Annual Report 2019
Stock Code: 688007 Stock Short Name: Appotronics
Appotronics Corporation Limited
Annual Report 2019
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Annual Report 2019
Laser focus on our long-term success
Dear Shareholders,
The year of 2019 is a significant year for Appotronics. In July 2019, we became one of
the first group of companies listed on the Shanghai Stock Exchange’s Sci-Tech Innovation
Board (“STAR Market”). The establishment of the STAR Market is a historic event of the
Chinese capital market in the past 30 years, which will provide technical innovation driven
companies, such as Appotronics, with a broader and high-quality development space
through combining the advantages of technology and capital.
The outbreak of Covid-19 throughout the world in 2020 has brought significant and
irrevocable changes to global economy, people’s daily life and production activities. Facing
the crisis, Appotronics believes that focusing on technical innovations, satisfying users’
basic demands and seeking stable and long-run profits will be the effective approach to
address the long-term social changes brought by the outbreak, and create higher value for
our investors.
We released our first corporate social responsibility report along with this annual
report. We believe that, by making unremitting efforts in technical innovations, we will
create value for the society, provide better services to the public, and effectively fulfill the
social responsibility as a corporate.
I. A review of our history: Basic technical innovations bring out long-term and
valuable returns
Appotronics was incorporated in Shenzhen in 2006. Since its establishment,
Appotronics has been focusing on the utilization of mature industry chain to create new
laser display technology architecture, form our proprietary intellectual properties (“IP”),
and master the design and manufacture technology of core devices. Through more than ten
years’ unremitting efforts, Appotronics has taken the lead in the world in overcoming the
shortcomings of traditional laser display technology, including high cost, low reliability and
inefficiency, invented the creative laser phosphor display architecture, and by giving full
play to this disruptive technical advantage, successfully overcome the barriers for
commercialization, and realized the driving forces of both technical innovation and
industrialization.
According to the Research Report on Chinese Laser Projector Market 2019 issued
by AVC, blue laser + phosphor powder technology (ALPD is a kind of such
technology), as the mainstream light source technology, occupies 98.6% of the
market share. The laser display industry is growing rapidly, and plays an important
role in the upgrading and transformation of the manufacturing industry. As a new
low energy-consumption display technology, laser display technology is developing
vigorously and will provide a good opportunity for our development.
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Since its establishment, Appotronics has persevered in investing in patents and other
IP rights. As of December 31, 2019, we had obtained 908 patents in total throughout
the world, and had another 756 patents pending. ALPD technology architecture
patent of Appotronics, as a basic patent for the laser phosphor display route, has
been quoted 416 times in the world. As a Leader Level Member of the Laser
Illuminated Projector Association (LIPA), Appotronics has participated in and led
the preparation of the international laser display standard.
In the process of industrialization in the past ten years, the advantages of ALPD
technology have been gradually reflected in high-end applications and other fields
of display application. Our revenue from ALPD technology has grown rapidly
from RMB 355 million in 2016 to nearly RMB 2 billion in 2019.
Since the installation of the first ALPD laser cinema projection system in the
world in 2014, we have been promoting laser cinema projection technology in the
world through cooperation with China Film and Barco of Belgium. At present, we
take the lead in the field of laser cinema projection in the world. The C5 laser
cinema projector launched in 2019 is not only the first Chinese product of the like
passing DCI certification of the U.S. Digital Cinema Projection Association, but
also the first laser cinema projector in the industry featuring non-manual operation,
muteness, no machine room and low operating cost.
Appotronics launched the first 100 inch laser TV in the world in cooperation with
LG in 2013, and the first 100 inch laser TV with a selling price of less than RMB
10,000 in cooperation with Xiaomi in 2017. In 2019, Appotronics occupied more
than 30% share of the laser TV market, ranking first in the industry, and launched a
portable mini projector with a selling price of less than RMB 3,000 in cooperation
with Xiaomi.
Through technical innovations, we enjoy unique opportunities as a pioneer. On the
cinema projector market, we take the lead in offering “Laser as a service” in the industry.
Under this “mode of laser light source lease”, the cinemas just need to pay rents according
to the length of use, without needing to purchase light sources, which will help the cinemas
not only effectively reduce equipment purchase costs, labor costs and maintenance costs,
but also improve their market competitiveness through the high luminance, wide color
gamut, high contrast and good picture quality and other technical advantages provided by
the laser light source of Appotronics. On the other hand, it will provide Appotronics with a
long-term and stable source of revenue, and promote the rapid application of ALPD
technology. As of the date of this report, Appotronics has supplied more than 17,000 sets of
ALPD laser projectors on the market, which have provided licensed services for more
than 100 million hours in total.
II. Prospects for 2020: Live in the present and focus on business and talent
development
The outbreak and spread of Covid-19 around the world in early 2020 has greatly
affected the economy, especially the cinema and other sectors featuring gathering of
crowds. We expect that our traditional laser projector business will be greatly affected for a
long time, and other business will also be affected due to the global economic recession, so
that the momentum of our rapid development may be hindered. Facing such severe
challenges, we have taken the following measures:
Just as before, we will continue to adhere to the pioneering spirit, maintain the
streamlined structure even after the listing of the Company, and uphold the virtue of
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saving and hard struggle, especially as the epidemic situation is still severe at
present.
We will enhance budget management, promptly make business analysis and adjust
the relevant budgets according to the development of the epidemic situation, closely
monitor the epidemic situation and adjust the relevant business plans in a timely
manner. During this process, we will enhance information disclosures, so that the
investors will fully understand our new strategies and be able to make their
judgments on our business plans.
We will take a more prudent approach toward employment and focus on those
talents who have pioneering spirit and will give support to the long-term
development of our core business. Just as before, we will continue to use share
incentive rather than cash as the main incentive approach. We wish this approach
will help us recruit more outstanding talents and enhance their sense of being the
master of their own affairs.
The completion of the IPO in 2019 laid a foundation for us to focus on business and
talent development. In 2019, our operating income was about RMB 1.979 billion,
up 42.82% year on year; the total assets reached RMB 3.1 billion, up 49.48% over
the opening of the period; the net cash flows from operating activities were RMB
243 million, up 106.33% year on year; and the R&D expenses were RMB 202
million, up 48.60% year on year.
III. Turn crisis into opportunities in the future
The consumers always seek portable large screen display technology, which will not be
changed by the epidemic situation. Even if the cinemas suffer a setback temporarily, after
the epidemic situation is eased or resolved, the cinemas will open again. However, the
video conference, online education and other new types of operation inspired by the
epidemic situation enhance the consumers’ expectation for large-screen and eye-care
displays. Our ALPD laser projector can effectively provide healthier large-screen and
eye-care displays. The unexpected epidemic situation makes us be clearly aware of users’
expectation for our laser projection technology.
Though the epidemic situation slows down the momentum of our rapid development in
the past few years, we find that it provides us with a good opportunity to adjust resources.
In the future, we will continue to listen to users’ demands, and focus on technology
development and services that can bring about long-term use value to users, rather than
product development or marketing catering to short-term market demands. We believe this
approach reflects the real customer-oriented concept, and we will bring about the best
long-term returns for our investors through continuous technology development.
Through accumulation of technologies in the past ten years, we have become a
technology leader in the industry. In comparison with our peers, we are stronger in
technology development and enjoy the head start advantage. Now we will extremely focus
on the target, just like laser. Though it seems that light is invisible and powerless, when
plenty of light, such as laser, focuses on an object, it can shoot through hard steel.
Therefore, we plan to do the following work:
Continue to be committed to disruptive innovations. Appotronics has been
committed to innovations in laser display technology, and created technology
reserves and patent portfolios covering the whole technology chain of laser display
from key system architecture, core devices to key algorithm. ALPD technology
architecture has been upgraded to the fourth generation. The performance of each
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generation of architecture platform 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. We will continuously increase
investments in technology reserves geared to the needs of the future, and improve
and extend the core industry chain, so as to build a sound patent protection system.
Focus on core devices. We will continuously strengthen our core device research,
development and manufacturing capability, as we will be unable to greatly improve
the performance of complete equipment without making breakthroughs in core
devices and architectures. We will consolidate and increase our advantages in core
devices, create the mode of open platform operation, and cooperate with the
industrial circles to jointly make the laser display industry bigger and stronger,
enrich the content of the industry, and expand the applications.
Persevere in the development direction of “software + hardware + service”. In the
future, we will be committed to providing better user experience and services to end
users through in-depth hardware and software integration, based on “hard-core
technology”, and supplemented by upgrading of software system. We will create a
stable and long-run mode of profit increase through continuous product services.
Fully respect to the emphasis on IP on the overseas market. We will expand our
overseas business and market through creating value for users.
The year of 2020 starts a new decade, witnesses great changes, and will go down in
history. Appotronics will continue to uphold the pioneering spirit, to face the unknown
challenges.
Thanks to all shareholders and friends following Appotronics.
Make unremitting efforts as God rewards those who work hard. Let time become our
friends.
LI Yi
Founder and Chairman of Appotronics
April 28, 2020
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Important Note
I. The Board of Directors, the Board of Supervisors, directors, supervisors and
senior officers of the Company hereby warrant that the information contained
in this Annual Report is true, accurate and complete and this Annual Report is
free from any misrepresentation, misleading statement or material omission,
and agree to assume joint and several liability for this Annual Report.
II. Alert of significant risks
During the reporting period, there has been no extremely significant risk that may
have a material effect on the production and operation of the Company. The Company has
described in detail the risks that may exist. Please refer to Section IV “Discussion and
Analysis of Business Situations” for the relevant risks.
III. All directors of the Company attended the meeting of the Board of Directors.
IV. Pan-China Certified Public Accountants (Special General Partnership) issued a
standard unqualified auditor’s report to the Company.
V. BO Lianming, Principal of the Company, ZHAO Ruijin, Person in Charge of
the Accounting Body and Chief Accountant WEI Yanlin hereby represent that
the financial statements contained in this Annual 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 period
The Company’s profit distribution proposal for the year of 2019 is as follows: On the
basis of the total share capital of the Company as at the record date for the dividend
distribution for the year of 2019, the Company will distribute a cash dividend of RMB 0.75
per 10 shares (inclusive of tax) to all shareholders. On the basis of 451,554,411 shares of
the Company as at December 31, 2019, RMB 33,866,580.83 of cash dividends is expected
to be distributed in total (inclusive of tax). The Company will not capitalize the capital
reserve or distribute bonus shares for the reporting period. The profit distribution proposal
for the year of 2019 is subject to approval by the general meeting of shareholders of the
Company.
VII. Is there any material event concerning any special arrangement of corporate
governance?
□ 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 or other matters of the Company do not constitute any substantive covenant made
by the Company to the investors. 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 stipulated
decision-making procedure?
No
XI. Other information
□ Applicable √ N/A
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Table of Contents
Section I Definitions .............................................................................................................. 8
Section II Company Profile and Financial Highlights ....................................................... 9
Section III Operational Highlights .................................................................................... 14
Section IV Discussion and Analysis of Business Situations ............................................. 32
Section V Significant Matters ............................................................................................ 49
Section VI Changes in Shares and Shareholders ........................................................... 117
Section VII Preferred Shares ........................................................................................... 127
Section VIII Directors, Supervisors, Senior Officers and Employees .......................... 128
Section IX Corporate Governance .................................................................................. 142
Section X Corporate Bonds .............................................................................................. 147
Section XI Financial Report ............................................................................................ 148
Section XII List of Documents Available for Inspection ............................................... 312
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Section I Definitions
I. Definitions
For purpose of this report, unless the context otherwise requires, the following terms shall
have the meanings indicated below:
Terms
Company or means Appotronics Corporation Limited
Appotronics
Appotronics Ltd. means Appotronics Corporation Ltd., the former name of the
Company
CINEAPPO means CINEAPPO Laser Cinema Technology (Beijing) Co.,
Ltd.
Fengmi means Fengmi (Beijing) Technology Co., Ltd.
Appotronics HK means Appotronics Hong Kong Limited
Yuanshi means Shenzhen Yuanshi Laser Industrial Investment
Consulting Partnership (LP)
Appotronics Daye means Shenzhen Appotronics Daye Investment Partnership
( LP)
Appotronics Deye means Shenzhen Appotronics Deye Consulting Partnership
(LP)
Appotronics Hongye means Shenzhen Appotronics Hongye Investment
Partnership ( LP)
Blackpine means Blackpine Investment Corp. Ltd
Jinleijing means Shenzhen Jinleijing Investment Limited Partnership
(LP)
Appotronics Chengye means Shenzhen Appotronics Chengye Consulting
Partnership (LP)
Appotronics Holdings means Shenzhen Appotronics Holdings Limited
Jiayuan I means Huatai Appotronics Employee Stock Ownership Plan
- Jiayuan I Collective Asset Management Plan
CINIONIC means Cinionic Limited (previously known as Barco
Cineappo Limited)
China Film means China Film Co., Ltd.
CFEC means China Film Equipment Co. Ltd
DonView Digital means Beijing DonView Digital Technology Co., Ltd.
Tianjin Jinmi means Tianjin Jinmi Investment Partnership (LP)
WUXGA means Widescreen Ultra eXtended Graphics Array, a
computer display mode, which provides a resolution
of 1920×1200 pixels.
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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 Limited
Short name in English Appotronics
Legal representative BO Lianming
Registered address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Postal code of registered address 518052
Office address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Postal code of office address 518052
Website http://www.appotronics.com
Email ir@appotronics.cn
II. Contact person and contact information
Board Secretary (Domestic representative for
information disclosure)
Name XIAO Yangjian
Address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Telephone 0755-32950536
Facsimile 0755-86186299
Email ir@appotronics.cn
III. Media for information disclosure and place for keeping the annual reports
Designated media for information China Securities Journal, Shanghai Securities
disclosure News, Securities Times, Securities Daily
Websites designated by the China www.sse.com.cn
Securities Regulation Commission for
publishing the annual reports
Place for keeping the annual reports Office of the Board of Directors
IV. Stock and depository receipts of the Company
(I) Stock of the Company
√Applicable □ N/A
Stock of the Company
Type of Stock exchange and Stock short name Stock code Former stock
stock board short name
A-shares Shanghai Stock Appotronics 688007 N/A
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Exchange, STAR
Market
(II) Depository receipts of the Company
□ Applicable √ N/A
V. Other related information
Name Pan-China Certified Public Accountants
(Special General Partnership)
Domestic accounting
Office address 9/F, No. 128 Xixi Road, Xihu District,
firm appointed by the
Hangzhou, Zhejiang
Company
Accountants signing YANG Kejing, ZOU Tiantian
the report
Name Huatai United Securities Co., Ltd.
Office address 5/F (01A, 02, 03 and 04), 17A, 18A, 24A,
25A and 26A, Hong Kong China Travel
Sponsor performing the Service Building, Central Plaza, Futian
duty of continuous District, Shenzhen
supervision within the Sponsor ZHANG Guanfeng, QIN Lin
reporting period representatives
signing the report
Period of continuous From July 22, 2019 to December 31,
supervision 2022
VI. Main accounting data and financial highlights in the past three years
(I) Main accounting data
In RMB
% Change (2019
Main accounting data 2019 2018 2017
v 2018)
Operating income 1,979,148,918.89 1,385,727,211.09 42.82 805,587,943.59
Net profit attributable 186,457,276.71 176,971,092.49 5.36 105,393,395.69
to shareholders of the
listed company
Net profit attributable 134,218,640.96 165,011,362.18 -18.66 132,015,218.32
to shareholders of the
listed company after
deduction of
non-recurring profit or
loss
Net cash flows from 243,000,903.71 117,773,454.30 106.33 -115,179,556.79
operating activities
December 31, December 31, % Change (2019 December 31,
2019 2018 v 2018) 2017
Net assets attributable 1,974,559,837.64 715,913,478.56 175.81 70,572,171.92
to shareholders of the
listed company
Total assets 3,099,508,090.85 2,073,471,490.56 49.48 1,037,660,589.99
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(II) Financial highlights
% Change (2019 v
Financial highlights 2019 2018 2017
2018)
Basic earnings per share 0.45 0.73 -38.36 -
(RMB/share)
Diluted earnings per share 0.45 0.73 -38.36 -
(RMB/share)
Basic earnings per share after 0.33 0.68 -51.47 -
deduction of non-recurring profit or
loss (RMB/share)
Weighted average return on net 14.84 41.25 -26.41 percentage 197.26
assets (%) points
Weighted average return on net 10.68 38.49 -27.81 percentage 531.94
assets after deduction of points
non-recurring profit or loss (%)
Proportion of R&D expenses to 10.19 9.79 +0.40 percentage 11.58
operating income points
Explanation about the main accounting data and financial highlights in the past three years
√Applicable □ N/A
1. The increase in operating income by 42.82% year on year was primarily due to the
increase in revenue from the sale of household To C products and cinema leases during
the reporting period.
2. The decrease in basic earnings per share by 38.36% year on year was primarily due to
the dilution of the earnings per share resulting from the increase in the share capital by
68,000,000 shares offered in the IPO of the Company.
3. The increase in total assets by 49.48% year on year was primarily due to the funds
raised through the IPO completed in the reporting period.
4. The decrease in net profit attributable to the owners of the parent company after
deduction of non-recurring profit or loss by 18.66% year on year was primarily due to
the rapid growth of expenses during the reporting period as the Company enhanced the
recruitment of talents in response to the larger scale of operation and increased
investments in technology research, development of new products and other areas.
5. The increase in net cash flows from operating activities by 106.33% year on year was
primarily due to the increase in the sales revenue received.
VII. Differences in accounting data arising from adoption of foreign and Chinese
accounting standards concurrently
(I) Differences in net profit and net assets attributable to shareholders of the listed
company disclosed on the financial statements according to the international
accounting standards and the Chinese accounting standards
□ Applicable √ N/A
(II) Differences in net profit and net assets attributable to shareholders of the listed
company disclosed on the financial statements according to the foreign accounting
standards and the Chinese accounting standards
□ Applicable √ N/A
(III) Explanation about the difference between foreign and Chinese accounting
standards
□ Applicable √ N/A
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VIII. Financial highlights in 2019 by quarter
In RMB
st nd rd th
1 quarter (Jan. - 2 quarter (Apr. 3 quarter (Jul. - 4 quarter (Oct. -
Mar.) - Jun.) Sep) Dec.)
Operating income 359,369,025.24 493,987,939.60 498,415,347.23 627,376,606.82
Net profit attributable to 27,848,207.29 38,731,366.77 57,550,852.99 62,326,849.66
shareholders of the listed
company
Net profit attributable to 17,279,140.15 24,325,503.60 48,553,875.07 44,060,122.14
shareholders of the listed
company after deduction of
non-recurring profit or loss
Net cash flows from operating -65,364,673.16 50,821,259.64 68,855,552.21 188,688,765.02
activities
Explanation about the difference between quarterly data and the data disclosed on regular
reports
□ Applicable √ N/A
IX. Items and amounts of non-recurring profit or loss
√Applicable □ N/A
In RMB
Note (if
Item of non-recurring profit or loss 2019 2018 2017
applicable)
Gain or loss on disposal of non-current -3,214,488.06 -1,711,797.47 -1,845,934.69
assets
Government grants recognized in profit or 25,782,112.48 24,032,705.76 9,606,112.65
loss for the current period (excluding
government grants that are closely related
to the business of the Company and are
provided in fixed amount or quantity
continuously according to the applicable
polices and standards of the country)
Net gain or loss on subsidiaries arising 23,321,528.06 18,765,375.86 -16,306,769.81
from business combinations involving
entities under common control from the
beginning of the reporting period till the
date of combination
Gain or loss on changes in fair value of 9,552,990.98
held-for-trading financial assets, derivative
financial assets, held-for-trading financial
liabilities, and derivative financial
liabilities and gain on disposal of
held-for-trading financial assets, derivative
financial assets, held-for-trading financial
liabilities, derivative financial liabilities
and other debt investments, except for
effective hedges held in the ordinary course
of business
Reversal of impairment loss on accounts 238,836.00
receivable tested for impairment
individually
Other non-operating income and expenses 2,981,778.07 1,182,062.52 386,740.42
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Other gains or losses meeting the definition -22,338,042.90 -6,846,741.55
of non-recurring profit or loss
Effect of minority interest -1,891,481.86 -3,860,005.15 -10,719,926.94
Effect of income tax -4,532,639.92 -4,110,568.31 -895,302.71
Total 52,238,635.75 11,959,730.31 -26,621,822.63
X. Items at fair value
√Applicable □ N/A
In RMB
Effect on profit for
Item Opening balance Closing balance Change
the current period
Held-for-trading 0 540,000,000.00 540,000,000.00 9,552,990.98
financial assets
Investment in other 0 11,975,419.38 11,975,419.38 0
equity instruments
Total 0 551,975,419.38 551,975,419.38 9,552,990.98
XI. Other information
□ Applicable √ N/A
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Section III Operational Highlights
I. Main business, business model, status of industry and R&D activities during the
reporting period
(I) Main business and main products or services
We are a leading laser display technology enterprise in the world owning proprietary
technologies and core patents and having core device research, development and
manufacturing capability. In the reporting period, we were mainly engaged in the research
and development, production and sale of core laser display devices and complete laser
display equipment, and provision of laser cinema projection services through lease of light
sources.
Since our establishment 14 years ago, we have been committed to technical
innovations, invented ALPD technology in 2007, created the new laser phosphor display
architecture, formed our proprietary IP, and mastered the design and manufacture
technology of core devices. We have upgraded ALPD technology continuously, and
relying on the advanced ALPD technology, promoted the industrial applications of laser
display, and gradually extended the application of laser display from laser cinema
projection and other high-end applications to large venue, business education, laser TV,
smart mini projector and other display applications. During this process, Appotronics has
consolidated its position as a leader and become a popular brand.
We have many types of products, which can be classified into core laser display
devices and complete laser display equipment, wherein the core devices can be further
classified into laser light source (cinema light source and large venue light source), laser
TV light generator and laser projection screen, and complete laser display equipment can
be further classified into laser cinema projector, large venue laser projector, laser video
wall, laser education projector, laser TV and 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.
Our rich product lines reflect the great advantages of ALPD technology architecture as
the fundamental key architecture, and the good operating results achieved by us driven by
technical innovation and industrialization.
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Figure 1: Technical innovation and industrialization, the double driving forces of the
development of the Company
1. Core devices
Technical innovation is the foundation of business, while core devices are the basis of
development. We will be unable to greatly improve the performance of complete
equipment without making breakthroughs in core devices and architectures. Among our
three types of core devices, laser light source and laser TV light generator are stable and
mature products, which make great contributions to our operating results, including sale of
such devices separately or sale of complete equipment containing such devices; while laser
projection screen is one of our key new products under development, which will be used in
conjunction with laser TV and smart projectors, to provide better visual experience.
Our core devices reflect various advantages and characteristics of ALPD technology,
such as high luminance, wide color gamut, high contrast and relatively low cost. The
quality and performance of such products have received recognition of downstream
customers, which helps us establish our position as a core supplier on the industry chain of
laser display.
Figure 2: Laser light source and laser light generator
On the commercial market, we have entered into in-depth cooperation with China
Film and Barco in laser light source and promotion of laser cinema projection technology
throughout the world. We took the lead in launching “laser as a service”, the mode of laser
light source lease, in the industry, which can effectively help the cinemas reduce costs and
increase efficiency with the technical advantages of the light source provided by us and the
flexibility and convenience of the lease mode, and has helped us become the company
deploying the most laser cinema light source in China.
On the household market, we have cooperated with LG and Xiaomi to develop
customized laser TV light generators. In particular, the laser TV with a selling price of less
than RMB 10,000 launched by us in cooperation with Xiaomi has led the reform and
development of the entire laser TV market and stimulated the consumers to purchase laser
TV. At present, our laser TV light generators are not only used on Mijia products and our
own brand products, but also used for providing customized development services to Hola,
VAVA, Haier, ViewSonic and other companies. Its customer base is expanding gradually.
According to AVC, our laser TV light generators occupied the largest domestic market
share in 2019.
In the future, we will further consolidate the advantages of core devices, create an
open platform, and cooperate with the industrial circles to jointly make the laser display
industry bigger and stronger, enrich the content of the industry, and expand the
applications.
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Figure 3：Application of ALPD laser cinema light source
2. Complete equipment
(1) To B commercial market
On the basis of laser light source and light generators, we have further developed
complete equipment, which has been widely used in cinema projection, cultural and
tourism lighting, security and surveillance, education and training, and other commercial
applications, and become the mainstream choice for high-quality projection display
technology.
——In the field of cinema projection, we have created a product portfolio of laser
cinema light source covering multiple ranges of lumens, from 5,000 lumens to 51,000
lumens, which can satisfy the projection demands of different scenarios, including without
limitation high-end cinema, ordinary cinema and private cinema. Relying on the solid basis
of light source research and development, we have developed C5 laser cinema projector,
the first equipment of the like in China that meets the standard of DCI (Digital Cinema
Initiatives, LLC), which marks that we have become the fifth company in the world that is
able to develop and manufacture DCI compliant digital cinema projector, have the technical
capability to provide solutions to all laser cinemas of various specifications, and will
promote the advancement of digital cinema projection technology in China1.
1
https://www.dcimovies.com/compliant_equipment/KEIO-CINEAPPO-C5-20190830-ver3.html
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Figure 4：Certificate of DCI compliant equipment
——On the large venue display market, as the country continuously gives strong
support to the cultural and tourism industry, there are strong demands for large venue laser
projectors in the cultural, creative, exhibition, display and other fields. Due to its
remarkable advantages such as no damage to landscape and cultural relics, being
convenient to install and dismantle, low cost and recyclability, large venue laser projector
has been successfully used in the “future city” project of Shenzhen venue of 2019 Spring
Festival Gala, the “Light up the Forbidden City” at the night of the Lantern Festival 2019,
and the ski resort project of the Beijing Winter Olympics, which has greatly increased our
brand popularity and influence.
Figure 5: Effect of “Night of the Lantern Festival” at the Forbidden City and the ski
resort project of the Beijing Winter Olympics
——On the security and surveillance market, the laser video wall unit produced by us
features high reliability, 7x24 operation free of failure, high luminance, wide color gamut,
wide viewing angle, precise color reproduction and low power consumption, among others,
and has been widely used by the important State organs and large-sized enterprises and
institutions. In 2019, we provided laser video walls to the Tiananmen Public Bureau of
Beijing, the Nanshan District Administrative Service Hall of Shenzhen and the Inner
Mongolia Commanding Center for Electric Power Dispatch.
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Figure 6：Commanding Center for Electric Power Dispatch
——On the education projector market, our laser business education projector product
series cover ultra short throw, short throw, long throw and other focal lengths, and
luminance from 3,300 lumens to 5,000 lumens, support WUXGA images, have a service
life of 25,000 hours, can be widely used in various scenarios such as colleges, universities,
middle schools and primary schools, commercial exhibition and homes, replace traditional
business education projectors using bulbs or LED as light source, and provide a new idea
for eye protection.
(2) To C household market
In recent years, laser TV, smart mini projector and other household projector products
have been developing rapidly, due to the ever increasing acceptance of the new mode of
movie watching by the consumers, and rapid decrease of the costs and prices and better
performance of products. During the reporting period, Mijia laser TV, Fengmi laser TV and
Fengmi smart mini projector continue to maintain the lead on the market, and our
household equipment business also grows rapidly.
——In the laser TV business segment, we manufacture Mijia laser TV and own brand
laser TV products, of which, Mijia laser TV products are customized products
manufactured for Xiaomi, which are sold by Fengmi (our affiliate) to Xiaomi and then
distributed by Xiaomi to end consumers, and the own brand laser TV products are
distributed by Fengmi, which have a luminance slightly higher than that of Mijia laser TV,
and provide projection screen, subwoofer and other components for the consumers to
choose, thereby implementing a differential sales strategy with Mijia laser TV.
The laser TV launched by us in cooperation with Xiaomi was the first product of the
like with a selling price lower than RMB 10,000, thereby becoming a benchmark product in
the laser TV industry. Due to the application of ALPD technology, our products show
remarkable superiority in overall performance, including image quality, audio effect and
smart experience. In the future, we will increase R&D investment to develop laser TV
toward larger screen, higher resolution and lower cost, and enhance hardware and software
integration to provide the consumers with products with outstanding performance and a
high cost-performance ratio.
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Figure 7: Laser TV product
——In the smart mini projector business segment, our smart mini projector products
feature small size, portability, high efficiency and strong color performance compared with
general projectors, and are embedded with smart operating system and Wi-Fi module for
connection with cloud server, so they can provide the consumers with more convenient
information and resource sharing and huge volume of content.
As we are entering the era of 5G, the big bandwidth and low latency provided by 5G
technology will make the real-time transmission and broadcasting of ultra high definition
videos become a reality. Laser display features large size, high resolution and portability.
The combination of laser display and 5G transmission technology can solve the
contradiction between large screen and portability. Along with the increasingly strong
functions of mobile phones, portable laser mini projectors used in conjunction with mobile
phones are expected to become a new growth area.
Figure 8: Smart mini projector product
(II) Main business model
We are mainly engaged in the R&D, production, sale and lease of core laser display
devices and complete laser display equipment, and provision of customized R&D and
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manufacturing services to customers, and have an independent and complete procurement,
sales, production and service system.
1. R&D mode
We mainly adopt the independent R&D mode, and separate technology development
from product development in organization structure and development process.
Our technology development focuses on creating and mastering core and key
technologies. When a kind of technology becomes relatively mature, it will be applied in
product development. Our technology development team comprises a large number of
creative scientists, who follow up the progress of frontier technology in the industry, focus
on the key technical problems that urgently need to be solved in our business development,
and develop the technologies required for our products to be launched in the next three
years, to create the Company’s core competitive edge in technology.
Our product development is driven by product planning, and mainly divided into
stages of feasibility, EVT, DVT, PVT and MP. We set up product lines and product
development teams by market segment, and develop series products based on product
platform, to rapidly respond to market demands. Our product development team is
responsible for developing the products that will be put into mass production within about
one year. The product development team is divided into optical, structure, software,
hardware, thermal and other technical departments by profession. Such technical
departments share technologies and platforms with each other.
Through matrix management, we realize flexible allocation and sharing of human,
operating and other resources among different products, to optimize resource allocation and
improve R&D efficiency and professional and technical capability.
2. Procurement mode
Our Resources Development Department and Supply Chain Center Planning
Management Department are responsible for procurement, of which, the Resources
Development Department is responsible for the selection of suppliers, determination of
purchasing prices, building of business system and supply platform and other front-end
procurement affairs, and the Planning Management Department is responsible for the
preparation and implementation of procurement plans and other back-end procurement
affairs. We have formulated the Supplier Development, Management and Control Process
and other policies, to manage the development of suppliers, implementation of procurement
plans, inspection of incoming materials and other business.
3. Production mode
Our production mode relies on own production, supplemented by OEM, mainly
because of the different production capacity required by different manufacturing processes
and modes and consideration of cost-effectiveness. Our core devices sold or leased to
customers are manufactured by us. Laser TV and smart mini projector products are
assembled by OEMs. Other complete equipment products are also manufactured by us.
With respect to the products manufactured by us, we schedule production pursuant to
purchase orders, taking into account the requirement of safety stock. The production of
standard spare parts is scheduled according to the requirement of safety stock and relevant
production plans.
With respect to OEM products, we appoint third parties to manufacture PCBA,
coating and other semi-finished products, and assemble laser TV, smart mini projector and
other complete equipment.
4. Sales mode
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Our sales mode is classified into product sales and lease service, as described below:
(1) Product sales mode
Our products include core laser display devices and complete laser display equipment.
① Core devices are customized for and directly sold to customers. For example, we
developed a customized laser cinema light source for Barco and Cinionic (a company
jointly established by Barco and us), and sold the light source products to Barco and
Cinionic; and developed a customized laser TV light generator for Hola, and sold the laser
TV light generator products to Hola or its supply chain service providers.
② The sale of complete equipment has three modes, which are customized direct sale,
non-customized direct sale and distribution.
Xiaomi, DonView, CVTE, VAVA, Haier, ViewSonic and other companies purchase
customized complete equipment products developed by us for them.
Large venue laser projectors are sold mainly using the off-line direct sale mode, while
Fengmi branded laser TV and smart mini projector products are sold both at the online
retail stores on Tmall, JD, Youpin, Pinduoduo and other platforms, and off-line physical
stores.
Other complete equipment products are sold through distributors.
(2) Mode of lease service
We established CINEAPPO jointly with CFEC, a wholly owned subsidiary of China
Film. CINEAPPO purchases laser cinema light source from Appotronics, and then leases
such light source and provides laser cinema projection service to downstream cinema
customers (“Laser as a service”).
Such mode of light source lease was a first in the industry, under which CINEAPPO
charges service fees according to the length of use of light source by the cinemas (the fees
are charged by the hour or a certain period of time), while the cinemas do not need to
purchase light source equipment, thereby effectively easing their capital pressure and
reducing their labor and maintenance costs. CINEAPPO connects the leased light source
equipment with its remote information platform, uses IT technology to provide remote
license and smart timer services in respect of such light source, and gives support to
day-to-day operation of such light source, such as asset monitoring, inspection and
maintenance order and tracking.
The lease of light source by CINEAPPO to the cinemas is classified as operating lease.
5. Mode of joint venture
We believe that it is a reasonable business strategy to establish joint ventures with the
excellent companies on the market segments, and have established the following joint
ventures:
(1) We established CINEAPPO jointly with CFEC. CINEAPPO provides laser light
source lease services to the cinemas throughout the country. Appotronics supplies laser
light source to CINEAPPO, while China Film contributes its in-depth understanding of the
film industry and gives support to CINEAPPO through its cinema network operation
system. The parties initiated the business model of lease by the hour in the film projection
industry, and promoted such business model among the cinemas throughout the country.
(2) We established Fengmi jointly with Tianjin Jinmi and Shunwei Technology (both
are affiliates of Xiaomi Technology, a leading Internet company). Fengmi is engaged in
R&D, manufacturing and sale of laser TV sets, and Xiaomi Communications is its main
customer. Appotronics supplies laser TV light generators to Fengmi. Xiaomi
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Communications sells the laser TV products of Fengmi at home and abroad, by giving full
play to its advantages in sales channel and brand marketing capability.
(3) We established Orient Appotronics jointly with DonView, a well-known company
in the field of multi-media display. Orient Appotronics is engaged in the sale of laser
business education projectors supplied by Appotronics, and DonView is its customer.
DonView distributes such products through its powerful sales channels throughout the
country.
Such joint venture arrangements combine the respective advantages and resources of
the parties thereto, and are routine and reasonable commercial arrangements. Such joint
ventures enjoy superiority in talents, as the members of their management teams come from
first-class enterprises in the industry, and have expertise and rich experience in the
implementation of business strategies, and business and product innovations. Such joint
venture arrangements have greatly promoted our business development in the past. In the
future, we will continue to consolidate our relationship and closely cooperate with the
relevant joint venturers, jointly promote technical and product innovations and seek
development opportunities on the market with them, to promote the stable and healthy
development of such joint ventures.
(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 Companies
published 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 projection
and large venue display, including cinema projection, security and surveillance, command
and control, theater performance, exhibition and display, artificial and virtual reality and
other scenarios. In recent years, due to its remarkable advantages such as stable
performance, long service life and rich color, laser display technology has been rapidly
replacing the traditional light source technology used in cinema projection and large venue
display equipment.
Since the launch of the first ALPD laser cinema projector jointly developed by
Appotronics, China Film and Barco in 2014, ALPD laser light source has been widely
applied in the cinemas throughout the country, and entered the overseas projector market.
According to the China Film Exhibition & Distribution Association, as of December 31,
2018, the domestic cinemas installed about 23,000 sets of laser projection systems; the
market penetration rate of laser projection system rapidly increased from 0% to 38% within
four years, and Appotronics is a leader on the laser cinema projector market. According to
the Research Report on Chinese Laser Projector Market 2019 issued by AVC, the sales of
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large venue laser projectors in 2019 increased by 30.5% year on year, which shows that the
laser display technology is rapidly penetrating into the large venue display market.
Though the growth of laser display on To B market is temporarily hindered by the
epidemic situation, laser display has great growth potentials due to its unique advantages.
We expect that after the epidemic situation is put under control, the demands for laser
display technologies and products on To B market will grow continuously and steadily, and
the laser display technologies and products for To B market will provide better
performance and more functions.
(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 a
wholly new creation. Based on the long-term accumulation of ALPD technology,
Appotronics has made a breakthrough in the application of core devices and imaging
solutions of laser display and achieved superiority in the field of household display,
including lower cost, higher efficiency and smaller size, among others, which makes laser
TV possible.
Since Appotronics launched the first 100 inch laser TV in the world and introduced
the concept of laser TV based on “ultra short throw front laser projector with anti-ambient
light screen” in 2013 in cooperation with LG, HiSense, Xiaomi, Changhong, Haier and
other well-known companies have been engaged in R&D, production and marketing of
laser TV products, promoting the rapid growth of the market size of laser TV and other
related household products. According to AVC, the sales of household laser display
products on the domestic market increased from 76,000 units in 2017 to 195,000 units in
2019, with a three-year compound growth rate of 60%.
Household laser display products have three unique advantages, which are large size,
eye care and portability. Along with the continuous development of the laser display
industry chain, the costs of core materials and devices will be further lowered and their
performance will be further improved. It is expected that household laser display products
will develop toward lower price, smaller size and better display effect in the next few years,
and become common household products.
1.3 Main technical barriers
(1) Technical barriers
The technical barriers for To B market are continuous upgrading of performance, and
the technical barriers for To C market are high efficiency, small size and low cost. After
fourth upgrading, our ALPD technology architecture has gained relatively solid technical
advantages in terms of performance, cost, efficiency and size, and formed a sound IP
protection system. In the future, certain companies in the industry may face the problems of
lack of R&D capability and core technology, and reliance on supply chain for core patents
and core devices, rendering them unable to compete with leading domestic or international
companies that have their proprietary IP or core technologies and core devices.
(2) Quality barriers
We have accumulated rich experience over the years and adopted strict quality
standards in respect of R&D, design, manufacturing, management system, quality control
standard, installation and operation, to ensure the stability of the internal optical
components and fluorescent materials of laser display products under prolonged laser
exposure. Any new enterprise wishing to enter the laser display industry must put in
enormous capital and accumulated experience in these areas, and may be unable to make an
outstanding product satisfying the demand of the market and having stable and reliable
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performance until a very long time has passed. Therefore, a new enterprise may face the
quality barriers of the laser display industry before its products become mature.
(3) Talent barriers
The display equipment industry is a knowledge and technology intensive industry,
requires the technologies in optical, semiconductor, material, mechanical, electronic,
software and other fields, and puts forward very high requirements for the overall R&D,
technology application, manufacturing and other capabilities of an enterprise, so it needs a
large number of professional and inter-disciplinary talents. Along with the continuous
development of the technological level of the industry, the consumers will have
increasingly higher requirements for the display quality of images. An enterprise must have
a high-quality R&D team with strong innovative capability, high R&D level and rich
product experience, so that it can continuously develop new technologies meeting the
market demands and maintain its competitive edge on the market.
Through ten years of development and fourth upgrading of ALPD technology
architecture, we have built and nurtured a team of laser display professionals having a firm
grounding in technology and rich R&D experience, which lays a solid foundation for the
continuous upgrading of our products and technologies and our long-term innovation and
development.
2. 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 the
leading companies in the field of laser display, Appotronics has mastered core technologies.
We have not only created the fundamental key architecture for laser phosphor display
technology, but also built a proprietary IP protection system through patent applications in
China, the United States, Japan, Europe and other countries. Our leading position mainly
comes from technical performance and market applications.
2.1 ALPD architecture has become the mainstream technical route for laser
light source
ALPD technology architecture has been upgraded to the fourth generation. The
performance of each generation of architecture platform 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. In terms of luminance, our products can
realize 55,000 lumens of ultra high luminance output, taking the lead in the world. In terms
of color gamut, ALPD technology can provide a wide color gamut, which covers 98.5%
of REC.2020 color gamut, or 153% of NTSC color gamut, taking the lead in the world. In
terms of speckle, ALPD technology mixes speckle-free fluorescence with laser, thereby
remarkably reducing the effect of laser speckle and achieving the effect of no speckle in
vision. This technology has been widely applied in the world.
According to the Research Report on Chinese Laser Projector Market 2019 issued by
AVC, blue laser + phosphor powder technology architecture, represented by ALPD,
occupies 98.6% of the market share, and has become the mainstream technical route for the
laser display industry.
2.2 Our core devices are widely applied and occupy a high market share in the
field of film and TV
Appotronics has, on the basis of its core technologies, made available its technical
solutions for complete equipment application to the market, and entered into strategic
cooperation with CFGC, Xiaomi, Haier, Barco and other well-known domestic and foreign
companies, to provide light source, optical engine and other core devices and complete
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equipment application solutions, thereby rapidly promoting and expanding the application
of ALPD technology in cinema, household and other market segments.
On the cinema projector market, the first ALPD cinema laser light source installed
by us in June 2014 has operated stably for nearly six years. As of the end of 2019, we have
supplied more than 17,000 sets of ALPD laser projectors on the market, which have
provided licensed services for more than 100 million hours in total, both of which take the
lead on the market.
On the laser TV market, in addition to own brand laser TV products, we have made
available our optical engine products and complete equipment application technology to the
market, and launched laser TV products jointly with Xiaomi, Haier and other companies, to
expand the application of ALPD technology in the household field. In 2019, Appotronics
maintained the lead in terms of market share of laser TV light generators.
3. Development of new technologies, new industries, new types of operation and new
modes during the reporting period and future trend
3.1 Application of 5G technology will stimulate the market demands for laser
display products
(1) 5G video will stimulate the demands for larger sized display equipment. The
capacity and speed of video transmission using 5G technology will increase greatly. Larger
display capacity and higher resolution are more suitable for large screen. Laser display
products have exceptional technical and cost advantages in large screen, and are suitable
for the content presentation and experience of 5G videos. In light of portability, eye care
and other traditional advantages of laser display products, the market demands for laser
display products, in particular, household products, are expected to be further stimulated.
Appotronics will grasp the development opportunities brought about by the
commercialization of 5G technology, focus on forward-looking development of laser TV,
smart mini projector and other household products, to provide the consumers with a wholly
new experience in large-screen display and entertainment in the era of 5G.
(2) The popularization of 5G mobile phones will stimulate the potential demands
for peripheral laser display products. 5G mobile phones provide more functions, but
have some shortcomings, such as limitation of screen size, damage to eyes by the light
produced by the phones, poor experience and easy-to-fatigue if looking at the screen for a
long time. If the laser display products are used in conjunction with mobile phones, the
content exhibited on the small screen of the phone can be projected on an ultra high
definition and large screen that is comfortable to watch, which is expected to bring about
considerably potential market demands. Appotronics will insist on the development concept
of high efficiency, small size and low cost, continuously follow up the demands for the
development of peripheral products for mobile phones, and take active actions as we deem
appropriate.
3.2 The epidemic situation brings about the market opportunity for the
upgrading of the mode of “hardware + software + service”
(1) The cinema industry is turning to the asset-light business strategy that focuses
on operation. During the period that the epidemic situation persists, the domestic and
foreign cinemas are unable to do business, which makes them realize the importance of
cash flows. The “laser as service” provided by Appotronics can partially ease the cinemas’
capital pressure caused by purchasing of cinema equipment, so this mode is expected to
receive recognition by more cinemas in the days to come.
(2) To C market faces the opportunity to upgrade software and services. During
the period that the epidemic situation persists, the number of users, traffic, duration of
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watch time, ARPU value and other indicators in respect of online videos have increased
rapidly. The epidemic situation has promoted the habits of users to watch videos on line.
Appotronics is committed to in-depth hardware and software integration for To C products,
and improving software capability and service experience based on its “hard-core
technology”. For example, our subsidiary Fengmi has cooperated with iQiyi and other
video platforms, to provide users with content services. In the future, Appotronics will
continue to give full play to its software and hardware advantages in laser TV, smart mini
projector and large screen display, and provide richer and high quality experiences and
services to users.
(IV) 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 and
industrialization of laser display technology, and created technology reserves and patent
portfolios covering the whole technology chain of laser display from key system
architecture, core devices to key algorithm. ALPD technology architecture has been
upgraded to the fourth generation. The performance of each generation of architecture
platform 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 have
participated in and led the preparation of the international laser display standard.
During the reporting period, we have poured substantial R&D resources in the
preparation and processing of thin film materials, micro- & nano- optical structure
technology, light source architecture, dynamic control, complete equipment structure,
machine perception and miniaturization of laser display system. The big data, algorithm
and reference designs accumulated by us over the years will enable us to rapidly develop
products and solutions meeting the requirements of different application scenarios, such as
cinema projection, home entertainment, outdoor exhibition, ultra large-sized display, and
immersive display.
In addition, we are developing laser display technology with high dynamic contrast
and high dynamic color gamut, battery-powered high-performance mini laser projector
technology and other technologies. Such new technologies have been continuously
validated and will be applied in our future products.
During the reporting period, we released ALPD 4.0, which has been applied in many
product series. At present, we are focusing on the development of ALPD 5.0. This
upgrading will not only increase the dynamic contrast and peak luminance of laser display
equipment, and reduce the luminance of dark field, but also maintain relatively high light
effect and high cost-performance ratio. The products for mass production applying ALPD
5.0 are expected to be launched on the market in 2021.
2. R&D achievements during the reporting period
In respect of technical innovation, we upgraded ALPD technology to Version 4.0 in
2019. This upgrading improved a lot of core indicators, such as light effect, reliability and
color gamut, and promoted the development of laser display products toward high
definition, miniaturization and higher efficiency.
In respect of product innovation, in 2019, we applied ALPD 4.0 in certain
new-generation laser display products, some of which have already been launched on the
market in consideration of different product demands. Please see “Section IV Discussion
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and Analysis of Business Situations - I. Discussion and analysis of business situations - (I)
Overall business situation during the reporting period”.
In respect of IP protection, we have established a sound IP protection system. As of
December 31, 2019, we obtained 908 patents throughout the world, including 682 domestic
patents and 226 foreign patents, had 756 domestic and foreign patents pending and 337
PCT patents pending, obtained 49 software copyrights, and owned 551 domestic and
foreign trademarks. In 2019, we obtained 163 new patents at home and abroad, including
113 patents for invention, and had 208 new domestic and foreign patents pending,
including 150 patents for invention. In addition, we were awarded the “22nd China Patent
Prize”, the “6th Gold Patent Prize of Guangdong” and the “Patent Prize 2019 of Shenzhen”,
and included in the “Top Ten IP Events of Shenzhen in 2018”.
3. R&D expenses
In RMB
R&D expenses expensed in the current period 201,697,766.26
R&D expenses capitalized in the current period -
Total R&D expenses 201,697,766.26
Proportion of R&D expenses to operating income (%) 10.19
Number of R&D staff 387
Proportion of R&D staff to total employees of the Company (%) 31.06
Proportion of R&D expenses capitalized (%) -
Note:
During the reporting period, our R&D expenses were RMB 202 million, accounting
for 10.19% of operating income. We have maintained R&D expenses at a high level,
because continuous technical innovations will enable us to maintain and increase our
technical advantages, and rapidly transform such technical advantages into product
advantages, thereby promoting our innovations and development.
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4. R&D projects
√Applicable □ N/A
In RMB
Investment in Progress or
Estimated total Aggregate Application
No. Project the current interim Goals Technological level
investment investment scenario
period results
1 Core devices 60,500,000.00 41,717,366.61 53,544,405.70 Mass Great improvement of Take the lead in the Upgrading of
production color gamut, contrast, light industry; the color light source for
effect, luminance and other gamut, contrast, light cinema
performance, to better effect, luminance and projectors, laser
satisfy the demands for other performance are TV and other
cinema, laser TV and other greatly improved, to fields.
high-end displays better satisfy the
demands of customers.
2 High 63,008,512.00 57,465,969.89 66,712,048.49 Mass 4K resolution laser TV 4K resolution laser TV 4K household
definition production takes the lead in the laser TV
laser TV industry.
3 Laser 48,985,000.00 24,101,039.59 34,972,284.37 Mass Laser cinema projector for The first proprietary DCI compliant
cinema production community cinema chains DCI compliant projector small cinema
projector and home theatres in China. projector
4 High-perfor 34,373,807.00 21,665,201.43 21,665,201.43 Mass High definition portable High definition portable Smart mini
mance smart production smart mini projector smart mini projector projector
mini takes the lead in the market
projector industry.
5 Other 48,750,000.00 45,528,606.83 45,528,606.83 Mass Large venue projector, Large venue projector Large venue
complete production business education and business education projector,
equipment projector and other projector with business
complete equipment with outstanding education
high luminance, large performance in projector and
screen and wide color luminance and color other fields.
gamut performance take the
lead in the industry.
6 Laser 34,000,000.00 5,342,814.91 6,224,971.65 Labor trial Development of laser The development of key Through
display lab phosphor display optical laser display technology transformation
engine, high-performance and devices based on of lab R&D
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fluorescent materials and laser phosphor results, develop
fluorescent components, technology takes the multiple laser
portable laser display lead in the industry. display terminal
technology, and laser products, and
display technology with promote the
high contrast and high development of
color reproduction the entire
display industry
chain.
7 Demonstrati 102,840,000.00 5,876,767.00 9,403,718.77 Prototype This project is a This project will greatly This project
on sub-project of the State promote the industrial will build a
production key R&D program titled upgrading of demonstration
line for “strategic advanced trichromatic laser production line
trichromatic electronic materials”, and display technology, and for trichromatic
laser display will research the gain international laser display
complete industrialization of the competitive edge for complete
equipment technology of trichromatic proprietary trichromatic equipment, with
laser with phosphor to laser display an annual
satisfy the market demands technology. production
for trichromatic laser capacity of
display, build a mass 200,000 sets of
production line for trichromatic
trichromatic laser display laser display
complete equipment, complete
acquire proprietary IP, and equipment, and
realize large-scale a yield ≥90%.
application of trichromatic
laser display products.
Total / 392,457,319.00 201,697,766.26 238,051,237.24 / / / /
Note:
None
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5. R&D staff
In RMB 0’000
Education
Academic background Number Percentage (%)
Doctor 28 7.24
Master 81 20.93
Undergraduate 206 53.23
College or below 72 18.60
Total 387 100.00
Age structure
Age Number Percentage (%)
25 years of age or below 53 13.69
26-35 years of age 224 57.88
36-45 years of age 96 24.81
46 years of age or above 14 3.62
Total 387 100.00
Compensation
Total compensation of R&D staff 11,805.40
Average compensation of R&D staff 30.50
6. Other issues
□ Applicable √ N/A
II. Material changes in the main assets during the reporting period
√Applicable □ N/A
During the reporting period, our total assets increased by 49.48%, primarily due to the
increase in cash and bank balances received through the IPO. Please see “Section IV
Discussion and Analysis of Business Situations - III. Main business activities during the
reporting period - (III) Analysis of assets and liabilities”.
Wherein, the overseas assets were RMB 326,727,855.34, representing 10.54% of the
total assets.
III. 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 architecture
has been gradually formed and improved. On the basis of this technology, we have
established rich product lines, which have a remarkable substitution effect on the traditional
products in cinema, TV, business education, large venue and other fields. ALPD
technology has become the mainstream technical route for laser display. By relying on
technical innovation rather than consumption of resources, we have realized rapid
development, continuously improved the performance and cost-performance ratio of our
products, and maintained the competitive advantages in the industry.
2. Sound IP protection system
Through years of R&D efforts, we have upgraded ALPD1.0 to ALPD4.0 and
accumulated a lot of proprietary technologies. As of December 31, 2019, we had obtained
908 patents throughout the world (including 487 patents for invention) and 337 PCT
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patents pending in respect of ALPD technology. Such patents jointly build our global
patent system, which is a united whole, and is hard to be simulated or broken by the
competitors. In addition to patented technologies, we also own multiple know-how
accumulated 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 been
given full play in cinema, household, large venue and other fields. Our products show
superior performance in luminance, service life, color gamut, removal of speckle and other
aspects. Through sufficient validation at R&D and quality labs and on-site use for a long
time, all types of our products have become mature. Since its installation in June 2014, the
first set of ALPD cinema light source has been stably operating for nearly six years. Our
products in other fields have also won trust on the market with their outstanding
performance and reliable quality.
4. Advantage in multiple product series
At present, our ALPD technology has certain demonstration effect in the field of
laser display, and its application covers professional market and mass market, and high-end
market and low-end market. Our multiple product series can satisfy the demands of various
scenarios. In addition, we have adopted the differential development strategy and upgraded
ALPD technology from multiple angles to satisfy the demands of different market
segments and applications.
5. Advantage in talents and teams
Our founder and Chairman, Dr. LI Yi, is a well-known expert in the field of laser
display. Our President, Dr. BO Lianming is a well-known leader in the display industry.
Before joining Appotronics, he held the posts of Chairman of Shenzhen Chinastar
Optoelectronic Co., Limited and President of TCL Group and other important posts, and
helped TCL become the third largest TV maker ranking only next to Samsung and LG in
terms of shipment in the global color TV market. Under the leadership of our outstanding
management team, we now have a sound corporate governance system and strong internal
controls, and have greatly improved our management level and risk prevention capability.
In addition, we have a group of high-quality R&D personnel, including a lot of doctors
graduated from famous domestic and 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, we are able to precisely catch the development trend of the
display industry, and continuously launch promising and new laser display products
meeting the market demands.
(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
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Section IV Discussion and Analysis of Business Situations
I. Discussion and analysis of business situations
(I) Overall business situation during the reporting period
The year of 2019 is a significant year for Appotronics. On July 22, we became one of
the first group of companies listed on the STAR Market.
During the reporting period, we continued to expand the household market and cinema
market, and steadily develop the overseas market. The large-sized IP projects completed by
us and our listing on the STAR Market further increased our brand popularity and influence.
We were awarded the “Application Innovation Prize” by the China Video Industry
Association for the project “Night of the Lantern Festival” at the Forbidden City, the “22nd
China Patent Prize”, the “6th Gold Patent Prize of Guangdong” and the “Patent Prize 2019
of Shenzhen”, included in the “Top Ten IP Events of Shenzhen in 2018”, and selected by
the National Business Daily as one of the “Most Highly Praised STAR Market Listed
Companies on the List of Highly Praised Listed Companies in China in 2019”.
During the reporting period, our operating income was RMB 1.979 billion, up 42.82%
year on year; total profit was RMB 279 million, up 8.17% year on year; and the net cash
flows from operating activities were RMB 243 million, up 106.33% year on year.
(II) Completion of key tasks during the reporting period
1. Continue to increase investment in technology R&D and enhance innovations
in product application
Since our establishment, we have persevered in the research and development of
proprietary technologies and product innovations, and maintained R&D investments at a
high level. We have applied patents for our core technologies throughout the world,
continuously improved our IP protection system, and reasonably protected our proprietary
IP by legal means. In addition, we have developed high-performance products and a variety
of solutions, to satisfy the diversified demands of the market.
(1) Field of cinema projector
The C5 laser digital cinema projector launched by us filled a gap in the field of
projector manufacturing in China, made China become the fourth country in the world that
could produce projectors, broke the long-term monopoly by foreign manufacturers, and
promoted the development of China’s film and cultural industry. The overall design of C5
projector has taken into account the demands of the emerging cinema projector market, and
popularization, communitization, video on demand (VOD), home theater and other
development trends in cinema projection in China. C5 is the first laser cinema projector in
the industry featuring non-manual operation, muteness, no machine room and low
operating cost. In addition, the technical innovations of C5 greatly reduce the projection
cost, which makes C5 become the cheapest laser cinema projector, and the entry of laser
cinema projector into homes possible.
(2) Field of household TV
Our controlled subsidiary Fengmi, as our major subsidiary in the household business,
launched “4K laser projector TV cinema” during the reporting period, which has a 4K ultra
high definition, accommodates up to 150 inch screen, and adopts the diffuse reflection
imaging principle. According to the tests by professional institutions, this laser TV can
better protect eyes. This product has won a Good Design Award in Japan. In addition,
“Wemax One laser projector” jointly launched by Fengmi and iQiyi was the first equipment
in the industry that has passed the tests for billing system (software) and projection
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equipment (hardware), and provided a cost-effective solution for the standardized and
high-quality development of VOD cinemas throughout the country.
In the field of software, Fengmi launched Feng OS project, which aims to develop an
open operating system customized for smart laser TV with ultra large screen, and integrate
each smart laser TV terminal into the content eco-system. Through Feng OS integrated
application store, the end users will have access to smart content services and functions,
such as VOD, community interaction, game, entertainment, interactive education, real-time
information and tremendous applications. In addition, Feng OS will provide users with
innovative and concise large-screen, human-machine interaction experience, and a variety
of convenient online services, so as to lay a solid foundation for Fengmi to realize the
business model of “terminal sales + platform operation”.
(3) Field of smart mini projector
To enrich its product lines and fill in gaps on the market, Fengmi has launched two
projector products named SmartM055FCN and SmartLiteM055DCN, which focus on the
“mobile market” and are embedded with large-capacity batteries. In addition, during the
reporting period, Fengmi launched 1,500 lumens “Vogue smart projector M135FCN” and
2,400 lumens “Mijia laser mini projector”, which are designed for high-end users, and
embedded with Classmate AI App, support far-field voice recognition and Bluetooth link,
accommodate up to 150 inch screen, and feature high luminance, high definition and
intelligent control.
(4) Field of large venue projector
During the reporting period, in the field of outdoor lighting and display, Appotronics
provided a laser display solution with higher luminance (up to 51,000 lumens). The size of
single-equipment projection screen is up 300 square meters. It can guarantee the quality of
large venue projection to the maximum extent with the minimum equipment.
The laser video wall solutions provided by Appotronics for disease control and
prevention centers, rail transit, commanding and dispatch, security and surveillance, power
system and other sectors and fields feature high luminance, high definition and high
reliability, among others, are able to process multiple routes of signals with complicated
background, and realize centralized management, efficient processing and accurate display
of massive information, zoom-in and zoom-out of signals on any position in the form of
window, display on single or full screen, and visualization and rapid sharing of information,
and further improve the capability to make forecasts, give early warnings and prevent
security risks. At present, more than 6,000 sets of Appotronics ALPD laser video wall
have been installed.
(5) Field of education projector
Along with the popularization of education IT equipment, the schools have provided
more and more education equipment with display functions, which greatly increases the
students’ exposure to blue light and the chances of their eyes being damaged by blue light.
In August 2019, all six series of education projector products of Appotronics passed the
tests by the National Testing & Inspection Center for Radio & TV Products. The first group
of 11 products have passed the certification in respect of the Technical Standard for the
Certification of Display Performance and Vision Health of Display Equipment Part IV:
Laser Projector, which proves that our products provide the teachers and students with high
standard laser display solutions with outstanding display effect, rich image color, high
contrast and eye care.
2. Establish and improve our management system and management cycle, and
improve our process IT system
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We have preliminarily established and improved the management cycle led by
mechanism, guaranteed by system, guided by culture and supported by capacity, set up a
number of professional committees responsible for major strategies and business decision
making, improved our strategic planning capability, and emphasized on the building of core
capabilities, and implementation, management and control of our strategies. We have
continuously optimized our process system through creating the process map. In addition,
through informatization, we have developed and maintained a variety of management
systems, including database management, business process management, Slack R&D
platform, OA office and other IT systems, to improve our operation efficiency, realize
all-round information management, provide information support for the implementation of
our future development strategies, and promote the transition of our management style from
a start-up to a comprehensive group.
3. Enhance the building of marketing system and increase our brand influence
In terms of marketing, we have focused on both domestic and overseas markets, and
gradually formed a multi-level and all-round marketing mode combining online sales with
off-line sales, agent mode with direct sale mode, and sales on the domestic market with
exploitation of overseas market. We have focused on the development of channels and
market cooperation through exhibitions, product presentations, nation-wide partner
programs, channel training and other activities and measures. The three major projects
undertaken by us, “2019 Spring Festival Gala”, the “Light up the Forbidden City” at the
night of the Lantern Festival 2019, and “Shougang Ski Resort”, have become nationwide
hot events, and increased our brand influence.
In terms of online sales, we have enhanced the building of our online flagship stores
on Tmall, JD and other major e-retail platforms, actively cooperated with our strategic
customers in online sales, and formulated well-targeted sales strategies. In terms of off-line
sales, we have gradually created the mode of proactive sales for household laser display
products, and made breakthroughs in retail customers on smart audio & video, household
appliances, IT and other core channels. As of the end of the reporting period, we had 974
terminal exhibition stores, a 200% increase year on year.
4. Promote the mode of operation by integrated business units, and enhance team
building and talent incentives
During the reporting period, we have initially completed the adjustment of business
structure. In order to ensure the achievement of our strategic objectives, fully motivate all
business units and improve the efficiency of internal resource integration, we have adopted
the business unit system in an all-round way, broken down the overall sales targets, and
assessed the performance of all business units according to their contributions to operating
income and profits.
Our team building focuses on “talent recruitment, talent nurturing, talent incentives
and cultural building”. In terms of talent nurturing, we have conducted “star light - sharp
light - polar light” three-level talent training program, product operation training camp,
Appotronics auditorium and other training programs, to improve the abilities of our
employees.
In terms of talent incentives, we have enhanced our efforts to acquire and attract
talents, continuously recruited high-end talents from the market, established the profit
sharing mechanism and launched the medium-to-long term share incentive plans, to
implement the share ownership plan for key employees. After completion of the IPO, we
have explored the establishment of a long-term incentive mechanism relying on the capital
market. We have granted 4.4 million incentive shares to 169 key employees, and adopted a
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triple assessment system, to ensure the achievement of our strategic objectives in an
all-round way.
5. Upgrade our corporate culture system and define our enterprise spirit to
promote the development of the Company
In 2019, we created the model of our corporate culture, and defined our culture and
core values. Specifically, we have defined our mission as “new light, new life”,
development objective as “to become the pioneer in the display industry through disruptive
technical innovations and differential mode covering the entire value chain”, and core
values as “respect customers, guided by performance, live up to one’s words, criticism and
self-criticism”. We will enhance education on our employees about our corporate culture,
continuously publicize our corporate culture, promote the implementation of our corporate
culture, practice our core values, improve cultural awareness, and build us into an
“incentive and high-performance” organization.
6. Exploit the overseas market and enhance our influence on the professional
market
We have been committed to expanding cooperation on the overseas market and
providing solutions to high-end cinemas throughout the world. In January 2019, we
established Cinionic jointly with Barco, China Film and CITIC Private Equity Funds, to
promote the laser cinema projection technology and other advanced projection technologies
on the overseas market, and the increase of the sales proceeds of our laser light source on
the overseas market. In December 2019, we announced our plan to acquire 36% shares of
GDC Technology Limited (“GDC”), a global leading digital cinema server provider. We
and GDC will explore cooperation in R&D, sales of products, provision of solutions and
other areas in the field of digital cinema projection, and relying on our R&D and
manufacturing advantages in the light source of laser cinema projectors and complete laser
cinema projection equipment, and the global sales market of GDC, promote the sales of our
proprietary laser cinema projectors on the overseas market.
7. Use the funds raised through the IPO on the STAR Market in accordance with
the applicable regulations
In July 2019, we successfully entered the capital market and became one of the first
group of companies listed on the STAR Market. We issued 68 million RMB-denominated
ordinary shares (A-shares) to the public, and raised RMB 1,190,000,000 in total. During the
reporting period, we have deposited and used the raised funds in strict accordance with the
applicable laws and regulations. Subject to the normal implementation of the plan for the
use of the raised funds, we used certain raised funds that were idle for the time being to
purchase low-risk and liquid bank principal-protected wealth management products, to
increase the use efficiency of idle funds raised, which brought up an investment income of
RMB 9,553,000 in total in 2019.
8. Optimize internal controls and supervision, and improve the effect of internal
controls
We have strictly complied with the provisions of the Basic Standard for Internal
Controls of Enterprises and its supplementary guidelines, and other regulatory requirements
for internal controls, and established systemic internal controls and effective internal
supervision mechanism, to provide reasonable guarantee for the achievement of our
development strategies by ensuring legal and regulatory compliance of business activities,
achievement of business goals, reliability of information, operating efficiency, and security
of capital and assets, among others.
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Under the leadership of the Audit Committee and by reference to the good practices in
the industry, the Audit Department has completed the reform of internal audit process, and
effectively improved the quality and efficiency of audits; through regular audits on business
process, the Audit Department has objectively assessed and identified the internal control
risks of the Company, and led the fixation of responsibilities and close-loop improvement
in respect of the problems with internal control, to give support to the building of business
and honest environment in the Company, provide guidance to business management in
respect of risk control, improve their capability to proactively identify and manage business
risks, and reduce the operating risks of the Company.
II. Risk factors
(I) Risk of not making a profit
□ Applicable √ N/A
(II) Risk of significant decrease in operating performance or loss
□ Applicable √ N/A
(III) Risk related to core competitiveness
√Applicable □ N/A
Risk of the technology R&D falling short of expectations
The core of our development is technical innovation. If we fail to effectively judge the
direction of technical innovations, or to make continuous technical innovations, or to make
effective R&D investments due to limited funds, or to successfully commercialize the
technologies developed by us, our core competitiveness in technical innovation may be
impaired, and we may encounter technological risks in future development.
(IV) Operating risk
√Applicable □ N/A
1. Risk of unsustainability of rapid growth driven by the mode of cooperation
We adopt the business strategy of joint venture and cooperation, which combines the
advantages and resources of all partners. If our technical and product innovations slow
down and cannot satisfy the market demands, or our innovation capability decreases
continuously as a result of which our products are surpassed by our competitors, such
cooperation may bring lower benefits, or become unable to drive our rapid growth or
unable to continue.
2. Risks related to tax benefits and government grants
During the reporting period, we have received certain VAT reduction and government
grants pursuant to the applicable policies of the country. Along with the growth of our
operating performance, though the effect of tax benefits and government grants on our
current net profit decreases year by year, and our operating results do not rely on tax
benefits and government grants, such tax benefits and government grants still have certain
effect on our operating results. The decrease in our revenue from tax benefits and
government grants may affect our profit.
3. Risk related to the management of light source
In our light source lease service, we enter into an agreement with a customer, pursuant
to which, we charge a lease service fee on the customer based on the duration of use of the
light source, while the customer uses the light source and pays fees therefor, and is
responsible for 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 will use their best endeavors to maintain the light source in good condition in
order to ensure normal projection of films and continuity of their business operation.
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However, we still face the risk of impairment of assets due to damage or loss of light
source caused by improper 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, some cinemas may go bankrupt, as a result of which our assets may fall into an
unsafe situation.
4. Risk of impairment of inventories
Our inventories mainly comprise raw materials and goods in stock. As of the end of
the reporting period, the carrying amount of our inventories was RMB 299,966,200. If any
significant change in the competition pattern of the industry, material innovation in laser
display technology and products or the persistence of Covid-19 results in a large quantity of
unsalable products, the recoverable amount of the inventories will be lower than their
carrying amount. The impairment of inventories will have a negative effect on our earnings.
5. Risk of impairment of accounts receivable
Our products are generally delivered after receiving the payment therefor. We give
certain credit period to some major customers. As of the end of the reporting period, the
carrying amount of our accounts receivable was RMB 176,035,200. In case of any material
adverse change in the business condition of our customers, we may be unable to recover
certain accounts receivable, which may have an adverse effect on our operating
performance in the future.
6. Risk of internal control
The increase of sales revenue and rapid growth of assets and number of employees put
forward challenges for our management level, structure of corporate governance and
effective implementation of internal controls. In the future, if our management fails to
effectively overcome the difficulties in management caused by rapid growth of sales
revenue and continuous expansion of the scale of operation, or to effectively implement
internal controls, we may face risks of internal control during rapid business development,
such as out-of-control in management, loss of assets, brain drain, and decrease in operating
performance.
7. Risk of IP litigation
IP protection and management includes protection of our proprietary and core
technologies, and prevention of infringement on third-party IP. On the one hand, the
process of patent application often lasts a long time and requires continuous and huge
investment. If any proprietary IP in the process of patent application is infringed by any
third party, it may have an adverse effect on our production and operation. On the other
hand, 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 inadvertently
infringe on any IP of others during the development of products, we may face IP litigations
or disputes, which may have an adverse effect on our business development and financial
condition.
8. Risk of business development on the overseas market
As 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, the
business development of Cinionic and GDC on the overseas market, and the efficient
operation and marketing of our subsidiaries in Hong Kong and the United States, as a result
of which our business development abroad may fall short of expectations.
9. Risk related to the supply of important raw materials
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The key components of our products include laser devices, chips and lenses, which are
mainly purchased from some key suppliers of the United States and Japan. If such suppliers
significantly change the prices for such components, or are unable to supply such
components in a timely manner with both quality and quantity guaranteed, or fall into
difficulties in operation, or are unable to supply such components in a normal manner due
to trade dispute between the relevant countries or any other reason, it may have an adverse
effect on our production and operation.
(V) Industrial risk
√Applicable □ N/A
Risk of increasingly fierce market competition
Laser display is a new and thriving field in the display device industry. A lot of
international and domestic companies have entered the field, further heating up the market
competition. If we cannot maintain our competitive advantages in technology, product, cost,
service and other areas, or the competitors combine their advantages and resources through
acquisition and merger, or the top technology companies in the world increase their
investment in the field of laser display, we may face the risks of decrease in the amount or
growth rate of operating income, gross margin, profitability and market share.
(VI) Risk of macro-environment
√Applicable □ N/A
Covid-19 is still spreading in the world, and the epidemic situation does not look good.
The economic stagnation caused by the epidemic situation, in particular the shut-down of
cinemas, will have a direct effect on our revenue from cinema light source lease service.
Other businesses may also be affected by the shrinkage in consumer demands caused by
global economic recession. Therefore, our operating performance may decrease sharply.
(VII) Risk related to depository receipts
□ Applicable √ N/A
(VIII) Other significant risks
√Applicable □ N/A
1. Risk of outflow of key technical personnel
The laser display industry is a technology intensive industry. Along with the rapid
development of the laser display industry, the competition for high-end technical personnel
has been increasingly fierce. If we cannot maintain the stability of the existing R&D staff,
continuously train technical personnel, and attract outstanding talents in the world, we may
be unable to maintain our technical advantages in the industry, and the stability and
sustainability of our business operation. The outflow of key technical personnel may cause
disclosure of know-how, slow-down of R&D process, weakening of competitive advantage
and other risks, which may have an adverse effect on our ability to operate continuously.
2. Risk of loss on external investments
We attempt to expand our scale of operation through merger, acquisition or otherwise
according to the development situation of the industry, to continuously improve our overall
competitiveness. If the environments or policies in respect of the industry in which the
investee operates undergo any material change, or the technological level of the investee
falls short of our expectation, or the operating performance of the investee decreases
sharply due to poor management, the returns on investment in the investee may fall short of
expectation and we may need to recognize an impairment loss on the long-term equity
investment. If we fail to achieve a synergy effect through acquisition of the investee, our
strategic plan may be unable to be implemented as scheduled.
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III. Main business activities during the reporting period
During the reporting period, our revenue from main business was RMB 1,979,148,900,
a 42.82% increase compared to 2018, and the net profit attributable to the shareholders of
the listed company was RMB 186,457,300, a 5.36% increase compared to 2018.
(I) Analysis of main business
1. Analysis of changes in statement of income and statement of cash flows lines
In RMB
Item 2019 2018 % Change
Operating income 1,979,148,918.89 1,385,727,211.09 42.82
Operating costs 1,183,650,635.25 783,243,430.56 51.12
Sales expenses 151,760,111.00 102,349,110.00 48.28
Administration expenses 152,626,530.61 95,580,970.10 59.68
R&D expenses 201,697,766.26 135,730,450.92 48.60
Financial expenses 29,491,223.42 -2,652,161.71 N/A
Net cash flows from operating activities 243,000,903.71 117,773,454.30 106.33
Net cash flows from investment activities -772,857,910.07 -272,432,179.99 N/A
Net cash flows from financing activities 884,616,830.77 522,562,789.37 69.28
2. Analysis of revenue and costs
√Applicable □ N/A
During the reporting period, our operating income was RMB 1,979,148,900, a 42.82%
increase year on year as compared to RMB 593,421,700 in 2018, primarily due to the
increase in the revenue from the sale of household To C products and cinema leases;
operating cost was RMB 1,183,650,600, an increase of RMB 400,407,200 or 51.12% year
on year. Our overall gross margin was 40.19% in 2019, a decrease of 3.28 percentage
points compared to 2018.
(1) Main business by sector, product and region
In RMB 0’000
Main business by sector
Gross % Change in % Change in
Operating Operating % Change in
Sector margin operating operating
income cost gross margin
(%) income cost
Laser 197,914.89 118,365.06 40.19 42.82 51.12 Decrease by 3.28
display percentage points
Main business by product
Gross % Change in % Change in
Operating Operating % Change in
Product margin operating operating
income cost gross margin
(%) income cost
155,344.15 102,544.69 33.99 46.73 54.49 Decrease by 3.32
1. Sales percentage points
2. Lease 39,799.12 13,526.03 66.01 30.78 35.8 Decrease by 1.26
service percentage points
3. Other 2,771.62 2,294.34 17.22 21.93 15.32 Decrease by 4.74
business percentage points
Main business by region
Gross % Change in % Change in
Operating Operating % Change in
Region margin operating operating
income cost gross margin
(%) income cost
Domestic 178,039.72 111,260.78 37.51 42.81 51.56 Decrease by 3.61
percentage points
Overseas 19,875.17 7,104.28 64.26 42.91 44.61 Decrease by 0.42
percentage points
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Explanation about main business by sector, product and region
Our laser display products have been successfully applied in cinema projection, home
entertainment, education interaction, commercial applications, outdoor exhibition and other
fields. Due to the strong consumer demands on the domestic market and driven by the sales
of household To C products and cinema leases, our operating income in 2019 increased by
42.82% year on year.
Our overall gross margin was 40.19% in 2019, a decrease of 3.28 percentage points as
compared to 2018, primarily because that we have vigorously promoted the sales of To C
laser TV and smart mini projector products on the household consumer market to address
the strong demands on the household consumer market that has a large customer base, and
our overall gross margin decreased to certain extent due to the increase in the proportion of
revenue from To C products to the total operating income.
Our products are mainly sold on the domestic market, which accounts for 89.96% of
our total operating income. Revenue from the overseas market accounts for 10.04% of our
total operating income.
(2) Analysis of output and sales volume
√Applicable □ N/A
Sales % Change in % Change in % Change in
Main products Unit Output Stock
volume output sales volume stock
Core devices and Set 251,407 236,290 32,123 93.51 115.57 59.30
complete
equipment
Explanation about output and sales volume
We supplied part of laser light source produced under operating leases, which was not
included in the sales volume and stock, and used part of laser TV light generators produced
to manufacture laser TV products, which were not included in the production, sales volume
and stock.
(3) Analysis of costs
In RMB 0’000
Costs by sector
Components of % of total % of %
Sector 2019 2018 Remark
cost cost total cost change
Laser 118,365.06 100.00 78,324.34 100.00 51.12
display
Costs by product
Components of % of total % of %
Product 2019 2018 Remark
cost cost total cost change
1. Sales Direct materials 89,655.34 87.43 59,106.35 89.05 51.68
Direct labor 2,673.66 2.61 2,044.33 3.08 30.78
Manufacturing 10,215.69 9.96 5,223.66 7.87 95.57
expenses
Subtotal 102,544.69 100.00 66,374.34 100.00 54.49
2. Lease Depreciation of 6,759.98 49.98 4,338.06 43.55 55.83
service light source
Software 2,399.51 17.74 2,350.73 23.60 2.08
license fee
Technical 3,917.01 28.96 2,853.46 28.65 37.27
service fee
Labor cost 449.53 3.32 410.16 4.12 9.60
Others - - 8.01 0.08 -100.00
Subtotal 13,526.03 100.00 9,960.42 100.00 35.80
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Annual Report 2019
3. Other 2,294.34 100.00 1,989.58 100.00 15.32
businesses
Total 118,365.06 100.00 78,324.34 100.00 51.12
Explanation about cost analysis
We are primarily engaged in the sale of products. Sales costs mainly comprise direct
materials, direct labor and manufacturing expenses, of which, the costs of direct materials
account for 87.43%. Our cost composition has basically remained stable as compared to
2018.
(4) Main customers and main suppliers
A. Main customers
The sales to top 5 customers were RMB 966,911,600 in 2019, representing 48.85% of the
total annual sales, of which, the sales to related parties were RMB 798,507,600,
representing 40.35% of the total annual sales.
Top 5 customers
√Applicable □ N/A
In RMB 0’000
No. Customer Sales % of total annual sales
1 Customer 1 45,648.60 23.06
2 Customer 2 23,038.31 11.64
3 Customer 3 14,177.80 7.16
4 Customer 4 7,484.85 3.78
5 Customer 5 6,341.60 3.20
Total / 96,691.16 48.85
Other information:
None.
B. Main suppliers
The purchases from top 5 suppliers were RMB 491,154,600 in 2019, representing 34.31%
of the total annual purchase cost, of which, the purchases from related parties were RMB
213,613,000, representing 14.92% of the total annual purchase cost.
Top 5 suppliers
√Applicable □ N/A
In RMB 0’000
No. Supplier Purchase cost % of total annual purchase cost
1 Supplier 1 13,594.80 9.50
2 Supplier 2 12,755.85 8.91
3 Supplier 3 9,474.80 6.62
4 Supplier 4 7,766.50 5.42
5 Supplier 5 5,523.51 3.86
Total / 49,115.46 34.31
Other information:
None.
3. Expenses
√Applicable □ N/A
In RMB
Item 2019 2018 % Change
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Annual Report 2019
Sales expenses 151,760,111.00 102,349,110.00 48.28
Administration expenses 152,626,530.61 95,580,970.10 59.68
R&D expenses 201,697,766.26 135,730,450.92 48.60
Financial expenses 29,491,223.42 -2,652,161.71 N/A
Analysis of change in sales expenses: The increase in sales expenses in 2019 by RMB
49,411,000 or 48.28% as compared to 2018 was primarily due to the increase in sales
efforts, employee benefits, marketing costs resulting from enhancing promotion of new
products and brand advertising, and provision for after-sale expenses along with increase in
sales.
Analysis of change in administration expenses: The increase in administration
expenses in 2019 by RMB 57,045,600 or 59.68% as compared to 2018 was primarily due
to the increase in investment in human resources and employee benefits to address the need
of rapid business development, increase in lease expenses for the premises and office space
newly leased, and increase in the amortization of land use right in respect of the R&D
center located at Nanshan District, Shenzhen.
Analysis of change in R&D expenses: The increase in R&D expenses in 2019 by RMB
65,967,300 or 48.60% as compared to 2018 was primarily due to the increase in R&D
investment in new products and technologies, and the increase in employee benefits and
material costs.
Analysis of change in financial expenses: The increase in financial expenses in 2019
by RMB 32,143,400 as compared to 2018 was primarily due to the sharp decrease in
exchange gain and increase in interest expenses caused by decrease in interest subsidies
offered by the government.
4. Cash flows
√Applicable □ N/A
In RMB
Item 2019 2018 % Change
Net cash flows from operating activities 243,000,903.71 117,773,454.30 106.33
Net cash flows from investment activities -772,857,910.07 -272,432,179.99 N/A
Net cash flows from financing activities 884,616,830.77 522,562,789.37 69.28
Analysis of change in net cash flows from operating activities: Net cash flows from
operating activities in 2019 were RMB 243,000,900, an increase of RMB 125,227,400 as
compared to 2018, primarily due to the increase in the sales revenue received.
Analysis of change in net cash flows from investment activities: Net cash flows from
investment activities in 2019 were RMB -772,857,900, an increase of RMB 500,425,700 as
compared to 2018, primarily due to the increase in the structured deposits purchased in
2019.
Analysis of change in net cash flows from financing activities: Net cash flows from
financing activities in 2019 were RMB 884,616,800, an increase of RMB 362,054,000 as
compared to 2018, primarily due to the proceeds from the IPO on the STAR Market.
(II) Explanation about material change in profit due to non-main business
□ Applicable √ N/A
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Annual Report 2019
(III) Analysis of assets and liabilities
√Applicable □ N/A
1. Status of assets and liabilities
In RMB
Balance as at % of total Balance as at % of total
Item % Change Remark
December 31, 2019 assets December 31, 2018 assets
Cash and bank 875,858,784.58 28.26 484,169,208.44 23.35 80.90 Primarily due to the proceeds from the IPO
balances and net cash flows from operating activities
in the reporting period
Held-for-trading 540,000,000.00 17.42 Primarily due to the purchase of wealth
financial assets management products using the idle funds
raised in the reporting period
Notes receivable 4,042,559.63 0.13 35,903,632.13 1.73 -88.74 Primarily due to the decrease in the notes
received in the reporting period and
acceptance of matured notes
Receivables financing 1,980,500.00 0.06 Primarily due to the adoption of the new
accounting standard for financial instruments
in the accounting of receivables financing
according to our business mode for the
management of notes receivable
Accounts receivable 176,035,155.24 5.68 119,715,786.19 5.77 47.04 Primarily due to the increase in the accounts
receivable from customers along with the
increase in sales
Prepayments 35,070,999.13 1.13 22,909,249.21 1.10 53.09 Primarily due to the increase in prepayments
to suppliers along with the increase in
purchases
Long-term equity 139,534,371.94 4.50 Primarily due to the investment of USD 20
investments million in Cinionic and returns on investment
Construction in 20,132,004.07 0.65 30,953,213.42 1.49 -34.96 Primarily due to the decrease in the light
progress source installed in the reporting period
Long-term prepaid 16,908,070.34 0.55 6,400,455.04 0.31 164.17 Primarily due to the increase in the fit-out
expenses expenses of the production site and office
space
Other non-current 11,420,185.94 0.37 137,518,255.16 6.63 -91.70 Primarily due to the transfer of the investment
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Annual Report 2019
assets in Cinionic to long-term equity investments in
the reporting period
Short-term 76,765,319.05 2.48 124,440,000.00 6.00 -38.31 Primarily due to the repayment of short-term
borrowings borrowings in the reporting period
Employee benefits 50,586,932.71 1.63 38,184,612.34 1.84 32.48 Primarily due to the increase in employee
payable benefits in the reporting period
Other payables 14,364,076.43 0.46 185,661,537.24 8.95 -92.26 Primarily due to the payment of the
remaining land use fee in the reporting period
Non-current liabilities 64,968,795.02 2.10 28,609,163.00 1.38 127.09 Primarily due to the increase in the long-term
due within one year borrowings due within one year
Long-term borrowings 279,615,107.27 9.02 403,107,800.00 19.44 -30.64 Primarily due to the transfer of long-term
borrowings to non-current liabilities due
within one year
Long-term accounts 3,488,100.00 0.11 6,863,200.00 0.33 -49.18 Primarily due to the payment for intangible
payable assets in the reporting period
Provisions 27,072,676.49 0.87 9,449,087.12 0.46 186.51 Primarily due to the increase in provision for
after-sale expenses along with the increase in
sales
Other information:
None.
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Annual Report 2019
2. Encumbrances on assets as of the end of the reporting period
√Applicable □ N/A
In RMB
Item Amount Reason
Other cash and bank balances - security 15,831,289.87 Security deposit for notes and letters of
deposit credit
Bank deposits - frozen funds 30,000,000.00 Funds frozen in connection with
litigations
Bank deposits - deposit interest that has 238,006.85 Deposit interest that has not become due
not become due but has been recognized but has been recognized
Note: As of the date of this report, among the frozen funds stated above, RMB 10 million
has been released.
3. Other information
□ Applicable √ N/A
(IV) Analysis of operation information of the industry
□ Applicable √ N/A
(V) Analysis of investments
1. Overall analysis of external equity investments
√Applicable □ N/A
As of the end of the reporting period, the balance of long-term equity investments was
RMB 139,534,371.94. In addition, we plan to invest an additional USD 18.2 million in
Appotronics HK, for it to acquire 36% shares of GDC Technology Limited (a company
incorporated in British Virgin Islands) (“GDC”). As of the end of 2019, this investment had
not yet been made.
(1) Material equity investments
√Applicable □ N/A
In January 2019, we invested USD 20 million in Cinionic to acquire 20.00% of its
shares, for the purpose of promoting the laser cinema projection technology and other
advanced projection technologies on the overseas market, and the increase of the sales of
our laser light source on the overseas market.
On December 6, 2019, the 20th meeting of the 1st Board of Directors of the Company
adopted the Proposal for Capital Injection in the Wholly Owned Subsidiary and Investment
in GDC, approving the investment of an additional USD 18.2 million in Appotronics HK,
for it to acquire 36% shares of GDC. The relevant information was disclosed in the
Announcement No.2019-029 issued by us on www.sse.com.cn and the designated media
for information disclosure on December 7, 2019. In March 2020, we completed the
approval and filing procedures with the development and reform, commerce and other
competent government authorities in respect of this transaction. Upon satisfaction of the
conditions precedent to the closing of this transaction, we paid an amount equivalent to
USD 18.11 million as the consideration for such shares on April 9, 2020. As of the date of
this report, we legally held 93,071,822 shares in GDC, representing 36% of the total shares
of GDC.
(2) Material non-equity investments
□ Applicable √ N/A
(3) Financial assets at fair value
√Applicable □ N/A
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Annual Report 2019
As of December 31, 2019, the balance of held-for-trading financial assets was RMB
540,000,000.00, which was structured deposits; the balance of investment in other equity
instruments was RMB 11,975,419.38, which was investment in equity instruments not held
for trading. The change in fair value of such financial assets was RMB 0 in the reporting
period.
(VI) Sale of material assets and equities
□ Applicable √ N/A
(VII) Analysis of major investees
√Applicable □ N/A
In RMB 0’000
Company Main business Registered Shareholding Total assets Net assets Operating Net profit
capital percentage income
CINEAPPO Provision of cinema 10,000.00 55.20% 104,563.87 37,341.21 59,302.09 14,480.26
laser light source lease
service and sales of
projectors
Fengmi R&D and sale of 5,000.00 55% 26,194.25 -2,867.57 70,057.77 -4,748.11
household display
products
Appotronics R&D and sale of laser 3,536.40 100% 32,868.29 22,873.35 18,941.60 3,266.52
HK light source
(VIII) Structured entities controlled by the Company
□ Applicable √ N/A
IV. Discussion and analysis of future development of the Company
(I) Structure and trend of the industry
√Applicable □ N/A
(1) Main market spaces
1. Sector of laser TV
In the household field, the application scenarios for home drawing room are of great
value, and have remarkable advantages in large-screen content and human-machine
interaction. At present, there are more and more ultra high definition TV programs; some
films have their premiere on line; some online TV plays and entertainment programs are
exclusively broadcast on streaming media, and there’s rich content available. HiSense and
other TV makers have continuously launched new laser TV products. All of these indicate
that the sector of laser TV will face a new and key development period in the future.
According to AVC, 194,500 sets of laser TV were sold in 2019, a 29% increase year
on year, and the total sales reached RMB 3.775 billion, a 34.5% increase year on year. The
top 5 brands are the brands of household appliances and Internet TV, holding 81.5% market
share in total. Appotronics holds 31.9% market share, the highest in the industry, including
17% market share held by Mijia (whose products are manufactured by Appotronics) and
14.9% market share held by Fengmi. According to AVC, the sales volume of laser TV will
exceed 1 million sets on the Chinese market, so the outlook for the market is promising.
2. Sector of smart mini projector
With the help of smart projection technology, users can access the information they
need at any time. Smart projector is becoming a new information access terminal. Through
this “entertainment center”, users can search all kinds of network resources, hold remote
meetings, watch online videos and carry out other operations.
According to AVC, 3.592 million sets of smart projectors were sold in 2019 in China,
a 37.5% increase year on year, and the total sales reached RMB 8.26 billion, a 38.8%
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Annual Report 2019
increase year on year. At present, young consumers are the main users of smart projectors.
The market is still at the blue sea growth period and has great potentials.
(2) Development trend of the industry
1. As an emerging technology, laser display technology is upgrading and substituting
the traditional projection industry on cinema, large venue, education, business and other
markets. Laser light source has become increasingly popular. All projector manufacturers
have entered the era of laser.
2. The smart products have become more and more practical, and now can provide
rapid data transmission, unlimited connection with the Internet of Things, audio functions,
lossless audio transmission with high sound quality, and smart hi-fi system that provide
perfect audio & video experience. In addition, such products are embedded with app stores,
which offer a variety of entertainment applications for downloading. The smart products
also provide video conference system and apps, online education and other functions, so
they have gradually become popular consumer electronic products.
3. The industrial solutions have been well accepted. As experience economy has
become popular in the world, the mode of audio & video technology plus cultural IP is
more preferred for the strategy of cultural and tourism integration. The immersive
experience enables off-line space, and the concept of smart cultural and tourism integration
draws wide attention. The outlook for the high-quality image solutions is promising.
4. The software and hardware integration and cross boundary have become the trend.
Simple product functions cannot satisfy the demands of consumers, and must provide
content support. A channel from the content side to the technology side will provide core
competitiveness for a company.
(II) Development strategy of the Company
√Applicable □ N/A
In the future, Appotronics will be committed to its mission of “New light, New life”,
focus on the demands of customers, create value for users with high-quality products and
services, and strive to become the pioneer in the display industry through disruptive
technical innovations and differential mode covering the entire value chain.
We will focus on the technology development and services that can provide long-term
use value for users, based on core devices, create the mode of open platform operation,
develop toward the mode of “software + hardware + service”, and through in-depth
software and hardware integration, provide end users with better experience and services,
and expand the overseas market relying on our global IP protection system.
(III) Business plan
√Applicable □ N/A
Business plan for 2020
The outbreak of Covid-19 since the beginning of 2020 has caused global economic
recession, affected our businesses to different degrees, and hindered the momentum of our
rapid development. Facing the present crisis and challenges, we adopt the bottom-line
thinking method and prepare for worst-case scenarios. Meanwhile, we wish to grasp the
opportunities of the recovery of the domestic and overseas market, consolidate resources
and business, and minimize the effect of the epidemic situation.
In 2020, Appotronics will improve its capabilities in the following ways:
1. Improve R&D capabilities, integrate and optimize the R&D system, consolidate
resources, optimize development mode and R&D efficiency, orient on the market, explore
emerging market opportunities and spaces, rapidly enrich and extend the product lines,
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Annual Report 2019
ensure timely delivery of major and new products, improve the technological
competitiveness of products and achieve the goal to reduce the design cost of products.
2. Improve the platform support capabilities, strictly control all kinds of expenses and
implement the relevant budgets, increase working efficiency per capita and the internal
collaborative efficiency, enhance echelon building of personnel, improve organization
capability, promote corporate culture, optimize processes, upgrade IT system, and improve
the process architecture and system, operating efficiency of business processes, and the
ERP-based interconnected IT architecture.
3. Improve the capabilities of the supply chain, gradually build the manufacturing
center into a profit center, continuously implement the supply chain optimization project
and Lean Six Sigma production, build an industry leading supply chain team, manufacture
products with reliable quality and competitive costs, increase the flexibility of supply chain,
reduce the inventories and increase the inventory turnover ratio.
4. Improve the marketing capabilities, under the guidance of industry-leading business
strategy, penetrate into all market segments, explore industrial applications according to the
demands of the industry, design corresponding products and solutions, train a group of
industrial business experts, enhance marketing efforts and channel building, dig deep into
the market, realize online and off-line integration, and turn technical advantages into
market advantages.
(IV) Other information
□ Applicable √ N/A
V. Information not disclosed according to the standard due to inapplicability of the
standard, involving State secrets or trade secrets or other reasons, and
explanation about the relevant reasons
□ Applicable √ N/A
48 / 312
Annual Report 2019
Section V Significant Matters
I. Proposals for profit distribution on ordinary shares and capitalization of the
capital reserve
(I) Establishment, implementation or adjustment of the cash dividend policy
√Applicable □ N/A
1. Pursuant to our Articles of Association and the Statement of Appotronics
Corporation Limited Regarding the Initial Public Offering of RMB-denominated Ordinary
Shares (A-shares) and the Plan for Distribution of Dividends to Shareholders within Three
Years Following the Listing on the STAR Market, we will focus on long-term and
sustainable development, and establish a clear profit distribution policy taking into
consideration our strategic development plan, actual business situation, development
objectives, future profitability, status of cash flows, shareholder return, cost of social
capital, external financing environment and other relevant factors, and the balance between
the reasonable returns on investment for shareholders and our sustainable development, to
ensure the consistency and stability of the profit distribution policy and ensure that we are
able to operate continuously and healthily in the long run.
Subject to the satisfaction of the conditions for distributing cash dividends, we will
distribute not less than 10% of the distributable profit made in each year in cash.
The Board of Directors will adopt the following differential cash dividend policy
according to the procedures set forth in our Articles of Association, giving comprehensive
consideration to the characteristics of the industry in which we operate, our development
stage, business model and earnings, material capital expenditure arrangements and other
relevant factors:
(1) If we are at the mature stage and do not have any material capital expenditure
arrangement, at least 80% of the distributable profit will be distributed in cash;
(2) If we are at the mature stage and have 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
expenditure arrangements, the policy set forth above may apply.
We will formulate or adjust the shareholder returns plan subject to the profit
distribution policy set forth above, according to our actual situations and the opinions of the
shareholders (in particular, the minority shareholders) and the independent directors.
2. Profit distribution proposal for the year of 2019: According to our consolidated
financial statements 2019 as audited by Pan-China Certified Public Accountants (Special
General Partnership), the net profit attributable to the shareholders of the listed company is
RMB 186,457,276.71, and the aggregate distributable profit of the parent company is RMB
211,573,548.42.
According to our overall business situations and development stage, we propose to
distribute a cash dividend of RMB 0.75 per 10 shares (inclusive of tax) to all shareholders
on the basis of our total share capital as at the record date for the dividend distribution for
the year of 2019. RMB 33,866,580.83 of cash dividends (inclusive of tax) is expected to be
distributed in total, representing 18.16% of the net profit attributable to the shareholders of
the listed company as reported on our consolidated financial statements 2019. We will not
capitalize the capital reserve or distribute bonus shares in the reporting period.
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Annual Report 2019
The amount of cash dividends stated in our profit distribution proposal for the year of
2019 was calculated on the basis of 451,554,411 shares in our total share capital at present.
The total amount of cash dividends actually distributed shall be calculated on the basis of
our total share capital as at the record date for the dividend distribution for the year of
2019.
The profit distribution proposal for the year of 2019 has been approved by the 21st
meeting of the 1st Board of Directors of the Company. The independent directors of the
Company have reviewed, expressed their independent opinions on and given explicit
consent to the proposal. The Board of Supervisors of the Company has reviewed and
expressed its opinions on the proposal. The proposal is still subject to approval by the
general meeting of shareholders. After the proposal has been approved by the general
meeting of shareholders, the Board of Directors shall distribute the cash dividends (or stock
dividends) (as applicable) within two months.
3. Reasons for distribution of cash dividends lower than 30% of the distributable profit
and actual use of the retained profit
The Board of Directors adopted the profit distribution proposal for the year of 2019
taking into account the provision of returns to shareholders and the requirements of the
Company’s steady growth. We plan to use the retained profit in R&D and market
development and to address the operating risks that might be brought about by the epidemic
situation, satisfy the working capital requirements in our R&D and marketing activities and
day-to-day management, and support the implementation of our medium-to-long term
development strategy and continuous and healthy development. In particular, we plan to
use the retained profit for the following purposes:
(1) The retained profit will be used to satisfy the capital requirements of R&D
activities to give support to our technical innovations and product innovations.
Our development strategy is to focus on technical innovations and product innovations,
to enhance our core competitiveness and ensure our sustainable development. We will
continue to maintain R&D investments in technical innovations and product innovations,
improve R&D capabilities in an all-round way, integrate and optimize R&D system,
consolidate resources, optimize development mode, increase R&D efficiency, and enhance
the competitiveness of our products. The retained profit will mainly be used in the
upgrading of core technologies, development of software platform and products for new
application scenarios, and other R&D activities.
(2) The retained profit will be used to satisfy the capital requirements of marketing
activities to give support to the development of the overseas market and brand building.
On the overseas market, we will adopt the internationalized thinking and management
standard, enhance the international orientation of our products, gradually build a global
marketing network, provide localized services, and increase the share of our products on
the overseas market. With respect to brand building, we will consolidate the position of
ALPD as proprietary technology in the field of laser display, and enhance the promotion
and advertising efforts on the domestic and overseas markets, to bring our products into the
mainstream market system in the world.
(3) The retained profit will be used to satisfy the capital requirements of day-to-day
management to address the uncertainties of the macro-environment caused by the outbreak
of Covid-19.
Due to the outbreak of Covid-19, the cinemas have shut down, resulting in the
suspension of our cinema light source lease service, which has a direct effect on our
revenue from cinema light source lease service and other related business. In addition, the
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Annual Report 2019
consumer demands are shrinking due to the effect of macro-environment. Therefore, our
operating performance may decrease sharply. We will keep cash reserves to address the
risk of uncertainties and satisfy the capital requirements of day-to-day management.
In the future, we will continue to emphasize on providing returns to the investors in
the form of cash dividends, and share our results of development with the investors in strict
accordance with the applicable laws and regulations and the provisions of our Articles of
Association, taking into consideration of all factors relating to profit distribution, to better
safeguard the long-term interests of all shareholders.
4. During the reporting period, we have strictly complied with the dividend principles
and policies in accordance with the provisions of our Articles of Association. Our dividend
distribution criteria and ratio are clear, and the relevant decision-making procedures and
mechanism are sound and transparent and comply with the applicable regulations. Our
independent directors have duly performed their duties in the review of the profit
distribution proposal by the Board of Directors, to ensure that the legitimate rights and
interests of the minority shareholders are fully protected.
(II) Proposals for profit distribution on ordinary shares and capitalization of the
capital reserve in the past three years (including the reporting period)
In RMB
Net profit
% of the net
attributable to
profit
the
Cash attributable to
Number of Number of shareholders of
dividends Amount of the shareholders
bonus shares ordinary shares
distributed cash of ordinary
shares distributed of the listed
Year per 10 dividends shares of the
distributed out of the company
shares (inclusive of listed company
per 10 capital reported in the
(inclusive tax) reported in the
shares reserve consolidated
of tax) consolidated
financial
financial
statements for
statements
the year
2019 0 0.75 0 33,866,580.83 186,457,276.71 18.16
2018 0 0 0 0 176,971,092.49 0
2017 0 0 0 0 105,393,395.69 0
(III) Repurchase of shares by cash included in cash dividends
□ Applicable √ N/A
(IV) If the Company made a profit in the reporting period and there’s profit
distributable by the parent company to the shareholders of its ordinary shares,
but the Company does not propose to distribute profits on ordinary shares in
cash, the Company shall explain the reason in detail and use of the
undistributed profit.
□ Applicable √ N/A
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Annual Report 2019
II. 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 the outstanding covenants made by them in the prior periods
√Applicable □ N/A
Whether the
Whether Action plan if
covenant Reason for failure
there’s a time failing to
Background of Type of Content of Validity period of has been to fulfill the
Covenantor limit for the fulfill the
covenant covenant covenant covenant strictly covenant on time
fulfillment of covenant on
fulfilled on (if applicable)
the covenant time
time
Covenant by the
controlling shareholder
regarding restriction on 36 months after
Restriction the sale of shares held by completion of the
Covenant
on the sale him, voluntary lock-up of Note 1 IPO and the Yes Yes N/A N/A
relating to IPO
of shares such shares, extension of extended period
lock-up period, intention stated below
to hold and dispose of
shares and other issues
Covenant by the actual 36 months after
controller regarding completion of the
restriction on the sale of IPO and the
Restriction shares held by him, extended period
Covenant
on the sale voluntary lock-up of such Note 2 stated below, and 6 Yes Yes N/A N/A
relating to IPO
of shares shares, extension of months after
lock-up period, intention termination of
to hold and dispose of employment with
shares and other issues the Company
Covenant by the concert
36 months after
parties of the actual
Restriction completion of the
Covenant controller regarding
on the sale Note 3 IPO and the Yes Yes N/A N/A
relating to IPO restriction on the sale of
of shares extended period
shares held by them,
stated below
voluntary lock-up of such
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Annual Report 2019
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the directors
regarding restriction on
12 months after
the sale of shares held by
Restriction completion of the
Covenant them, voluntary lock-up of
on the sale Note 4 IPO and the Yes Yes N/A N/A
relating to IPO such shares, extension of
of shares extended period
lock-up period, intention
stated below
to hold and dispose of
shares and other issues
Covenant by the
supervisors regarding
restriction on the sale of
Restriction shares held by them, 12 months after
Covenant
on the sale voluntary lock-up of such Note 5 completion of the Yes Yes N/A N/A
relating to IPO
of shares shares, extension of IPO
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by HU Fei, as a
12 months after
senior officer and member
completion of the
of key technical staff,
IPO and the
regarding restriction on
Restriction extended period
Covenant the sale of shares held by
on the sale Note 6 stated below, and 6 Yes Yes N/A N/A
relating to IPO him, voluntary lock-up of
of shares months after
such shares, extension of
termination of
lock-up period, intention
employment with
to hold and dispose of
the Company
shares and other issues
Covenant by the senior
12 months after
officers BO Lianming,
Restriction completion of the
Covenant WU Bin, LI Lu, ZHAO
on the sale Note 7 IPO and the Yes Yes N/A N/A
relating to IPO Ruijin and XIAO
of shares extended period
Yangjian regarding
stated below
restriction on the sale of
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shares held by them,
voluntary lock-up of such
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the key
technical staff YU Xin,
WU Xiliang, WANG Lin
12 months after
and GUO Zuqiang
completion of the
Restriction regarding restriction on
Covenant IPO and listing of
on the sale the sale of shares held by Note 8 Yes Yes N/A N/A
relating to IPO stock and the
of shares them, voluntary lock-up of
extended period
such shares, extension of
stated below
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the holders
of more than 5% shares
regarding restriction on
12 months after
Restriction the sale of shares held by
Covenant completion of the
on the sale them, voluntary lock-up of Note 9 Yes Yes N/A N/A
relating to IPO IPO and listing of
of shares such shares, extension of
stock
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the other
shareholders regarding
restriction on the sale of
12 months after
Restriction shares held by them,
Covenant completion of the
on the sale voluntary lock-up of such Note 10 Yes Yes N/A N/A
relating to IPO IPO and listing of
of shares shares, extension of
stock
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant Restriction Covenant by the senior at least 12 months
Note 11 Yes Yes N/A N/A
relating to IPO on the sale officers and key after completion of
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Annual Report 2019
of shares employees participating in the IPO and listing
the strategic allotment, LI of stock
Yi, BO Lianming, WU
Bin, LI Lu, GAO Lijing,
CHEN Xuxiang, LAI
Yongsai and GAO
Xiaohong, regarding
restriction on the sale of
shares held by him,
voluntary lock-up of such
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Issuer’s plan for
stabilizing the Company’s 36 months after
Covenant stock price and covenant completion of the
Others Note 12 Yes Yes N/A N/A
relating to IPO regarding share repurchase IPO and listing of
measures within three stock
years after the listing
Controlling shareholder
and the actual controller’s
plan for stabilizing the 36 months after
Covenant Company’s stock price completion of the
Others Note 13 Yes Yes N/A N/A
relating to IPO and covenant regarding IPO and listing of
share repurchase measures stock
within three years after the
listing
Directors and senior
officers’ plan for
36 months after
stabilizing the Company’s
Covenant completion of the
Others stock price and covenant Note 14 Yes Yes N/A N/A
relating to IPO IPO and listing of
regarding share repurchase
stock
measures within three
years after the listing
Covenant Issuer’s covenant
Others Note 15 Permanent No Yes N/A N/A
relating to IPO regarding measures
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Annual Report 2019
against fraud in IPO
Controlling shareholder,
actual controller and their
Covenant
Others concert parties’ covenant Note 16 Permanent No Yes N/A N/A
relating to IPO
regarding measures
against fraud in IPO
Directors, supervisors and
Covenant senior officers’ covenant
Others Note 17 Permanent No Yes N/A N/A
relating to IPO regarding measures
against fraud in IPO
Issuer’s covenant
regarding remedial
Covenant
Others measures for diluted Note 18 Permanent No Yes N/A N/A
relating to IPO
earnings in the current
period
Controlling shareholder,
actual controller and their
concert parties’ covenant
Covenant
Others regarding remedial Note 19 Permanent No Yes N/A N/A
relating to IPO
measures for diluted
earnings in the current
period
Directors, supervisors and
senior officers’ covenant
Covenant regarding remedial
Others Note 20 Term of office No Yes N/A N/A
relating to IPO measures for diluted
earnings in the current
period
Issuer’s covenant
Covenant
Others regarding profit Note 21 Permanent No Yes N/A N/A
relating to IPO
distribution policy
Issuer’s covenant
regarding restraint
Covenant measures and liability for
Others Note 22 Permanent No Yes N/A N/A
relating to IPO compensation in the event
of failure to fulfill its
covenants
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Controlling shareholder,
actual controller and their
concert parties’ covenant
Covenant regarding restraint
Others Note 23 Permanent No Yes N/A N/A
relating to IPO measures and liability for
compensation in the event
of failure to fulfill their
covenants
Directors, supervisors and
senior officers’ covenant
regarding restraint
Covenant
Others measures and liability for Note 24 Term of office No Yes N/A N/A
relating to IPO
compensation in the event
of failure to fulfill their
covenants
Controlling shareholder’s
Resolve
covenant on avoiding
Covenant horizontal
horizontal competition and Note 25 Permanent No Yes N/A N/A
relating to IPO competition
regulating and reducing
issues
related-party transactions
Actual controller’s
Resolve
covenant on avoiding
Covenant related-party
horizontal competition and Note 26 Permanent No Yes N/A N/A
relating to IPO transaction
regulating and reducing
issues
related-party transactions
Covenant by the grantee
Covenant related
of share incentives
to share Others Note 27 Permanent No Yes N/A N/A
regarding information
incentives
disclosure documents
Covenant related Company’s covenant on
to share Others refraining from providing Note 28 Permanent No Yes N/A N/A
incentives financial assistance
Note 1:
Appotronics Holdings, as the controlling shareholder of the Company, hereby covenants that:
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Annual Report 2019
“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 the Company 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 Shanghai Stock Exchange regarding share transfer by the controlling shareholder and
the actual controller of a listed company.
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under 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 months after completion of the IPO, the Lock-up Period for the shares held by us
in the Company shall be extended 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, we will ensure that such transfer is conducted on an arm’s length basis, without
prejudice to the legitimate rights and interests of the Company and other shareholders, and that we are free from the following circumstances
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 us to the Company’s debt or any outstanding guarantee offered by the Company for us;
(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 of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable 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 price of the Company’s stock then.
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Annual Report 2019
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 the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a 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 the relevant 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 Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant 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 administration penalty 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 listing status 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, has seriously 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 effect regarding 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 the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 2：
LI Yi, as the actual controller of the Company, hereby covenants that:
“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 appoint any other person to manage the shares held by me in the Company directly or
indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase such Pre-IPO Shares;
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Annual Report 2019
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under 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 Shanghai Stock Exchange regarding share transfer by the actual controller, directors
or key technical staff of a listed company.
I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due 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 months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended 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 will ensure that such transfer is conducted on an arm’s length basis, without
prejudice to the legitimate rights and interests of the Company and other shareholders, and that I’m free from the following circumstances upon
the transfer of my control over the Company:
(1) any illegal occupation by me 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 me 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 of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable rules of the
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Annual Report 2019
Shanghai Stock Exchange. If I 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 price of 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 the Lock-up Period. After the expiration of the Lock-up Period, I will formulate the share
disposal plan in a prudent manner, and dispose of the shares at such time as I deem fit in my sole discretion, taking into consideration the
situations of the stock market, movement of the Company’s stock price, and the relevant 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 any dividend 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 Regulatory Commission 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 administration penalty 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 listing status 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, has seriously 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 effect regarding 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 the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 3：
Each of the concert parties of the actual controller of the Company hereby covenants that:
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Annual Report 2019
“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 the Company 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 Shanghai Stock Exchange regarding share transfer by the controlling shareholder and
the actual controller of a listed company.
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under 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 months after completion of the IPO, the Lock-up Period for the shares held by us
in the Company shall be extended 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 of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable 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 price of 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 the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a 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 the relevant 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 Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant information disclosure.
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Annual Report 2019
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 administration penalty 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 listing status 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, has seriously 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 effect regarding 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 the Company’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 after completion of the IPO and the extended
period stated below (“Lock-up Period”), I will not transfer or appoint any other person to manage the shares 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. 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 be extended 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 any dividend 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 of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
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Annual Report 2019
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling 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 Company due 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 administration penalty 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 listing status 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, has seriously 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, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith. If I fail to perform my duties and
obligations under the covenants set forth above, I will indemnify the Company and other shareholders or stakeholders of the Company for the
losses arising therefrom according to law, and surrender my gains from illegal disposal of the Company’s shares (if any) to the Company.”
Note 5：
Each supervisor of the Company, who is also a shareholder, hereby covenants that:
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“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO (“Lock-up
Period”), I will not transfer or appoint any other person to manage the shares 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 any dividend 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 Company due 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 administration penalty 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 listing status 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, has seriously 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 regarding 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, all applicable information disclosure provisions 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 6：
HU Fei, as the deputy general manager and member of key technical staff of the Company, hereby covenants that:
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“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 or appoint any other person to manage the shares held by me in the
Company directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase such
Pre-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 Shanghai Stock 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 months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended 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 of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling 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 administration penalty 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 listing status 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, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
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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 any dividend distribution or capitalization of the capital reserve by the Company).
If I acquire any additional shares of the Company or become eligible to sell any shares held by me directly or indirectly in the Company, I will
strictly comply with, and cooperate with the Company to comply with, all applicable information disclosure provisions 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, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO and the extended
period stated below (“Lock-up Period”), I will not transfer or appoint any other person to manage the shares 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. 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 be extended 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 any dividend 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 of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling 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 senior officer 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 senior officer of the Company, I will not transfer any shares held by me in the Company.
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I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due 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 administration penalty 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 listing status 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, has seriously 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, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
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 a shareholder, hereby covenants that:
“1. Within 12 months after completion of the IPO and listing of stock (“the IPO”) and the extended period stated below (“Lock-up Period”), I
will not transfer or appoint any other person to manage the shares 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 dividends or bonus shares, capitalized the capital reserve or made any rights issue
during such period, the number of 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 any dividend distribution or capitalization of the capital reserve by the Company).
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,
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and cooperate with the Company to comply with, all applicable information disclosure provisions 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 the Shanghai 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 after completion of the IPO (“Lock-up
Period”), we will not 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 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 of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable 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 price of 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 the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a 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 the relevant public information, subject to the applicable 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 Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant information disclosure.
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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 effect regarding the duties and obligations of a shareholder.
We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
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 after completion of the IPO (“Lock-up
Period”), we will not 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 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 effect regarding 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, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
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 after completion of the IPO (“Lock-up
Period”), I will not transfer or appoint any other person to manage the shares 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 effect regarding 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, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 11：
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Each of the senior officers and key employees participating in the strategic allotment, namely LI Yi, BO Lianming, WU Bin, LI Lu, GAO
Lijing, CHEN Xuxiang, LAI Yongsai and GAO Xiaohong, hereby covenants that:
“1. I am the actual holder of the asset management plan, and have not participated in the strategic allotment on behalf of any other investor or
appointed any other investor to participate in the strategic allotment 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 as finally 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 management plan 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 measures
If, within 36 months after completion of the IPO and listing of the Company’s RMB-denominated ordinary shares (A-shares) on the STAR
Market (“IPO”), the closing price of the Company’s stock has been 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 by the Company) for 20
consecutive trading days (“Trigger Condition” or “Trigger Condition for Stabilization of Stock Price”), except for any event of force majeure,
the Company and the related persons shall take the following measures to stabilize the Company’s stock price subject to the provisions of the
China Securities Regulatory Commission (“CSRC”) and the Shanghai Stock Exchange (“SSE”) regarding share repurchase, acquisition of
additional shares and information disclosure and other 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;
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(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 Company shall hold a meeting of the Board of
Directors within 10 days and a general meeting of shareholders within 30 days, to review the specific proposal for stabilizing the stock price
and the period for implementing such proposal, and implement such proposal within five trading days after the same has been 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 the Company’s stock has been higher than
its most recently audited net assets per share for 20 consecutive trading days, the Company shall stop the stock price stabilization measures to
the extent permitted by the applicable laws, rules, regulations and normative documents.
After the stock price stabilization measures have been completed or stopped, if the Trigger Condition is satisfied again, the Company shall
implement the stock price stabilization plan again.
II. Measures for stabilizing the stock price of the Company
Upon satisfaction of the Trigger Condition, the Company and its controlling shareholder, actual controller, directors and senior officers shall
promptly take all or part of the following measures to stabilize 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 through Call 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 Listed Companies, 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 registered capital accordingly, the Company may do
so even if its stock has been listed for less than one year.
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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 and the 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 shall specify the specific powers delegated to the Board of Directors and the
delegation period. The resolution of the Board of Directors on the share repurchase proposal requires the approval of more than two thirds of
the directors present at the meeting of the Board of Directors. The non-independent directors of the Company undertake to vote for the share
repurchase proposal (to the extent that they have the voting power).
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 applicable approval 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, information disclosure
and other procedures have been completed. If the share repurchase proposal fails to be approved by the general meeting of shareholders, the
Company shall procure the controlling shareholder and the actual controller to perform their obligations to acquire additional shares of the
Company as promised 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 with the 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 of Directors;
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 of the projects in which the funds raised invest, the funds raised that have
been permanently applied to replenish working capital according to law, loans from financial institutions and other legal funds to repurchase its
shares.
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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 plan prudently, and ensure that the number and amount of the shares repurchased
are appropriate for the actual financial condition of the Company.
The Company shall establish sound and effective internal controls in respect of share repurchase, draw up the detailed operation plans, prevent
insider trading and other unfair transactions, and shall not manipulate its stock price or make any illegal benefit transfer to any of its directors,
supervisors, senior officers, controlling shareholder or actual controller through any share repurchase.
(II) Acquisition of additional shares of the Company by the controlling shareholder and the actual controller
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, subject to 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 the shareholding structure
of Company to cease to meet the listing conditions and/or trigger obligation to make 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 of their plan to acquire additional shares, which shall specify, among others,
the scope of number of shares to be acquired, upper limit of the purchase price and time limit for such acquisition. The Company shall
announce 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 (after tax) 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 the aggregate cash dividends (after tax) received by them from the Company after the
listing of the Company;
(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.
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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 the Company, or fail to put forward or implement the plan to acquire additional shares of
the Company, the directors and senior officers shall acquire additional shares of the Company, subject to the Administrative Measures for the
Acquisition of the Listed Companies, the Management Rules for Shareholding by Directors, Supervisors and Senior Officers of Listed
Companies in the Companies and Changes 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 the listing 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 to acquire additional shares, which shall specify, among others, the scope of number of
shares to be acquired, upper limit of the purchase price and time limit for such acquisition. The Company shall announce 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 each case, if any and after tax) received by such director or senior officer from
the Company in the preceding year;
(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 senior officer 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 made by the existing directors and senior officers in the IPO.
(IV) Other measures permitted by the applicable laws, rules, regulations and normative documents, and the CSRC and the SSE
The Company and the related persons may take one or more measures to stabilize the Company’s stock price according to the situations of the
Company and the market, provided that such measures shall be taken for purpose of safeguarding the listing status of the Company and
protecting the interests of the Company and the investors, and comply with the applicable laws, rules, regulations and normative documents,
and the relevant provisions of the SSE, and shall perform the relevant obligation of information disclosure.
III. Restraint mechanisms for stock price stabilization plan
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Upon satisfaction of the Trigger Condition, if the Company or any controlling shareholder, actual controller, director or senior officer fails to
take the stock price stabilization measures stated above, the Company 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 to the general meeting of shareholders of the Company and on the media for information
disclosure designated by the CSRC, and apologize to the shareholders of the Company and the investors, and the Company 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 and 50% of the total remuneration and subsidies for such year payable to him, and prohibit him from transferring the
shares held by him in the Company, until he has taken and completed the relevant stock price 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 stock price stabilization measures.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’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 Appotronics Corporation 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 the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the 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 in any abuse of rights, insider trading,
market manipulation or other illegal acts to the detriment of the interests of the Company and other shareholders in connection with the share
repurchase by the Company.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
LI Yi, as the actual controller of the Company, hereby covenants that:
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“I will seriously perform my duties in accordance with the requirements of the Plan of Appotronics Corporation 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 the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the 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 any abuse of rights, insider trading, market
manipulation or other illegal acts to the detriment of the interests of the Company and other shareholders in connection with the share
repurchase by the Company. I will be honest, keep my promise, be assiduous in my duties, and safeguard the interests of the Company 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 not prejudice 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 the Company’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 Appotronics Corporation 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 the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the 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 the Company 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 not prejudice 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 the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 15：
The issuer hereby covenants that:
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“1. If the competent securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any
misrepresentation or misleading statement or omits any material fact, which has a material and substantial effect on the determination of
whether the Company meets the conditions for IPO and listing set forth in the applicable laws, regulations and normative documents, the
Company undertakes to take the following measures to repurchase all new shares issued in 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 days after the competent securities regulatory authority or any other competent authority
makes the relevant decision, the Company shall repurchase all new shares issued in the IPO from the investors who have successfully
subscribed for the new shares on line and the investors who have received the new shares allotted 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 the competent 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 of shareholders 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 be determined on the basis of the offering price, taking into account the relevant market factors. If the
Company has distributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue after the listing of the Company,
the price and number of shares repurchased shall be adjusted 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 the stock of the Company resulting therefrom in the following manner according to
law: after the competent securities regulatory authority has found that the Company violated the law and issued an official decision on
administrative penalty, the Company shall arrange for registration of the investors who claim 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 parties hereby covenant that:
“The Company’s IPO prospectus is free from any misrepresentation, misleading statement or material omission. If the prospectus contains any
misrepresentation or misleading statement or omits any material fact, which has been found to have a material and substantial effect on the
determination of whether the Company meets the conditions for IPO set forth in the applicable laws, we/I and the related persons will promptly
put forward proposals for compensation and conduct share repurchase according to law, vote for such proposals at the meeting of the Board of
Directors or general meeting of shareholders, and indemnify the investors for the losses incurred in dealings in the stock of the Company
resulting therefrom according to law.
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Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20 working days after the competent
securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any misrepresentation or
misleading statement or omits any material fact, the procedures for compensating the losses of the investors shall be commenced. The losses of
the investors shall be determined through consultation with the investors, or in such manner as required 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 IPO prospectus is free from any misrepresentation, misleading statement or material omission. If the prospectus contains any
misrepresentation or misleading statement or omits any material fact, I will indemnify the investors for the losses incurred in dealings in the
stock of the Company resulting therefrom according to law.
Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20 working days after the competent
securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any misrepresentation or
misleading statement or omits any material fact, the procedures for compensating the losses of the investors shall be commenced. The losses of
the investors shall be determined through consultation with the investors, or in such manner as required 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 protection system
The Company will focus on technology R&D and product innovations relying on its technology R&D capabilities. Since its establishment, the
Company has obtained a lot of domestic and foreign patents in respect of laser display and related fields. In the future, the Company will
continue to consolidate and enhance 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 and other measures. In addition, the Company will
continue to improve its IP protection system, apply for patents in respect of its core technologies throughout the world, reasonably use legal
means to protect its proprietary IP, and promote the establishment of industrial technical standards and the harmonious and healthy
development of the laser display industry.
(II) Enhance the building of marketing system and improve profitability
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The Company will, based on the current marketing system, give full play to the advantages of the multi-level and all-round marketing mode
combining online sales with off-line sales, agent mode with direct sale mode, and sales on the domestic market with exploitation of overseas
market, to expand the market layout, and continuously optimize the sales service system and enhance brand influence relying on the advantages
of technologies and products, to realize synchronous and sound development of the base and quality of customers. In addition, the Company
will actively cultivate and develop overseas market, promote its laser display products with proprietary IP in the world based on its leading
technologies and outstanding products, and giving full play to the synergy effect with its strategic partners, to realize the continuous growth of
sales and improvement of profitability.
(III) Enhance internal controls and team building of talents, and improve management and operational efficiency in an all-round way
The Company has established relatively sound internal controls and management system, and will continue to improve its management and
operation level, revise and improve internal controls, control management and operating risks, and ensure the continuous and effective
implementation of internal controls. 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 of costs and improvement of efficiency. The Company
will also continuously improve the compensation and 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 such measures, 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 as practicable
The projects in which the funds raised will invest orient on the main business of the Company and comply with the applicable industrial policies
of the country, and after being completed, will improve the Company’s technological level, increase its production scale and market share, and
improve its profitability, core competitiveness and sustainability.
After completion of the IPO, the Company will strictly manage the use and ensure the full and efficient use of the funds raised in accordance
with the Company Law, the Securities Law, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai Stock
Exchange, the Administrative 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 the building and
implementation of the relevant projects, and have the projects yield the desired results as soon 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 and building 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. In addition, the Company will ensure the availability of the relevant personnel, provide thorough and comprehensive skill trainings to
new employees, and through active market exploitation and sound communications with the customers, ensure that the products of the newly
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built projects will be launched on the market successfully. Through these all-round measures, the Company will procure the relevant investment
projects to reach the designed production capacity and yield the desired results as soon as practicable.
(V) Improve the profit distribution policy and enhance the mechanism of returns to investors
The general meeting of shareholders of the Company has adopted the Articles of Association of Appotronics Corporation Limited (draft) for the
IPO, which further specifies and improves the Company’s profit distribution principles and approaches, the respective conditions and
proportion of cash dividends and stock dividends, and improves the Company’s decision-making procedures and mechanisms with respect to
profit distribution, and decision-making procedures for the adjustment of the profit distribution policy.
In addition, the Company has formulated the Plan of Appotronics Corporation Limited on the Shareholder Returns within Three Years after
Completion of the IPO and Listing of the Company’s Shares on the STAR Market, to make specific arrangements for profit distribution within
three years after completion of the IPO. The Company will maintain the consistency and stability of its profit distribution policy, attach
importance to the reasonable returns to investors, enhance the protection of the investors’ rights and interests, and take into account both the
overall interest of all shareholders and the sustainable development of the Company.
The Company reminds the investors to be aware that the remedial measures for diluted earnings stated above do not mean any warranty made
by the Company as to its earnings in the future. After being approved by the general meeting of shareholders of the Company, this proposal will
take effect from the date 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 remedial measures for diluted earnings of the
Company
Pursuant to the relevant provisions of the CSRC, each of the directors and senior officers of the Company hereby covenants as follows with
respect to the remedial measures for diluted earnings of the Company:
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 for diluted earnings in the current period; and
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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 follows with respect to the serious
implementation of the remedial measures for diluted earnings of the Company:
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 the Company’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 period
Each of the concert parties of the controlling shareholder Appotronics Holdings and the actual controller hereby 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 refuse to 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 the relevant provisions and rules established or published by them.
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This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties stated above shall remain in effect so long as we remain a concert party of the controlling
shareholder or the actual controller 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 for diluted earnings in the current period.
As one of the persons responsible for the remedial measures for diluted earnings, if I breach or refuse to fulfill the covenants set forth above, I
agree that the CSRC, the SSE and other securities regulatory authorities may mete out punishments on or take other administrative actions
against me pursuant to the relevant 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 the Company’s RMB-denominated ordinary
shares (A-shares). The covenants contained in Paragraphs 1 through 4 above shall remain in effect so long as I remain the actual controller of
the Company, and the covenants contained in Paragraphs 3 through 8 above shall remain in effect so long as I remain a director of the
Company.”
Note 20：
Each of the directors and senior officers of the Company hereby undertakes:
“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;
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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 for diluted 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 to fulfill the covenants set forth above, I
agree that the CSRC, the SSE and other securities regulatory authorities may mete out punishments on or take other administrative actions
against me pursuant to the relevant 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 the Company’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 plan
The Company focuses on the long-term and sustainable development, and in preparing the plan, has taken into consideration its strategic
development plan, actual business situation, development objectives, future profitability, status of cash flows, shareholder returns, cost of social
capital, external financing environment and other relevant factors, and established a clear profit distribution mechanism on the basis of the
balance between the reasonable returns on investment for shareholders and its sustainable development, to ensure the consistency and stability
of the profit distribution policy and that the Company 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 Association of Appotronics Corporation Limited
(“AOA”);
(II) To give full consideration and listen to the opinions of the shareholders (especially the minority shareholders) and the independent
directors;
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(III) To strike a balance between the short-term interest and long-term development, and ensure that the profit 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 of reasonable returns to investors, and ensure that
the profit distributions are made continuously and stably and 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 distribution
The Company shall make profit distributions at least once a year to the extent there are distributable profits. The annual profit distributions shall
be made within two months following the relevant annual general meeting of shareholders. The Company may make interim profit distributions
in cash according to its production and business situations and capital requirements. Such interim profit distributions shall be proposed by the
Board of Directors according to the capital position of the Company, and made within two months after the same have been approved by the
general meeting of shareholders.
(II) Form of profit distribution
The Company may distribute its profits in the form of cash dividends, stock dividends or a combination of cash dividends and stock dividends
or otherwise permitted by the applicable laws, rules, regulations and normative documents, provided that cash dividends shall take precedence
over stock dividends. The Company shall distribute its profits in cash to the extent that the conditions for distribution of cash dividends are
satisfied.
The cash dividends shall be distributed once every year in principle, but the Board of Directors may propose the distribution of interim cash
dividends according to the earnings and capital position of the Company.
(III) Conditions for distribution of cash dividends
The 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 a going 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);
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Material capital expenditures mean: (i) 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 12 months is equal to or exceeds 50% of the most
recently audited net assets of the Company; or (ii) 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 12 months 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 of Directors shall determine whether or not to distribute cash dividends according to
the actual circumstances.
(IV) Ratio of cash dividends
Subject to the satisfaction of the conditions for distribution of cash dividends, the Company shall pay out at least 10% of the distributable profit
earned each year as cash dividends for such year.
A subsidiary shall prepare its distribution plans on the basis of the distributable profit reported in the financial statements of the parent company.
The Company shall determine the specific profit distribution ratio on the basis of the lower of the distributable profits reported in the
consolidated financial statements 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, the repurchase price paid by the Company
shall be deemed as the cash dividends already distributed by the Company, and taken into account in the calculation of the cash dividend ratio
for such year.
(V) Differential cash dividend policy
The Board of Directors will adopt the following differential cash dividend policy according to the procedures set forth in the AOA, giving
comprehensive consideration to the characteristics of the industry in which the Company operates, its development stage, business model and
earnings, material capital 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 the Company is at the growth stage and has 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 expenditure arrangements, the policy set forth above may
apply.
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The Company will formulate or adjust the shareholder returns plan subject to the profit distribution policy set forth above, according to its
actual situations and the opinions of the shareholders (in particular, the minority shareholders) and the independent directors.
(VI) Conditions for distribution of stock dividends
The Company may distribute profits in the form of stock dividends according to its earnings and cash flows in a given year and on the premise
of full distribution of cash dividends, to the extent that the Company maintains the minimum cash dividend ratio and reasonable share capital
and shareholding structure, and ensures that the increase in share capital keeps pace with the growth of its operating performance.
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, make appropriate and necessary amendments to its
profit distribution policy and decide on the shareholder returns plan for the giving period according to the opinions of the shareholders (in
particular, holders of public 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 according to the AOA, earnings, capital
requirements and shareholder returns plan of the Company, thoroughly discuss 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 in respect of
distribution of cash dividends, adopt a special resolution thereon, and submit the same to the general meeting of shareholders for consideration.
The independent directors shall explicitly express their 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 shareholders shall actively communicate and exchange
with shareholders, in particular minority shareholders in various ways, including without limitation online voting and inviting minority
shareholders to participate in the general meeting of shareholders, fully listen to the opinions and claims of minority shareholders, and promptly
answer the questions raised by minority shareholders. The dividend distribution proposal requires the approval of the shareholders representing
a majority of the total votes present 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 distribution policy and shareholder returns plan by
the Board of Directors and the management of the Company and the relevant decision-making procedures, and if the Company makes a profit in
a year and does not intend to distribute profits, make an explanation and issue an opinion about the implementation of the relevant policies and
plans.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
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Note 22：
The issuer hereby covenants that:
“The Company will strictly perform all duties and obligations under all covenants made by it publicly in connection with the IPO (“Covenants”).
If the Company fails to perform all duties and obligations under the Covenants, the Company shall make a public explanation and apologize to
the shareholders and investors of public shares at the general meeting of shareholders and on the media for information disclosure 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 legal liabilities and liability for compensation according to law. The shareholders and investors of public
shares 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 officers who assume personal liability for
failure of the Company to fulfill the Covenants in any manner until the Company 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 the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 23：
The controlling shareholder Appotronics Holdings, the actual controller LI Yi and their concert parties hereby covenant that:
“1. We/I will strictly perform all duties and obligations under all covenants made by us/me publicly in connection 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 the applicable laws, regulations and policies, natural disaster, event of force majeure or
any other objective circumstances 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 other shareholders 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 therefrom according to law.
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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
circumstances 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
(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 the Company’s RMB-denominated ordinary
shares (A-shares). The covenants set forth above shall remain in effect so long as we/I remain the controlling shareholder/actual
controller/concert party of the actual controller (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 in connection 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 applicable laws, regulations and policies, natural disaster, event of force majeure or
any other objective circumstances beyond my control), I agree to surrender the gains obtained from breach of the Covenants to the Company,
and indemnify the Company or the investors for the losses arising therefrom according to 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 and policies, 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 the Company’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties set forth above shall remain in effect so long as I remain a director/supervisor/senior officer (as
applicable) of the Company.”
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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 presently conducted 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, we and our subsidiaries will not engage in
any competing business that might have a material adverse effect on the main business of Appotronics.
III. We and our subsidiaries will avoid and reduce related-party transactions with Appotronics to the maximum 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 of Association, 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 valuable consideration”, and ensure that the price for such related-party transactions is fair and does not
materially differ from the price or rate that will be offered by or to an independent third party on the market;
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 and interests of Appotronics and the other shareholders of Appotronics.
V. We undertake to exercise the relevant rights and perform the relevant obligations in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association of Appotronics, and not to take advantage of our position and influence as
the controlling shareholder to seek illegal gains or damage the legitimate rights and interests of Appotronics and the other shareholders of
Appotronics.
VI. We will procure our subsidiaries to comply with the covenants set forth above, and indemnify Appotronics and the other shareholders of
Appotronics for damages to their legitimate rights and interests resulting from any breach by us or any of our subsidiaries of the covenants set
forth above.
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This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of Appotronics’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties set forth above shall remain in effect so long as we remain the controlling shareholder of
Appotronics.”
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 presently conducted 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 my subsidiaries will not engage in any competing
business that might have a material adverse effect on the main business of Appotronics.
III. I and my subsidiaries and other business or economic entities in which I hold the post of director or senior officer (each an “Employer”) will
avoid and reduce related-party transactions with Appotronics to the 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 of Association, 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”, and ensure that the price for such related-party transactions is fair and does not
materially differ from the price 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, regulations and 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 and interests of Appotronics and the other shareholders of Appotronics.
V. I undertake to exercise the relevant rights and perform the relevant obligations in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association of Appotronics, and not to take advantage of my position and influence as
the actual controller to seek illegal gains or damage the legitimate rights and interests of Appotronics and the other shareholders of Appotronics.
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VI. I will procure my subsidiaries and the Employers to comply with the covenants set forth above, and indemnify Appotronics and the other
shareholders of Appotronics for damages to their legitimate rights and interests resulting from any breach by me or any of my subsidiaries or
the Employers of the covenants set forth above.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of Appotronics’s RMB-denominated ordinary
shares (A-shares). Unless otherwise agreed, the covenants and warranties set forth above shall remain in effect so long as I remain the actual
controller of Appotronics.”
Note 27：
Each of the grantees of share incentives of the Company hereby covenants that if the relevant information disclosure documents of the
Company contain any misrepresentation or misleading statement or omit any material fact, as a result of which that the grantee becomes
ineligible for the equities granted to him or the relevant equity attribution arrangement, the grantee shall surrender all benefits received by him
under the incentive plan to the Company after the relevant information disclosure documents of the Company have been found to contain any
misrepresentation or misleading statement or omit any material fact.
Note 28：
The Company undertakes not to provide loans or any other financial assistance to any grantee of restricted shares under the incentive plan,
including guarantee for any loan obtained by such grantee.
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(II) If the Company has made any profit forecast on its assets or project and the
reporting period falls within the period of such profit forecast, explanation
about whether the goal has been achieved and the relevant reasons
□ Reached □ Not reached √ N/A
(III) Fulfillment of performance covenant and the relevant effect on goodwill
impairment test
□ Applicable √ N/A
III. Occupation of funds during the reporting period and return of such funds
□ Applicable √ N/A
IV. Explanation about the modified audit opinion issued by the accounting firm
□ Applicable √ N/A
V. Explanation about the reasons and effect of changes in accounting policies and
accounting estimates and correction of material accounting errors
(I) Analysis of the reasons of changes in accounting policies and accounting estimates
and the relevant effect
√Applicable □ N/A
Please see “Section XI. Financial Report - V. Significant accounting policies and
accounting estimates - 41 Changes in significant accounting policies and accounting
estimates”.
(II) Explanation about the reasons and effect of correction of material accounting
errors
□ Applicable √ N/A
(III) Communication with the former accounting firm
□ Applicable √ N/A
(IV) Other information
□ Applicable √ N/A
VI. Appointment and termination of appointment of accounting firm
In RMB 0’000
Current accounting firm
Name of domestic accounting firm Pan-China Certified Public Accountants
(Special General Partnership)
Fee payable to domestic accounting firm 53
Audit period of domestic accounting firm 4 years
Name Fee
Sponsor Huatai United Securities Co., Ltd. /
Explanation about the appointment and termination of appointment of accounting firm
√Applicable □ N/A
The annual general meeting of shareholders of the Company for the year of 2018 approved
the resolution to continue to appoint Pan-China Certified Public Accountants (Special
General Partnership) as the auditor of the Company for the year of 2019 for a term of one
93 / 312
Annual Report 2019
year. Pan-China Certified Public Accountants (Special General Partnership) has issued
auditor’s reports for the Company between 2016 and 2018.
Explanation about re-appointment of accounting firm during the audit period
□ Applicable √ N/A
VII. Risk of delisting and the reason
□ Applicable √ N/A
VIII. Matters relating to bankruptcy and reorganization
□ Applicable √ N/A
94 / 312
Annual Report 2019
IX. Material litigations and arbitrations
√ The Company has been involved in material litigations and arbitration in this year □ The Company has not been involved in material
litigations and arbitration in this year
(I) Litigations and arbitrations already disclosed in interim announcements about which no new information is available
√Applicable □ N/A
Summary and type of case Reference
I. Cases of dispute over infringement on patents for invention [2019] Yue 73 Zhi Min Chu No. Please refer to the Announcement No.
663 and No. 664 2019-005 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Delta Electronics, Inc. for information disclosure on July 30, 2019.
Defendant 1: Appotronics Corporation Limited
Defendant 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 patent for invention and caused economic losses to
the Plaintiff.
3. Amount claimed: RMB 16,145,300.
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 amount of the Company.
II. Cases of dispute over infringement on patents for invention [2019] Yue 03 Min Chu No.s Please refer to the Announcement No.
2942-2951 2019-006 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Appotronics Corporation Limited for information disclosure on July 31, 2019.
Defendant 1: Delta Electronics Business Management (Shanghai) Co., Ltd.
95 / 312
Annual Report 2019
Defendant 2: Delta Video Display System (Wujiang) Limited
Defendant 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 the production, sale and offer for sale of a variety of laser
projector products by Defendant 1, Defendant 2 and Defendant 3 for purpose of production
and operation has infringed on such patents for invention owned by the Plaintiff and caused
economic losses to the Plaintiff.
3. Amount claimed: RMB 56 million.
III. Case for changing the inventor of patent 19-cv-00466-RGD-LRL in the United States Please refer to the Announcement No.
District Court for the Eastern District of Virginia 2019-012 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Appotronics Corporation Limited for information disclosure on September 9,
2019.
Defendant: Delta Electronics, Inc.
2. Background
The Company brings a suit against Delta in the United States District Court for the Eastern
District of Virginia for breach of non-disclosure agreement, wrongful appropriation of the
technical solutions actually invented by the Company’s employees LI Yi and HU Fei, and
filing for patent application in the United States without authorization, and petitions the court
to order that the inventors of the patent-in-suit US 9,024,241 shall be changed from WANG
Bo, ZHANG Kesu and HUA Jianhao into LI Yi and HU Fei.
IV. Cases of dispute over infringement on patents for invention [2019] Jing 73 Min Chu No. Please refer to the Announcement No.
1275 and No. 1276 2019-014 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Delta Electronics, Inc. for information disclosure on September 21,
2019.
Defendant 1: Fengmi (Beijing) Technology Co., Ltd.
96 / 312
Annual Report 2019
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 wheel and 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 the Plaintiff and caused economic losses to
the Plaintiff.
3. Amount claimed: RMB 32.02 million.
V. Case of dispute over title to patents [2019] Yue 03 Min Chu No. 4309 Please refer to the Announcement No.
1. Parties 2019-028 issued by the Company on
Plaintiff: Appotronics Corporation Limited www.sse.com.cn and the designated media
for information disclosure on November 8,
Defendant: Delta Electronics, Inc.
2019.
2. Background
The Plaintiff brings a suit in the Shenzhen Intermediate People’s Court, alleging that the
Defendant filed a patent application in respect of the technical solution owned by the Plaintiff
and named WANG Bo, ZHANG Kesu and HUA Jianhao as the inventors of such technical
solution without authorization, thereby infringed on the technical achievements made by the
Plaintiff and the right of authorship of LI Yi and HU Fei, the actual inventors, and petitions the
court to declare that Plaintiff 1, Appotronics Corporation Limited owns the patent
ZL201610387831.8 “phosphor color wheel and its applicable light source system”, and that
Plaintiff 2, HU Fei and Plaintiff 3, LI Yi are the first and second inventors of the patent
ZL201610387831.8 “phosphor color wheel and its applicable light source system”.
(II) Litigations and arbitrations that have not been disclosed in interim announcements or about which there’s new information
available
√Applicable □ N/A
In RMB 0’000
97 / 312
Annual Report 2019
During the reporting period:
Whether
any
Party jointly Type of provision Enforcement
Plaintiff/ Defendant/ Amount Result and
and severally litigation/ Background is Status of judgment/
claimant respondent claimed effect
liable arbitration recognized award
and the
amount
Delta Appotronics Futian SPN Infringement In the case of dispute over 1,614.53 No Stayed, Stayed RMB 10
Electronics, Corporation Projector & on patent for infringement on patents for RMB 10 million has
Inc. Limited Video invention invention [2019] Yue 73 Zhi Min million been
System Firm Chu No. 662, the Plaintiff alleges has been released
of Shenzhen that it is the owner of the patent for released
invention ZL201610387831.8
“phosphor color wheel and its
applicable light source system”,
and 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 such
patent for invention of the Plaintiff
and caused economic losses to the
Plaintiff.
Appotronics Dehao Shenzhen Infringement In the cases of dispute over 4,163.04 No Pending Judgment of Pending
Corporation Electronic Super on patent for infringement on patents for second first instance: second trial
Limited, and Technology Network invention invention [2018] Yue 03 Min Chu trial The
Shenzhen Ltd. Technology No.s 1891-1898, 1899-1907 and Defendant
YLX Co., Ltd. 1940, the Plaintiff alleges that the should stop
Technology production, sale and offer for sale its act of
Development of a variety of projector products infringement
Co., Ltd. by Defendant 1 and Defendant 2 and pay the
for purpose of production and Plaintiff for
operation has infringed on the the economic
Plaintiff’s patent for invention and losses and
caused economic losses to the reasonable
98 / 312
Annual Report 2019
Plaintiff. expenses,
RMB 35.6
million in
total.
Casio Appotronics AV Design Infringement In the cases of dispute over 2,049.95 No The Judgment of In the
Computer Corporation (Beijing) on patent for infringement on patents for Parties first instance: process of
Co., Ltd. Limited Technology invention invention [2016] Jing 73 Min Chu entered All claims withdrawing
Development No.s 59-60, the Plaintiff alleges into a made by the suit
Co., Ltd. that it is the owner of the patents mediation Casio
for invention 201210334155.X and agreement Computer
201010293730.7, and the in March Co., Ltd.
production, sale and offer for sale 2020. were
of Laser TV APUS-20(S) by dismissed.
Defendant 1 and Defendant 2 for The Parties
purpose of production and entered into a
operation has infringed on such mediation
patents for invention of the agreement in
Plaintiff and caused economic March 2020.
losses to the Plaintiff.
Appotronics Casio Casio Infringement In the cases of dispute over 760 No The The Parties In the
Corporation Computer (China) Co., on patent for infringement on patents for Parties entered into a process of
Limited Co., Ltd. Ltd. and invention invention [2018] Jing 73 Min Chu entered mediation withdrawing
Beijing No.s 1239 and 1240, the Plaintiff into a agreement in the suit
Hongyang alleges that it is the owner of the mediation March 2020.
Jiye patent for invention agreement
Technology ZL200810065225.X, and the in March
Co., Ltd. production, sale and offer for sale 2020.
of two laser projector products by
Defendant 1, Defendant 2 and
Defendant 3 for purpose of
production and operation has
infringed on such patent for
invention of the Plaintiff and
caused economic losses to the
Plaintiff.
99 / 312
Annual Report 2019
Note: In March 2020, the Company and Casio Computer Co., Ltd. entered into a Mediation Agreement, to finally settle the litigations
involving the Parties. After the execution of the Mediation Agreement, each party has begun to withdraw the suits instituted by it against the
other party, and will not lodge any claim against the other party or file any new petition for invalidation in respect of the relevant patents.
Please refer to the Announcement No. 2020-008 issued by the Company on www.sse.com.cn and the designated media for information
disclosure on March 21, 2020. As of the disclosure date of this report, the parties are going through the procedures for withdrawing their
respective suits.
(III) Other information
√Applicable □ N/A
As of December 31, 2019, 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 Patent No. at issue Title of patent at issue Petitioner for Background Remark
patent invalidation
assignee
1 4W109289 Appotronics ZL200880107739.5 A multi-color lighting WEI Qun On July 25, 2019, the petitioner for On February 5, 2020,
4W109291 Corporation apparatus using moving invalidation filed a petition for the State Intellectual
Limited pattern plate containing invalidation of the patent for Property Office
wavelength conversion invention owned by the Company, decided that the patent
material which was found to comply with the at issue is valid. Please
relevant provisions of the Patent refer to our Interim
Law, the Rules for Implementation Announcement No.
of the Patent Law and the 2020-005.
Guidelines for Examination
according to prima facie
examination, and was accepted by
the State Intellectual Property Office
on August 5, 2019.
2 4W109439 Appotronics ZL200880107739.5 A multi-color lighting Delta On August 29, 2019, the petitioner The petitioner for
Corporation apparatus using moving Electronics for invalidation filed a petition for invalidation withdrew
Limited pattern plate containing Business invalidation of the patent for the petition in March
wavelength conversion Management invention 200880107739.5 titled “a 2020.
material (Shanghai) multi-color lighting apparatus using
100 / 312
Annual Report 2019
Co., Ltd. moving pattern plate containing
wavelength conversion material”
(“Patent 7739”) 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 September 2, 2019.
3 4W108668 Appotronics ZL200810065225.X A phosphor-based light Dehao On March 27, 2019, the petitioner Pending trial
Corporation source structure for Electronic for invalidation filed a petition for
Limited improving the efficiency Technology invalidation of the patent for
of light conversion Ltd. 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.
4 4W108847 Appotronics ZL200810065225.X A phosphor-based light WEI Qun On May 9, 2019, the petitioner for Pending trial
Corporation source structure for invalidation filed a petition for
Limited improving the efficiency invalidation of the patent for
of light conversion 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
101 / 312
Annual Report 2019
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 June 5, 2019.
5 4W109440 Appotronics ZL200810065225.X A phosphor-based light Delta On August 29, 2019, the petitioner The petitioner for
Corporation source structure for Electronics for invalidation filed a petition for invalidation withdrew
Limited improving the efficiency Business invalidation of the patent for the petition in March
of light conversion Management invention 200810065225.X titled “a 2020.
(Shanghai) phosphor-based light source
Co., Ltd. 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 September 2, 2019.
2. Cases of petition for invalidation brought by the Company
No. Case No. Current patent Patent No. at issue Title of patent at Petitioner for Background Remark
assignee issue invalidation
1 4W109293 Delta Electronics, ZL201310017478.0 (1) Optical Appotronics On July 29, 2019, the Company filed a petition On February 5,
4W109294 Inc. ZL201310625063.1 system; (2) Corporation for invalidation of the patents for invention 2020, the State
Blu-ray Limited 201310017478.0 titled “optical system” and Intellectual
integration 201310625063.1 titled “blu-ray integration Property Office
method and method and system” owned by Delta decided that the
system Electronics, Inc. with the State Intellectual patent at issue is
Property Office, which was found to comply wholly invalid.
with the relevant provisions of the Patent Law, Please refer to
the Rules for Implementation of the Patent Law our Interim
102 / 312
Annual Report 2019
and the Guidelines for Examination according Announcement
to prima facie examination, and was accepted No. 2020-004.
by the State Intellectual Property Office on July
30, 2019.
2 4W109295 Delta Electronics, ZL201610387831.8 Phosphor color Appotronics On July 29, 2019, the Company filed a petition On December 9,
Inc. wheel and its Corporation for invalidation of the patent for invention 2019, the State
applicable light Limited 201610387831.8 titled “phosphor color wheel Intellectual
source system and its applicable light source system” owned Property Office
by Delta Electronics, Inc. with the State decided to
Intellectual Property Office, which was found suspend the trial
to comply with the relevant provisions of the from November
Patent Law, the Rules for Implementation of 7, 2019 to
the Patent Law and the Guidelines for November 7,
Examination according to prima facie 2020.
examination, and was accepted by the State
Intellectual Property Office on July 30, 2019.
3 4W109538 Delta Electronics, ZL201410249663.7 Manufacturing Appotronics On September 20, 2019, the Company filed a Pending trial
Inc. method of light Corporation petition for invalidation of the patent for
source module Limited invention 201410249663.7 titled
and color wheel “manufacturing method of light source module
and color wheel” 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 September
23, 2019.
103 / 312
Annual Report 2019
X. Penalties imposed on the listed company and its directors, supervisors, senior
officers, controlling shareholder, actual controller and acquirer and rectification
of the relevant violations
□ Applicable √ N/A
XI. Credit standing of the Company and its controlling shareholder and actual
controller during the reporting period
□ Applicable √ N/A
XII. Share incentive plan, employee stock ownership plan and other employee
incentive measures of the Company and their effect
(I) Incentives already disclosed in the interim announcements about which no new
information is available
√Applicable □ N/A
Summary Reference
On September 27, 2019, the Company held the 17th meeting of the Please refer to the relevant
1st Board of Directors and the 7th meeting of the 1st Board of announcement issued by the
Supervisors, which reviewed and approved the Proposal on the Company on www.sse.com.cn and the
2019 Restricted Share Incentive Plan (Draft) of the Company and designated media for information
Summary of the Plan and other related proposals. disclosure on September 28, 2019.
On October 14, 2019, the Company held the 6th extraordinary Please refer to the relevant
general meeting of shareholders in 2019, which reviewed and announcement issued by the
approved the Proposal on the 2019 Restricted Share Incentive Plan Company on www.sse.com.cn and the
(Draft) of the Company and Summary of the Plan and other related designated media for information
proposals. disclosure on October 15, 2019.
On October 14, 2019, the Company held the 18th meeting of the 1st Please refer to the relevant
Board of Directors and the 8th meeting of the 1st Board of announcement issued by the
Supervisors, which reviewed and approved the Proposal on the Company on www.sse.com.cn and the
Adjustment of the 2019 Restricted Share Incentive Plan and the designated media for information
Proposal on Initial Grant of Restricted Shares, pursuant to which, disclosure on October 15, 2019.
the Company initially granted 4.4 million shares to 169 persons at
the price of RMB 17.5 per share on October 14, 2019. The
Company’s independent directors expressed their independent
opinions on such proposals, and the Board of Supervisors expressed
its opinion after review of such proposals.
(II) Incentives that have not been disclosed in any interim announcement or about
which there’s new information available
Share incentives
□ Applicable √ N/A
Other information
□ Applicable √ N/A
Employee stock ownership plan
□ Applicable √ N/A
Other incentives
□ Applicable √ N/A
104 / 312
Annual Report 2019
XIII. Material related-party transactions
(I) Related-party transactions in connection with day-to-day operation
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
√Applicable □ N/A
In RMB 0’000
Reason for
% of the big
total amount difference
Subject Pricing Transaction Method of Market
Counterparty Relationship Type Amount of the same between the
matter principle price settlement price
type of transaction
transactions price and the
market price
Xiaomi Corporation Sale of Laser TV, Determined 45,648.60 23.06 Bank / N/A
Communications or other goods smart mini through settlement
Technologies organization projector consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Sale of Laser light Determined 14,177.80 7.16 Bank / N/A
affiliates or other goods, source, through settlement
organization lease and lease and consultation
holding services services on the basis
more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Cinionic Corporation Sale of Laser light Determined 12,539.51 6.34 Bank / N/A
in which the goods source through settlement
actual consultation
controller or on the basis
a director of of market
/
the price
Company
holds the
post of
director
Beijing Donview Corporation Sale of Laser Determined 7,484.85 3.78 Bank / N/A
Education or other goods business through settlement
Technology Co., organization education consultation
Ltd. and its holding projector on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Xiaomi Corporation Purchase of Electronic Determined / 13,500.66 9.43 Bank / N/A
105 / 312
Annual Report 2019
Communications or other goods and components through settlement
Technologies organization materials consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Purchase of Power Determined 3,814.97 2.66 Bank / N/A
affiliates or other goods and supply, through settlement
organization materials water consultation
holding cooling and on the basis
more than services of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Xiaomi Corporation Acceptance Service Determined 94.14 0.07 Bank / N/A
Communications or other of services through settlement
Technologies organization consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Acceptance Service Determined 3,744.48 2.62 Bank / N/A
affiliates or other of services through settlement
organization consultation
holding on the basis
more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Beijing Donview Corporation Acceptance Service Determined 7.03 0.00 Bank / N/A
Education or other of services through settlement
Technology Co., organization consultation
Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Property Property Determined 207.05 0.14 Bank / N/A
affiliates or other lease lease through settlement
organization consultation
holding on the basis
more than of market
10% shares price /
in a
controlled
subsidiary
having
significant
106 / 312
Annual Report 2019
influence on
the
Company
Total / / 101,219.09 / / / /
Large-sum returned sales N/A
Explanation about related-party transactions We conduct routine related-party transactions on an arm’ length basis,
according to the relevant market rules, for purpose of satisfying the
requirements of our business development, production and operation. The
proportion of related-party transactions to the same type of transactions is
calculated on the basis of total operating income if such transactions
involve sale of goods, or on the basis of total purchase cost if such
transactions involve purchase of goods.
(II) Related-party transactions involving acquisition or sale of assets or equities
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
4. Fulfillment of performance covenants (if any) during the reporting period
□ Applicable √ N/A
(III) Related-party transactions involving joint external investments
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
(IV) Accounts receivable from and payable to related parties
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
(V) Other information
□ Applicable √ N/A
XIV. Material contracts and performance thereof
(I) Trusteeship, contracting and lease
1. Trusteeship
□ Applicable √ N/A
107 / 312
Annual Report 2019
2. Contracting
□ Applicable √ N/A
3. Lease
□ Applicable √ N/A
108 / 312
Annual Report 2019
(II) Guarantees
√Applicable □ N/A
In RMB 0’000
External guarantees provided by the Company (excluding those provided for the subsidiaries)
Total amount of guarantees provided during the reporting period (excluding those provided for the subsidiaries) 0
Balance of guarantees at the end of the reporting period (excluding those provided for the subsidiaries) (A) 0
Guarantees provided by the Company or its subsidiaries for the subsidiaries of the Company
Relationship Relationship Whether the Whether the Amount of the Whether
Commencement date
between the between the Amount Effective date of Expiry date of Type of obligation obligation overdue there’s a
Guarantor Obligor of guarantee (signing
guarantor and the obligor and the guaranteed guarantee guarantee guarantee guaranteed has guaranteed has obligation counter
date of agreement)
listed company listed company been discharged become overdue guaranteed guarantee
Two years after the
Appotronics Joint and
Controlled due date for the
Corporation Headquarters CINEAPPO 80,000 November 28, 2018 November 28, 2018 several No No No
subsidiary obligations under
Limited liability
the master contract
Appotronics Joint and
Controlled
Corporation Headquarters CINEAPPO 6,000 June 27, 2019 June 27, 2019 June 26, 2023 several No No No
subsidiary
Limited liability
Appotronics Two years after the Joint and
Controlled
Corporation Headquarters Fengmi 16,500 October 21, 2019 October 21, 2019 due date for the several No No No
subsidiary
Limited obligations liability
Initial utilization Two years after the
Appotronics Joint and
Controlled date or actual date latest due date of
Corporation Headquarters Fengmi 10,000 November 23, 2018 several Yes No No
subsidiary of utilization under the loans under the
Limited liability
the financing letter financing letter
Total amount of guarantees provided for the subsidiaries during the reporting period 27,379
Balance of guarantees provided for the subsidiaries at the end of the reporting period (B) 41,024
Total amount of guarantees provided by the Company (including those provided for the subsidiaries)
Total amount guaranteed (A+B) 41,024
Proportion of total amount guaranteed to the net assets of the Company (%) 19.31
Where:
Total amount of guarantees provided for the shareholders, actual controller and their affiliates (C) 0
Total amount of debt guarantees directly or indirectly provided for the obligors whose equity-debt ratio exceeds 70% (D) 26,500
109 / 312
Annual Report 2019
Total amount guaranteed in excess of 50% of the net assets of the Company (E)
Total amount guaranteed (C+D+E) 26,500
Explanation about outstanding guarantees for which the Company may assume joint and several liability None
Explanation about guarantees None
Note: 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 has been executed but the relevant bank loan has not been granted, so no liability for guarantee has been incurred.
(III) Entrusted cash asset management
1. Entrusted wealth management
(1) Overall situation of entrusted wealth management
√Applicable □ N/A
In RMB
Type Source of funds Total amount Outstanding amount Overdue amount
Bank wealth management amount Offering proceeds 859,000,000.00 540,000,000.00 0
Other information
□ Applicable √ N/A
(2) Single entrusted wealth management
□ Applicable √ N/A
Other information
□ Applicable √ N/A
110 / 312
Annual Report 2019
(3) Provision for impairment of entrusted wealth management products
□ Applicable √ N/A
2. Entrusted loans
(1) Overall situation of entrusted loans
□ Applicable √ N/A
Other information
□ Applicable √ N/A
(2) Single entrusted loans
□ Applicable √ N/A
Other information
□ Applicable √ N/A
(3) Provision for impairment of entrusted loans
□ Applicable √ N/A
3. Other information
□ Applicable √ N/A
(IV) Other material contracts
□ Applicable √ N/A
XV. Other significant matters
□ Applicable √ N/A
XVI. Active performance of social responsibilities
(I) Poverty alleviation of listed companies
□ Applicable √ N/A
(II) Performance of social responsibilities
1. Protection of the rights and interests of shareholders and creditors
√Applicable □ N/A
(1) Seriously safeguard the legitimate rights and interests of investors
During the reporting period, we have continuously improved our corporate governance
structure, and operated in strict accordance with the applicable laws and regulations. In
addition, we have reviewed our internal control and information systems, to improve our
management efficiency. We have defined the operating mechanisms of the Board of
Directors, the Board of Supervisors and the general meeting of shareholders in strict
accordance with the applicable laws and regulations. At the general meetings of
shareholders held after our listing on the STAR Market, the shareholders could cast their
votes at the venue of meeting or on line, so as to ensure that the minority shareholders can
exercise their voting rights. The proceedings of the Board of Directors, the Board of
Supervisors and the general meeting of shareholders comply with the applicable laws and
regulations, and the procedures of business transaction are legal and valid. The directors,
supervisors and senior officers have been assiduous in their duties, and seriously
safeguarded the legitimate rights and interests of the shareholders.
We have strictly complied with the Securities Law of the People’s Republic of China,
the Administrative Measures for Information Disclosure by the Listed Companies, the
Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai
Stock Exchange and other applicable laws and regulations, and performed the obligation of
information disclosure as a listed company. We have disclosed information on the principle
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of truthfulness, accuracy and completeness, to ensure the investors are informed of our
operational highlights and significant events in a timely manner.
We have actively carried out investor relations activities in various forms, and
subjected ourselves to the supervision of the investors, to increase the transparency of our
operation and enhance our corporate image. We have established the investor relations
management policy, and actively communicated with the investors by telephone, email, the
e-information platform of the SSE, investor briefing or otherwise, to enable the investors to
have a better understanding about our business situations and development directions. We
have also adopted the reasonable advice of the investors to promote our healthy
development.
(2) Seriously safeguard the legitimate rights and interests of creditors
We attach importance to the protection of the legitimate rights and interests of
creditors, through execution of contract or otherwise. We have duly performed our payment
obligation and other obligations in strict accordance with the relevant contracts. In addition,
we have enhanced communications and exchanges with our creditors, to enhance their
understanding about us.
2. Protection of the rights and interests of employees
√Applicable □ N/A
We have complied with the Labor Law, the Labor Contract Law and other applicable
laws, regulations and normative documents, and continuously improved our human
resources management system and compensation and incentive mechanisms. With a view
to complying with the applicable laws and regulations of the country and fully safeguarding
the rights, interests and benefits of the employees, we have established the Recruitment
Policy, the Training Policy, the Performance Assessment Policy, the Basic Personnel
Management Policy, the Employee Attendance Policy, the Employee Leave Policy, the
Employee Benefits Policy, and other human resources management regulations and
policies.
Main rights and interests of employees
In the recruitment and employment of the employees, we adhere to the principle of
equality and fairness, and comply with the applicable anti-discrimination regulations, and
will not treat differently, or show a bias or discrimination against any employee based on
age, sex, gender, ethnicity, race, national origin, color, disability or other characteristics.
Our production activities are free from any child labor or forced labor.
Our regular employees are entitled to all legal leaves stipulated by the country. In
addition, the bereavement leave, and (for the employees of our subsidiary in Hong Kong)
maternity leave, wedding leave and parenting leave granted by us to our employees are
more favorable than those stipulated by the governments of China and Hong Kong.
Compensation and benefits of employees
In order to establish a fair and equal compensation and incentive system, and ensure
the Company’s market competitiveness externally and effective incentive for employees
internally, we have designed a compensation system based on post, capability and
performance, according to the design concept and approaches of international
compensation system, and by reference to the compensation level on the market.
Our compensation system is based on position hierarchy, wherein different positions
and ranks correspond to different levels of compensation, so that the employees’
compensation corresponds to the value of their position and their capability and experience.
The employees’ compensation is also linked to their performance and contribution to the
Company, thereby establishing a performance-based compensation and incentive system.
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We adjust the salaries of all employees or promote certain employees to higher ranks or
positions or adjust the salaries of certain employees at multiple fixed points of time every
year. The adjustment of salaries is determined according to the compensation level on the
market, changes in the ranks of employees, performance and other relevant factors.
Share incentive plan
In order to further improve our long-term incentive mechanism, attract and retain
outstanding talents, enhance the sense of responsibility and mission of our management
team and key employees for the continuous and healthy development of the Company, and
ensure the achievement of our development objectives, we launched the 2019 share
incentive plan immediately after our listing on the STAR Market. The plan is designed to
fully motivate our business teams, effectively bind the interests of the shareholders and the
Company with their personal interests, procure all stakeholders to focus on our long-term
development, share the benefits of our development with the employees, and enhance the
competitiveness of the salaries of our employees.
Career development of employees
We stick to the philosophy of “pooling top talents, keeping company with outstanding
talents, and nurturing more talents”, continuously recruit outstanding talents, provide them
with broad development spaces, and continuously improve our compensation and benefit
system, talent training system and career development system.
With respect to the career development system, we have created two career
development routes oriented on profession and management respectively, and carried out
talent training plans for the professional line and management line respectively. In 2019,
we established Appotronics auditorium, which is a platform for employees to learn and
share. Through all-round talent training, we will promote and foster our corporate culture
and values, and realize both development of the Company and the personal development of
employees.
In order to promote talent development, Appotronics has established a fair, equal and
sound performance management system, formulated the Appotronics Performance Policy,
provided the employees with chances of promotion every year depending on their
performance, competence for their jobs and other qualifications for jobs, and designed a
sound promotion assessment process. In addition, we have provided the employees with
cross-position and cross-channel career development opportunities. We have also
established the complaint mechanism for the result of performance assessment, and
provided channels for the employees to raise their objections to the result of performance
assessment, so as to further ensure the fairness of performance assessment.
Diversified training mechanisms
We stick to the philosophy of “helping outstanding talents become more outstanding”,
focus on the development of the capabilities of key employees, and arouse their enthusiasm
for continuous innovation, to achieve our development objective “to become the pioneer in
the laser display industry through disruptive technical innovations and differential mode
covering the entire value chain”.
In 2019, we organized and implemented the “Polar Light Program”, the “Product
Operation Training Camp”, the “Star Light Program” and other talent development
programs, to help medium and high level managerial staff better implement our strategies,
lead their teams and achieve the goals of the organization; help the members of product
operation team understand product operation, enhance awareness of products and create
popular products of Appotronics; and help college graduates rapidly transit to their new
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roles, master the professional knowledge and skills required in their jobs, be competent for
their jobs within a short time, and create the highest value.
In 2019, we built and gradually improved a three-level training management system,
and achieved the initial goals. The three-level training management and course system
provides visual presentation of skill training courses, makes available learning channels and
satisfies the learning requirements for professional, non-professional and cross-department
knowledge. In 2019, we organized and shared more than 500 training courses, with nearly
20,000 class hours in total, which effectively satisfied the requirements for the
improvement of the employees’ personal capabilities and the organization capabilities.
Focus on safety and health of employees
Appotronics strictly complies with the provisions of the Labor Law regarding injuries
at work. In 2019, we did not have any accident involving injuries at work.
We advocate the philosophy of “happy work, healthy life”, and focus on the health of
employees. Our employees have physical examinations every year at the professional
institutions selected by us. The family members of employees who have physical
examinations will get the same discounts as those given to the Company. In addition, we
have purchased personal accident insurance and disease and mortality life insurance for all
of our employees at Ping An Insurance.
3. Protection of the rights and interests of suppliers, customers and consumers
√Applicable □ N/A
We have established the Supplier Development, Management and Control Process and
other relevant policies according to our actual circumstances, to strictly control the
development of suppliers, implementation of procurement plans, inspection of incoming
materials and other business. When selecting a new supplier, we will organize a group of
specialists comprising members from R&D, quality control, purchasing and other related
departments, to assess the processing, quality control, financial and other capabilities of the
supplier. We have established long-term and stable cooperation relationship with many
suppliers, and bound such suppliers by contract and standard in terms of date of delivery,
quality control and others issues in respect of the goods delivered by them.
We are committed to providing the customers with high-quality products through strict
quality control. Our production base has passed ISO9001 quality management system
certification. The contracts executed by us with the customers generally contain quality
assurance clauses, pursuant to which we have the obligation to repair the products sold by
us that are found to have quality problems during the warranty period (which is 1-3 years
generally) free of charge. We guarantee that the laser light source sold by us on the
domestic market will have a service life of 30,000 hours. We respond to customers’
requests rapidly. With respect to any service request made by a customer, our policy is to
respond within two hours, provide a solution within four hours, and solve the related
problems within the shortest possible time. In 2019, we passed “five-star” service
certification of the After-sale Service Assessment System.
We safeguard the legitimate rights and interests of the suppliers, customers and
consumers through the measures stated above.
4. Product safety
√Applicable □ N/A
We attach great importance to ensuring safety of products, and have passed the
following product safety certifications in the manufacturing field at home and abroad,
which provides assurance for the safety of our products.
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Abbreviation Description
China Compulsory Certification, a compulsory safety certification
CCC required by the Certification and Accreditation Administration of the
People’s Republic of China for the products covered.
Electrical Testing Laboratories, a generally accepted product safety
ETL
certification in the North America.
CE Conformite Europeenne, a compulsory certification required by EU.
Federal Communications Commission, a certification required by the
Federal Communications Commission for the radio products,
FCC
communication products and digital products entering the American
market.
Certification Bodies, a global system established by the International
CB Electrotechnical Commission (IECEE). CB test reports and CB test
certificates are recognized in all member states of IECEE.
Technischer berwachungs-Verein, a generally accepted safety
TUV
certification of electronic components in Germany and Europe.
5. Public relations and public welfare activities
√Applicable □ N/A
In the context that the country is vigorously promoting the building of education IT system,
the IT infrastructure is relatively weak in western China. Appotronics has closely
cooperated with the local education bureaus and sports bureaus to promote the development
of the educational undertakings, and enhanced cultural exchanges between Shenzhen and
Ganzi County, to actively help the western region improve the level of IT infrastructure.
We donated 10 sets of smart classroom solution with ALPD laser projector, worth RMB
300,000 in total, to Ganzi Tibet Autonomous Prefecture of Sichuan Province, which have
been installed and used in No.2 Six-grade Primary School of Chengguan in Ganzi County
and No. 4 Middle School of Luding County.
(III) Environment
1. Environmental protection information of the Company and its major subsidiaries
that are identified as major polluters by the environmental protection authority
□ Applicable √ N/A
2. 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 to environmental protection and have taken the following environmental
protection measures to fulfill our social responsibility:
Disposal of solid wastes
Our solid wastes include consumer wastes, general industrial solid wastes and hazardous
wastes. The consumer wastes are collected and then handed over to the environmental
sanitation entity for centralized treatment. The general industrial solid wastes mainly
consist of leadless waste scruff and waste packing materials generated in the production
process, which are collected by category and then handed over to the relevant resource
recycling entities for recycling. The hazardous wastes mainly consist of waste active carbon
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generated in the waste gas treatment process, and wastes containing industrial alcohol and
waste packing materials containing cleaning agents that are generated in the production
process, which are collected and then handed over to the qualified entities for treatment.
Sewage treatment
Our sewage includes domestic sewage and industrial sewage. The domestic sewage is
pre-treated through septic tank or otherwise, and after meeting the relevant standard,
discharged to the municipal sewage treatment pipelines and sewage treatment plant. The
industrial sewage is handed over to the qualified entities for treatment. In addition, we have
optimized the technologies currently used to reduce the sewage discharged. We appoint a
third party to inspect our domestic sewage every year.
Waste gas treatment
Our waste gas mainly includes waste gas containing tin and organic waste gas generated in
the production process. We have built a waste gas treatment system, comprising UV
photolysis, active carbon adsorption plant, air purification equipment and other equipment.
The concentration of tin and NmHc in the waste gas discharged by us to the air meets the
local standard for Atmospheric Pollutant Emission Limit. We appoint a third party to
conduct the relevant inspections every year.
Certifications relating to environmental protection
We passed ISO14001 environmental management system certification in 2008, and has
maintained such certification to date. In 2019, we passed QC080000 hazardous substance
process management system certification. All of our products are green products and have
passed RoHS, REACH and China environmental labeling product certification, among
others.
3. Reason for failure to disclose environmental protection information of the
Company that is not identified as a major polluter
□ Applicable √ N/A
4. New information about the environmental protection information disclosed
during the reporting period
□ Applicable √ N/A
(IV) Other information
□ Applicable √ N/A
XVII. Convertible corporate bonds
□ Applicable √ N/A
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Annual Report 2019
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: Share
Before the change +/- After the change
Bonus Capitalization of
Number % New shares Others Subtotal Number %
shares capital reserves
I. Non-tradable shares 383,554,411 100.00 10,807,087 10,807,087 394,361,498 87.33
1. Shares held by the State
2. Shares held by State-owned corporations
3. Shares held by other domestic investors 232,858,375 60.71 10,807,087 10,807,087 243,665,462 53.96
Incl.: Shares held by domestic non-Stated-owned 222,808,836 58.09 10,807,087 10,807,087 233,615,923 51.73
corporations
Shares held by domestic natural persons 10,049,539 2.62 10,049,539 2.23
4. Shares held by foreign investors 150,696,036 39.29 150,696,036 33.37
Incl.: Shares held by foreign corporations 135,203,427 35.25 135,203,427 29.94
Shares held by foreign natural persons 15,492,609 4.04 15,492,609 3.43
II. Tradable shares 57,192,913 57,192,913 57,192,913 12.67
1. RMB-denominated ordinary shares 57,192,913 57,192,913 57,192,913 12.67
2. Foreign currency-denominated shares listed
domestically
3. Foreign currency-denominated shares listed
overseas
4. Others
III. Total ordinary shares 383,554,411 100.00 68,000,000 68,000,000 451,554,411 100.00
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Annual Report 2019
2. Explanation about changes in ordinary shares
√Applicable □ N/A
Upon approval by the CSRC through the Reply on Approving the Registration of the
Initial Public Offering of Appotronics Corporation Limited (Zheng Jian Xu Ke [2019] No.
1163) and by the SSE, we issued 68 million RMB-denominated ordinary shares (A-shares)
to the public at the offering price of RMB 17.5 per share. The total offering proceeds were
RMB 1,190,000,000, and the net offering proceeds were RMB 1,062,470,797.73 after
deducting the offering expense of RMB 127,529,202.27 (exclusive of tax), of which, RMB
68,000,000.00 was recorded in the share capital, and RMB 994,470,797.73 was recorded in
the capital reserve. Pan-China Certified Public Accountants (Special General Partnership)
examined our capital increase through IPO and issued the Capital Verification Report (Tian
Jian Yan [2019] No. 7-62) thereon.
3. Effect of the changes in ordinary shares on the earnings per share, net assets per
share and other financial indicators of the most recent year and the most recent
reporting period (if any)
√Applicable □ N/A
During the reporting period, we publicly issued A-shares on the SSE, as a result of which
our share capital increased by RMB 68,000,000.00 and capital reserve increased by RMB
994,470,797.73.
Unit: RMB per share
Item 2019 2019 (calculated on the same
basis) (Note)
Basic earnings per share 0.45 0.49
Diluted earnings per share 0.45 0.49
Net assets per share attributable to the 4.37 2.38
shareholders of ordinary shares of the listed
company
Note: The basic earnings per share, diluted earnings per share and net assets per share
attributable to the shareholders of ordinary shares of the listed company in 2019 calculated
on the same basis are calculated supposing that no shares were issued in 2019.
4. Other information disclosed as the Company deems necessary or required by the
securities regulatory authority
□ Applicable √ N/A
(II) Changes in non-tradable shares
√Applicable □ N/A
Unit: Share
Balance of Number of Balance of
Number of
non-tradable non-tradable non-tradable
non-tradable Reason for
Shareholder shares as at shares shares as at Unlock date
shares increased restriction
January 1, unlocked in December 31,
in 2019
2019 2019 2019
Appotronics Holdings 0 0 79,762,679 79,762,679 Non-tradable July 22, 2022
pre-IPO shares
SAIF IV Hong 0 0 62,980,676 62,980,676 Non-tradable July 22, 2020
Kong (China pre-IPO shares
Investments) Limited
CITIC PE Investment 0 0 41,774,562 41,774,562 Non-tradable July 22, 2020
(Hong Kong) 2016 pre-IPO shares
Limited
Fuzhou Haixia 0 0 25,064,737 25,064,737 Non-tradable July 22, 2020
Appotronics pre-IPO shares
Investment Partnership
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Annual Report 2019
(LP)
Yuanshi 0 0 24,139,500 24,139,500 Non-tradable July 22, 2022
pre-IPO shares
Appotronics Daye 0 0 20,430,250 20,430,250 Non-tradable July 22, 2022
pre-IPO shares
Green Future 0 0 16,504,518 16,504,518 Non-tradable July 22, 2020
Holdings Limited pre-IPO shares
Appotronics Hongye 0 0 15,662,374 15,662,374 Non-tradable July 22, 2022
pre-IPO shares
Jinleijing 0 0 12,353,106 12,353,106 Non-tradable July 22, 2022
pre-IPO shares
Changzhou Lisheng 0 0 11,667,635 11,667,635 Non-tradable July 22, 2020
Equity Investment pre-IPO shares
Partnership (LP)
Shenzhen Guochuang 0 0 10,443,640 10,443,640 Non-tradable July 22, 2020
Chenggu Capital pre-IPO shares
Management Co., Ltd.
- Shenzhen
Chengguhui Equity
Investment Partnership
(LP)
Appotronics Chengye 0 0 10,394,846 10,394,846 Non-tradable July 22, 2022
pre-IPO shares
CAI Kunliang 0 0 10,049,539 10,049,539 Non-tradable July 22, 2020
pre-IPO shares
CUI Jingtao 0 0 9,658,792 9,658,792 Non-tradable July 22, 2020
pre-IPO shares
Smart Team 0 0 6,799,660 6,799,660 Non-tradable July 22, 2020
Investment Limited pre-IPO shares
ZHENG Yongshi 0 0 5,833,817 5,833,817 Non-tradable July 22, 2020
pre-IPO shares
Shenzhen Liansong 0 0 5,833,817 5,833,817 Non-tradable July 22, 2020
Capital Management pre-IPO shares
Partnership (LP)
Shenzhen Shanqiao 0 0 5,320,000 5,320,000 Non-tradable July 22, 2020
Capital Management pre-IPO shares
Partnership (LP)
Jiayuan I 0 0 4,548,685 4,548,685 Non-tradable July 22, 2020
strategic
allotted shares
in IPO
Blackpine Investment 0 0 3,994,011 3,994,011 Non-tradable July 22, 2022
Corp. Limited pre-IPO shares
Light Zone Limited 0 0 3,150,000 3,150,000 Non-tradable July 22, 2020
pre-IPO shares
Huatai Venture 0 0 2,720,000 2,720,000 Non-tradable July 22, 2021
Capital Investment strategic
Co., Ltd. allotted shares
in IPO
SCGC Hongtu Angel 0 0 1,736,252 1,736,252 Non-tradable July 22, 2020
Investment pre-IPO shares
Management
(Shenzhen) Co., Ltd. -
Shenzhen Hongtu
Kongque Venture
Capital Investment
Co., Ltd.
Off-line allotment 0 0 3,538,402 3,538,402 Non-tradable January 22,
account off-line 2020
allotted shares
in IPO
Total 0 0 394,361,498 394,361,498 / /
Note：As of the end of the reporting period, Huatai Venture Capital Investment Co., Ltd.
held 2,720,000 non-tradable shares in total, including the shares lent out under refinancing
arrangement.
II. Issuance and listing of securities
(I) Securities issued during the reporting period
√Applicable □ N/A
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Annual Report 2019
Unit: Share, RMB
Offering Number of Termination
Type of shares Listing Number of
Issue date price (or shares date of
and derivatives date shares listed
interest rate) issued transaction
Type of ordinary shares
A-shares July 22, 17.5 68,000,000 July 22, 68,000,000 N/A
2019 2019
Explanation about the securities issued during the reporting period (in case of any
outstanding bonds with different interest rates, please explain separately):
√Applicable □ N/A
Upon approval by the CSRC through the Reply on Approving the Registration of the Initial
Public Offering of Appotronics Corporation Limited (Zheng Jian Xu Ke [2019] No. 1163)
and by the SSE, we issued 68 million RMB-denominated ordinary shares (A-shares) to the
public at the offering price of RMB 17.5 per share. The total offering proceeds were RMB
1,190,000,000. Such shares were listed on the STAR Market on July 22, 2019.
(II) Changes in total number of ordinary shares, shareholding structure, and
structure of assets and liabilities of the Company
√Applicable □ N/A
During the reporting period, we issued 68 million RMB-denominated ordinary shares
(A-shares) to the public , as a result of which the total number of shares in our share capital
increased from 383,554,411 shares to 451,554,411 shares.
III. Shareholders and actual controller
(I) Total number of shareholders
Total number of shareholders of ordinary shares as of the end of the 19,204
reporting period
Total number of shareholders of ordinary shares as of the end of the month 17,029
immediately prior to the issue date of this annual report
Total number of shareholders of preferred shares whose voting right has 0
been restituted as of the end of the reporting period
Total number of shareholders of preferred shares whose voting right has 0
been restituted as of the end of the month immediately prior to the issue
date of this annual report
Number of holders of depository receipts
□ Applicable √ N/A
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Annual Report 2019
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares as of the end of the reporting period
Unit: Share
Shares held by top 10 shareholders
Balance of Number of Shares pledged or
Change shares held non-tradable shares frozen
Number of
during the as at the end held, including the Nature of
Shareholder % non-tradable
reporting of the shares lent out under shareholder
shares held Status of
period reporting the refinancing Number
period arrangement shares
Appotronics Holdings 0 79,762,679 17.66 79,762,679 79,762,679 0 Domestic non-stated
None
owned corporation
SAIF IV Hong Kong (China Investments) 0 62,980,676 13.95 62,980,676 62,980,676 0 Foreign corporation
None
Limited
CITIC PE Investment (Hong Kong) 2016 0 41,774,562 9.25 41,774,562 41,774,562 0 Foreign corporation
None
Limited
Fuzhou Haixia Appotronics Investment 0 25,064,737 5.55 25,064,737 25,064,737 0 Domestic non-stated
None
Partnership (LP) owned corporation
Yuanshi 0 24,139,500 5.35 24,139,500 24,139,500 0 Domestic non-stated
None
owned corporation
Appotronics Daye 0 20,430,250 4.52 20,430,250 20,430,250 0 Domestic non-stated
None
owned corporation
Green Future Holdings Limited 0 16,504,518 3.66 16,504,518 16,504,518 None 0 Foreign corporation
Appotronics Hongye 0 15,662,374 3.47 15,662,374 15,662,374 0 Domestic non-stated
None
owned corporation
Jinleijing 0 12,353,106 2.74 12,353,106 12,353,106 0 Domestic non-stated
None
owned corporation
Changzhou Lisheng Equity Investment 0 11,667,635 2.58 11,667,635 11,667,635 0 Domestic non-stated
None
Partnership (LP) owned corporation
Shares held by top 10 holders of tradable shares
Type and number of shares
Shareholder Number of tradable shares held
Type Number
National Social Security Fund Portfolio No. 102 1,742,168 RMB-denominated ordinary 1,742,168
share
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Annual Report 2019
UBS AG 1,546,625 RMB-denominated ordinary 1,546,625
share
WANG Danping 329,210 RMB-denominated ordinary 329,210
share
GAO Ermei 307,411 RMB-denominated ordinary 307,411
share
Shanghai Securities Co., Ltd. 300,000 RMB-denominated ordinary 300,000
share
LIU Qing’an 266,769 RMB-denominated ordinary 266,769
share
ZHANG Shangmin 244,000 RMB-denominated ordinary 244,000
share
ZHONG Haidi 201,967 RMB-denominated ordinary 201,967
share
GAO Mei 185,913 RMB-denominated ordinary 185,913
share
HE Ziheng 180,280 RMB-denominated ordinary 180,280
share
Affiliates or concert parties among the shareholders stated above 1. As of December 31, 2019, among our top 10 shareholders, Appotronics Holdings,
Yuanshi, Appotronics Daye, Appotronics Hongye and Jinleijing are concert parties. We
have not received any notice about affiliates or concert parties among other shareholders
stated above.
2. We are not aware whether there are affiliates or concert parties as defined in the
Administrative Measures for the Acquisition of the Listed Companies among the holders
of tradable shares.
Holders of preferred shares whose voting right has been restituted and the N/A
number of shares held by them
Top 10 holders of non-tradable shares and lock-up period
√Applicable □ N/A
Unit: Share
Unlocking of non-tradable shares
Number of non-tradable
No. Holder of non-tradable shares Number of shares Lock-up period
shares held Unlock date
newly unlocked
1 Appotronics Holdings 79,762,679 July 22, 2022 0 36 months after the listing date
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Annual Report 2019
2 SAIF IV Hong Kong (China Investments) Limited 62,980,676 July 22, 2020 0 12 months after the listing date
3 CITIC PE Investment (Hong Kong) 2016 Limited 41,774,562 July 22, 2020 0 12 months after the listing date
4 Fuzhou Haixia Appotronics Investment Partnership (LP) 25,064,737 July 22, 2020 0 12 months after the listing date
5 Yuanshi 24,139,500 July 22, 2022 0 36 months after the listing date
6 Appotronics Daye 20,430,250 July 22, 2022 0 36 months after the listing date
7 Green Future Holdings Limited 16,504,518 July 22, 2020 0 12 months after the listing date
8 Appotronics Hongye 15,662,374 July 22, 2022 0 36 months after the listing date
9 Jinleijing 12,353,106 July 22, 2022 0 36 months after the listing date
10 Changzhou Lisheng Equity Investment Partnership (LP) 11,667,635 July 22, 2020 0 12 months after the listing date
Affiliates or concert parties among the shareholders stated above As of December 31, 2019, among our top 10 shareholders, Appotronics Holdings, Yuanshi,
Appotronics Daye, Appotronics Hongye and Jinleijing are concert parties. We have not received any
notice about affiliates or concert parties among other shareholders 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 reporting period
□ Applicable √ N/A
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(IV) Strategic investors or general corporations that become top 10 shareholders as a
result of allotment of new shares/ depository receipts
□ Applicable √ N/A
(V) Strategic allotment in IPO
1. Participation by any special asset management plan established by senior officers
and key employees in the strategic allotment in IPO
√Applicable □ N/A
Unit: Share
Number of shares/ Balance at the
Change during the
Shareholder depository receipts Unlock date end of the
reporting period
allotted reporting period
Jiayuan I 4,548,685 July 22, 2020 0 4,548,685
2. Participation by any subsidiary of the sponsor in the strategic allotment in IPO
√Applicable □ N/A
Unit: Share
Relationship Number of shares/ Change during Balance at the
Shareholder with the depository Unlock date the reporting end of the
sponsor receipts allotted period reporting period
Huatai Subsidiary of 2,720,000 July 22, 2021 0 2,720,000
Venture the sponsor
Capital
Investment
Co., Ltd.
IV. Controlling shareholder and actual controller
(I) Controlling shareholder
1 Corporation
√Applicable □ N/A
Name Appotronics Holdings
Principal or legal representative LI Yi
Date of establishment January 17, 2014
Main business Investment holding
Shares held in other domestic or foreign listed None
companies during the reporting period
Other information N/A
2 Natural person
□ Applicable √ N/A
3 Special explanation if the Company does not have a controlling shareholder
□ Applicable √ N/A
4 Reference to and date of change in the controlling shareholder during the
reporting period
□ Applicable √ N/A
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5 Block diagram of the controlling shareholder’s ownership of and control over the
Company
√Applicable □ N/A
Appotronics
Holdings
Appotronics
(II) Actual controller
1 Corporation
□ Applicable √ N/A
2 Natural person
√Applicable □ N/A
Name LI Yi
Nationality China
Whether or not have right of residence in Yes
any other country or region
Main occupation and title Chairman of Appotronics
Whether or not control any domestic or No
foreign listed company in the past 10 years
3 Special explanation if the Company does not have an actual controller
□ Applicable √ N/A
4 Reference to and date of change in the actual controller during the reporting
period
□ Applicable √ N/A
5 Block diagram of the actual controller’s ownership of and control over the
Company
√Applicable □ N/A
LI Yi
Appotronics Yuanshi Appotronics Appotronics Jinleijing Appotronics Jiayuan I
Holdings Daye Hongye Chengye
Appotronics
Note: The shareholding percentages of LI Yi in Yuanshi, Appotronics Daye, Appotronics
Hongye, Jinleijing and Appotronics Chengye indicated above include the shares held by
him in such companies directly and indirectly. LI Yi holds 28.78% of the shares of the
Company in total. In addition, LI Yi’s son indirectly holds 0.2521% of the shares of the
Company through Blackpine.
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Annual Report 2019
6 Control by the actual controller over the Company through trust or otherwise
□ Applicable √ N/A
(III) Other information about the controlling shareholder and the actual controller
□ Applicable √ N/A
V. Other corporate shareholders holding more than 10% shares
√Applicable □ N/A
In RMB
Principal or Main business or
Corporate Date of Organization Registered
legal management
shareholder establishment code capital
representative activity
SAIF IV Hong Kong YAN Yan August 9, N/A N/A Equity investment
(China Investments) Pak Tao Wan 2013
Limited
Explanation N/A
VI. Restrictions on the disposal of shares/ depository receipts
□ Applicable √ N/A
VII. Implementation of and changes in arrangements relating to depository receipts
during the reporting period
□ Applicable √ N/A
VIII. Shares with special voting rights
□ Applicable √ N/A
126 / 312
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Section VII Preferred Shares
□ Applicable √ N/A
127 / 312
Annual Report 2019
Section VIII Directors, Supervisors, Senior Officers and Employees
I. Changes in shareholding and remunerations
(I) Changes in shareholding and remunerations of current directors, supervisors, senior officers and key technical staff and the former
directors, supervisors, senior officers and key technical staff who left the Company during the reporting period
√Applicable □ N/A
Unit: Share
Total Whether or
remuneration not receive
(inclusive of any
Number of Number of
tax) received remuneration
Beginning Expiry date shares shares held Cause
Change in from the from any
Name Title (Note) Sex Age date of term of term of held as at as at of
shareholding Company affiliate of the
of office office January 1, December change
during the Company
2019 31, 2019
reporting
period (in
RMB 0’000)
LI Yi Chairman of the Male 49 July 18, 2018 July 17, 2021 / / / / 293.99 No
Board of Directors
& key technical
staff
YAN Yan Director Male 63 July 18, 2018 July 17, 2021 / / / / 0 Yes
WU BIN Director Male 49 July 18, 2018 July 17, 2021 / / / / 0 Yes
BO Director & Male 57 July 18, 2018 July 17, 2021 / / / / 332.4 No
Lianming General Manager
NING Independent Male 54 July 18, 2018 July 17, 2021 / / / / 15 No
Xiangdong director
TANG Independent Male 57 July 18, 2018 July 17, 2021 / / / / 15 No
Guliang director
ZHANG Independent Male 44 July 18, 2018 July 17, 2021 / / / / 15 No
Wei director
WU Bin Deputy General Male 56 October 19, July 17, 2021 / / / / 100 No
Manager 2018
ZENG Deputy General Male 44 April 16, January 23, / / / / 313.01 No
Luhai Manager 2019 2020
HU Fei Deputy General Male 40 July 18, 2018 July 17, 2021 / / / / 148.76 No
128 / 312
Annual Report 2019
Manager & key
technical staff
LI Lu Deputy General Male 49 October 19, July 17, 2021 / / / / 141.42 No
Manager 2018
ZHAO Financial Director Male 42 July 18, 2018 July 17, 2021 / / / / 85.28 No
Ruijin
XIAO Board Secretary & Male 34 July 18, 2018 July 17, 2021 / / / / 69.31 No
Yangjian Deputy General
Manager
GAO Chairman of the Female 40 July 18, 2018 July 17, 2021 / / / / 61.29 No
Lijing Board of
Supervisors
LIANG Supervisor Male 49 July 18, 2018 July 17, 2021 / / / / 52.87 No
Rong
WANG Supervisor Female 43 July 18, 2018 July 17, 2021 / / / / 29.78 No
Yanyun
YU Xin Key technical staff Male 40 / / / / / / 98.46 No
WU Key technical staff Male 45 / / / / / / 45.46 No
Xiliang
WANG Key technical staff Male 39 / / / / / / 58.59 No
Lin
GUO Key technical staff Male 30 / / / / / / 50.04 No
Zuqiang
total / / / / / / / / / 1,925.66 /
Note: None of the directors, supervisors, senior officers and key technical staff directly holds any share in the Company. As of the end of the
reporting period, their indirect shareholdings in the Company are as follows: Refer to “Section VI- IV(II) Actual controller” for the shares held
by LI Yi; YAN Yan indirectly holds shares in the Company through Light Zone; BO Lianming indirectly holds shares in the Company through
direct or indirect shareholding in Appotronics Daye; WU Bin indirectly holds shares in the Company through Appotronics Hongye, Liansong
Capital and Jinleijing; HU Fei, GAO Lijing, LIANG Rong, WANG Yanyun and WU Xiliang indirectly hold shares in the Company through
direct shareholding in Appotronics Hongye and indirect shareholding in Appotronics Daye; ZHAO Ruijin and XIAO Yangjian indirectly hold
shares in the Company through indirect shareholding in Appotronics Daye; YU Xin and GUO Zuqiang indirectly hold shares in the Company
through Appotronics Daye; and WANG Lin indirectly holds shares in the Company through Appotronics Hongye. There is no change in the
indirect shareholding stated above during the reporting period. During the reporting period, LI Yi, BO Lianming, WU Bin, LI Lu and GAO
Lijing participated in the strategic allotment in IPO through Jiayuan I.
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Annual Report 2019
Name Main work experience
LI Yi Mr. LI Yi holds a bachelor’s degree from Tsinghua University, and a master’s degree and a doctor’s degree from the University of Rochester. He
was previously CTO of O-Net Communications (HK) Limited. In October 2006, LI Yi founded Appotronics Corporation Ltd.. He has served as
Chairman of the Company since December 2010.
YAN Yan Mr. YAN Yan holds a master’s degree from Princeton University. He was previously Economist of Washington Headquarter of the World Bank,
researcher of American Thinker Hudson Institute, Director of Strategic Planning and Business Development of Sprint International Corporation in
Asia Pacific, Managing Director of Emerging Markets Partnership in the Management Company of AIG Asian Infrastructure Investment Fund and
Director of Hong Kong Office. He has served as Founding Managing Partner of SAIF Partners since October 2001. He has been a Director of the
Company since December 2016.
WU BIN Mr. WU BIN holds a master’s degree from Stanford University. He was previously Global Associate Director of McKinsey & Company and Chief
Inspector of Legend Holdings Corporation. He has served as Managing Director of CITIC Private Equity Funds since 2010. He has been a Director
of the Company since December 2016.
BO Lianming Mr. BO Lianming holds a doctor’s degree from Xi’an Jiaotong University. He was previously Chief Accountant of Shenzhen Airlines Co., Ltd.,
President and CEO of Shenzhen Chinastar Optoelectronic Co., Limited, Director and President of TCL Technology Group Corporation and
Chairman and CEO of TCL Multimedia Technology Holdings Limited.. He joined the Company in March 2018, responsible for the management
and operation of the Company. He has been a Director and General Manager of the Company since July 2018, and Legal Representative of the
Company since December 2018.
NING Xiangdong Mr. NING Xiangdong holds a doctor’s degree from Tsinghua University. He previously served as teaching assistant, lecturer and associate professor
at Tsinghua University and Executive Deputy Director of National Center for Economic Research, Tsinghua University, and currently is a professor
and doctoral tutor of Tsinghua University, School of Economic and Management. He has been an independent director of the Company since July
2018.
TANG Guliang Mr. TANG Guliang holds a doctor’s degree from Chinese Academy of Fiscal Sciences. He previously served as Dean and professor of Beijing
Technology and Business University, School of Accounting (formerly known as Beijing College of Commerce), and currently is a professor and
doctoral tutor of the Business School, University of International Business and Economics. He has been an independent director of the Company
since July 2018.
ZHANG Wei Mr. ZHANG Wei holds a doctor’s degree from Indiana University. He was previously Legal Director of Legend Holdings Corporation and General
Manager of the Legal Affairs Department of China Vanke Co., Ltd.. He has served as Vice President, Legal Affairs of Qifei International
Development Co., Limited since February 2019. He has been an independent director of the Company since July 2018.
WU Bin Mr. WU Bin holds a master’s degree from Party School of the CPC. He was previously a non-executive director of Shenzhen Gotonly Investment
Ltd. and Vice President of Shenzhen Lighting Institute. He has been Deputy General Manager of the Company since October 2018.
ZENG Luhai Mr. ZENG Luhai holds a bachelor’s degree from Nanyang Technological University and a master’s degree from University of Michigan. He was
previously Executive General Manager of the Department of Investment Bank, China International Capital Corporation Limited, and Managing
Director of the Department of Equity Market, CMB International Capital Limited. He served as Deputy General Manager of the Company between
130 / 312
Annual Report 2019
April 2019 and January 2020.
HU Fei Mr. HU Fei holds a bachelor’s degree and a master’s degree from Tsinghua University and a master’s degree from Rensselaer Polytechnic Institute.
He was previously a software engineer at Optical Research Associates, and Deputy President, R&D of Shenzhen YLX Technology Development
Co., Ltd. and Appotronics Ltd.. He has served as CTO of the Company since February 2018, and Deputy General Manager of the Company since
July 2018.
LI Lu Mr. LI Lu holds a master’s degree from Cheung Kong Graduate School of Business. He was previously Deputy President of TCL Multimedia
Technology Holdings Limited., General Manager of TCL (China) Sales Company, and General Manager of White Goods Business Division of TCL
Technology Group Corporation. He has been Deputy General Manager of the Company since October 2018, and Legal Representative and
Chairman of Fengmi since December 2018.
ZHAO Ruijin Mr. ZHAO Ruijin holds a master’s degree from Peking University. He was previously Financial Manager of ZTE Corporation, Financial Director
and Assistant to General Manager of Shenzhen ZNV Technology Co., Ltd.. He joined the Company in February 2018 as Director of the Department
of Financial Management, and has been Financial Director of the Company since July 2018.
XIAO Yangjian Mr. XIAO Yangjian holds a bachelor’s degree from Beijing Jiaotong University. He was previously Deputy General Manager and Board Secretary
of Vision Group and head of the Office of the Board of Directors of Appotronics Ltd.. He has been Deputy General Manager and Board Secretary of
the Company since July 2018.
GAO Lijing Ms. GAO Lijing holds a bachelor’s degree from Tianjin University of Technology and Education. She previously worked at Southern China IP
Office of Foxconn Technology Group, and Center for IP and Legal Affairs of Netac Technology Co., Ltd.. She has served as a supervisor of Netac
Technology Co., Ltd., and Director of IP and Legal Department of the Company since May 2017, and a Supervisor of the Company since July 2018.
LIANG Rong Mr. LIANG Rong holds a master’s degree from Shanghai University of Finance and Economics. He joined the Company in 2013, and served as
Assistant to Chairman of Appotronics Ltd.. He has been Director of Public Affairs of the Company since March 2018, and a Supervisor of the
Company since November 2017.
WANG Yanyun Ms. WANG Yanyun holds a bachelor’s degree from Tianjin University of Commerce. She has been a senior manager of the Company since July
2013, and a Supervisor of the Company since July 2018.
YU Xin Mr. YU Xin holds a doctor’s degree from Tsinghua University. He was previously a senior software engineer at Schlumberger Ltd. and senior
researcher at Shenzhen Lighting Institute. He has been a senior researcher and Software Director of the R&D Center of the Company since February
2018.
WU Xiliang Mr. WU Xiliang holds a bachelor’s degree from Huazhong University of Science and Technology. He served as R&D Manager and Technology
Director of the Company between 2007 and 2016, and has been Deputy General Manager of Fengmi since 2016.
WANG Lin Mr. WANG Lin holds a bachelor’s degree from University of Science and Technology of China, a master’s degree from Tsinghua University, and a
doctor’s degree from Universidad Politécnica de Madrid. He was previously a senior optical engineer at Shanghai Phillips Lighting (China)
Investment Co., Ltd.. He has been a senior optical research of the Company since February 2017.
GUO Zuqiang Mr. GUO Zuqiang holds a master’s degree from Tsinghua University. He was previously an optical engineer at Shenzhen YLX Technology
Development Co., Ltd.. He has been R&D Manager of the Company since March 2017.
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Annual Report 2019
Other information
□ Applicable √ N/A
(II) Share incentives granted to directors, senior officers and key technical staff during the reporting period
1. Share options
□ Applicable √ N/A
2. Type I restricted shares
□ Applicable √ N/A
3. Type II restricted shares
√Applicable □ N/A
Unit: Share
Number of
Number of Number of
restricted Number of Market price as
restricted shares Number of Exercise price of restricted
shares that restricted shares of the end of
already granted restricted shares the restricted shares actually
Name Title could be already granted as the reporting
as at the granted during the shares granted vested in the
vested in the of the end of the period (RMB
beginning of the reporting period (RMB per share) reporting
reporting reporting period per share)
reporting period period
period
BO Director & 0 100,000 17.5 0 0 100,000 27.7
Lianming General
Manager
WU Bin Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager
ZENG Deputy General 0 100,000 17.5 0 0 100,000 27.7
Luhai Manager
HU Fei Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager &
CTO
LI Lu Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager
ZHAO Financial 0 50,000 17.5 0 0 50,000 27.7
Ruijin Director
XIAO Board Secretary 0 30,000 17.5 0 0 30,000 27.7
Yangjian & Deputy
General
132 / 312
Annual Report 2019
Manager
YU Xin Key technical 0 50,000 17.5 0 0 50,000 27.7
staff
WANG Lin Key technical 0 50,000 17.5 0 0 50,000 27.7
staff
GUO Key technical 0 40,000 17.5 0 0 40,000 27.7
Zuqiang staff
WU Xiliang Key technical 0 30,000 17.5 0 0 30,000 27.7
staff
Total / 0 750,000 / 0 0 750,000 /
II. Posts held by current directors, supervisors and senior officers and the former directors, supervisors and senior officers who left
the Company during the reporting period
(I) Posts held at corporate shareholders of the Company
√Applicable □ N/A
Beginning date of term of Expiry date of term of
Name Corporate shareholder Posts held at corporate shareholder
office office
LI Yi Appotronics Holdings Executive Director & General January 2014 /
Manager
LI Yi Appotronics Daye Representative of Managing Partner October 2016 /
LI Yi Appotronics Hongye Representative of Managing Partner December 2015 /
LI Yi Jinleijing Representative of Managing Partner October 2016 /
LI Yi Yuanshi Representative of Managing Partner June 2016 /
LI Yi Appotronics Chengye Representative of Managing Partner July 2017 /
LI Yi Blackpine Investment Corp. Limited Director September 2018 /
YAN Yan SAIF IV Hong Kong Director August 2013
(China Investments) Limited
YAN Yan Light Zone Limited Director March 2017
WU BIN CITIC Private Equity Funds Managing Director January 2010
Explanation about the posts None
held at corporate shareholders
of the Company
133 / 312
Annual Report 2019
(II) Posts held at other entities
√Applicable □ N/A
Beginning date of Expiry date of
Name Other entity Posts held at other entity
term of office term of office
LI Yi Appotronics Deye Representative of Managing Partner May 2018
LI Yi Cinionic Director November 2018
LI Yi Shenzhen Appotronics Technical Consulting Co., Ltd. Executive Director & General October 2017
Manager
LI Yi Jiangsu Yisheng Technology Co., Ltd. Chairman September 2017
LI Yi Shenzhen YLX Technology Development Co., Ltd. Chairman January 2007
LI Yi Shenzhen Qingda Yifeng Equity Investment Fund General Manager & Executive January 2017
Management Enterprise (LP) Director
LI Yi Shenzhen Qingda Yifeng Investment Consulting Partnership Managing Partner October 2016
(LP)
LI Yi Shenzhen Lighting Institute Director & Sponsor November 2016
LI Yi APEX Fund Managed Limited Director November 2013
LI Yi Atria Light Ltd. Director April 2018
LI Yi Atria Light Hong Kong Limited Director April 2018
LI Yi Long Pine Investment Ltd. Director September 2016
LI Yi Longpines Financial Investment Ltd. Director May 2018
LI Yi YLX (Hong Kong) Limited Director June 2008
YAN Yan SAIF Partners Founding Managing Partner October 2001
YAN Yan Atria Light Ltd. Director May 2018
YAN Yan SAIF Investment Management Consulting (Shanghai) Co., General Manager June 2002
Ltd.
YAN Yan Beijing Daotong Changjing Investment Management Center Representative of Managing Partner July 2011
(LP)
YAN Yan Beijing SAIF Chuangyuan Investment Center (LP) Representative of Managing Partner August 2010
YAN Yan Beijing SAIF Hongyuan Investment Center (LP) Representative of Managing Partner October 2010
YAN Yan Beijing SAIF Ruiyi Investment Management Center (LP) Representative of Managing Partner July 2012 August 2019
YAN Yan Beijing SAIF Ruizhi Investment Center (LP) Representative of Managing Partner July 2012 August 2019
YAN Yan Beijing SAIF Xiangrui Investment Center (LP) Representative of Managing Partner April 2010
YAN Yan Changzhou SAIF High-Tech Venture Capital Center (LP) Representative of Managing Partner December 2009
YAN Yan Guangzhou SAIF Guangdong Fortune Radio and Television Representative of Managing Partner December 2011
Network Investment Limited Partnership (LP)
YAN Yan Hefei SAIF Heyuan Venture Capital Center (LP) Representative of Managing Partner January 2011
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Annual Report 2019
YAN Yan Qingdao Haier-Saifu Intelligent Family Venture Capital Representative of Managing Partner October 2014
Center (LP)
YAN Yan SAIF Songyuan (Shanghai) Equity Investment Fund Representative of Managing Partner September 2012
Partnership (LP)
YAN Yan Xiamen SAIF Equity Investment Partnership (LP) Representative of Managing Partner August 2012
YAN Yan Xiamen SAIF Keyuan Equity Investment Partnership (LP) Representative of Managing Partner August 2012
YAN Yan Xiamen SAIF Xiayuan Equity Investment Partnership (LP) Representative of Managing Partner November 2013 May 2019
YAN Yan Tianjin SAIF Venture Capital Fund (LP) Representative of Managing Partner July 2008
YAN Yan Tianjin SAIF Composite Equity Investment Center (LP) Representative of Managing Partner May 2010
YAN Yan Tianjin SAIF Hanyuan Equity Investment Partnership (LP) Representative of Managing Partner June 2010
YAN Yan Tianjin SAIF Shengyuan Investment Management Center Representative of Managing Partner July 2008
(LP)
YAN Yan Hefei SAIF Venture Capital Management Co. Ltd. Legal Representative & Executive November 2010
Director & General Manager
YAN Yan Nanjing SAIF Hengzhun Venture Capital Fund (LP) Representative of Managing Partner July 2017
YAN Yan China Resources Land Limited Independent Non-executive July 2006
Director
YAN Yan Shanghai SAIF Yanyuan Equity Fund Management Co. Ltd. Legal Representative & Executive January 2013
Director & General Manager
YAN Yan Tianjin Himalaya Investment Consulting Co. Ltd. Legal Representative & Executive June 2008
Director & Manager
YAN Yan Shanghai SAIF Xinpai Investment Management Co. Ltd. Legal Representative & Executive March 2014
Director
YAN Yan Qingdao SAIF Investment Management Co. Ltd. Legal Representative & Chairman September 2014
& General Manager
YAN Yan Changzhou SAIF High-Tech Venture Capital Management Legal Representative & Chairman October 2009
Co. Ltd.
YAN Yan Tianjin SAIF Zhongyuan Investment Advisory Co. Ltd. Legal Representative & Chairman July 2008
YAN Yan Shenzhen SAIF Qianyuan Equity Investment Fund Legal Representative & Chairman August 2013
Management Co. Ltd.
YAN Yan TCL Technology Group Corporation Independent Director March 2015
YAN Yan Beijing Blue Focus Brand Management Co. Ltd. Independent Director March 2014
YAN Yan Beijing Softbank SAIF Investment Advisory Co., Ltd. Chairman February 2001
YAN Yan Huangshan SAIF Fund Management Co., Ltd. Chairman November 2016
YAN Yan Youth Happy (Beijing) Business Management Co., Ltd. Chairman July 2012
YAN Yan Shanghai TopxGun Robotics Co., Ltd. Chairman September 2015
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Annual Report 2019
YAN Yan CYPA (Beijing) Investment Management Co., Ltd. Chairman June 2012
YAN Yan Foreign Tribes (Beijing) Business Management Consulting Chairman September 2012 September 2019
Co., Ltd.
YAN Yan Leqicheng Technology (Beijing) Co., Ltd. Vice Chairman June 2015 May 2019
YAN Yan Suzhou Beiang Technology Co., Ltd. Vice Chairman October 2013
YAN Yan Xi’an Maike Metal International Group Co., Ltd. Vice Chairman April 2014
YAN Yan Anqing SAIF Huanxin Auto Parts Co., Ltd. Director August 2015
YAN Yan SAIF IV Mauritius (China Investment) Ltd. Director July 2010
YAN Yan ATA Creativity Global Director March 2005
YAN Yan Anqing SAIF Huanxin Enterprise Management Consultant Director November 2014
Co., Ltd.
YAN Yan Beijing Hanyuan Capital Management Co., Ltd. Director December 2015
YAN Yan Beijing Xiaodu Entertainment Technology Co., Ltd. Director January 2018
YAN Yan Guangdong Cable Co., Ltd. Director February 2017
YAN Yan Guangzhou SAIF Heyin Asset Management Co., Ltd. Director August 2013
YAN Yan Guodian Technology & Environmental Protection Group Co., Non-executive Director June 2012
Ltd.
YAN Yan Hangzhou Geyun Technology Co., Ltd. Director February 2015 April 2016
YAN Yan Heilongjiang Dazheng Derun Investment Management Co., Director February 2017
Ltd.
YAN Yan Heilongjiang Dazheng SAIF Investment Management Co., Director November 2009
Ltd.
YAN Yan Pacoo (Beijing) Technology Co., Ltd. Director September 2016
YAN Yan Xiamen SAIF Venture Capital Management Co., Ltd. Director February 2012
YAN Yan Shanghai Wenxi Enterprise Management Co., Ltd. Director June 2017
YAN Yan Shanghai Yingxun Technology Co., Ltd. Director August 2017
YAN Yan Shenzhen Orbbec Technology Co., Ltd. Director May 2018
YAN Yan Xinyong Computing Information Technology (Shanghai) Co., Director September 2017
Ltd.
YAN Yan Zhejiang Daily Interaction Network Technology Co., Ltd. Director December 2015 May 2019
YAN Yan Gexin Interaction (Beijing) Network Technology Co., Ltd. Director October 2014 December 2016
YAN Yan COFCO Haiyou Trading Co., Ltd. Director July 2013
YAN Yan COFCO Womai Investment Co., Ltd. Director November 2018
YAN Yan Khorgos Big Color Information Technology Co., Ltd. Director November 2018 July 2019
YAN Yan Shenzhen Digital Media Technology Co., Ltd. Director October 2018
YAN Yan Yinda International Holding Company Limited Director August 2014
YAN Yan Wisers Information Holdings Company Limited Director May 2016
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Annual Report 2019
YAN Yan Haier Smart Home Co., Ltd. Director June 2019
YAN Yan Shanghai Welltech Automation Co., Ltd. Director June 2019
YAN Yan 360 Finance, Inc. Independent Director July 2019
YAN Yan COFCO Haiyou (Beijing) Co., Ltd. Director November 2018
YAN Yan COFCO Youcai Kitchen Food (Shanghai) Co., Ltd. Director November 2018
WU BIN Shaanxi Xifeng Liquor Co., Ltd. Director 2012
WU BIN Shaanxi Xifeng 15-Year and 6-Year Liquor Marketing Co., Director 2013
Ltd.
WU BIN Yunnan Green A Biological Project Co., Ltd. Director 2011
WU BIN Hangzhou BroadLink Electronic Technology Co., Ltd. Director 2018
NING Xiangdong Tsinghua University Professor & Doctoral Tutor 1990
NING Xiangdong Weichai Power Co., Ltd. Independent Director June 2018
NING Xiangdong Sinopec Sales Co., Ltd. Independent Director December 2018
NING Xiangdong China Life Asset Management Co., Ltd. Independent Director March 2018
NING Xiangdong Sinochem Energy Co., Ltd. Independent Director August 2018
NING Xiangdong Xiamen Bank Co., Ltd. Director July 2017
NING Xiangdong Shandong Heavy Industry Group Co., Ltd. Director January 2018
TANG Guliang University of International Business and Economics Professor March 2006
TANG Guliang China JIC Leasing Co., Ltd. Independent Director April 2017
TANG Guliang Three Gorges Capital Holdings Co., Ltd. Independent Director February 2018
TANG Guliang Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Independent Director March 2019
ZHANG Wei Qifei International Development Co. Limited Deputy President, Legal Affairs February 2019
ZHANG Wei AVIC Vanke Co., Ltd. Director January 2018
ZHANG Wei Hengqin Vanke Cloudland Commercial Services Co., Ltd. Director & General Manager May 2017
ZHANG Wei Shenzhen Yingda Investment Fund Management Co., Ltd. Director April 2016
ZHANG Wei Tian’an Xincheng Development (Hengqin) Co., Ltd. Director July 2017
ZHANG Wei Shenzhen Wanhu Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanhu Quanyuan Management Consulting Co., Supervisor November 2017
Ltd.
ZHANG Wei Shenzhen Wanshuzhimiao Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanqing Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanmazhengxian Management Consulting Co., Supervisor November 2017
Ltd.
ZHANG Wei Dongguan Vanke Real Estate Co., Ltd. Supervisor October 2015
ZHANG Wei Lijiang Banyan Tree Property Services Co., Ltd. Director May 2018
ZHANG Wei Lijiang Banyan Tree Hotel Co., Ltd. Director March 2018
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Annual Report 2019
ZHANG Wei Lijiang Banyan Tree International Travel Agency Co., Ltd. Director March 2018
ZHANG Wei Lijiang Angsana Real Estate Development Co., Ltd. Director July 2018
ZHANG Wei Huangshan Banyan Tree Property Management Co., Ltd. Director September 2018
ZHANG Wei Huangshan Banyan Tree Tourism Development Co., Ltd. Director September 2018
ZHANG Wei Chengdu Banyan Tree No.1 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Chengdu Banyan Tree No.3 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Chengdu Banyan Tree No.4 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Beijing 6.cn Technology Co., Ltd. Director December 2019
GAO Lijing Netac Technology Co., Ltd. Supervisor January 2008
LIANG Rong Shanghai QianKun Photoelectric Technology Co., Ltd. Supervisor May 2015 April 2019
WU Bin Shenzhen Shangzuo Charity Foundation Secretary-General November 2015
WU Bin Shenzhen Lighting Institute Director November 2016
Explanation about None
the posts held at
other entities
III. Remunerations of directors, supervisors, senior officers and key technical staff
√Applicable □ N/A
In RMB 0’000
Decision-making procedure regarding the Pursuant to the Company’s Articles of Association, the Compensation and Performance Assessment Committee
remunerations of directors, supervisors and senior consider and review the compensation policy and proposal for directors and senior officers; the compensation
officers proposal for senior officers is implemented after being approved by the Board of Directors; the compensation proposal
for directors is implemented after being adopted by the Board of Directors and then approved by the general meeting
of shareholders; and the compensation proposal for supervisors is implemented after being adopted by the Board of
Supervisors and then approved by the general meeting of shareholders.
Basis for determining the remunerations of The Company’s directors and supervisors who hold posts in the Company shall receive remunerations for such posts
directors, supervisors and senior officers pursuant to the relevant provisions of the Company, but will not receive remunerations in their capacity as director or
supervisor. Each independent director will receive a fixed amount of director’s emoluments. Non-independent
directors not holding posts in the Company will receive director’s emoluments pursuant to the compensation proposal
approved by the general meeting of shareholders. Remunerations paid to senior officers comprise basic salaries and
year-end bonuses, where the basic salaries are paid on a monthly basis according to the ranks and duties of the senior
officers, and the year-end bonuses are paid according to the operating results of the Company and their performance in
the given year.
Remunerations actually paid to directors, During the reporting period, the remunerations actually paid to directors, supervisors and senior officers are consistent
supervisors and senior officers with the relevant information disclosed by the Company.
138 / 312
Annual Report 2019
Total remunerations paid to directors, supervisors 1673.11
and senior officers as of the end of the reporting
period
Total remunerations paid to key technical staff as 695.30
of the end of the reporting period
IV. Changes in directors, supervisors, senior officers and key technical staff
√Applicable □ N/A
Name Position Change Cause of change
ZENG Luhai Deputy General Manager Left the Company Resigned
Explanation about the changes in directors, supervisors, senior officers and key technical staff:
1. The Company’s Deputy General Manager Mr. ZENG Luhai resigned from his position as Deputy General Manager of the Company due to
personal career development reasons on January 23, 2020, and will act as a consultant of the Company after resigning from the Company. The
Company issued an announcement regarding this event on January 23, 2020.
V. Penalties imposed by the securities regulatory authorities in the past three years
□ Applicable √ N/A
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VI. Employees of the parent company and major subsidiaries
(I) Employees
Number of active employees of the parent company 959
Number of active employees of major subsidiaries 287
Total number of active employees 1,246
Number of retired employees for whom the parent company 0
and major subsidiaries need to pay certain expenses
Profession
Category Number of employees
Production staff 473
Sales staff 166
R&D staff 387
Financial staff 33
Administrative staff 187
Total 1,246
Education
Level of education Number of employees
Doctor 29
Master 154
Undergraduate 486
College or below 577
Total 1,246
(II) Compensation policy
√Applicable □ N/A
In order to ensure the market competitiveness of our compensation level externally
and the fairness and equality internally, insist on performance-based compensation, adhere
to the corporate values of creating together and sharing by all, and fully motivate the
employees, we have designed a compensation system based on posts, capability and
performance, according to the design concept and approaches of international
compensation system, and by reference to the compensation level on the market. Our
compensation system is based on position hierarchy, wherein different positions and ranks
correspond to different levels of compensation, so that the employees’ compensation
corresponds to the value of their position and their capability and experience. The
employees’ compensation and bonuses are also linked to their performance and
contribution to the Company, thereby establishing a performance-based compensation and
incentive system. In addition to fixed salaries and bonuses, our employees enjoy a variety
of benefits. We adjust the salaries of all employees or promote certain employees to higher
ranks or positions or adjust the salaries of certain employees every year according to the
compensation level on the market, changes in the ranks of employees, performance and
other relevant factors.
Pursuant to the Company Law of the People’s Republic of China, the Securities Law of
the People’s Republic of China, the Rules Governing the Listing of Stocks on the Sci-tech
Innovation Board of the Shanghai Stock Exchange, the Administrative Measures for Share
Incentives of the Listed Companies, the Measures for the Continuous Supervision of
Companies Listed on the Sci-tech Innovation Board, the Memorandum on Information
Disclosure by the Listed Companies on the STAR Market No. 4 - Guide on Information
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Disclosure Regarding Share Incentives, and other applicable laws, regulations and
normative documents, we launched the restricted share incentive plan in 2019 to further
improve our long-term incentive mechanism, attract and retain outstanding talents, enhance
the sense of responsibility and mission of our management team and key employees for the
continuous and healthy development of the Company, and ensure the achievement of our
development objectives. The plan is designed to fully motivate our business teams,
effectively bind the interests of the shareholders and the Company with their personal
interests, procure all stakeholders to focus on our long-term development, share the benefits
of our development with the employees, and enhance the competitiveness of the salaries of
our employees.
(III) Training programs
√Applicable □ N/A
The building of training system plays an important role in developing the capabilities
of the organization and employees, and promoting the sustainable development of the
organization.
In 2019, Appotronics built and gradually improved a three-level training management
system. Through providing plenty of opportunities for internal learning and high-quality
external education resources, the system has effectively satisfied the requirements for the
improvement of the employees’ personal capabilities and the organization capabilities, and
greatly aroused the employees’ enthusiasm for learning and growth. According to statistics,
in 2019, more than 7,000 personnel participated in the courses/sharing organized by the
company, with nearly 20,000 class hours in total. Nearly 200 internal and external lecturers
have given lectures at Appotronics auditorium, which lays a solid foundation for building a
learning-oriented organization.
We lay stress on the training of key talents: The “Polar Light Program” is designed to
help medium and high level managerial staff implement our strategies, lead their teams and
achieve the goals of the organization; the “Product Operation Training Camp” is designed
to help the product operation team form product-oriented thinking and create better
business ideas; and the “Star Light Program” is designed to help college graduates rapidly
transit to their new roles, successfully integrate with the team, rapidly improve their
professional knowledge and skills, and make outstanding contributions to the Company.
In 2020, our training programs will focus on accumulating internal knowledge,
consolidating the basis of the three-level training management system, training and
building a team of experienced internal trainers having aspiration and spirit of dedication in
a planned way, summing up the management and professional experience of the Company,
and studying external good practices, to create learning products with the characteristics of
Appotronics, and provide the employees with well-targeted learning services. In addition,
we will continue to train key talents through the Polar Light Program, the Sharp Light
Program and the Star Light Program. The growth of talents will inject vigor into the
Company, while the growth of the Company will bring about opportunities for the growth
of talents. Appotronics is committed to building a platform for the growth of outstanding
talents, so as to enter into a sound cycle of growth of both the Company and the talents.
(IV) Outsourced workers
√Applicable □ N/A
Total man-hours of outsourced workers 2,496 hours
Total remunerations paid to outsourced workers RMB102,816
VII. Other information
□ Applicable √ N/A
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Annual Report 2019
Section IX Corporate Governance
I. Corporate governance
√Applicable □ N/A
We have continuously improved our corporate governance structure and operated in
strict accordance with the requirement of the Company Law, the Securities Law and the
relevant rules and regulations of the CSRC and the SSE, taking into account our actual
business situations, and established a corporate governance structure comprising the
general meeting of shareholders, the Board of Directors, the Board of Supervisors and the
management, and a mechanism in which the highest authority, the decision-making body,
the supervisory body and the management coordinate with and hold up each other. We have
established a sound corporate governance system, to effectively protect the interests of
investors.
(I) Shareholders and general meeting of shareholders
The general meeting of shareholders is the highest authority of the Company. During
the reporting period, we have convened and held general meetings of shareholders in strict
accordance with our Articles of Association (“AOA”), the Rules of Procedure of the
General Meeting of Shareholders and other applicable laws and regulations. The notices,
convening, resolutions, voting, signing and information disclosures in respect of the general
meeting of shareholders comply with the relevant provisions of the Company Law, the
Securities Law, the CSRC and the SSE, and the resolutions of the general meeting of
shareholders are legal and valid. We have fully protected the rights of all shareholders,
especially the minority shareholders, and ensured that each shareholder can enjoy the right
to know and participate in the affairs of the Company and exercise his voting rights
according to law.
(II) Directors and the Board of Directors
The Board of Directors is the standing decision-making and management body of the
Company, and has set up four committees, namely the Strategy Committee, the
Compensation and Performance Assessment Committee, the Nomination Committee and
the Audit Committee. During the reporting period, the number of directors and the
composition of the Board of Directors comply with the requirements of the applicable laws
and regulations and the AOA; the Board of Directors has exercised its functions and
powers in strict accordance with the requirements of the applicable laws and regulations,
the AOA, the Rules of Procedure of the Board of Directors, and the Work Regulations for
Independent Directors, and each director has been assiduous in his duties and actively
received the relevant trainings. In order to improve the objectivity and scientificness of the
decisions made by the Board of Directors, we have appointed the independent directors to
participate in and supervise the decision-making process of the Board of Directors. The
independent directors have performed their duties independently, actively safeguarded the
interests of the Company and the shareholders, and expressed their opinions on important
and material matters of the Company. The committees of the Board of Directors have fully
exercised their relevant functions, to ensure that the Board of Directors makes scientific
and reasonable decisions for the Company.
(III) Supervisors and the Board of Supervisors
The Board of Supervisors is the supervisory body of the Company and comprises three
supervisors. The Board of Supervisors has exercised its functions and powers according to
the procedures set forth in the AOA and the Rules of Procedure of the Board of Supervisors,
effectively supervised the legal and regulatory compliance of the performance of duties by
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Annual Report 2019
the financial staff, directors and senior officers of the Company, and actively safeguarded
the interests of the Company and the shareholders.
(IV) Management of information disclosures
During the reporting period, we have disclosed the relevant information truthfully,
accurately, promptly, fairly and completely, and duly performed our obligation of
information disclosure in accordance with the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange, the Administrative Measures
for Information Disclosure by the Listed Companies and other applicable laws and
regulations, and our Information Disclosure Policy, to ensure that all shareholders and other
stakeholders have equal access to the information of the Company.
(V) Registration of insiders
During the reporting period, we have registered and filed the insiders in connection
with the matters disclosed in our regular reports in strict accordance with the applicable
laws and regulations and our Insider Management Policy.
During the reporting period, we have defined the respective responsibilities of the
general meeting of shareholders, the Board of Directors, the Board of Supervisors and the
management. According to the requirements of the Board of Directors, the management has
continuously improved the management cycle led by mechanism, guaranteed by system,
guided by culture and supported by capacity. Our management level and governance
capability have been improved remarkably, providing further assurance for our healthy and
sustainable development. The directors, supervisors and senior officers have been
assiduous in their duties, and seriously exercised the rights and performed the obligations
under the Company Law and the AOA, to ensure the safe, steady and sustainable
development of the Company and safeguard the interests of the shareholders to the
maximum extent practicable.
Explanation about the material deviations (if any) of the Company’s corporate governance
from the relevant requirements of the CSRC
□ Applicable √ N/A
II. General meetings of shareholders held
Reference to resolutions
Date of disclosure of
Session Date of meeting published on the
resolutions
designated website
1st extraordinary general February 26, 2019 N/A N/A
meeting of shareholders
in 2019
2nd extraordinary general March 18, 2019 N/A N/A
meeting of shareholders
in 2019
2018 annual general April 14, 2019 N/A N/A
meeting of shareholders
in 2019
3rd extraordinary general May 8, 2019 N/A N/A
meeting of shareholders
in 2019
4th extraordinary general May 24, 2019 N/A N/A
meeting of shareholders
in 2019
5th extraordinary general July 8, 2019 N/A N/A
meeting of shareholders
in 2019
6th extraordinary general October 14, 2019 www.sse.com.cn October 15, 2019
meeting of shareholders
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Annual Report 2019
in 2019
Explanation about the general meetings of shareholders
√Applicable □ N/A
The 1st, 2nd, 3rd, 4th and 5th extraordinary general meeting of shareholders in 2019 and
2018 annual general meeting of shareholders were held prior to the listing of the Company.
The convening, proceedings, qualification of the conveners, qualification of the participants
and voting procedures of such general meetings of shareholders comply with the relevant
provisions of the Company Law, the Rules of the General Meeting of Shareholders of the
Listed Company and other applicable laws and regulations and the AOA, and the
resolutions of such meetings are legal and valid.
III. Performance of duties by the directors
(I) Attendance by the directors of the meetings of the Board of Directors and
shareholders
Attendance of
the general
Attendance of the meetings of the Board of Directors
meetings of
shareholders
Whether or
Meetings
not an Whether the
Director Meetings Meetings from
independent director has General
the director Meetings attended Meetings which
director been absent meetings of
should have attended through attended the
from two shareholders
attended in in person communication by proxy director
consecutive attended
2019 equipment was
meetings
absent
LI Yi No 15 15 0 0 0 No 6
YAN Yan No 15 15 5 0 0 No 7
WU BIN No 15 15 5 0 0 No 7
BO No 15 15 0 0 0 No 7
Lianming
NING Yes 15 15 5 0 0 No 7
Xiangdong
TANG Yes 15 15 5 0 0 No 7
Guliang
ZHANG Yes 15 15 5 0 0 No 7
Wei
Explanation about absence from two consecutive meetings of the Board of Directors
□ Applicable √ N/A
Meetings of the Board of Directors held in 2019 15
Incl.: Face-to-face meetings 10
Meeting held through communication equipment 0
Meetings held both in the form of face-to-face meeting and 5
through communication equipment
(II) Objections raised by the independent directors to matters of the Company
□ Applicable √ N/A
(III) Other information
□ Applicable √ N/A
IV. Important opinions and suggestions put forward by the committees of the Board
of Directors during the reporting period and objections thereto (if any)
√Applicable □ N/A
The Board of Directors has set up the Strategy Committee, the Audit Committee, the
Compensation and Performance Assessment Committee, and the Nomination Committee.
Each committee has duly exercised its functions in strict accordance with the AOA, the
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Annual Report 2019
Rules of Procedure of the Board of Directors, the rules of procedure of such committee and
other relevant regulations. During the reporting period, the Strategy Committee has held
one meeting; the Audit Committee has held four meetings; the Compensation and
Performance Assessment Committee has held two meetings, and the Nomination
Committee has held one meeting. The members of each committee have actively attended
the meetings of such committee, been assiduous in their duties, duly exercised the functions
and powers delegated by the Board of Directors to such committee, put forward guidance
and advice for the proper functioning of such committee and the long-term development of
the Company, and played active roles in improving the corporate governance structure and
promoting the development of the Company.
During the reporting period, the members of the Strategy Committee have seriously
performed their duties, fully communicated with the management of the Company with
respect to the future development direction, external investments and other affairs of the
Company from the prospective of their profession and put forward reasonable suggestions
on the basis of the actual operations of the company; the Audit Committee has duly
exercised its functions, and played an active role in the appointment of the auditor, review
of regular financial reports, examination of related-party transactions, establishment of
internal controls, and other relevant affairs of the Company; the Compensation and
Performance Assessment Committee has assessed the performance of the senior officers of
the Company, examined the compensation proposal for the senior officers, and reviewed
and expressed its opinions on the 2019 restrictive share incentive plan of the Company; and
the Nomination Committee has examined the qualifications of the senior officers of the
Company, and reviewed and expressed its opinions on the criteria and procedures in respect
of the appointment of the senior officers. Each committee of the Board of Directors has
duly performed the duty of care.
V. Risks of the Company identified by the Board of Supervisors
□ Applicable √ N/A
VI. Give an explanation if the Company cannot guarantee its dependence and ability
to operate independently due to its relationship with the controlling shareholder
in business, personnel, assets, organization, financial and other affairs
□ Applicable √ N/A
Solutions to horizontal competition with the Company (if any) and the relevant progress
and subsequent action plans
□ Applicable √ N/A
VII. Performance assessment mechanism for senior officers and the establishment
and implementation of incentive mechanism for senior officers during the
reporting period
√Applicable □ N/A
The remunerations of the senior officers comprise salaries and bonuses. The
Compensation and Performance Assessment Committee of the Board of Directors is
responsible for formulating and implementing the compensation proposal and performance
assessment proposal for senior officers. The compensation proposal for senior officers has
been reviewed in accordance with the AOA and other relevant corporate governance
policies. During the reporting period, the remunerations paid to the senior officers of the
Company have been reviewed and approved by the Board of Directors. During the
reporting period, the senior officers have been assiduous in their duties in strict accordance
with the requirements of the Company Law and other applicable laws and regulations and
the AOA, and continuously enhanced internal management of the Company under the
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Annual Report 2019
guidance of the Board of Directors, to lay a solid foundation for future development of the
Company.
VIII. Whether a self-assessment report on internal controls has been disclosed
√Applicable □ N/A
Please see the 2019 Assessment Report on Internal Controls disclosed by us on
www.sse.com.cn on April 29, 2020.
Explanation about material loopholes in internal controls during the reporting period
□ Applicable √ N/A
IX. Explanation about the auditor’s report on internal controls
□ Applicable √ N/A
Whether an auditor’s report on internal controls has been disclosed: No.
X. Control structure by agreement and other special arrangements in respect of
corporate governance
□ Applicable √ N/A
XI. Other information
□ Applicable √ N/A
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Section X Corporate Bonds
□ Applicable √ N/A
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2019 Annual Report
Section XI Financial Report
I. Auditor's report
√Applicable □N/A
I. Opinion
We have audited the financial statements of Appotronics Corporation Limited
(“Appotronics”), which comprise the consolidated and the Parent Company's balance sheets
as at December 31, 2019, and the consolidated and the Parent Company's income statements,
the consolidated and the Parent Company's statements of cash flow and the consolidated and
the Parent Company's statements of changes in owners' equity for the year then ended, and
the notes to the relevant financial statements.
In our opinion, the accompanying financial statements of Appotronics are prepared and
present fairly, in all material respects, the consolidated and the Parent Company's financial
position as of December 31, 2019, and the consolidated and the Parent Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards
for Business Enterprises.
II. Basis for opinion
We conducted our audit in accordance with Chinese Standards on Audit. Our
responsibilities under those standards are further described in the “Auditor's Responsibilities
for the Audit of the Financial Statements” section of our report. We are independent of
Appotronics in accordance with the code of ethics for Chinese Certified Public Accountants,
and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue recognition
1. Description
Details of relevant information are disclosed in V 36, VII 59, and XVI 6 of Section XI.
Appotronics is mainly engaged in research and development, production, sales and
leasing of laser display core devices and complete equipment. In 2019, the operating income
of Appotronics amounted to RMB1,979,148,900, of which the income from product sales
and lease services amounted to RMB 1,553,441,500 and RMB 397,991,200 respectively.
Relevant policies in terms of the revenue recognition are disclosed in V 36 of Section XI in
details. As the operating income is one of Appotronics's KPIs, there may be an inherent risk
that the management of Appotronics (hereinafter referred to as "management”) may
recognize the revenue inappropriately to achieve specific objectives or expectations.
Therefore, we identified revenue recognition as a key audit matter.
2. Description of how the key audit matter was addressed in the audit
For revenue recognition, our audit procedures include, inter alia:
(1) Understand the key internal controls related to revenue recognition, evaluate the
design of those controls, determine whether they are implemented, and test the operational
effectiveness of the relevant internal controls;
(2) Test general controls of information system and application controls related to the
revenue recognition process;
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2019 Annual Report
(3) Examine major sales contracts and lease contracts, understand the major provisions
or conditions thereof, and evaluate whether revenue recognition methods are appropriate;
(4) Implement analysis procedures for operating income and gross margin by month,
product, customer, etc., to identify whether there are significant or unusual fluctuations and
to find out the
