256.98Business entertainment expenses 344,196.591,217,757.65Marketing fees 11,258,761.3515,155,417.35Advertising costs and business publicityexpenses
2,025,841.22
3,340,057.79After-sale repair expenses 7,335,750.914,797,990.08Other expenses 5,838,419.508,095,110.78
Total 50,833,894.5060,585,489.84Other description:
None
64. Administrationexpenses
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Amount for the current
period
Amount for the prior
periodEmployee benefits 27,739,712.4933,954,968.02Rent expense 3,676,664.67 8,124,328.18Service fees 17,562,845.34 2,764,441.73Depreciation and amortization fees 8,228,493.80 7,371,168.39Share-based payment expenses 17,576,543.47Other expenses 3,029,397.326,562,831.90
Total 77,813,657.0958,777,738.22Other description:
None
65. R&Dexpenses
√ Applicable□ N/A
Unit:YuanCurrency:RMB
Item Amount for the current
period
Amount for the prior
periodEmployee benefits 54,917,336.4552,557,555.42Material consumption expenses 9,045,544.8410,978,567.36Rent expense 4,614,423.445,519,043.68Service fees 2,313,102.756,105,287.85Depreciation and amortization fees 6,299,814.114,291,396.67Testing expenses 1,963,709.912,564,033.45Patent fees 4,325,481.234,412,009.53Other expenses 3,816,038.022,881,595.84
Total 87,295,450.7589,309,489.80Other description:
None
66. Financialexpenses
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Amount for the current
period
Amount for the prior
periodInterest expenses 11,612,825.8718,267,758.92Less: Interest income -4,618,971.33-2,986,857.28Exchange profit or loss 189,748.991,440,004.41Bank service charges 854,087.51636,733.64
Total 8,037,691.0417,357,639.69Other description:
None
67. Otherincome
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current
period
Amount for the prior
periodGovernment grants related to assets 17,881.982,000,000.00Government grants related to income 31,357,361.0415,417,109.11Additional deduction of input VAT 1,546,791.95
Total 32,922,034.9717,417,109.11Other description:
Government grants recognized in other income in the current period are disclosed in VII.84 of Section Xin details.
68. Investment income
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount for the current
period
Amount for the prior periodLong-term equity investment accountedfor using the equity method
901,894.80-3,460,616.55Investment income from disposal offinancial assets at fair value throughprofit or loss
10,824,793.71Total 11,726,688.51-3,460,616.55Other description:
None
69. Incomefromnetexposurehedges
□ Applicable√ N/A
70. Gains from changes in fair values
□ Applicable√ N/A
71. Lossesofcreditimpairment
√ Applicable□ N/A
Unit:YuanCurrency:RMBItem Amount for the current periodAmount for the prior periodBad debt losses 2,170,106.96-761,760.88
Total 2,170,106.96-761,760.88Other description:
None
72. Impairment losses of assets
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item
Amount for the current
period
Amount for the prior period
2. Losses of decline in value of
inventories and losses of contractperformance cost
-12,109,681.09-1,379,296.10
Total -12,109,681.09-1,379,296.10Other description:
None
73. Gainsondisposalofassets
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current period Amount for the prior periodGains on disposal of assets 149,620.91
Total 149,620.91Other description:
□ Applicable√ N/A
74. Non-operating income
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount for the current
period
Amount for the prior
period
Amount included innon-recurring profit orloss for the periodGains from damageand retirement ofnon-current assets
8,412.778,412.77
Amounts not requiredfor payment
4,200.00818,292.074,200.00Indemnity 252,001.081,500,000.00252,001.08Others 6,001.6311,883.776,001.63
Total 270,615.482,330,175.84270,615.48
Government grants included in profit or loss for the period
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
75. Non-operating expenses
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount for the current
period
Amount for the prior
period
Amount included innon-recurring profit or
loss for the periodExternal donations 563,138.63563,138.63Losses from damageand retirement ofnon-current assets
140,563.32816,871.91140,563.32Penalties andoverdue fines
1,000.00214,462.771,000.00Others 36,000.0036,000.00
Total 740,701.951,031,334.68740,701.95Other description:
None
76. Income tax expense
(1) Statementofincometaxexpense
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current periodAmount for the prior periodIncome tax expense in the currentperiod
7,761,319.1236,244,557.63Deferred income tax expenses -5,067,377.70-3,104,343.89
Total 2,693,941.4233,140,213.74
(2) Reconciliationofincometaxexpensestotheaccountingprofit
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current periodTotal profit -5,684,302.75Income tax expense calculated based onstatutory/applicable tax rate
-852,645.41Effect of different tax rates of subsidiariesoperating in other jurisdictions
-4,137,384.06Effect of adjustment on income tax for the period-295,268.25Effect of non-taxable income -470,704.61Effect of non-deductible cost, expense and loss 1,808,156.04Effect of utilizing deductible loss not recognizedfor deferred tax assets for prior periodEffect of deductible temporary difference ordeductible loss not recognized for deferred tax
6,641,787.71
assets for the current periodIncome tax expense 2,693,941.42Other description:
□ Applicable√ N/A
77. Other comprehensive income
√ Applicable□ N/A
Other comprehensive income net of tax has been disclosed in VII.57 of Section X in details.
78. Items in cash flow statement
(1). Othercashreceiptsrelatingtooperatingactivities
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Amount for the current periodAmount for the prior periodGovernment grants 29,527,428.6918,030,440.03Non-operating income 258,002.711,513,303.93Interest income 4,618,971.332,986,857.28Other monetary funds-margins 20,402,679.8624,642,060.94Bank deposits-frozen funds due tolitigation 10,000,000.00Receivables and payables 16,463,315.135,699,366.68
Total 81,270,397.7252,872,028.86Description of other cash receipts relating to operating activities:
None
(2). Othercashpaymentsrelatingtooperatingactivities
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Amount for the current periodAmount for the prior periodSales expenses, administrative andR&D expenses paid in cash
67,811,667.4384,083,929.16Financial expenses paid in cash 854,087.51636,733.64Non-operating expenses 600,138.63214,462.77Other monetary funds-margins 27,484,998.9218,134,123.73Receivables and payables 3,395,213.715,247,143.62
Total 100,146,106.20108,316,392.92Description of other cash payments relating to operating activities:
None
(3). Other cash receipts relating to investing activities
□ Applicable√ N/A
(4). Other cash payments relating to operating activities
□ Applicable√ N/A
(5). Othercashreceiptsrelatingtofinancingactivities
□ Applicable√ N/A
(6). Other cash payments relating to financing activities
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Item Amount for the current periodAmount for the prior periodShare-based payment expenses 22,587.36Issue expenses 3,570,350.00
Total 22,587.363,570,350.00Description of other cash payments relating to financing activities:
None
79. Supplementaryinformationtothecashflowstatement
(1) Supplementaryinformationtothecashflowstatement
√ Applicable□ N/A
Unit: Yuan Currency: RMBSupplementary information 2019 2018
1. Reconciliation of net profit to
cash flow from operating activities:
Net profit -8,378,244.1791,205,816.19Add: Provision for impairment ofassets
12,109,681.09761,760.88Losses of credit impairment -2,170,106.961,379,296.10Depreciation of fixed assets, depletionof oil and gas assets, depreciation ofbearer biological assets
47,418,126.6537,653,612.42Amortization of use right assetsAmortization of intangible assets 7,660,838.997,226,875.32Amortization of long-term prepaidexpenses
3,409,529.26
1,346,577.20Losses on disposal of fixed assets,intangible assets and other long-termassets (gains are indicated by “－”)
-149,620.91816,871.91Losses on retirement of fixed assets(gains are indicated by “－”)
132,150.55Losses on changes in fair values(gains are indicated by “－”)Financial expenses (income isindicated by “－”)
11,802,574.86
19,707,763.33Investment losses (income is indicatedby “－”)
-11,726,688.51
3,460,616.55Decrease in deferred tax assets(increase is indicated by “-”)
-5,071,725.84
-3,104,697.63Increase in deferred tax liabilities(decrease is indicated by “-”)Decrease in inventories (increase isindicated by “－”)
-142,500,844.11
-91,143,123.90Decrease in receivables fromoperating activities (increase isindicated by “－”)
67,912,872.37
-22,249,801.57Increase in payables from operatingactivities (decrease is indicated by“－”)
64,980,975.06
-61,604,980.32Others 17,576,543.47Net cash flow from operatingactivities
63,006,061.80
-14,543,413.52
2. Significant investing and
financing activities that do notinvolve cash receipts and payments:
Conversion of debt into capitalConvertible corporate bonds duewithin one yearFixed assets acquired under financeleases
3. Net changes in cash and cash
equivalents:
Closing balance of cash 686,296,049.61517,744,659.82Less: Opening balance of cash 829,789,487.86472,508,550.40Add: Closing balance of cashequivalentsLess: Opening balance of cashequivalentsNet increase in cash and cashequivalents
-143,493,438.2545,236,109.42
(2) Netcashpaidtoacquiresubsidiariesforthecurrentperiod
□ Applicable√ N/A
(3) Netcashreceiptsfromdisposalofsubsidiariesforthecurrentperiod
□ Applicable√ N/A
(4) Compositionofcashandcashequivalents
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balanceOpening balanceI. Cash686,296,049.61829,789,487.86Including: Cash on hand3,189.123,348.57Bank deposit that can be paid atany time
679,310,868.31
827,470,990.73Other monetary funds that canbe paid at any time
6,981,992.18
2,315,148.56Deposits in the Central Bankthat can be used for paymentsDeposits made with other banksPlacements with banksII. Cash equivalentsIncluding: Investments in debtsecurities due within three months
III. Closing balance of cash and cashequivalents
686,296,049.61829,789,487.86Including: Restricted cash and cashequivalents of the Parent Companyor subsidiaries within the GroupOther description:
√ Applicable□ N/A
In the cash flow statement, the following are excluded from the scope of cash equivalents: themargins of RMB 23,151,615.78 under restriction, the fund of RMB 20,000,000.00 frozen due tolitigation.
80. Notes to items in the statement of changes in owners' equity
Describe matters such as the names and the adjustment amounts of the items included in “others” inrespect of adjustments to the closing balances of the prior year:
□ Applicable√ N/A
81. Assets with limited ownership or use right
√ Applicable□ N/A
Unit:Yuan Currency:RMBItem Closing balance of carrying
amount
ReasonCash and bank balances 23,151,615.78MarginsBank deposits 20,000,000.00Frozen due to litigation
Total 43,151,615.78/Other description:
None
82. Foreign currency monetary items
(1). Foreign currency monetary items
√ Applicable□ N/A
Unit:YuanItem
Closing balance of
foreign currency
Exchange rate
Closing balance ofRMB equivalentbalanceCash and bank balances -- 114,063,299.33Including: USD 15,939,775.697.0795 112,845,641.99 VND 128,710,543.000.00030595 39,378.47 HKD 1,286,444.370.9134 1,175,089.75 GBP 365.968.7144 3,189.12Accounts receivable -- 24,631,615.01Including: USD 3,479,287.387.0795 24,631,615.01Short-term borrowings -- 12,281,152.08Including: USD 1,734,748.517.0795 12,281,152.08Accounts payable -- 60,890,264.62Including: USD 8,569,726.647.0795 60,669,379.75 EUR 27,745.877.9610 220,884.87Other receivables -- 1,451,045.43Including: USD 37,674.717.0795 266,718.11 VND 110,630,000.000.00030595 33,846.80 HKD 1,259,503.110.9134 1,150,480.52Other payables -- 5,846,302.51Including: USD 707,891.147.0795 5,011,515.30 EUR 64,845.307.9610 516,233.44 HKD 348,740.770.9134 318,553.77Other description:
None
(2). Descriptionofoverseasoperatingentities,includingsignificantoverseasoperatingentities,of
whichthemajoroperationplace,functionalcurrencyandchoosingbasisaswellasthereasonforchangeoffunctionalcurrencyshouldbedisclosed
□ Applicable√ N/A
83. Hedge
□ Applicable√ N/A
84. Governmentgrants
1. Basicgovernmentgrants
√ Applicable□ N/A
Unit: Yuan Currency: RMBCategory Amount Item presented Amount recognized in
current profit or lossGovernment grants related to assets Deferred
income
17,881.98Government grants related to incomeand used for compensation of theCompany’s relevant costs or losses insubsequent periods
11,083,800.00
Deferredincome
11,390,183.51Government grants related to incomeand used for compensation of theCompany’s relevant costs or losses thathave been incurred
19,967,177.53Other income 19,967,177.53
Note: the amount refers to government grants actually received in the current period. The amountrecognized in the profit or loss for the current period include the amount of government grants that isreceived in previous periods and recognized in the profit or loss for the current period.
2. Refundofgovernmentgrants
□ Applicable√ N/A
Other descriptionNone
85. Others
□ Applicable√ N/A
VIII. Changes in scope of consolidation
1. Business combination not involving enterprises under common control
□ Applicable√ N/A
2. Business combination involving entities under common control
□ Applicable√ N/A
3. Counter purchase
□ Applicable√ N/A
4. Disposal of subsidiaries
Single disposal of investments in subsidiaries, i.e. the loss of control
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
Disposal of investment in a subsidiary through multiple transactions by steps with loss of control overthe subsidiary in the current period
□ Applicable□ N/A
Package deal
□ Applicable√ N/A
Non-package deal
□ Applicable√ N/A
5. Changesinscopeofconsolidationforotherreasons
Description of changes in the scope of consolidation for other reasons (e.g., new subsidiaryestablishment and subsidiary liquidation, etc.) and the relevant information:
√ Applicable□ N/A
1. Increased scope of combination
Company
Method ofobtaining equity
Time point ofobtainingequity
Capitalcontribution
(RMB)
Proportion ofcontributionShenzhen AppotronicsDisplay Device Co., Ltd.
Establishment2020-2-13 3,000,000.00 100.00%
WEMAX LLC Establishment2020-3-17 / /JOVEAI ASIACOMPANY LIMITED
Establishment2020-4-24 709,310.00 64.29%
6. Others
□ Applicable√ N/A
IX. Equity in other entities
1. Equityinsubsidiaries
(1). Compositionofenterprisegroup
√ Applicable□ N/A
Subsidiary
Name
Princip
aloperationplace
Registrationplace
Business nature
Proportion ofshareholding (%) Acquisiti
onmethodDirect IndirectAppotronics Timewaying(Beijing) Technology Co.,Ltd.
Beijing Beijing
Sales; technologydevelopment,consulting
90.00
Shenzhen AppotronicsSoftware Technology Co.,Ltd.
Shenzhen
Shenzhen
Technologydevelopment andsales of computersoftware andhardware
100.00
Beijing OrientAppotronics TechnologyCo., Ltd.
Beijing Beijing
Technologypromotion; computersystems, applicationsoftware services
59.00
Shenzhen AppotronicsXiaoming TechnologyCo., Ltd.
Shenzhen
Shenzhen
Development,consultation andtransfer of laserdisplay technology
100.00
EstablishmentFengmi (Beijing)Technology Co., Ltd.
Beijing Beijing
Technology andsoftware development
55.00
EstablishmentShenzhen AppotronicsLaser Display TechnologyCo., Ltd.
Shenzh
en
Shenzh
en
R&D and sales oflaser display products
100.00
Businesscombinationinvolving entitiesundercommoncontrolCINEAPPO LaserCinema Technology(Beijing) Co., Ltd.
Beijing Beijing
Research anddevelopment,production, sales andservice of lasercinema projectionequipment
24.84 30.36
Businesscombinationinvolving entitiesundercommoncontrolQingda Appotronics(Xiamen) TechnologyCo., Ltd.
Beijing
Xiame
n
Informationtechnology consultingservices
51.00
EstablishmentShenzhen AppotronicsLaser Technology Co.,Ltd.
Shenzh
en
Shenzh
en
Softwaredevelopment forsemiconductoroptoelectronicdevices
100.00
EstablishmentShenzhen AppotronicsHome Line TechnologyCo., Ltd.
Shenzh
en
Shenzh
en
Softwaredevelopment relatedto semiconductoroptoelectronic
100.00
Establishment
productsAppotronics Hong KongLimited
HongKong
HongKong
Information
technology consulting
services
100.00
Establishment
Appotronics USA, Inc. USA USA
R&D, manufacture
and sales of
semiconductor
optoelectronic
products
100.00
Businesscombinationinvolving entitiesundercommoncontrolFabulus Technology HongKong Limited
HongKong
HongKong
R&D, manufacture
and sales of screens
100.00
EstablishmentJoveAI Limited
CaymanIsland
Cayma
nIsland
No specific businessconducted 64.29
EstablishmentJoveAI Innovation, Inc. USA USA
R&D of laser displaysoftware system
64.29
EstablishmentAppotronics Technology(Changzhou) Co., Ltd.
Changzhou
Changzhou
Technical researchand development ofprojection equipment,screen and electroniccomputer.
100.00
EstablishmentFORMOVIETECHNOLOGY INC
USA USA
No specific businessconducted
55.00
EstablishmentShenzhen AppotronicsDisplay Device Co., Ltd.
Shenzhen
Shenzh
en
No specific businessconducted
100.00
EstablishmentWEMAX LLC USA USA
Sale of laserequipment
100.00
EstablishmentJOVEAI ASIACOMPANY LIMITED
Vietna
m
Vietna
m
Technical researchand development ofprojection equipment,screen and electroniccomputer.
64.29
EstablishmentDescription of the difference between the proportion of shareholding and the proportion of voting rightsin a subsidiary:
NoneBasis for holding half of the voting rights or below but still controlling the investee, and holding overhalf voting right but having no control over the investee:
NoneBasis for controls over significant structured entities included in consolidation scope:
NoneBasis to determine the company acts as the agent or the principal:
NoneOther description:
None
(2). Significant non-wholly subsidiaries
√ Applicable□ N/A
Unit: Yuan Currency: RMBSubsidiaries
Shareholding by
minorityshareholdersPercentage (%)
Profit or lossattributable to
minorityshareholders for the
current period
Dividends declared
for distribution to
minorityshareholders in the
current period
Closing balance
of minority
interests
Fengmi(Beijing)TechnologyCo., Ltd.
45.00-4,688,356.17 -17,583,172.99CINEAPPOLaser CinemaTechnology(Beijing) Co.,Ltd.
44.80-15,518,003.49 152,467,740.13
Description of the difference between the proportion of shareholding by minority shareholders and theirproportion of voting rights in a subsidiary:
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
(3). Significant financial information of significant non-wholly subsidiaries
√ Applicable□ N/A
Unit: Yuan Currency: RMBSubsidiaries
Closing balance Opening balanceCurrentassets
Non-current
assets
Totalassets
Currentliabilities
Non-currentLiabilities
TotalLiabilities
Currentassets
Non-current
assets
Total assets
Currentliabilities
Non-currentLiabilities
TotalLiabilities
Fengmi421,067,008.90
10,764,967.98
431,831,976.88
467,579,146.78
3,326,547.85
470,905,694.63
252,558,076.54
7,968,567.46
260,526,644.00
288,201,120.45
2,437,972.51
290,639,092.96
CINEAPPO147,816,334.88
747,344,068.24
895,160,403.12
462,864,399.74
91,966,226.31
554,830,626.05
255,777,103.29
789,861,645.43
1,045,638,748.72
383,085,231.40
289,141,441.68
672,226,673.08
Subsidiaries
Amount for the current period Amount for the prior periodOperating income Net profit
Totalcomprehensiveincome
Cash flow from
operatingactivities
Operating income Net profit
Totalcomprehensive
income
Cash flow fromoperatingactivities
Fengmi396,335,864.51
-10,418,569.26
-10,418,569.26
83,212,791.30
327,846,132.62
-16,225,067.89
-16,225,067.89
-5,554,506.48
CINEAPPO78,528,870.68
-34,638,400.65
-34,638,400.65
22,787,991.80
267,701,240.20
77,574,624.13
77,574,624.13
41,227,104.36
Other description: Due to the implementation of the new revenue standard, Fengmi (Beijing) Technology Co., Ltd. adjusted the opening balances on the balancesheet on a retrospective basis without adjusting comparable data.
(4). Significant limitations on use of the group assets and paying off the group debts:
□ Applicable√ N/A
(5). Financial or other support provided to structured entities included in consolidated
financial statements:
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
2. Changes of shares of owners' equity in subsidiaries but continue to remain control over
transactions of subsidiaries
□ Applicable√ N/A
3. Equity in joint ventures or associates
√ Applicable□ N/A
(1). Significant associates or joint ventures
√ Applicable□ N/A
Unit: Yuan Currency: RMBName ofassociates orjoint ventures
Principaloperationplace
Registrationplace
Business nature
Proportion ofshareholding (%)
Accountingtreatmentmethod forinvestments injoint venturesand associatesDirectIndirectGDCTechnologyLimited (BVI)
Asia andNorthAmerica
BritishVirginIslands
R&D, production,and sale of digitalcinema servers andcinema managementsystem
36.00
Accounting forunder equitymethodDescription of variances between shareholding ratio and the ratio of voting rights in joint ventures orassociates:
NoneBasis that the Company owns less than 20% voting rights but may exercise major impact, or that theCompany owns 20% or over voting rights but does not has major impact:
None
(2). Major financial information of significant joint ventures
□ Applicable√ N/A
(3). Major financial information of significant associates
√ Applicable□ N/A
Unit: Yuan Currency: RMBClosing balance/amount of this
period
Opening balance/amount
of last periodGDC GDC (note 2)Current assets 586,292,470.81395,470,018.62Non-current assets 249,809,120.86435,956,015.86Total assets 836,101,591.67831,426,034.48
Current liabilities 629,982,428.50365,525,438.62Non-current Liabilities 19,357,179.51283,701,219.95Total Liabilities 649,339,608.01649,226,658.57
Minority interestsInterests attributable to shareholders ofthe parent company
186,761,983.66182,199,375.91
Share of net assets calculated byownership percentage
67,234,314.1265,591,775.33Adjustment 62,228,269.4662,182,045.29--Goodwill 62,182,045.2962,182,045.29--Unrealized profits for insidetransactions--Others 46,224.17Carrying amount of investment ofassociate
129,462,583.58127,773,820.62Fair values of equity investments inassociates having publicly quoted prices
Operating income 44,845,312.70Net profit 2,142,306.37Net profit of discontinued operationsOther comprehensive income 2,565,157.07Total comprehensive income 4,707,463.44
Dividends received from associates in thecurrent year
Other descriptionNote 1: “Others” in the adjustment matters refer to the portion not belonging to the Company in theexchange differences for converting foreign currency-denominated statements of associates intoRMB-denominated statements.Note 2: The opening balance in respect of GDC is the recent unaudited data as of the recognition date(March 31, 2020), and the data on gains/losses from GDC during the period is the cumulated data fromApril to June.
(4). Summary financial information of insignificant joint ventures and associates
√ Applicable□ N/A
Unit: Yuan Currency: RMBClosing balance/2019 Opening balance / 2018Associates:
Total carrying amount ofinvestments
138,692,410.29139,534,371.94Total amounts calculated based on shareholding proportionsOpening book value 139,534,371.94--Net profit 217,201.22-3,458,306.31--Other comprehensive income -1,059,162.87-2,035,318.38--Total comprehensive income -841,961.65-5,493,624.69Other description
1、 The amount of other comprehensive income arise from the exchange difference on the translation
of foreign currency statements due to different functional currencies in use by the investee and theinvestor enterprise, and the exchange difference on the translation of foreign currency statements of theinvestee.
2、 Basic information of associates:
Associates
Principal
Registration
place
Business
nature
Proportion of shareholding (%)
Accounting
treatmentmethod forinvestments
in joint
venturesoperation
place
Direct Indirect
andassociatesCinionicLimited
Europe and
USA
Hong Kong
Sale ofcinemaprojectors
Accountingfor underequitymethod
(5). Descriptions of significant limitations over the ability of joint ventures or
associates to transfer funds to the Company
□ Applicable√ N/A
(6). Excessive loss of joint venture or associates
□ Applicable√ N/A
(7). Unrecognizedcommitmentrelatingtoinvestmentsinjointventures
□ Applicable√ N/A
(8). Contingentliabilitiesrelatingtoinvestmentsinjointventuresorassociates
□ Applicable√ N/A
4. Significant joint operations
□ Applicable√ N/A
5. Interests in structured entities that are not included in consolidated financial
statementsDescription of structured entities that are not included in consolidated financial statements:
□ Applicable√ N/A
6. Others
□ Applicable√ N/A
X. Risks associated with financial instruments
√ Applicable□ N/A
The Company's risk management objectives are to achieve a proper balance betweenrisks and yield, minimize the adverse impacts of risks on the Company's operationperformance, and maximize the benefits of the shareholders and other stakeholders. Basedon these risk management objectives, the Company's basic risk management strategy is toidentify and analyze its exposure to various risks, establish an appropriate maximumtolerance to risk, implement risk management, and monitor regularly and effectively theseexposures to ensure the risks are monitored at a certain level.
The Company is exposed to various risks associated with financial instruments in itsdaily routines, primarily including credit risk, liquidity risk and market risk. Themanagement has reviewed and approved policies to manage these risks, summarized asbelow.
(I) Credit risk
Credit risk refers to the risk that a party of the financial instrument will default on itsobligations resulting in financial loss to the counterparty.
1. Management of credit risk
(1) Evaluation of credit risk
The Company assesses at each balance sheet date whether the credit risk of theunderlying financial instruments has increased significantly since initial recognition. Indetermining whether the credit risk has increased significantly since initial recognition, theCompany considers reasonable and supportable information that is available without unduecost or effort, including quantitative and qualitative analysis based on historical data,ranking of external credit risks and forward-looking information. The Company comparesthe risk of a default occurring on a financial instrument as at the balance sheet date with therisk of a default occurring on the financial instrument as at the date of initial recognitionbased on individual financial instrument or a group of financial instruments with similarcredit risk characteristic, to determine the change of the risk of a default occurring on afinancial instrument over the expected life.The Company considers the credit risk of financial instruments has increasedsignificantly when one or more of the following quantitative and qualitative criteria aremet:
1) The quantitative criterion primarily refers to a certain percentage of increase in the
probability of default over the remaining life of the financial instruments as of the balancesheet date when comparing with that at initial recognition of the financial instruments;
2) The qualitative criteria includes, inter alia, adverse material changes in business or
financial conditions that are expected to cause a significant decrease in the debtor's abilityto meet its debt obligations, and an actual or expected significant adverse change in thetechnological, market, economic, or legal environment of the debtor that results in asignificant decrease in the debtor’s ability to meet its debt obligations.
(2) Definition of defaulted or credit-impaired assets
A financial asset is defined as defaulted when the financial instrument meets one ormore conditions stated as below, and the criteria of defining defaulted asset is consistentwith that of defining credit-impaired asset:
1) significant financial difficulty of the debtor;
2) a breach of contract terms with binding force by the debtor;
3) it is becoming probable that the debtor will enter bankruptcy or other financial
reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the
debtor’s financial difficulty, has granted to the debtor a concession(s) that the creditorwould not otherwise consider.
2. Measurement of ECL
Key parameters to measure ECL include the probability of default, loss given defaultand the exposure at default. The Company established models of the probability of default,loss given default and the exposure at default on the basis of qualitative analysis onhistorical statistical data (such as counterparty ranking, guarantee methods, collateralcategory, and repayment way) and forward-looking information.
3. Details of reconciliation of the opening balance and the closing balance of provision
for impairment of financial instruments can refer to the description in VII 4, 5 and 8 ofSection X.
4. Credit risk exposure and credit risk concentration
The Company's credit risk is primarily from cash and bank balances and receivables. Inorder to control the risks associated with aforementioned items, the Company has taken thefollowing measures.
(1) Cash and bank balances
The credit risk of the Company is limited because the Company has deposited bank
deposits and other monetary funds in banks with high credit ratings.
(2) Receivables
The Company regularly evaluates the creditworthiness of its customers with deals oncredit, and selects to deal with approved and creditworthy customers subject to the resultsof the credit assessment with monitoring the balance of its receivables, so as to ensure thatthe Company is not exposed to significant risk of bad debt.
No collaterals are required since the Company only deals with third parties that areapproved and creditworthy. The concentrated credit risks are managed by customers. AsJune 30, 2020, the Company faced certain credit concentration risks 74.40% (June 30, 2020)of the Company's accounts receivable comes from top 5 customers. The Company held nocollateral or other credit ranking measures for the balance of accounts receivable.
The maximum exposure to the Company is the carrying amount of each financial assetin the balance sheet.
(II) Liquidity risk
Liquidity risk refers to the risk that the Company is in shortage of funds in performingobligations that are settled by delivering cash or another financial asset. Liquidity risk mayarise from an inability to sell a financial asset at fair value as soon as possible, acounterparty's inability to pay its contractual liabilities, the accelerated maturity ofliabilities, or an inability to generate expected cash flows.
In order to control this risk, the Company balances the continuity and flexibility offinancing by using various financing measures such as notes settlement and bank loanscomprehensively and adopting both long-term and short-term financing methods tooptimize the financing structure. The Company has received credit facilities from a numberof commercial banks to satisfy its working capital requirements and capital expenditures.
Financial liabilities classified by remaining maturity dates
Item
Closing balanceBook value
Undiscountedcontract amount
Within 1 year 1-3 years Over 3 yearsBank borrowings 339,536,470.76 351,355,411.88269,576,858.9681,778,552.92Notes payable 126,525,026.22 126,525,026.22126,525,026.22Accounts payable 198,595,546.20 198,595,546.20198,595,546.20Other payables 42,106,615.24 42,106,615.2442,106,615.24Long-termaccounts payable
3,539,750.00 3,539,750.003,539,750.00Sub-total 710,303,408.42 722,122,349.54640,343,796.6281,778,552.92
(Continued to above table)
Item
Opening balanceBook value
Undiscountedcontract amount
Within 1 year 1-3 years
Over 3yearsBank borrowings 421,349,221.34 444,275,984.40159,065,657.15285,210,327.25
Notes payable 37,335,841.79 37,335,841.7937,335,841.79Accounts payable 176,624,445.46 176,624,445.46176,624,445.46
Other payables 14,364,076.43 14,364,076.4314,364,076.43
Long-termaccounts payable
3,488,100.00 3,488,100.003,488,100.00Sub-total 653,161,685.02 676,088,448.08390,878,120.83285,210,327.25(III) Market riskMarket risk refers to the risk that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in market prices. Market risk mainly includesinterest rate risk and currency risk.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in market interest rates. Interest rate risk is therisk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Company is exposed to the risk of fair valueinterest rate due to financial instruments with a fixed interest rate and to the risk of cashvalue interest rate due to financial instruments with a floating interest rate. The Companydetermines the proportion between the fixed-rate financial instruments and the floating-ratefinancial instruments based on market conditions, and maintains appropriate portfolios offinancial instruments through regular review and monitoring. The cash flow interest raterisk exposed to the Company relates primarily to the Company’s floating-rateinterest-bearing bank borrowings.
As of June 30, 2020, the Company held bank loans of RMB 339,536,470.76(December 31, 2019: RMB 420,240,038.66 Yuan) at floating rates. On the assumption thatother variables remain unchanged, a change in the interest rate by 50 base points will notcause significant impact on the total profits and shareholders’ equity of the Company.
2. Currency risk
Currency risk is the risk that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in foreign exchange rates. The Company'sexposure to the currency risk is primarily associated with the Company’s monetary assetsand liabilities dominated in foreign currencies. The Company's exposure to the currencyrisk is primarily associated with the Company’s monetary assets and liabilities dominatedin foreign currencies. If the monetary assets and liabilities dominated in foreign currenciesare imbalanced in a short time, the Company will purchase and sell foreign currencies atthe market exchange rate to keep the net risk exposure acceptable.
The closing balance of the Company’s monetary assets and liabilities dominated inforeign currencies are disclosed in VII.82 of Section X in details.XI. Disclosure of fair value
1. Theclosingbalanceofthefairvalueofassetsandliabilitiesmeasuredatfairvalue
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance of fair valueLevel 1 Level 2 Level 3 TotalI. Continuous fair valuemeasurement
(I) Held-for-tradingfinancial assets
495,000,000.00 495,000,000.00
1. Financial assets at fair
value through profit or loss
495,000,000.00 495,000,000.00
(1) Investment in debt
instrument
(2) Investment in equity
instrument
(3)Derivative financial
assets
(4) Structural deposits 495,000,000.00 495,000,000.00
2. Designated as financial
assets at fair value throughprofit or loss
(1) Investment in debt
instrument
(2) Investment in equity
instrument
(II) Other debt investments(III) Other equityinstrument investments
11,975,419.38 11,975,419.38(IV) Investment properties
1. Land use right for
leasing purpose
2. Buildings leased
3. Land use right held for
the purpose of transferafter value appreciation
(V) Biological assets
1. Consumable biological
assets
2. Bearer biological assets
Total assets continuouslymeasured at fair value
506,975,419.38 506,975,419.38(VI) Held-for-tradingfinancial liabilities
1. Financial liabilities at
fair value through profit orloss
Including: Held-for-tradingbonds issued
Derivative financialliabilities
Others
2. Designated as financial
liabilities at fair valuethrough profit or loss
Total liabilitiescontinuously measured atfair value
II. Non-continuous fairvalue measurement
(I) Held-for-sale assets
Total assets that are notcontinuously measured atfair value
Total liabilities that arenot continuouslymeasured at fair value
2. Basis for determining the market price of continuous and non-continuous level 1 fair
value measurement items
□ Applicable√ N/A
3. Valuation techniques and qualitative and quantitative information of key parameters
adopted for continuous and non-continuous level 2 fair value measurement items
□ Applicable√ N/A
4. Valuation techniques and qualitative and quantitative information of key parameters
adopted for continuous and non-continuous level 3 fair value measurement items
√ Applicable□ N/A
The fair value of short-term wealth management products of banks is determinedbased on their par value. The fair value of investments in equity instruments is determinedby using the cost as the best estimate, since such investments are unlisted equityinvestments that do not have quoted prices in active markets.
5. Reconciliationbetweenopeningandclosingcarryingamountsandsensitivityanalysisof
unobservableparametersforcontinuouslevel3fairvaluemeasurementitems
□ Applicable√ N/A
6. Wheretransfersamonglevelsoccurredintheperiod,transferreasonsandpoliciesfor
determiningtransfertimepointforcontinuousfairvaluemeasurementitems
□ Applicable√ N/A
7. Changesinvaluationtechniquesintheperiodandreasonsforchanges
□ Applicable√ N/A
8. Fairvalueoffinancialassetsandfinancialliabilitiesnotmeasuredatfairvalue
□ Applicable√ N/A
9. Others
□ Applicable√ N/A
XII. Related-party relationships and transactions
1. ParentoftheCompany
√ Applicable□ N/A
Unit: In RMB 0’000 RMBName of theparent
Registrationplace
Businessnature
Registeredcapital
Proportion of theCompany'sshares held bythe parent (%)
Proportion of theCompany's voting
right held by the
parent (%)ShenzhenAppotronicsHoldingsCo., Ltd.
Shenzhen
R&D andsales ofsemiconductorproducts
1,00020.80 20.80Description of the parent of the CompanyNoneThe ultimate controlling party of the Company is LI Yi.Other description:
None
2. Subsidiaries of the Company
Please refer to the Notes for details about the subsidiaries of the Company.
√ Applicable□ N/A
Please refer to the description in XII.2 of Section X for details about the subsidiaries of the Company.
3. AssociatesandjointventuresoftheCompany
Information of the significant joint ventures or associates of the Company are disclosed in the Annex.
√ Applicable□ N/A
Please refer to the description in XII.3 of Section X for the details about the major joint ventures orassociates of the Company.
Details of other joint ventures or associates having related-party transactions and balances with theCompany in the period or in prior periods:
√ Applicable□ N/A
Name of associates or joint ventures Relationship with the CompanyGDC Technology Limited (BVI) Enterprise with 36% equity interests held by the
CompanyCinionic Limited Enterprise with 20% equity interests held by the
CompanyOther description
□ Applicable√ N/A
4. OtherrelatedpartiesoftheCompany
√ Applicable□ N/A
Name of other related party Relationship between other related party and the
CompanyShenzhen YLX Technology Development Co.,Ltd.
Controlled by the same de facto controllerShenzhen Bevix Technology Co., Ltd. holding more than 5% of shares in the companyShenzhen Lighting Institute Affiliates of the de facto controllerShenzhen Fengye Investment ConsultingLimited Partnership (LP)
Affiliates of the de facto controllerChina Film Equipment Corporation and itsaffiliates
Minority shareholders holding more than 10% shares
in the subsidiary and their affiliatesXiaomi Communications Technologies Co.,Ltd. and its affiliates
Minority shareholders holding more than 10% shares
in the subsidiary and their affiliatesBeijing Donview Education Technology Co.,Ltd. and its affiliates
Minority shareholders holding more than 10% shares
in the subsidiary and their affiliatesOther descriptionNone
5. Related‐partytransactions
(1). Salesandpurchaseofgoods,renderingandreceiptofservices
Purchase of goods/receipt of services
√ Applicable□ N/A
Unit: Yuan Currency: RMBRelated party Subject matter
Amount for the current
period
Amount for the prior
periodChina Film EquipmentCorporation and itsaffiliates
Power supply, watercooling and services
10,824,895.69 22,838,096.22Xiaomi CommunicationsTechnologies Co., Ltd. andits affiliates
Electronic componentsand services
99,513,144.41 82,763,206.03
Beijing Donview EducationTechnology Co., Ltd. andits affiliates
Service 17,123.89 27,452.70GDC and its affiliates Circuit board 3,586,000.00 0.00
Total 113,941,163.99 105,628,754.95
Sales of goods/rendering of services
√ Applicable□ N/A
Unit: Yuan Currency: RMBRelated party Subject matter
Amount for the current
period
Amount for the prior
periodChina Film EquipmentCorporation and itsaffiliates
Laser cinema projectorlight source and cinemaservices
34,976,389.39 43,561,500.35Xiaomi CommunicationsTechnologies Co., Ltd. andits affiliates
Laser TV, smart miniprojector 254,631,263.83 259,366,426.80Beijing Donview EducationTechnology Co., Ltd. andits affiliates
Laser businesseducation projector 6,138,857.93 27,229,934.46CINIONIC Laser light source 35,973,430.61 53,450,024.46GDC and its affiliates Laser light source parts13,274.34 0.00
Sub-total 331,733,216.10 383,607,886.07Description of sales and purchase of goods, rendering and receipt of services
□ Applicable√ N/A
(2). Detailsoftrustwithrelatedparties/subcontractingandtrustmanagement/
contract‐issuingDetails of trust / contracting where a group entity is the trustor / main contractor:
□ Applicable√ N/A
Description of trust/subcontracting with related parties
□ Applicable√ N/A
Details of trust/contracting where a group entity is the trustor/main contractor:
□ Applicable√ N/A
Description of management/contract-issuing with related parties
□ Applicable√ N/A
(3). Leaseswithrelatedparties
The Company as the lessor:
□ Applicable√ N/A
The Company as the lessee:
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Name of lessor Type of leased assets
Lease fees recognized inthe current period
Lease fees recognized in
the prior periodChina Film EquipmentCorporation and itsaffiliates
Property lease 835,379.651,118,156.20Description of leases with related parties
□ Applicable√ N/A
(4). Guaranteeswithrelatedparties
The Company as a guarantor:
□ Applicable√ N/A
The Company as a guaranteed party:
√ Applicable□ N/A
Unit: Yuan Currency: RMB
Guarantor
Guaranteed
amount
Inception dateof guarantee
Expiry date of
guarantee
Whether the
obligationguaranteed hasbeen dischargedShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
2,041,659.002018-1-17 2020-7-17 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
1,237,500.002018-3-26 2020-9-23 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
1,987,500.002018-3-26 2020-9-23 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
2,340,154.002018-4-25 2020-10-25 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
1,575,000.002018-6-1 2020-12-1 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
1,324,988.002018-6-27 2020-12-26 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
2,546,656.002018-8-17 2021-2-17 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
3,827,620.002018-9-27 2021-3-26 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
12,207,707.902018-11-1 2021-4-30 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
7,172,908.002018-11-302021-4-29 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
43,670,392.002018-12-192021-12-19 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
16,481,996.002018-12-192021-6-21 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
7,745,992.002018-12-292021-12-29 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
20,152,663.002019-1-30 2022-1-30 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
7,896,000.002019-3-1 2022-3-1 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
12,201,000.002019-3-1 2022-3-1 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
8,001,000.002019-3-29 2022-8-29 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
9,000,662.002019-5-9 2022-4-30 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
8,448,000.002019-6-4 2022-6-4 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
10,650,000.002019-7-8 2022-7-4 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
15,450,000.002019-7-29 2022-7-29 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
10,001,332.002019-8-21 2022-8-21 NoShenzhen YLX TechnologyDevelopment Co., Ltd., LI Yi
18,296,999.002019-9-18 2022-9-18 NoDescription of guarantees with related parties
□ Applicable√ N/A
(5). Borrowings/loanswithrelatedparties
□ Applicable√ N/A
(6). Assetstransfer/debtrestructuringwithrelatedparties
□ Applicable√ N/A
(7). Compensationforkeymanagementpersonnel
√ Applicable□ N/A
Unit: In RMB 0’000 RMBItem Amount for the current period
Amount for the prior
periodCompensation for key managementpersonnel
657.82682.63
(8). Otherrelated‐partytransactions
□ Applicable√ N/A
6. Amounts due from / to related parties
(1). Amountsduefromrelatedparties
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Related party
Closing balance Opening balanceCarryingamount
Provision forbad debts
Carrying amount
Provision forbad debtsAccountsreceivable
China Film EquipmentCorporation and itsaffiliates
1,320,333.2681,543.9217,494,326.54 874,716.33Accountsreceivable
Beijing DonviewEducation TechnologyCo., Ltd. and itsaffiliates
2,198.00109.908,829,840.85 442,339.31Accountsreceivable
XiaomiCommunicationsTechnologies Co., Ltd.and its affiliates
61,820,725.663,091,036.2945,679,955.49 2,283,997.77Accountsreceivable
CINIONIC 10,072,422.34503,621.1224,298,258.08 1,214,912.90Sub-total 73,215,679.263,676,311.2396,302,380.96 4,815,966.31Prepayments GDC and its affiliates 2,270,088.50Prepayments
China Film Equipment
Corporation and its
affiliates
2,678,466.273,350,592.41Sub-total 4,948,554.773,350,592.41Otherreceivables
China Film EquipmentCorporation and itsaffiliates
296,435.0014,821.75290,866.00 14,543.30Otherreceivables
XiaomiCommunicationsTechnologies Co., Ltd.and its affiliates
100,000.005,000.00100,000.00 5,000.00Sub-total 396,435.0019,821.75390,866.00 19,543.30
(2). Amountsduetorelatedparties
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Related party Closing balance of
carrying amount
Opening balance of
carrying amountAccounts China Film Equipment Corporation and its 7,787,327.81 11,595,819.93
payable affiliates
Sub-total 7,787,327.81 11,595,819.93Receipts inadvance
China Film Equipment Corporation and itsaffiliates
1,082,606.56 15,407,937.54
Sub-total 1,082,606.56 15,407,937.54Contractliabilities
China Film Equipment Corporation and itsaffiliates
1,964,601.77 429,634.22
Sub-total 1,964,601.77 429,634.22Otherpayables
China Film Equipment Corporation and itsaffiliates
9,645.00
Sub-total 9,645.00
7. Relatedpartycommitments
□ Applicable√ N/A
8. Others
□ Applicable√ N/A
XIII. Share-based payments
1. Summaryofshare‐basedpayments
√ Applicable□ N/A
Unit: Share Currency: RMBTotal number of the Company's equity instrumentsgranted during the period
Restricted shares 4.4000 million sharesTotal number of the Company's equity instrumentsexecuted during the period
NoneTotal number of the Company's equity instrumentslapsed during the period
NoneRange of exercise prices and remaining contractuallife of the Company's share options outstanding atthe end of the period
Granted on October 14, 2019Range of exercise prices and remaining contractuallife of the Company's other equity instrumentsoutstanding at the end of the period
grant price: RMB 17.50/share; remaining
contractual life: 4/16/28 monthsOther descriptionNone
2. Equity‐settledshare‐basedpayments
√ Applicable□ N/A
Unit: Yuan Currency: RMBThe method of determining the fair value of equityinstruments at the grant date
Open market quotesThe basis of determining the number of equityinstruments expected to be executed
Actual grant amountReasons for the significant difference between theestimate in the current period and that in the priorperiod
NoneAmounts of equity-settled share-based paymentsaccumulated in capital reserve
23,560,626.63Total expenses recognized arising from equity-settledshare-based payments
17,576,543.47Other descriptionThe difference between the the total expenses recognized by equity-settled share-based payments in thecurrent period and the amount of share-based payments included in owners' equity arises from theexchange rate translation difference.
3. Cash‐settledshare‐basedpayments
□ Applicable√ N/A
4. Modificationtoandterminationofshare‐basedpayments
□ Applicable√ N/A
5. Others
□ Applicable√ N/A
XIV. Commitments and contingencies
1. Significant commitments
√ Applicable□ N/A
Significant external commitments, and nature and amount thereof as of the balance sheet date
1. Significant lease contracts which the Company has entered into or will perform and their
financial impacts are disclosed in the following table:
No. Rent address
Rentarea(squaremeters)
Rentpurpose
Rent period
Rentexpense/year
20/F, 21/F, 22/F, United HeadquarterBuilding, High-Tech Zone, No. 63Xuefu Road, Nanshan District,Shenzhen
5,808.79
Researchanddevelopment, officeadministration
From May 1,2018 toDecember 31,2021
5,310,893.71
23/F, United Headquarter Building,High-Tech Zone, No. 63 Xuefu Road,Nanshan District, Shenzhen
2,047.93
Researchanddevelopment, officeadministration
From February1, 2020 toJanuary 31,2025
1,872,393.14
Yaochuan Industrial Zone, TangweiCommunity, Fuhai Street, Bao'anDistrict, Shenzhen
23,765.57
Plant anddormitory
From December
1, 2018 toNovember 30,
2022
13,405,336.20
Room101, 1/F, Building 22E, Phase IIIof Hong Kong Science and TechnologyPark
1,138.25
Officeadministrati
on
From March 20,2019 to March
19, 2022
3,354,004.80
C1002, Building B6, DongshengScience & Technology Park, 66 WestXiaokou Road, Haidian District, Beijing
998.39
Research
anddevelopmen
t, officeadministrati
on
From May 11,2020 to May 10,2021
1,706,605.80
2. Contingencies
(1). Significantcontingenciesasofthebalancesheetdate
√ Applicable□ N/A
Case No.
Cause of
action
Plaintiffs Defendants Patents involved Progress(2019)Yue 73Zhi MinChuNo.663
Infringementof patentrights ofinventions
DeltaElectronics,Inc.
AppotronicsCorporation Limited;Futian SPN Projector
& Video SystemFirm of Shenzhen
ZL201310017478.0
Pending
trial(2019)Yue 73Zhi Min
ZL20310625063.1
Pending
trial
ChuNo.664(2019)Jing 73Min ChuNo.1275
Fengmi (Beijing)Technology Co.,Ltd.; AppotronicsCorporation Limited
ZL201410249663.7
Pendingtrial(2019)Jing 73Min ChuNo. 1276
ZL201610387831.8
Pendingtrial(2019)Jing 73Min ChuNo. 1277
ZL201310017478.0
Pendingtrial(2019)Jing 73Min ChuNo. 1278
ZL201010624724.5
PendingtrialAs of June 30, 2020, the Company has had RMB 20 million frozen a result of the above litigations. Asof the date of this report, RMB 20 million involved under [2019] Yue 73 Zhi Min Chu No.s 663 and 664has been released.
(2). DescriptionshallalsobeprovidedeveniftheCompanyhasnosignificant
contingenciestobedisclosed:
□ Applicable√ N/A
3. Others
□ Applicable√ N/A
XV. Events after the balance sheet date
1. Materialnon‐adjustingevent
□ Applicable√ N/A
2. Profitdistribution
□ Applicable√ N/A
3. Salesreturn
□ Applicable√ N/A
4. Description of other events after the balance sheet date
□ Applicable√ N/A
XVI. Other significant events
1. Correctionsofpriorperioderrors
(1). Retrospectiveapplication
□ Applicable√ N/A
(2). Prospectiveapplication
□ Applicable√ N/A
2. Debtrestructuring
□ Applicable√ N/A
3. Assetswap
(1). Exchangeofnon‐monetaryassets
□ Applicable√ N/A
(2). Otherassetswap
□ Applicable√ N/A
4. Annuityplan
□ Applicable√ N/A
5. Discontinued operations
□ Applicable√ N/A
6. Segment reporting
(1). Determination basis and accounting policies of reporting segments
□ Applicable√ N/A
(2). Financialinformationofreportingsegments
□ Applicable√ N/A
(3). IftheCompanyhasnoreportingsegments,orcannotdisclosethetotalassetsand
liabilitiesofreportingsegments,specifythereasons
√ Applicable□ N/A
The Company has no reporting segments due to absence of diversified operations.
(4). Otherdescription:
√ Applicable□ N/A
Categorized by businesses and products:
Unit:
YuanProject
Amount of the current period Amount of the prior periodPrincipal activityincome
Principal activity costPrincipal activity
income
Principal activity costSales 687,172,378.00485,666,508.20646,147,276.73 444,567,381.82Lease service 27,433,018.2242,549,487.82198,853,981.12 59,785,111.50Other business 1,419,811.121,571,793.928,355,706.99 7,405,409.80 Sub-total 716,025,207.34529,787,789.94853,356,964.84 511,757,903.12
Categorized by regions:
Unit:
YuanProject
Amount of the current period Amount of the prior periodPrincipal activity
income
Principal activity costPrincipal activity
income
Principal activity costDomestic640,139,114.14 503,435,571.70771,763,293.59 483,942,730.42Overseas 75,886,093.20 26,352,218.24 81,593,671.25 27,815,172.70Sub-total716,025,207.34 529,787,789.94 853,356,964.84 511,757,903.12
7. Other significant transactions and matters having an impact on the decisions of investors
□ Applicable√ N/A
8. Others
□ Applicable√ N/A
XVII. Notes to key items in the Parent Company's financial statements
1. Accounts receivable
(1). Disclosure by aging
√ Applicable□ N/A
Unit: Yuan Currency: RMBAging Closing balance of carrying amountWithin 1 yearIncluding: Subitems within 1 yearOthers 16,147,768.10Group of receivables from related parties in the scopeof consolidation
341,024,873.57Sub-total of items within 1 year 357,172,641.671 to 2 years 25,404,808.352 to 3 years 49,366.65Over 3 years
Total 382,626,816.67
(2). Disclosurebycategoriesofprovisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMB
Category
Closing balance Opening balanceCarrying amount
Provision for baddebts
Bookvalue
Carrying amount
Provision for baddebts
B
va
| o |
| l |
Amount
Proportion(%)
Amount
Proportionofprovision(%)
Amount
Proportion(%)
Amount
Proportionofprovision(%)Provision forbad debtsmadeindividually
Including:
Provision forbad debtsmade bygroup
382,626,816.67100.00 1,310,771.730.34381,316,044.94296,895,698.30 100.00 1,279,338.670.43295,61
Including:
Group ofaging
18,111,934.754.73 1,310,771.737.2416,801,163.0217,257,141.02 5.81 1,279,338.677.4115,97
Combinationof relatedparties in thescope ofconsolidation
364,514,881.9295.27 364,514,881.92279,638,557.28 94.19 279,63
Total382,626,816.67100.00 1,310,771.730.34 381,316,044.94296,895,698.30 100.00 1,279,338.670.43 295,616
,
Provision for bad debts made individually:
□ Applicable√ N/A
Provision for bad debts made by group:
√ Applicable□ N/A
Item by group: Group of aging
Unit: Yuan Currency: RMB
Name
Closing balanceAccounts receivable Provision for bad debts
Proportion of provision
(%)Within 1 year 16,147,768.10807,388.405.001-2 years 1,914,800.00478,700.0025.002-3 years 49,366.6524,683.3350.00
Total 18,111,934.751,310,771.737.24Recognition criterion to make the bad debt provision by group and explanation:
□ Applicable√ N/A
If a provision for bad debts of accounts receivable is made in accordance with the general model of ECL,please disclose relevant information subject to the disclosure of the bad debt provision for otherreceivables.
□ Applicable√ N/A
(3). Provisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Openingbalance
Changes for the current period
ClosingbalanceProvision
Recoveryor reversal
Write off orcancellation
OtherchangesProvision forbad debtsmadeindividually
Provision forbad debtsmade bygroup
1,279,338.67 31,433.06 1,310,771.73Total 1,279,338.67 31,433.06 1,310,771.73
Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(4). Accountsreceivableactuallycanceledinthecurrentperiod
□ Applicable√ N/A
(5). Topfiveclosingbalancesofaccountsreceivablecategorizedbydebtors
√ Applicable□ N/A
Entity Carrying amount
Proportion to the
alance of accountsreceivable(%)
Provision for
bad debtsFengmi (Beijing) Technology Co., Ltd. 244,410,569.5063.88CINEAPPO Laser Cinema Technology(Beijing) Co., Ltd.
61,166,154.6615.99Appotronics Hong Kong Limited 46,266,620.9512.09Appotronics Technology (Changzhou) Co., Ltd.5,555,472.591.45Qingda Appotronics (Xiamen) Technology Co.,Ltd.
4,243,723.751.11Sub-total 361,642,541.4594.52
(6). Accountsreceivablederecognizedduetotransferoffinancialassets
□ Applicable√ N/A
(7). Assets and liabilities arising from transfer of accounts receivable and continued
involvement
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
2. Other receivables
Presentedbyitems
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem Closing balance Opening balanceInterest receivableDividends receivableOther receivables 32,169,108.0867,227,575.21
Total 32,169,108.0867,227,575.21Other description:
□ Applicable√ N/A
Interestreceivable
(1). Categoriesofinterestreceivable
□ Applicable√ N/A
(2). Significantinterestsoverdue
□ Applicable√ N/A
(3). Provision for bad debts
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
(4). Dividendsreceivable
□ Applicable√ N/A
(5). Dividendsreceivablewithsignificantamountsagedmorethan1year
□ Applicable√ N/A
(6). Provision for bad debts
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
Otherreceivables
(7). Disclosurebyaging
√ Applicable□ N/A
Unit: Yuan Currency: RMBAging Closing balance of carrying amountWithin 1 yearIncluding: Subitems within 1 yearWithin 1 year 13,729,992.78Sub-total of items within 1 year 13,729,992.781 to 2 years 17,698,419.152 to 3 years 441,715.69Over 3 years 675,637.60
Total 32,545,765.22
(8). Categoriesbythenatureoftheamount
√ Applicable□ N/A
Unit: Yuan Currency: RMBNature of receivables
Closing balance of carrying
amount
Opening balance of carrying
amountDeposits/margins/petty cash 7,342,161.246,343,792.67Withholding 650,484.24
Receivables from related partiesin the scope of consolidation
25,012,622.3460,540,712.71Temporary receivables 190,981.6410,289.71
Total 32,545,765.2267,545,279.33
(9). Provisionforbaddebts
√ Applicable□ N/A
Unit: Yuan Currency: RMBProvision for bad
debts
Stage I Stage II Stage III
Total12-month ECL
in the future
Lifetime ECL(without creditimpairment)
Lifetime ECL (withcredit impairment)Balance as atJanuary 1, 2020
317,704.12 317,704.12Balance as atJanuary 1, 2020 inthe current period
--transferred toStage II
--transferred toStage III
--reversed to StageII
--reversed to StageI
Provision 58,953.02 58,953.02ReversalWrite-offCancellationOther changesBalance as at June30, 2020
376,657.14 376,657.14Descriptionofsignificantchangesinthebalanceofotherreceivableswithchangedprovisionsforlossesinthecurrentperiod:
□ Applicable√ N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk offinancial instruments has been increased significantly in the current period:
□ Applicable√ N/A
(10). Provisionforbaddebts
√ Applicable□ N/A
Unit:YuanCurrency:RMBCategory
Openingbalance
Changes for the current period
ClosingbalanceProvision
Recoveryor reversal
Write off orcancellation
OtherchangesProvision forbad debtsmade bygroup
317,704.12 58,953.02376,657.14
Total317,704.12 58,953.02376,657.14Including significant amounts recovered or reversed from the current provision for bad debts:
□ Applicable√ N/A
(11). Otherreceivablesactuallycanceledinthecurrentperiod
□ Applicable√ N/A
Description of other receivables cancellation:
□ Applicable√ N/A
(12). Topfiveclosingbalancesofotherreceivablescategorizedbydebtors
√ Applicable□ N/A
Unit: Yuan Currency: RMBEntity
Nature ofotherreceivables
Closing balanceAging
Proportion to thebalance of otherreceivables (%)
Provision
for bad
debtsClosingbalanceShenzhen AppotronicsLaser DisplayTechnology Co., Ltd.
Internaltransaction
13,969,500.00
Within1 yearand 1-2
years
42.92
Fengmi (Beijing)Technology Co., Ltd.
Internaltransaction
10,621,938.36
Within1 year
32.64
Shenzhen MeishengIndustry Co., Ltd.
Supplierdeposit
3,574,618.00
1-2years
10.98 178,730.90
China SecuritiesDepository and ClearingCo., Ltd. ShanghaiBranch (settlementreserve)
Suppliersecurity
2,000,000.00
Within1 year
6.15 100,000.00
Shenzhen Science andTechnology AssessmentManagement Center Supplier
deposit
1,257,075.20
Within1 year,
1-2years,
2-3years
3.86 62,853.76
Total 31,423,131.56 96.55 341,584.66
(13). Accountsreceivableinvolvinggovernmentgrants
□ Applicable√ N/A
(14). therreceivablesderecognizedduetotransferoffinancialassets
□ Applicable√ N/A
(15). Assetsandliabilitiesarisingfromtransferofotherreceivablesandcontinued
involvement
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
3. Long-term equity investments
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Closing balance Opening balanceCarryingamount
Provision forimpairment
Book value
Carryingamount
Provision for
impairment
Book valueInvestmentsinsubsidiaries
439,528,444.09 45,885,284.27393,643,159.82303,680,560.4045,885,284.27 257,795,276.13
Total439,528,444.09 45,885,284.27393,643,159.82303,680,560.4045,885,284.27 257,795,276.13
(1) Investmentsinsubsidiaries
√ Applicable□ N/A
Unit: Yuan Currency: RMBInvestees Opening Increase DecreaseClosing Provision Closing
balance balance for
impairment
balance ofprovision
forimpairmentAppotronicsTimewaying(Beijing)TechnologyCo., Ltd.
27,000,000.00 27,000,000.00 27,000,000.00ShenzhenAppotronicsSoftwareTechnologyCo., Ltd.
516,813.05 972,563.801,489,376.85Beijing OrientAppotronicsTechnologyCo., Ltd.
5,900,000.00 5,900,000.00Fengmi(Beijing)TechnologyCo., Ltd.
28,203,950.93 1,457,301.9529,661,252.88 6,057,491.48ShenzhenAppotronicsLaser DisplayTechnologyCo., Ltd.
18,966,857.26 18,966,857.26
CINEAPPOLaser CinemaTechnology(Beijing) Co.,Ltd.
30,767,063.78 1,556,102.0832,323,165.86
QingdaAppotronics(Xiamen)TechnologyCo., Ltd.
5,100,000.00 5,100,000.00 827,792.79ShenzhenAppotronicsXiaomingTechnologyCo., Ltd.
12,000,000.00 12,000,000.00 12,000,000.00AppotronicsHong KongLimited
173,225,875.38 128,861,915.86302,087,791.24
AppotronicsTechnology(Changzhou)Co., Ltd.
2,000,000.00 2,000,000.00
ShenzhenAppotronicsDisplayDevice Co.,Ltd.
3,000,000.003,000,000.00Total303,680,560.40 135,847,883.69439,528,444.09 45,885,284.27
(2) Investmentsinassociatesandjointventures
□ Applicable√ N/A
Other description:
□ Applicable√ N/A
4. Operatingincomeandoperatingcosts
(1). Descriptionofoperatingincomeandoperatingcosts
√ Applicable□ N/A
Unit:Yuan Currency:RMBItem
Amount for the current period Amount for the prior periodRevenue Cost Revenue CostMain business 384,899,378.41256,660,786.97427,684,505.04 290,643,668.97
Total 384,899,378.41 256,660,786.97 427,684,505.04 290,643,668.97
(2). Descriptionofincomesfromcontracts
□ Applicable√ N/A
(3). Descriptionofperformanceobligations
□ Applicable√ N/A
(4). Descriptionofallocationtoremainingperformanceobligations
□ Applicable√ N/A
Other description:
None
5. Investment income
√ Applicable□ N/A
Unit: Yuan Currency: RMBItem
Amount for the current
period
Amount for the prior periodInvestment income from disposal oflong-term equity investments
-64,542.33Investment income from disposal ofheld-for-trading financial assets
10,824,793.71Total 10,824,793.71-64,542.33Other description:
None
6. Others
□ Applicable√ N/A
XVIII. Supplementary information
1. Breakdown of non-recurring profit or loss for the current period
√ Applicable□ N/A
Unit: 元 Currency: 人民币Item Amount DescriptionGain or loss on disposal of non-current assets 45,940.33
Government grants recognized in profit or loss(other than grants which are closely related to theCompany's business and are either in fixedamounts or determined under quantitative methodsin accordance with the national standard)
29,851,687.48
Net profit or loss of subsidiaries from thebeginning of the period up to the businesscombination date recognized as a result ofbusiness combination of enterprises involving
11,655,728.28
enterprises under common controlProfit or loss on changes in the fair value ofheld-for-trading financial assets, derivativefinancial assets, held-for-trading financialliabilities and derivative financial liabilities andinvestment income on disposal of held-for-tradingfinancial assets, derivative financial assets,held-for-trading financial liabilities, derivativefinancial liabilities and other debt investments,other than those used in the effective hedgingactivities relating to normal operating business
10,824,793.71
Other non-operating income and expenses otherthan the above
-366,405.89
Other gains or losses meeting the definition ofnon-recurring profit or loss
Effect of income tax -5,513,728.59Effects attributable to minority interests -1,938,077.23
Total 44,559,938.09
It is required to specify the reason for defining items as non-recurring profit or loss items according toInformation Disclosure and Presentation Rules for Companies Making Public Offering of Securities No.1－Non-recurring Profit or Loss, and reasons for defining non-recurring profit or loss items illustrated inInformation Disclosure and Presentation Rules for Companies Making Public Offering of Securities No.1－Non-recurring Profit or Loss as recurring profit or loss items.
□ Applicable√ N/A
2. Returnonnetassetsandearningspershare
√ Applicable□ N/A
Profit for the reporting period
Weightedaverage returnon net assets(%)
Earnings per shareBasic earnings pershare
Diluted earnings per
shareNet profit attributable to ordinaryshareholders of the Company
0.720.03 0.03Net profit after deduction ofnon-recurring profits or lossesattributable to ordinary shareholdersof the Company
-1.52-0.07 -0.07
2. Calculation process of weighted average return on net assets
Item No.
Amount of the current
periodNet profit attributable to ordinary shareholders of the Company A 14,327,442.96Non-recurring profit or loss B 44,559,938.09Net profits after deduction of non-recurring profits or lossesattributable to ordinary shareholders of the Company
C=A-B -30,232,495.13Opening balance of net assets attributable to ordinary shareholdersof the Company
D 1,975,838,572.52Net assets increased due to issue of new shares or debt-to-equityswap that are attributable to ordinary shareholders of the Company
EAccumulated months from the month following the addition of netassets to the end of the reporting period
FNet assets reduced by repurchases or cash dividends that areattributable to ordinary shareholders of the Company
G 33,866,580.83
Accumulated months from the month following the reduction ofnet assets to the end of the reporting period
H 1
Others
Effect of share-based payments on netassets
I1 16,084,702.84Accumulated months from the monthfollowing the addition or reduction of netassets to the end of the reporting period
J1 3Effect of translation of financial statementsdenominated in foreign currencies on netassets
I2 1,013,815.20
Accumulated months from the monthfollowing the addition or reduction of netassets to the end of the reporting period
J2 3Months of reporting period K 6Weighted average net assets
L=D+A/2+E×F/K-G×H/K
±I×J/K
1,985,907,122.88Weighted average return on net assets M=A/L 0.72%Weighted average return on net assets after deduction ofnon-recurring profit or loss
N=C/L -1.52%
3. Calculation process of basic and diluted earnings per share
(1) Calculation process of basic earnings per share
Item No.
Amount of thecurrent periodNet profit attributable to ordinary shareholders of the Company A
14,327,442.
Non-recurring profit or loss B
44,559,938.
Net profits after deduction of non-recurring profits or losses attributable to ordinaryshareholders of the Company
C=A-B
-30,232,49
5.13
Total shares at the beginning of the period D
451,554,41
1.00
Shares increased from conversion of reserve into capital or share dividend distributionEShares increased due to issue of new shares or debt-to-equity swap FAccumulated months from the month following the addition of shares to the end of thereporting period
GReduced shares arising from repurchase HAccumulated months from the month following the reduction of shares to the end ofthe reporting period
INumber of reduced shares during the reporting period JMonths of reporting period K 6Weighted average number of outstanding ordinary shares
L=D+E+F×G/K-H×I/K-J
451,554,41
1.00
Basic earnings per share M=A/L 0.03Basic earnings per share after deduction of non-recurring profit or loss N=C/L -0.07
(2) Calculation process of diluted earnings per share
Item No. Amount of the current period
Net profit attributable to ordinary shareholders of the CompanyA 14,327,442.96Effect of diluted potential ordinary shares on net profit BNet profits after dilution attributable to ordinary shareholders ofthe Company
C=A-B 14,327,442.96Non-recurring profit or loss D 44,559,938.09Net profits after dilution and deduction of non-recurring profitsor losses attributable to ordinary shareholders of the Company
E=C-D -30,232,495.13Weighted average number of outstanding ordinary shares F 451,554,411.00Weighted average number of ordinary shares added towarrants, share options, and convertible bonds, etc.
G 1,336,784.26Weighted average number of outstanding ordinary shares afterdilution
H=F+G 452,891,195.26Diluted earnings per share M=C/H 0.03Diluted earnings per share after deduction of non-recurringprofit or loss
N=E/H -0.07
3. Differences in accounting data under Chinese Accounting Standards and Oversea
Accounting Standards
□ Applicable√ N/A
4. Others
□ Applicable√ N/A
Section XI. List of Documents Available for Inspection
List of DocumentsAvailable for Inspection
1. 2020 Semiannual Financial Statements with seals and signatures of the
principal of the Company, the person in charge of the accounting body andthe chief accountant
2. All original documents and announcements of the Company publicly
disclosed in the websites designated by the Company as of the reportingperiod
3. The above-mentioned documents are prepared in: Office of the Board of
Directors of Appotronics Corporation Limited
Legal representative: BO LianmingApproval for submission by the Board of Directors: August 25, 2020
Revision information
□ Applicable√ N/A