2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Yunnan Energy New Material Co., Ltd.
2020 Annual Report
March 2021
If there is any discrepancy between the Chinese version and the English version, the Chinese version shall prevail.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Section 1 Important Notes, Contents and DefinitionsThe Board of Directors and its members, the Supervisory Committee andits members, and the senior management warrant that the contents of theAnnual Report are truthful, accurate and complete, without any false statement,misrepresentation or major omission, and that they are jointly and severallyliable for them.
PAUL XIAOMING LEE, the Company's legal representative, Li Jian, theperson in charge of accounting affairs, and Liu Lianhua, the person in charge ofaccounting department (“Accounting Principal”) hereby declare and warrantthat the contents of the Financial Statements in this Annual Report are truthful,accurate and complete.
All Directors were present at the Board meeting to review this AnnualReport.
The forward-looking statements in this Annual Report, such as estimates ofoperating results, are among the planned matters of the Company, subjected touncertainties and do not constitute material commitments of the Company toinvestors. Investors are advised to pay attention to investment risks. The futureplans, development strategies and other forward-looking descriptions in thisReport do not constitute material commitments of the Company to investors.Investors and related persons should be fully aware of the risks in connectiontherewith and should understand the difference between plan, forecast andcommitment.
For details, please refer to the “3. Risks The Company May Face” under the“Outlook for the Company’s Future Prospects” in the Section 4 “Discussion andAnalysis on Business Operations” of this Report.
1. Regulatory risk relating to lithium-ion battery separator film business
China will gradually annul the financial assistance policies as the newenergy vehicle industry develops to a certain extent, which will change thedemands of the downstream customers and thus adversely change the results ofthe Company. If the downstream segments, such as new energy vehicle andlithium-ion battery manufacturing, are unable to improve their competitivenessthrough technological advancement, scale effect or otherwise, the future possibleadjustments to the assistance policies will have a negative impact on each link ofthe whole industry chain of new energy vehicle, including the lithium-ion batteryseparator film as an upstream segment.
2. Market competition risk
The rapid growth of the new energy vehicle industry has driven thedevelopment of lithium-ion battery separator film in the upstream part. Thefierce competition in this segment is driving the rapid increase in productioncapacity and the supply, and thus the decrease in price. The increasingly fiercecompetition will have an adverse impact on the results of the Company if it can’tdeeply understand the law of industrial development and make constant effortsfor technological innovation and operational management improvement toimprove product quality and reduce production costs.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
3. Risk of price fluctuation of major raw materials
The major raw materials used by the Company are subjected to pricefluctuation to some extent, especially polyethylene and polypropylene, whoseprices are affected by the strong fluctuations of the international crude oil price.The results of the Company may be adversely affected by the gross profitmargin which may be affected to some extent if the prices of major rawmaterials fluctuate sharply due to the macroeconomic fluctuations, the demandand supply relation for enterprises in the upstream and downstream parts andother factors.
4. Risk relating to construction in progress
The Company needs a great amount of investment funds for theunder-construction production lines in the production bases, such as, JiangxiTonry, and Wuxi Energy. If the Company fails to raise sufficient funds in time,or complete the projects and put into operation on schedule, the production,operation and profitability will be adversely affected.
5. Risk of technology leakage and talent outflow
An enterprise engaging in lithium-ion battery separator film requiresadvanced technology and process, rich management experience and deepunderstanding of the industry. To ensure the ability of constant innovation andthe steady growth of business, the Company should have teams consisting ofsteady high-quality employees in scientific research, management and sale. TheCompany constantly improves the mechanisms for talent cultivation, incentive,promotion and restriction, but there is still the possibility of the outflow of coreemployees from the Company. In case of leakage of the core technology or thedeparture of core employees, the production and operation of the Company maybe adversely affected.
6. Risk of technological progress and alternatives
Lithium-ion battery is mainly used for electronics and electrical appliances,new energy vehicles, and energy storage power stations. As the alternatives tolithium-ion battery, nickel-cadmium batteries, nickel-hydrogen batteries, fuelcells and lead-acid batteries can also be used for the industries above-mentioned.Although the lithium-ion battery is currently the first choice for electronics,electrical appliances and new energy vehicles, the demands of the industriesabove-mentioned for lithium-ion battery will decline when technologicalprogress improves the performance and reduce the production costs of thesealternatives or creates batteries with better performance, and the lithium-ionbattery separator film in the upstream part of the industry chain will also beaffected adversely.
7. Risk of exchange rate fluctuation
The export sales volume of the Company increases constantly as theCompany expands its business scale and gradually strengthens the developmentin the international market. If the RMB exchange rate and the foreign exchangerate in the countries where our products were sold fluctuate sharply in thefuture, the results of the Company may be affected to some extent.
8. Risk of China-US trade friction
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Since 2018, the U.S. has restricted import of Chinese products by means oftariff increases to reduce the trade deficit with China. Lithium-ion batteries arealso among the products subject to the tariff increase. From the perspective ofsupply chain, the total revenue of the Company has been less affected by theChina-US trade disputes because the exports to US account for a very smallproportion in the total revenue of the Company. However, if the demands of thedownstream customers change due to the China-US trade friction, the results ofthe Company may be affected adversely. In addition, some of the Company'sraw materials and mechanical equipment are imported from overseas. If thetrade friction between the U.S. and China intensifies and results in changes inthe global trading environment, but the Company fails to make timelyadjustments, the stability of the Company's supply chain may be adverselyaffected.
9. Risk of COVID-19 Epidemic
Since 2020, the COVID-19 epidemic broke out in China and other parts ofthe world, and spread rapidly. China’s new energy vehicle industry andupstream industries have been affected by the epidemic, and the demand forlithium-ion battery separator film has been affected accordingly. So far, theCompany has resumed normal production and operation in all respects, amongother enterprises. However, there exists still great uncertainty about the globalepidemic situation and its control, and the overseas spread also imposes risk ofimporting cases to China. If the international epidemic can’t be controlledeffectively in the future and spread continuously for a long time, the globaleconomy and new energy vehicle industry will be affected adversely, and theresults of the Company will be affected negatively.
10. Management risk after expansion of business scale
With the development of the Company’s business, the scale of theCompany’s assets and business will be further expanded, which raises higherrequirements for the management level of the Company. The management riskarises if the capabilities of the Company to manage the production, sales, qualitycontrol and risks can’t meet the requirements for scale expansion, and thesystems for talent cultivation and management, and the organizational structureare not further improved.
The profit distribution proposal approved by the Board of Directors is asfollows: Based on 886,566,151, the Company proposed to distribute cashdividend of RMB1.70 (tax inclusive) per each 10 shares to all shareholders, andbonus share 0 (tax inclusive), and share distribution from capital reserve is nil.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Contents
Section 1 Important Notes, Contents and Definitions ...... 2
Section 2 Company Profile & Key Financial Indicators ...... 10
Section 3 Business Overview ...... 15
Section 4 Discussion and Analysis on Business Operation ...... 21
Section 5 Significant Events ...... 51
Section 6 Share Changes and Shareholder Details ...... 101
Section 7 Details about Preferred Shares ...... 113
Section 8 Details about Convertible Corporate Bonds ...... 114
Section 9 Directors, Supervisors, Senior Management and Employees ...... 117
Section 10 Corporate Governance ...... 125
Section 11 Corporate Bonds ...... 131
Section 12 Financial Report ...... 136
Section 13 Documents Available for Inspection ...... 299
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Definitions
| Term | Definition |
| Energy Technology, The listed Company, This Company, the Company | Yunnan Energy New Material Co., Ltd. |
| Actual controller, Paul Xiaoming Lee family | the six natural persons, namely Paul Xiaoming Lee, Li Xiaohua, Yan Ma, Yanyang Hui, Sherry Lee, and Jerry Yang Li |
| Heyi Investment | Yuxi Heyi Investment Co., Ltd, a shareholder of the Company |
| Heli Investment | Yuxi Heli Investment Co., Ltd, a shareholder of the Company |
| Zhuhai Hengjie | Zhuhai Hengjie Enterprise Management Office (Limited Partnership), a shareholder of the Company |
| Huachen Investment | Kunming Huachen Investment Co., Ltd, a shareholder of the Company |
| Future Industry Investment Fund | Future Industry Investment Fund (Limited Partnership), a shareholder of the Company |
| Shanghai Guohe | Shanghai Guohe Modern Service Industry Equity Investment Management Co., Ltd. (Limited Partnership), a shareholder of the Company |
| Hongta Plastic | Yunnan Hongta Plastic Co., Ltd, a wholly-owned subsidiary of the Company |
| Chengdu Hongta Plastic | Hongta Plastic (Chengdu) Co., Ltd, a wholly-owned subsidiary of Hongta Plastic |
| Dexin Paper | Yunnan Dexin Paper Co., Ltd., a wholly-owned subsidiary of the Company |
| Hongchuang Packaging | Yunnan Hongchuang Packaging Co., Ltd, a controlled subsidiary of the Company |
| Shanghai Energy | Shanghai Energy New Material Technology Co., Ltd, a controlled subsidiary of the Company |
| Suzhou Green Power | Suzhou Green Power New Energy Material Co., Ltd., a wholly-owned subsidiary of Shanghai Energy |
| Newmi Tech | Chongqing Yuntianhua Newmi Technological Co., Ltd., a controlled subsidiary of Shanghai Energy |
| Zhuhai Energy | Zhuhai Energy New Material Technology Co., Ltd, a wholly-owned subsidiary of Shanghai Energy |
| Wuxi Energy | Wuxi Energy New Material Technology Co., Ltd, a wholly-owned subsidiary of Shanghai Energy |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Jiangxi Tonry | Jiangxi Tonry New Energy Technology Development Co., Ltd, a wholly-owned subsidiary of Shanghai Energy |
| Jiangxi Ruijie | Jiangxi Ruijie New Material Technology Co., Ltd, a controlled subsidiary of Jiangxi Tonry |
| Hainan Energy | Hainan Energy Investment Co., Ltd, a wholly-owned subsidiary of Shanghai Energy |
| Hong Kong Chuangxin | Chuangxin New Material (Hong Kong) Co., Ltd., a wholly-owned subsidiary of the Company during the Reporting Period |
| Energy Trading | Wuxi Energy Trading Co., Ltd., a wholly-owned subsidiary of the Company |
| Kunshasi | Yuxi Kunshasi Plastic Co., Ltd., a joint-stock Company of Yunnan Hongta Plastic Co., Ltd. |
| General Meeting of Shareholders | The general meeting of shareholders of Yunnan Energy New Material Co., Ltd. |
| Board of Directors | the Board of Directors of Yunnan Energy New Material Co., Ltd. |
| Board of Supervisors | the Supervisory Committee of Yunnan Energy New Material Co., Ltd. |
| CSRC | China Securities Regulatory Commission |
| CSDCC Shenzhen Branch | Shenzhen Branch of China Securities Depository and Clearing Company Limited |
| SZSE | Shenzhen Stock Exchange |
| Company Law | Company Law of the People's Republic of China |
| Securities Law | Securities Law of the People's Republic of China |
| Labor Law | Labor Law of the People's Republic of China |
| Articles of Association | Articles of Association of Yunnan Energy New Material Co., Ltd. |
| CITIC Securities | CITIC Securities Co., Ltd., the sponsor and financial advisor of the Company |
| Dahua CPAs, Dahua CPAs Firm | Dahua CPAs (SGP) |
| Grandall Law Firm, Legal Adviser | Grandall (Shanghai) Law firm |
| cninfo.com | cninfo.com (http://www.cninfo.com.cn) |
| Yuan, 0’000 Yuan, 100 million Yuan | RMB Yuan, RMB0’000 Yuan, RMB100 million Yuan |
| Reporting Period, This Reporting Period | January 1, 2020 to December 31, 2020 |
| Same period last year | January 1, 2019 to December 31, 2019 |
| Major Asset Restructuring | the Company issues share to purchase assets and raises supporting funds and related transactions (now changed to: the Company issues share in 2018 to purchase assets and related transactions) |
| Counterparties of major asset restructuring, Counterparties | Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua, Kunming Huachen Investment Co., Ltd, Sherry Lee, Future Industry Investment Fund |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| (Limited Partnership), Zhuhai Hengjie Enterprise Management Office (Limited Partnership), Huang Shuhua, Zhang Tao, Gao Xiang, He Baohua, Huang Yuchen, Hu Jiadong, Wang Chizhou, Jiang Xinmin, Zhang Fang, Zhang Fan, Zheng Mei, Liu Wei, Du Jun, Cao Ben | |
| Shares not publicly offered in 2020, non-public offering | The 69,444,444 RMB-denominated ordinary shares (A shares) offered by Energy Technology to 22 specific investors by way of non-public offering in 2020 |
| Counterparties of shares not publicly offered in 2020 | Shanghai Lingang Dongfang Jun and Kechuang Industry Equity Investment Fund Partnership(L.P.), Shanghai Shenchuang Equity Investment Fund Partnership(L.P.), Shanghai Shenchuang Pujiang Equity Investment Fund Partnership(L.P.), Shanghai Shenchuang New Power Equity Investment Fund Partnership(L.P.), Dajia Assets Management Co., Ltd., JPMorgan Asset Management（Asia Pacific） Limited, JPMorgan Chase Bank, National Association, JT Asset Management Co., Ltd., Generali China Asset Management Co., Ltd., Lombarda China Fund Management Co., Ltd., UBS AG, Yunnan Energy Finance Holdings Co., Ltd., Guotai Fund Management Co., Ltd., Hongde Fund Management Co., Ltd., Bill & Melinda Gates Foundation Trust, Caisse de dép?t et placement du Québec, Hongta Securities Co., Ltd., Tianjin Liren Investment Management Partnership(L.P.), Zhuhai Hecheng Equity Investment Partnership (L.P.), Beijing Hongdao Investment Management Co., Ltd., Caitong Fund Management Co., Ltd., and China Structural Reform Fund Co., Ltd.. |
| Stock Ownership Incentive Scheme | 2017 restricted stock incentive plan of the Company |
| Lithium-ion battery, lithium battery | Rechargeable battery (chargeable battery), which works through the lithium ion movement between the positive and negative electrodes It generally used the electrodes contain lithium materials, and representative of modern high-performance battery. |
| Lithium Ion Battery Separator Film | In the structure of lithium battery, the film is one of the key inner components. Its main function is to separate the positive and negative electrodes of the battery, prevent the contact between the two poles and short circuit, and achieve the function of blocking current conduction and preventing the battery from overheating |
| Base film | The film immersed in the electrolyte of lithium battery is widely distributed with nano-scale micropores on its surface to allow lithium ion to move freely between the positive and negative electrodes |
| Coating film | The film with coating treatment |
| Wet-process, Wet processing | A production process of lithium-ion battery separator film, also known as phase separation or thermal phase separation. It is a preparation process of microporous film material by adding small molecules with high boiling point into polyolefin as pore forming agent, heating and melting into a uniform system, extruding the casting piece by screw, |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| extracting the pore forming agent with organic solvent after simultaneous or sequential stretching, and then heat setting with stretching amplitude. | |
| PVDF | PVDF |
| Cigarette label | Cigarette external packing, commonly known as “cigarette box” |
| Aseptic packaging | Composite packaging materials for aseptic filling of dairy products or non-carbonated soft drinks |
| Gable top package | The gable top package is a packaging for pasteurized milk, a paper-plastic composite packaging |
| Special paper | Special paper refers to paper with special functions, a general term for all kinds of special purpose paper or art paper. The term “special paper” in this Report mainly refers to special packaging paper. |
| BOPP film | The film made of high polymer polypropylene melt is drawn at a certain temperature and speed in a special drawing machine before proper process (e.g. corona, coating) |
| Cigarette film | BOPP film used for external packing of cigarette, also known as “BOPP cigarette film” |
| Flat film | BOPP film for general packaging, also known as “BOPP flat film” |
| Holographic electrified aluminum | A hot stamping material made by adding a layer of metal foil through coating and vacuum evaporation on the film base |
| Transfer film | A layer of chemical elastic film, which is also an intermediate carrier that exists on the transfer paper base or plastic base and used to transfer the printed patterns to the printed articles. |
| Panasonic | Panasonic Corporation |
| Samsung | Samsung SDI, a subsidiary of Samsung Group in the field of electronics |
| LG Chem | LG Chem, Ltd |
| CATL Group, CATL | Contemporary Amperex Technology Co., Ltd. |
| BYD | Shenzhen BYD Lithium Battery Co., Ltd. |
| GOTION HIGH-TECH | GOTION HIGH-TECH Co., Ltd. |
| Farasis Energy | Farasis Energy (Ganzhou) Inc. |
| Lishen | Tianjin Lishen Battery Co., Ltd. |
| Convertible Bonds | The convertible corporate bonds of RMB 1.6 billion issued by the Company on February 11, 2020, with a number of 16 million pieces, a term of 6 years, an abbreviation of “Energy Convertible Bonds, and a code of 128095. |
| YPS | Yunnan Property Exchange |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Section 2 Company Profile & Key Financial IndicatorsI. Corporate Information
| Stock Name | Energy Technology | Stock Code | 002812 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | 云南恩捷新材料股份有限公司 | ||
| Short Name of the Company in Chinese | 恩捷股份 | ||
| Name of the Company in English | YUNNAN ENERGY NEW MATERIAL CO., LTD. | ||
| Short Name of the Company in English | ENERGY TECHNOLOGY | ||
| Legal Representative of the Company | PAUL XIAOMING LEE | ||
| Registered Address | No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province | ||
| Postal Code for Registered Address | 653100 | ||
| Office Address | No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province | ||
| Postal Code for Office Address | 653100 | ||
| Official Website | www.cxxcl.cn | ||
| groupheadquarter@cxxcl.cn | |||
II. Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Xiong Wei | Yu Xue |
| Correspondence Address | No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province | No.125, Fuxian Road, High-tech Zone, Yuxi City, Yunnan Province |
| Tel. | 0877-8888661 | 0877-8888661 |
| Fax | 0877-8888677 | 0877-8888677 |
| groupheadquarter@cxxcl.cn | groupheadquarter@cxxcl.cn |
III. Information Disclosure and Place Where the Annual Report Is Kept
| Media Selected by the Company for Information Disclosure | Securities Times, China Securities Journal, Shanghai Securities Journal, Securities Daily |
| Website Designated by the China Securities Regulatory Commission for Publishing Annual Reports | www.cninfo.com.cn |
| Place Where the Annual Report Is Kept | Securities Department of the Company |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
IV. Registration Changes
| Organization Code | 91530000727317703K |
| Changes in Main Businesses Since the Company’s Listing (If Any) | When the Company was listed, its main businesses were divided into two categories: (1) packaging materials: BOPP films (cigarette film and flat film) and special paper products (laser transfer anti-counterfeiting paper, direct plating paper and cellophane); (2) packaging printing: mainly including cigarette label products and aseptic packaging products. Upon the completion of major asset restructuring in 2018, the Company's main businesses were divided into three categories: (1) Film products (lithium-ion battery separator film, cigarette film and flat film); (2) packaging printing products (cigarette label and aseptic packaging); (3) packaging products (special paper, holographic anti-counterfeiting electrochemical aluminum and other products). |
| Changes of Previous Controlling Shareholders (If Any) | Mr. Paul Xiaoming Lee and Ms. Sherry Lee, who are shareholders of the Company and members of Xiaoming Lee's family and the de facto controllers of the Company, signed the Power of Attorney for Shareholding on January 14, 2020, by which Ms. Sherry Lee fully delegated the shareholders' rights, such as rights to question, proposal and vote, in connection with all the shares she held in the Company, to her father Mr. Paul Xiaoming Lee, for a period of three years from the date of the Power of Attorney. After the signing of the above-mentioned Power of Attorney for Shareholding, Mr. Paul Xiaoming Lee becomes the single shareholder of the Company with the most voting shares, and the controlling shareholder of the Company is changed from Heyi Investment to Mr. Paul Xiaoming Lee. |
V. Other Related InformationAccounting firm hired by the Company
| Name of Accounting Firm | Dahua CPAs (SGP) |
| Office Address of the Accounting Firm | Floor 12, Building 7, 16 West 4th Ring Middle Road, Haidian District, Beijing |
| Name of Accountant (Signature) | Tang Rongzhou, Yao Rui |
Sponsor engaged by the Company to perform continuous supervision duties during the Reporting Period
√ Applicable □ N/A
| Name of Sponsor | Office Address | Name of Sponsor Representative | Continuous Supervision Period |
| CITIC Securities | CITIC Securities Building, 48 Liangmaqiao Road, Chaoyang District, Beijing | Wang Jiaji, Liu Chunqin | July 18, 2019 to December 31, 2021 |
Financial adviser engaged by the Company to perform continuous supervision duties during the Reporting Period
√ Applicable □ N/A
| Name of Financial Adviser | Office Address | Name of Principal of Financial Adviser | Continuous Supervision Period |
| CITIC Securities | CITIC Securities Building, 48 Liangmaqiao Road, Chaoyang District, Beijing | Wang Jiaji, Liu Chunqin | July 18, 2019 to December 31, 2021 |
VI. Key Accounting Data and Financial IndicatorsWhether the Company is required to retroactively adjust or restate prior years' accounting data
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
√ Yes □ No
Reasons for retrospective adjustment or restatementOther reasons
| 2020 | 2019 | YoY Increase or Decrease | 2018 | |||
| Before Adjustment | After Adjustment | After Adjustment | Before Adjustment | After Adjustment | ||
| Operating Income | 4,283,007,589.11 | 3,159,561,554.91 | 3,159,561,554.91 | 35.56% | 2,457,492,825.89 | 2,457,492,825.89 |
| Net profits attributable to shareholders of the listed Company (RMB) | 1,115,604,020.47 | 849,837,425.81 | 849,837,425.81 | 31.27% | 518,439,455.43 | 518,439,455.43 |
| Net profits attributable to shareholders of the Company (without non-recurring profit and loss) | 990,507,177.08 | 752,823,445.85 | 752,823,445.85 | 31.57% | 318,233,698.49 | 318,233,698.49 |
| Net cash flow from operating activities | 1,055,180,013.19 | 763,297,007.77 | 763,297,007.77 | 38.24% | 171,020,949.81 | 171,020,949.81 |
| Basic earnings per share (RMB/share) | 1.34 | 1.06 | 1.06 | 26.42% | 1.21 | 0.72 |
| Diluted earnings per share (RMB/share) | 1.34 | 1.06 | 1.06 | 26.42% | 1.21 | 0.72 |
| Weighted average return on net assets | 17.15% | 20.36% | 20.36% | -3.21% | 16.48% | 16.48% |
| End of 2020 | End of 2019 | YoY Increase or Decrease | End of 2018 | |||
| Before Adjustment | After Adjustment | After Adjustment | Before Adjustment | After Adjustment | ||
| Total Assets (RMB) | 20,572,234,846.40 | 12,193,188,361.42 | 12,193,188,361.42 | 68.72% | 7,702,468,537.78 | 7,702,468,537.78 |
| Net assets attributable to shareholders of the listed Company (RMB) | 11,102,880,648.67 | 4,551,052,876.43 | 4,551,052,876.43 | 143.96% | 3,831,154,951.68 | 3,831,154,951.68 |
The lower of the Company's net profit before and after deduction of non-recurring gains or losses for the last three fiscal years isnegative, and the audit report for the latest year shows that there is uncertainty about the Company's ability to continue as a goingconcern
□ Yes √ No
The lower of the net profit before and after deduction of non-recurring gains or losses is negative
□ Yes √ No
VII. Differences in Accounting Data under Accounting Standards of the PRC and theInternational Accounting Standards
1．Differences in net profits and net assets disclosed in the financial reports prepared under the accountingstandards of the PRC and international accounting standards
□ Applicable √ N/A
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There is no difference in the net profits and net assets disclosed in the financial reports for the Reporting Period prepared under theaccounting standards of the PRC and international accounting standards.
2．Differences in net profit and net assets disclosed in the financial reports prepared under the accountingstandards of the PRC and overseas accounting standards.
□ Applicable √ N/A
There is no difference in the net profits and net assets disclosed in the financial reports for the Reporting Period prepared under theaccounting standards of the PRC and overseas accounting standards.VIII. Key Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 552,861,641.98 | 887,782,615.50 | 1,140,685,184.40 | 1,701,678,147.23 |
| Net profits attributable to shareholders of the Company | 138,230,902.44 | 183,161,737.43 | 322,104,471.98 | 472,106,908.62 |
| Net profits attributable to shareholders of the Company (without Income from discontinued operation) | 105,336,315.65 | 162,151,408.49 | 292,069,716.03 | 430,949,736.91 |
| Net cash flows from operating activities | 34,367,094.55 | 166,595,532.54 | 61,577,174.06 | 792,640,212.04 |
Whether the above financial indicators or their sums are materially different from those disclosed in the quarterly and semiannualreports of the Company
□ Yes √ No
IX. Items and Amounts of Non-Recurring Gains or Losses
√ Applicable □ N/A
Unit: RMB
| Item | Amount in 2020 | Amount in 2019 | Amount in 2018 | Description |
| Gains or losses on disposal of non-current assets (including the write-off portion of the provision for asset impairment) | -144,872.28 | 2,066.58 | -125,018.08 | |
| Government subsidies recognized in current gains or losses (except for those closely related to the Company's business and are either in fixed amounts or determined under quantitative methods in accordance with the national standard) | 139,305,009.71 | 121,993,732.08 | 91,358,617.68 | Due to increase in investment in the production line of lithium-ion battery separator film, the local government gave policy support. |
| Profit generated for the costs of the Company in the acquisition of subsidiaries, associates or joint ventures are lower than the fair value of the Company’s share in the identifiable net | 673,727.72 |
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| assets of the investees | ||||
| Gains or losses on entrusted investments or assets management | 7,111,089.67 | 191,780.82 | 8,160,860.73 | |
| Net gains or losses of subsidiaries as a result of business combination of enterprises under common control for the current period from the beginning to the combination date | 310,748,377.96 | |||
| Except for effectively hedging business related to normal business operations of the Company, gain or loss arising from the change in the fair value of held-for-trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, as well as investment income produced from the disposal of held-for-trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and other debt investments. | 10,951,914.18 | |||
| Other non-operating income/expenses other than items above-mentioned | -4,201,996.76 | -549,671.34 | 338,681.94 | |
| Other items within the definition of non-recurring gains or losses | 357,802.66 | 4,692,941.18 | ||
| Less: amount affected by the income tax | 23,107,901.22 | 18,944,093.93 | 58,641,435.61 | |
| Amount affected by the minority shareholders’ equity (after tax) | 5,847,930.29 | 10,372,775.43 | 151,634,327.68 | |
| Total | 125,096,843.39 | 97,013,979.96 | 200,205,756.94 | -- |
The reasons should be explained for items defined by the Company as non-recurring gains or losses according to the definitionspecified in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 --Items of Non-recurring Gains and Losses and for items defined by the Company as recurrent gains or losses which are listed asnon-recurring gains or losses in the Explanatory Announcement on Information Disclosure for Companies Offering Their Securitiesto the Public No.1 -- Items of Non-recurring Gains and Losses.
□ Applicable √ N/A
During the Reporting Period, the Company did not define any items of non-recurring gains or losses defined or listed in theExplanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 -- Items ofNon-recurring Gains and Losses as the items of recurrent gains or losses according to this announcement.
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Section 3 Business OverviewI. Main Businesses of the Company during the Reporting Period
1. Main businesses and products of the Company
During the Reporting Period, the Company's main products are divided into three categories: (1)film products, mainly including lithium-ion battery separator film (base film and coated film),BOPP film (cigarette film and flat film); (2) packaging printing products, mainly including cigarettelabel and aseptic packaging; (3) paper packaging, mainly including special paper products (lasertransfer anti-counterfeiting paper, direct plating paper and coated paper), holographicanti-counterfeiting electrochemical aluminum, transfer film and other products.The wet-process lithium-ion battery separator film produced by the Company is mainly used formanufacturing lithium-ion battery for the new energy vehicle, 3C products and energy storage;cigarette film is mainly used for cigarette manufacturing; aseptic packaging is mainly used for milkboxes, beverage boxes, etc.; among special paper products, laser transfer anti-counterfeiting paper ismainly used for cigarette labels, cosmetic boxes, toothpaste boxes, pharmaceutical boxes, etc.,direct plating paper is mainly used for lining of cigarette label, and packing chocolate and otherfood, and coated paper is mainly used in tobacco, food, pharmaceutical, cosmetic and foodindustries. The major customers of the Company are large domestic and foreign producers oflithium-ion battery, cigarette, food and beverage and plastic packaging, and printers. The majorcustomers of wet-process lithium-ion battery separator film of the Company include Panasonic, LGChem. Ltd., Samsung SDI, CATL Group, GOTION HIGH-TECH, BYD, Farasis Energy, Lishenand other domestic well-established lithium-ion battery enterprises. Company is the a-class supplierof monopoly cigarette material in Yunnan province, the main customers of cigarette label productare the large domestic cigarette manufacturing enterprises, including Yunnan Zhongyan Material(Group) Co., Ltd. and Chongqing Zhongyan Industrial Co., Ltd., etc., products are widely used in"Yuxi", "Hongta", "Clouds", "Red River", "Snow Area", "Ziyun" and "Marble","Longfengchengxiang”, and other well-known domestic brand of cigarettes. The major customersof cigarette films of the Company include domestic well-known cigarette producers, such asYunnan Zhongyan Material (Group) Co., Ltd., Sichuan Zhongyan Industrial Co., Ltd., ChongqingZhongyan Industrial Co., Ltd., Hunan Zhongyan Industrial Co., Ltd., Anhui Zhongyan IndustrialCo., Ltd, Hubei Zhongyan Industrial Co., Ltd., Guizhou Zhongyan Industrial Co., Ltd.,Heilongjiang Tobacco Industrial Co., Ltd., Jiangxi Zhongyan Industrial Co., Ltd., and GansuTobacco Industrial Co., Ltd. The major customers of aseptic packaging products of the Companyinclude Inner Mongolia Yili Industrial Group Co., Ltd., Inner Mongolia Mengniu Dairy (Group) Co.,Ltd., Beijing Sanyuan Foods Co., Ltd., Royal Group South China Dairy Co., Ltd., GuizhouHaoyiduo Dairy Co., Ltd., Shenzhen Dongpeng Jiexun Supply Chain Management Co., Ltd, DaliFoods Group Co., Ltd., Heilongjiang Wondersun Dairy Sunshine Co., Ltd., Yunnan Europe-AsiaDairy Co., Ltd., Yunnan Huangshi Lesson Dairy Industry Co., Ltd., and new customers in 2020:
Bright Dairy & Food Co., Ltd. and Nanjing Weigang Dairy Co., Ltd.
2. Business models
The Company adopts different business models for different products. Customization applies towet-process lithium-ion battery separator films, cigarette labels, aseptic packagings, special paperproducts and cigarette films, subject to the customer requirements, while flat films are producedbased on sales prospects, with appropriate number of inventory stocked up.
(1) Procurement mode: the Supply Department of the Company makes a List of Qualified Suppliers(or a List of Qualified Suppliers/Materials) after evaluating and selecting suppliers. The materialslisted in the purchase list can only be purchased from suppliers included in the List of QualifiedSuppliers. For each type of materials, at least 2 suppliers should be selected. The Companyconducts a comprehensive supplier evaluation every year and updates the List of QualifiedSuppliers (or the List of Qualified Suppliers/Materials) in time.
(2) Production mode: the Company carries out production based on orders and centralized
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scheduling so as to reasonably control the costs and improve the efficiency. The ProductionScheduling Department makes the production schedule based on orders and sales plan, and managesthe production and quality in a unified manner so as to endure the completion of production taskswithin the standards in terms of quality, quantity and time frame.
(3) Sales mode: direct selling is adopted for wet-process lithium-ion battery separator film, and thesalespersons of the Marketing Department are responsible for the sale, promotion and ordersolicitation; customization is adopted for cigarette label and cigarette film whose production andsale are organized based on the orders the Company obtains through the participation in thenationwide bid called for by the downstream cigarette enterprises according to AdministrativeMeasures for Cigarette Materials Procurement; flat films are produced based on sales prospects,with appropriate number of inventory stocked up; aseptic packagings and special paper products arecustomized pursuant to the customer requirements.
3. Industrial overview and market position of the Company
The Company is a global leader in lithium-ion battery separator film, with global competitiveness,and diversified product portfolios ranging from cigarette label, BOPP film, aseptic packaging tospecial paper.
(1) Film products
The film products of the Company are divided into two categories: lithium- ion battery separatorfilm, and BOPP film. Lithium-ion battery separator film is one of the main raw materials oflithium-ion battery. The market scale of lithium-ion battery determines the market scale of theseparator film. The market scale of the separator film increases with the growth of the lithium-ionbattery market. Lithium-ion batteries are widely used in multiple markets and scenarios, includingthree major markets, namely consumer electronics, power battery and energy storage, and also usedin some market segments, such as power tools. From a global perspective, the Company and a fewother domestic manufacturers have entered the supply chain of the global major batterymanufacturers by virtue of their technological accumulation and business scale. The Company hasestablished a good cooperative relationship with three major foreign lithium-ion batterymanufacturers, namely Panasonic, Samsung, LG Chem, and other domestic well-establishedlithium-ion battery enterprises, including CATL Group, BYD, GOTION HIGH-TECH, FarasisEnergy and Lishen. With the improvement of technology and capacity scale of domestic lithium-ionbattery manufacturers, the domestic demands for the separator films are basically satisfied by localmanufacturers. With the fierce competition, manufacturers of lithium-ion battery separator filmwithout independent R&D design capacity will have narrower space of development. Domesticcompetition will focus on raw materials and formula technology, micropore preparation technologyand design capacity of complete equipment, product quality and sales channels, etc.. Manufacturerswith independent core technology, stable product quality and sales channels will have more andmore market shares. Relying on the accurate market judgment made by the management team andthe technical advantages of its own R&D team, the Company is currently a leader in wet-processlithium-ion battery separator film, with global competitiveness in terms of capacity scale, productquality, cost efficiency, and technological research and development. The Company has establishedfive production bases of wet-process separator film in Shanghai, Wuxi, Jiangxi, Zhuhai and Suzhou,and started the construction of the production base of lithium-ion battery separator film in Hungaryduring the Reporting Period to further increase the production capacity, expand the overseas market,and meet the demands of the global high-end lithium-ion battery customers for wet-processseparator films and services with high consistency and safety. The Company has established a goodbrand image in the global medium and high-end separator film markets, as its wet-process separatorfilms have stable quality and large production capacity. As a director member, Shanghai Energyestablished the Separator Film Manufacturers Association to build an exemplary image and lead thepositive and healthy development of China’s separator film industry. In addition, Shanghai Energyhas received many titles and awards, such as “National High-Tech Enterprise”, “ShanghaiMunicipal Technology Center”, and “Top 10 Exemplary Headquarters in Pudong New Area”.BOPP films are produced by Hongta Plastic and its subsidiary Chengdu Hongta Plastic, which areamong the few Chinese enterprises with ability to produce BOPP cigarette films, andanti-counterfeit printing cigarette films. The Company’s sales volume of BOPP films wasapproximately 21,000 tons in 2020, and the production scale of BOPP films ranked among the bestof its kind in the Southwest China. Hongta Plastic is a national high-tech enterprise, and wasawarded the titles of “Yunnan Provincial Excellent and Strong Industrial Enterprises”, “Yunnan
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Provincial First Excellent and Strong Packaging Enterprises”, “Yunnan Provincial Second Top 30Packaging Enterprises”, “Yunnan Provincial Growing SMEs”, “Yunnan Provincial InnovativeEnterprises”, “Yunnan Provincial Technology SMEs”, and “Yunnan Provincial Private Small GiantEnterprises”, and undertook two National Torch Plan projects. The trademark of "Hongta PlasticPlus Symbol" (“红塑及图”) was recognized by the Trademark Office of the State Administrationfor Industry and Commerce as a national well-known trademark and was awarded the titles of"Yunnan Provincial Famous Trademark" and "Yunnan Provincial Famous Brand Product". ChengduHongta Plastic was recognized as a “high-tech enterprise”, “Sichuan Enterprise Technology Center”,etc.
(2) Packaging printing products
In 2020, China’s tobacco industry achieved a total of RMB 1.2803 trillion of industrial andcommercial taxes and profits, up 6.2% year on year; the total fiscal revenue paid reached RMB
1.2037 trillion, up 2.3%. The Company is one of the important cigarette label suppliers in China andClass-A suppliers of the non-exclusive cigarette materials in Yunnan, its major customers are largedomestic well-known cigarette manufacturers. Its products have been widely used by domesticfamous cigarette brands.In respect of aseptic packaging, although the international packaging giants still occupy a leadershipposition by virtue of its first-mover advantage in the market, their share in China’s market has beendeclining in recent years as Chinese producers have made constant progress in material technologyand production technology. According to the current situation, there will have a gradual transitionfrom medium and low-end market to high-end aseptic packaging market, and the market share ofdomestic aseptic packaging manufacturers will be increased gradually, as domestic manufacturershave the price-performance advantage. The Company independently develops roll-form asepticbrick package, pre-made aseptic brick package, A-type gable top package (mainly used for freshmilk) and B-type gable top package (mainly used for tea drinks, fruit juice and non-carbonatedbeverages), making it become one of the few enterprises able to produce roll-form aseptic brickpackage, pre-made aseptic brick package, A-type gable top package and B-type gable top package.Domestic famous large diary and beverage producers are the major customers of HongChuangPackaging, such as Yili, Mengniu, Bright Dairy, Dali, Dongpeng, Beijing Sanyuan Food, HuangshiGroup, Guizhou Haoyiduo Dairy, Wondersun, Europe-Asia Dairy, Huangshi Lesson Dairy, andNanjing Weigang Dairy. The product quality and service of HongChuang Packaging have gainedrecognition of a large number of customers. “Hongchuang Packaging” (红创包装) has beenrecognized as a Yunnan Province famous trademark by Yunnan Administration for Industry andCommerce. The “paper-based aluminum-plastic eight-layer composite packing paper” was certifiedas the national key new product, and Hongchuang Packaging was awarded the titles of “High-TechEnterprise”, “Yunnan Provincial Enterprise Technology Center”, “Yunnan Provincial LeadingPackaging Enterprise”, “Yunnan Provincial Growing SMEs”, etc.
(4) Special paper and other products
China has lots of paper packaging producers, with full market competition. Dexin Paper mainlyproduces special paper products, holographic anti-counterfeiting electrochemical aluminumproducts and transfer films. They are widely used for the cigarette labels for domestic famouscigarette brands, such as “Yunyan”, “Hongtashan”, “Yuxi”, “Hongshuangxi”, “Jiaozi”,“Huanghelou”, and “Hongjinlong”. Thanks to the Company’s strong capability in productdevelopment, excellent product quality and good adaptability, the special paper products havedeveloped rapidly and fill the gap of no special paper deep processing enterprise in SouthwestChina where a large number of packaging printing enterprises operate. As a national high-techenterprise, Dexin Paper has won recognition of downstream customers by virtue of the seamavoidance technology of laser transfer paper, the positioning and transfer technology of pre-printedcursor, and the transfer technology of water-based films. Its rainbow laser transferanti-counterfeiting paperboard was certified as National Key New Product and Yunnan ProvincialKey New Product. Dexin Paper was awarded the titles of “Yunnan Provincial EnterpriseTechnology Center” and “Yunnan Provincial Technology SMEs”.
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II. Major Changes in Prime Assets
1. Major changes in prime assets
| Prime Assets | Notes to Major Changes |
| Equity assets | No major change |
| Fixed assets | Up 70.58% compared with the beginning of the period, primarily driven by more investments made in production line of lithium-ion battery separator film, and inclusion of Suzhou Green Power and Newmi Tech in the consolidated financial statements during the Reporting Period. |
| Intangible assets | Up 54.60% compared with the beginning of the period, primarily driven by inclusion of Suzhou Green Power and Newmi Tech in the consolidated financial statements during the Reporting Period. |
| Construction in progress | No major change |
| Monetary capital | Up 134.76% compared with the beginning of the period, primarily driven by receipt by the Company of the proceeds from the offering of convertible corporate bonds, the proceeds from the non-public offering of shares, and the funds needed for reserved investments during the Reporting Period. |
| Notes receivable | Up 104.95% compared with the beginning of the period, primarily driven by the great increase in product sales income and as a result the increase in relevant notes receivable during the Reporting Period. |
| Accounts receivable | Up 63.46% compared with the beginning of the period, primarily driven by the great increase in product sales income and as a result the increase in relevant accounts receivable during the Reporting Period. |
| Receivable financing | Up 118.89% compared with the beginning of the period, primarily driven by the great increase in product sales income and as a result the increase in relevant notes receivable and accounts receivable during the Reporting Period. |
| Prepayments | Up 71.43% compared with the beginning of the period, primarily driven by the operation starting of production line of lithium battery separator film , and as a result the increase in prepayments for materials during the Reporting Period. |
| Other receivables | Down 98.69% compared with the beginning of the period, primarily driven by the completion of the acquisition of 100% equity of Suzhou Green Power and the confirmation of the prepaid equity transfer consideration as the investment during the Reporting Period |
| Inventories | Up 52.40% compared with the beginning of the period, primarily driven by the inclusion of Suzhou Green Power in the consolidated financial statements during the Reporting Period. |
| Goodwill | Up 1078.20 % compared with the beginning of the period, primarily driven by inclusion of Suzhou Green Power and Newmi Tech in the consolidated financial statements during the Reporting Period. |
| Deferred income tax assets | Up 114.23 % compared with the beginning of the period, primarily driven by the receipt of government subsidy related to assets during the Reporting Period. |
| Other non-current assets | Up 165.48% compared with the beginning of the period, primarily driven by the more investments made in production line of lithium battery separator film , and as a result the increase in prepayments for equipment during the Reporting Period. |
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2. Overseas Prime Assets
□ Applicable √ N/A
III. Core Competitiveness Analysis
1. Scale advantage
As at the end of the Reporting Period, the Company has the world’s first production scale of wet-process lithium-ion batteryseparator film, with the world’s largest supply capacity. As a supplier of lithium-ion battery separator film with the world’s firstshipments, the Company has the world’s largest market share. The Company’s scale advantage is mainly reflected in cost control andsales development. The Company is capable of undertaking large-scale orders from large battery manufacturers, such as LG Chem,CATL, and GOTION HIGH-TECH. Furthermore, the Company’s scale advantage also improves the production efficiency, createsthe procurement advantage, and effectively reduces the cost. In terms of cost control, the Company’s scale advantage firstly createsthe cost advantage for raw materials procurement. Large-scale centralized procurement makes the cost of raw materials lower thanthat of the counterparts in this industry. Secondly, the Company’s huge sales scale brings a large number of orders to the Company, sothat the Company can effectively reduce the frequency of downtime during production and effectively reduce the cost caused bydowntime through reasonable production scheduling. As a result, the Company has the largest operating rate and capacity utilizationrate. In terms of sales development, the industry concentration of the lithium-ion battery is increasing day by day. The existing andunder-construction production lines of domestic first-class lithium-ion battery manufacturers boast huge production scale. Therefore,whether they have a supply capacity to satisfy the current and future demands of international first-class lithium-ion batterymanufacturers will be the first consideration in their selection of suppliers. As the world’s largest lithium-ion battery separator filmsupplier, the Company has a competitive advantage thanks to its sufficient supply capacity.
2. Cost advantage
The Company has long been committed to development and improvement of production technology for advanced wet-processlithium-ion battery separator film. Thanks to the continuous improvement of production equipment and production process by theCompany’s production management and technical teams, the Company’s output from a single production equipment line oflithium-ion battery separator film ranks the best in the industry to further reduce the unit cost in depreciation, energy consumptionand labor. Moreover, thanks to the Company’s continuous improvement of production technology and production management, theCompany’s yield coefficient and first pass yield of lithium-ion battery separator film rank the best in the industry. Besides, theCompany continues to improve the recovery efficiency of auxiliary materials, so that the consumption of auxiliary materials is farlower than that of counterparts in the industry. On the whole, the Company’s cost advantage is the result of synthetic action,including continuous improvement of production equipment, continuous improvement of production technology, continuousinvestment in research and development, constant improvement of production management, strong market development ability andhuge production scale, and the Company will maintain this advantage for a long term.
3. Product advantage
The Company has long been committed to the research and development of lithium-ion battery separator film and committed tocreating value for customers with high-quality products and excellent service. Mainstream lithium-ion battery manufacturers,especially international first-class lithium-ion battery manufacturers, have strict requirements for material quality. As one of the corematerials for lithium-ion batteries, the separator film has high technical barrier and its performance directly affects the dischargecapacity, cycle life and safety of lithium-ion battery. Lithium-ion battery manufacturing requires strong properties of separator films,such as the size, distribution uniformity and consistency of separator film micropores. Mainstream lithium-ion battery manufacturersapply a long system verification process covering product, technology and production flow to introduce material suppliers. So far, theCompany has successfully passed the product certification of most domestic and foreign mainstream lithium-ion batterymanufacturers, and entered the overseas power battery supply chain system with the most stringent requirements. The product quality
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has been recognized by many lithium-ion battery manufacturers. In addition, the Company continues to invest in the development ofnew products, and carry out product research and forward-looking technical reserve while meeting customized needs. So far, theCompany has become a supplier with the most diversified lithium-ion battery separator film products to meet multiple demands ofdifferent customers.
4. R&D advantage
The Company has established a research and development team with sound system through years of accumulation. The research anddevelopment scope covers the separator film and coated production equipment, separator film preparation process, raw & auxiliarymaterials improvement, coating process, slurry formula, recovery and energy saving technology, as well as R&D for forward-lookingtechnical reserve projects. The Company’s research and development team of lithium-ion battery separator film has made a series ofachievements in improving production efficiency, enhancing the quality of lithium-ion battery separator film and developing newproducts. So far, the Company has had 208 currently effective patents, including 3 authorized foreign patents, and 199 ongoing patentapplications, including 42 international patents. What’s more, the Company’s research and development team of lithium-ion batteryseparator film can not only customize a variety of new products for downstream customers, but also jointly develop products withdownstream customers to meet their diversified demands.
5. Talent advantage
The lithium-ion battery separator film is currently an emerging industry in China, with only more than ten years of history. With therapid global growth of energy industry in recent years, there are insufficient talents and no qualified professionals in the wholeindustry of lithium-ion battery separator film. The Company relies on the talents accumulated in more than 20 years in BOPP filmindustry that is similar to the lithium-ion battery separator film industry. The Company has established a good talent incentivemechanism and also recruited talents worldwide. As at the end of the Reporting Period, the Company has more than 80 professionalswith master’s degree or above in the lithium-ion battery separator film, and has established a core technology research anddevelopment team composed of professional research and development staff from the United States, Japan, Korea and other countries.Furthermore, through long-term efforts, the Company has established a complete professional team in production management,system construction, quality control, market expansion and equipment design, installation and maintenance, etc. All teams of theCompany have achieved fruitful results in their respective professional fields to jointly grow the Company to be an internationallycompetitive leader in the lithium-ion battery separator film.
6. Advantage of market and customer resources
In the first half of 2020, the Company still maintained the leading position in the market of wet-process lithium-ion battery separatorfilm. So far, the Company has entered the supply chain system of most mainstream lithium-ion battery manufacturers in the world,including overseas lithium-ion battery production giants, such as Panasonic, Samsung, LG Chem, CATL, BYD and GOTIONHIGH-TECH, and other domestic well-established lithium-ion battery enterprises, such as Farasis Energy and Lishen. The Companyhas established a stable and good cooperation relationship with downstream customers, and had an in-depth technical exchange withthem during cooperation. Therefore, the Company has a profound understanding of customer needs and is able to quickly respond tocustomer needs and provide corresponding services. With the rapid development of the industry and continuous release of thecapacity, the Company will grow along with the rapid growth of downstream customers.
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Section 4 Discussion and Analysis on Business Operation
I. OverviewIn 2020, the COVID-19 swept the world. We experienced the journey of fighting the epidemic,preventing the epidemic, resuming work and production, and strictly preventing the recurrence ofthe epidemic. The Company exerted every effort to go through the tough time by arranging tasks forthe epidemic prevention and control in an orderly manner while managing the production and salestooth and nail by means of active response to the market competition and rapid response tocustomers’ demands during the epidemic for the cigarette label, aseptic packaging, and specialpaper, with a view to grasp the market opportunity; in addition, in the second half of the Year, thenew energy automobile industry recovered and developed rapidly, the Company's order quantity ofpower lithium battery separator film rose by virtue of the high product quality, and the Companyexpanded its business to consumer lithium-ion battery separator film market by acquiring SuzhouGreen Power. The business integration of Suzhou Green Power achieved remarkable effect, andSuzhou Green Power turned loss to profit during the Reporting Period. The Company has becomethe world's largest separator film supplier in the two fields of power battery and consumer battery,and its market position and profitability will continue to rise rapidly. During the Reporting Period,the total assets, net assets, operating income and net profit of the Company achieved great growth.In 2020, the Company achieved consolidated operating income of RMB4.28billion, representing ayear-on-year increase of 35.56%, and net profit attributable to the parent Company ofRMB1.1156billion, representing a year-on-year increase of 31.27%.
1. Overall financial performance in 2020
(1) Film products
Film products are the core products of the Company. The operating income of film products in2020 was RMB3.4640963 billion, accounting for 80.88%, an increase of 35.92% compared withlast year, mainly due to the continuous growth of the revenue of wet-process lithium-ion batteryseparator film business. Benefiting from the recovery and boom of the global new energy industryand new energy vehicle market, the demand for power batteries was strong in the second half of theYear, driving the rapid growth of the upstream supporting products and market space of thelithium-ion battery. In the first half of the Year, the Company reduced the impact of the epidemic onthe Company by reducing costs and increasing efficiency and reasonably controlling expenses. Inthe second half of the Year, the Company achieved an increase in income along with the rise indownstream demand by strengthening market development and seizing market opportunities. Thegradual construction completion and putting into operation of the 4 base film production lines ofZhuhai Energy Phase II project, 8 base film production lines of Jiangxi Tonry, 8 base filmproduction lines of Wuxi Energy enabled the Company to further meet the domestic and foreignexisting and potential customers' requirements for supply capacity and enhance the Company'sindustry competitiveness. As at the end of 2020, the Company has 46 wet-process separator filmproduction lines in its five major bases located respectively in Shanghai, Zhuhai, Jiangxi, Wuxi andSuzhou, with a production capacity of 3.3 billion square meters, ranking the first in the world. theCompany's wet-process separator film shipments exceeded 1.3 billion square meters during theReporting Period, with the highest market share. The wet-process separator film achieved anincome of RMB 2.89 billion, a great growth of 48.83% year on year. With a remarkable growth in2020, Shanghai Energy's operating income was RMB 2.65 billion, net profit was RMB 0.96 billion,and net profit attributable to shareholders of the listed Company was RMB 0.92 billion.During the Reporting Period, the Company expanded its business market from power batteryseparator film to consumer lithium-ion battery separator film by acquiring 100% equity of SuzhouGreen Power and 76.3574% equity of Newmi Tech. On the one hand, the Company enlarged itsproduction capacity of consumer batter separator film, on the other hand, due to the remarkableeffect of business integration of Suzhou Green Power, Suzhou Green Power turned loss to profitduring the Reporting Period, enhancing the performance of the listed Company. In 2020, theoperating income of Suzhou Green Power was RMB888.03 million, net profit was RMB175.97million. After inclusion in the consolidated financial statements of the Company in March 2020, the
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net profit attributable to shareholders of the listed Company as at the end of the Reporting Periodwas RMB222.64 million. The Company will strengthen the integration of Newmi Tech through theinclusion of it into the Group's supply chain system, transformation of production equipment,optimization of processes and other measures to achieve resource complementarity and advantagesuperposition, reduce its procurement costs, improve production efficiency and operationalefficiency.The Company has developed more than 100 varieties of wet-process film products. This wideproduct range can meet the different needs of customers. The products are stable and consistent inquality, and thus widely recognized by large foreign lithium battery manufacturers, with largemarket demands. The major overseas customers of power lithium-ion battery separator film of theCompany include Panasonic, Samsung and LG Chem, and domestic customers include CATL, BYD,GOTION HIGH-TECH, Farasis Energy, Lishen and many other domestic lithium-ion batteryenterprises. Along with the constant high prosperity of new energy vehicles, the Company's existingand potential customers maintain strong demands for the Company's wet-process separator filmproducts, and at the same time the Company actively expand overseas markets. During theReporting Period, the Company launched the Hungary project of wet-process lithium-ion batteryseparator film production line and supporting plant, with ab expected total investment ofapproximately �183 million. This project is to build 4 fully automatic imported film productionlines and more than 30 coating production lines, with an annual base film production capacity ofapproximately 400 million square meters to meet the growing demand for lithium-ion batteryseparator film in the European market. Building a plant in Hungary for localizing production andoperation in Europe is conducive to quickly responding to customer demand, reducing the risk ofinternational trade policies and tariffs, expanding business in overseas markets, and is expected toincrease global market share, and is of strategic importance to the Company's internationalizationprocess.The Company has been working in film industry for many years, with continuously improvingproduction equipment, continuously improving production process, continuously improving productquality, gradually optimizing production efficiency, and constantly developing new products to meetthe needs of downstream customers, gradually establishing strong competitive advantages inproduction capacity scale, product quality, product research and development, market development,etc., it still relies on its technological and scale advantages to continue to occupy a leading positionand gradually gain more and more domestic market share, even after government subsidy policy isabolished and market competition is intensified. In addition, the Company enters the overseassupply chain system, the proportion of overseas sales continued to increase. Overseas customerscertified the suppliers in terms of product quality, production technology, production environment,supply capacity, etc., with an average certification period of 18-24 months. Shanghai Energy is sofar the only wet-process film supplier in China that has fully entered the overseas power batterysupply chain system. The Company's significant competitive advantage enables the Company tomaintain a high profitability level. The Company will make full use of existing competitiveadvantage and continued investment in the expansion and technical R&D, as the wet Lithium IonBattery Separator Film capacity of production release, scale effect will be even more apparent. TheCompany will maintain its competitive advantages in terms of capacity scale, cost efficiency andtechnical ability, so as to ensure that the Company can maintain its position in the industry for along time.In addition, the Company leveraged its advantages in terms of technology, quality and cost inthe manufacture of cigarette film films, seized the market opportunities, quickly adjusted productionand responded to customer demand quickly during the epidemic. During the Reporting Period, theCompany's operating income of cigarette film was RMB272.0213 million, representing ayear-on-year increase of 9.09%. In view of the fact that the production line of BOPP film is sharedby cigarette film and flat film, and the production is almost at full capacity, the increase ofproduction output and sales volume of cigarette film leads to the decrease of that of flat film, anddue to the drop in sales price of crude oil, the main raw material, in 2020, the unit price of flat filmdecreased. The operating revenue of flat film in the Reporting Period was RMB300.6742 million,down 15.67% year on year. During the Reporting Period, the BOPP film expansion project ofHongta Plastic made steady progress. Hongta Plastic will form an annual production capacity of70,000 tons of functional films by relocating the original two BOPP film production lines andadding a new BOPP film production line and supporting equipment, etc.
(2) Packaging printing products
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Due to the impact of the epidemic on domestic logistics, some customers of the Company werenot supplied with sufficient cigarette label products. The Company seized the market opportunityand quickly adjusted production to respond to customer demand quickly. The sales volume of theCompany's cigarette labels grew significantly during the Reporting Period, and the operatingincome of cigarette labels was RMB 128.9761 million, up 10.08% year on year.Through continuous development of new products, customized services and internal leanmanagement measures, the Company's aseptic packaging business still focuses on servinglarge-scale dairy enterprises and regional well-known dairy enterprise to achieve sales growth. Theexpansion of production capacity of the aseptic packaging has promoted the scale expansion andprofitability of aseptic packaging products. In 2020, the aseptic packaging business grew fast, withan operating income of RMB 403.5137 million, up 39.52% year on year. The Company's asepticpackaging products have the characteristics of excellent heat-sealing performance, strongadaptability to the machine, low filling loss, etc., the product quality and performance indicators canbe comparable with similar products at home and abroad. In the future, the Company will continueto promote customer relationship management, jointly grasp market growth opportunities with largedairy enterprises to realize the rapid development. With large-scale famous dairy enterprises andregional well-known dairy enterprises as the major customers, including Inner Mongolia YiliIndustrial Group Co., Ltd., Inner Mongolia Mengniu Dairy (Group) Co., Ltd., Bright Dairy & FoodCo., Ltd., Nanjing Weigang Dairy Co., Ltd, Beijing Sanyuan Foods Co., Ltd., Shenzhen DongpengJiexun Supply Chain Management Co., Ltd, Dali Foods Group Co., Ltd., Heilongjiang WondersunDairy Sunshine Co., Ltd., Yunnan Europe-Asia Dairy Co., Ltd., and Yunnan Huangshi Lesson DairyIndustry Co., Ltd., the Company’s sales volume of aseptic packaging products was 2.309 billionpieces during the Reporting Period, up 36.30% year on year. The Company will focus on packagingprinting products, and make use of good product design, material optimization, customizedresponse ability and timely after-sales service ability to continuously expand the market and expandthe market share.
(3) Special paper and other products
During the Reporting Period, the Company actively expanded the market, responded tocustomer demand quickly, strengthened fine management internally, reduced costs and improvedefficiency. The sales volume of the Company's special paper grew significantly during theReporting Period, and the operating income of special paper was RMB 174.7243 million, up
35.76% year on year.
2. Review of other works
During the Reporting Period, the Company publicly offered convertible corporate bonds with aterm of 6 years and got proceeds of RMB1.5861226 billion, which were mainly used for the“project of lithium-ion battery separator film (Phase I) of Jiangxi Tonry New Energy TechnologyDevelopment Co., Ltd. with an annual production capacity of 400 million square meters” and theproject of Wuxi Energy New Material Industrial Base. These projects for which funds were raisedthrough offering of convertible corporate bonds completed, and put into operation, improving thesupply scale of the Company's lithium battery separator film products and satisfying the newrequirements of existing and potential overseas customers for the production process, technologicallevel, production control capability and product quality.
During the Reporting Period, the Company issued 69,444,444 ordinary shares to 22 specificinvestors through non-public offering of shares, at a price of RMB72.00 per share, and raised a netamount of RMB 4.983 billion, which are used for the expansion project of lithium-ion batteryseparator film Phase I of Jiangxi Tonry, the expansion project of Wuxi Energy New MaterialIndustrial Base Phase II, and for supplementing the current capital. These projects make steadyprogress. So far 8 production lines of Jiangxi Tonry project have been put into operation, and 8production lines of Wuxi Energy New Material Industrial Base project have been put into operation,further enlarging the production capacity of the separator film. The implementation of these projectwill lay a solid foundation for the Company’s future development and developing potentialcustomers. In addition, they will help the Company to seize the opportunity of industrialdevelopment, further strengthen its leading position in the field of lithium-ion battery separators andfurther enhance the industrial scale and profitability of the Company.
The election of the fourth Board of Directors, and the special committees of the Board ofDirectors and the Supervisory Committee of the Company was successfully completed during theReporting Period. The composition, professional distribution and knowledge structure of themembers of the new Board of Directors, the special committees of the Board of Directors and the
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Supervisory Committee are more reasonable. The effective operation of the new Board of Directors,the special committees of the Board of Directors, and the Supervisory Committee will furtheroptimize the corporate governance structure of the Company and play a positive role in promotingthe rapid development of the Company.On July 13, 2020, the 5th meeting of the fourth Board of Directors deliberated and approvedthe Proposal on the Fulfillment of Conditions for Unlocking within the Third Unlocking Periodunder the 2017 Restricted Stock Incentive Plan, the Proposal on Repurchase and Cancellation ofPart Incentive Stocks under the 2017 Restricted Stock Incentive Plan, and other related proposals.Under the two proposals, 83 participants eligible for unlocking were proposed and 3,404,080restricted stocks could be unlocked for circulation in the market. The unlocking date (i.e. date ifcirculation in the market) of the restricted stock under this unlocking period is July 23, 2020. 4participants were assessed “good”, so the Company repurchased and canceled part restricted stocks,namely 23,120 shares, that granted to but not yet unlocked by those participants, and the repurchaseprice is RMB8.426/stock.
The Company made a number of breakthroughs in technological innovation during theReporting Period. As at the end of the Reporting Period, the Company and its subsidiaries registered372 patents in total, including 315 utility model patents, 43 invention patents and 11 appearancedesign patents. Attaching importance to the overseas patent registration, the Company has 42international patents under application and under review, and 177 domestic patents underapplication and under review.II. Analysis on Main Businesses
1. Overview
Please refer to “I. Overview” under the section “Discussion and Analysis on Business Operation”.
2. Revenue and cost
(1) Breakdown of operating income
Unit: RMB
| 2020 | 2019 | Year-on-year increase or decrease | |||
| Amount | Proportion in the operating income | Amount | Proportion in the operating income | ||
| Total Operating Income | 4,283,007,589.11 | 100% | 3,159,561,554.91 | 100% | 35.56% |
| By industry | |||||
| Manufacturing | 4,205,724,684.56 | 98.20% | 3,126,340,216.38 | 98.95% | 34.53% |
| Other businesses | 77,282,904.55 | 1.80% | 33,221,338.53 | 1.05% | 132.63% |
| By product | |||||
| Film products | 3,464,096,284.00 | 80.88% | 2,548,679,847.72 | 80.67% | 35.92% |
| Cigarette label | 128,976,058.50 | 3.01% | 117,164,386.20 | 3.71% | 10.08% |
| Aseptic packaging | 403,513,678.80 | 9.42% | 289,222,202.20 | 9.15% | 39.52% |
| Special paper | 174,724,290.56 | 4.08% | 128,704,093.13 | 4.07% | 35.76% |
| Other Products | 34,414,372.70 | 0.80% | 42,569,687.13 | 1.35% | -19.16% |
| Other businesses | 77,282,904.55 | 1.80% | 33,221,338.53 | 1.05% | 132.63% |
| By region | |||||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Southwest | 652,445,734.88 | 15.23% | 642,008,612.82 | 20.32% | 1.63% |
| East | 1,834,948,385.75 | 42.84% | 1,265,744,809.31 | 40.06% | 44.97% |
| North | 112,167,705.95 | 2.62% | 90,039,636.26 | 2.85% | 24.58% |
| South Central | 809,685,998.42 | 18.90% | 718,537,858.83 | 22.74% | 12.69% |
| Northwest | 137,124,648.48 | 3.20% | 67,748,456.39 | 2.14% | 102.40% |
| Northeast | 32,064,502.66 | 0.75% | 31,522,819.66 | 1.00% | 1.72% |
| Abroad | 704,570,612.97 | 16.45% | 343,959,361.64 | 10.89% | 104.84% |
(2) Industries, products or regions with a proportion more than 10% in the Company’s operating incomeor operating profit
√ Applicable □ N/A
Unit: RMB
| operating income | Operating cost | Gross margin rate | Year-on-year increase or decrease in operating income | Year-on-year increase or decrease in operating cost | Year-on-year increase or decrease in gross margin rate | |
| By industry | ||||||
| Manufacturing | 4, 205,724,684.56 | 2, 431,374,588.76 | 42.19% | 34.53% | 42.92% | -3. 39% |
| By product | ||||||
| Film products | 3, 464,096,284.00 | 1, 891,705,873.91 | 45.39% | 35.92% | 46.96% | -4.10% |
| By region | ||||||
| Southwest | 644,106,434.82 | 482,797,621.02 | 25.04% | 0.33% | -3.70% | 3.13% |
| East | 1,834,948,385.75 | 848,245,358.25 | 53.77% | 44.97% | 62.19% | -4.91% |
| South Central | 809,685,998.42 | 624,518,790.51 | 22.87% | 12.69% | 21.29% | -5.47% |
| Abroad | 704,570,612.97 | 312,215,037.04 | 55.69% | 104.84% | 196.88% | -13.74% |
Under the circumstances that the statistical standards for the Company's main business data adjusted in the Reporting Period, theCompany's main business data in the recent year is calculated based on adjusted statistical standards at the end of the ReportingPeriod.
□ Applicable √ N/A
(3) Whether revenue from physical sales is higher than service revenue
√ Yes □ No
| Business segment | Item | Unit | 2020 | 2019 | Year-on-year increase or decrease |
| Film products | Sales | Ton | 68,730.73 | 60,306.88 | 13.97% |
| Production | Ton | 70,450.72 | 58,194.53 | 21.06% | |
| Inventory | Ton | 6,798.75 | 5,078.75 | 33.87% |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Cigarette label | Sales | 10,000 boxes | 40.43 | 22.18 | 82.28% |
| Production | 10,000 boxes | 36.21 | 27.08 | 33.72% | |
| Inventory | 10,000 boxes | 3.59 | 7.81 | -54.02% | |
| Aseptic packaging | Sales | 10000 | 230,943.97 | 169,434.31 | 36.30% |
| Production | 10000 | 232,814.28 | 181,971.65 | 27.94% | |
| Inventory | 10000 | 26,670.48 | 24,800.17 | 7.54% | |
| Special paper | Sales | Ton | 14,066.68 | 11,484.28 | 22.49% |
| Production | Ton | 14,243.59 | 11,762.93 | 21.09% | |
| Inventory | Ton | 1,483.14 | 1,306.23 | 13.54% |
Reason for any over 30% YoY movements in the data above
√ Applicable □ N/A
(1) The significant year-on-year increase in inventory of film products in 2020 was mainly due to the release of the production
capacity of the Company’s lithium-ion battery separator film and the strong demand for power batteries in the second half of theYear, driving the rapid growth of the upstream supporting products and market space of the lithium-ion battery, and thecontinuous increase of production output and sales volume the Company's lithium battery separator film. Therefore, theCompany made to stock pursuant to the customer's sales plan and delivered to them after production upon the request of thecustomers.
(2) The significant year-on-year increase in production output and sales volume of cigarette labels in 2020 was mainly driven by the
fact that due to the impact of the epidemic on domestic logistics, some customers of the Company were not supplied withsufficient cigarette label products, and the Company seized the market opportunity and quickly adjusted production to respondto customer demand quickly. The significant year-on-year decrease in inventory is mainly driven by the fact that due to theearlier settlement of the accounts by the Company's cigarette label customers at the end of 2019, some of the Company'scigarette label products have been delivered but not confirmed for acceptance by customers.
(3) The significant year-on-year increase in the production output and sales volume of aseptic packaging in 2020 was mainly due tothe expansion of the Company's aseptic packaging production capacity and active market development.
(4) Execution of significant sales contracts signed by the Company as at the Reporting Period
√ Applicable □ N/A
Shanghai Energy, a controlled subsidiary of the Company, signed a Purchase and Sales Contract with LG Chem, Ltd. with respect tothe purchase of lithium-ion battery separator film products, with a total contract price of no more than US$617 million and a term of5 years. For details, please refer to the Announcement on the Significant Contract Signed by the Controlled Subsidiary ShanghaiEnergy New Material Technology Co., Ltd. (No.: 2019-061) disclosed by the Company on the cninfo.com on May 19, 2019. Thiscontract has been performed normally. The sales income recognized during the Reporting Period was RMB0.47 billion. The salesincome recognized accumulatively at the end of the Reporting Period was RMB0.71 billion. The balance of accounts receivable atthe end of the Reporting Period was RMB0.22 billion. The amount recovered accumulatively after the Reporting Period as of March17, 2021 was RMB0.12 billion, accounting for 55.04%, representing a normal progress of recovery.
(5) Breakdown of operating cost
Product category
Unit: RMB
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Product category | Item | 2020 | 2019 | Year-on-year increase or decrease | ||
| Amount | As a percentage of total operating cost | Amount | As a percentage of total operating cost | |||
| Film products | Raw material | 1,085,857,106.87 | 57.40% | 724,639,964.81 | 56.29% | 46.55% |
| Labor | 112,590,099.47 | 5.95% | 75,161,550.98 | 5.84% | 48.35% | |
| Manufacturing costs | 385,575,292.18 | 20.38% | 272,091,995.11 | 21.14% | 41.33% | |
| Energy | 307,683,375.40 | 16.26% | 215,343,445.15 | 16.73% | 42.33% | |
| Subtotal | 1,891,705,873.91 | 100.00% | 1,287,236,956.04 | 100.00% | 44.84% | |
| Cigarette label | Raw material | 56,404,482.20 | 87.35% | 51,697,207.14 | 81.79% | 9.11% |
| Labor | 5,455,678.38 | 8.45% | 6,678,217.91 | 10.56% | -18.31% | |
| Manufacturing costs | 2,434,225.49 | 3.77% | 3,935,800.11 | 6.23% | -38.15% | |
| Energy | 276,988.96 | 0.43% | 899,767.44 | 1.42% | -69.22% | |
| Subtotal | 64,571,375.04 | 100.00% | 63,210,992.62 | 100.00% | 2.15% | |
| Aseptic packaging | Raw material | 277,755,799.13 | 89.34% | 188,589,710.01 | 86.02% | 47.28% |
| Labor | 15,819,168.05 | 5.09% | 8,731,300.51 | 3.98% | 81.18% | |
| Manufacturing costs | 13,039,212.57 | 4.19% | 19,864,278.02 | 9.06% | -34.36% | |
| Energy | 4,278,899.77 | 1.38% | 2,054,567.14 | 0.94% | 108.26% | |
| Subtotal | 310,893,079.52 | 100.00% | 219,239,855.68 | 100.00% | 41.81% | |
| Special paper | Raw material | 115,016,516.52 | 82.12% | 85,416,413.30 | 83.57% | 34.65% |
| Labor | 8,604,180.09 | 6.14% | 5,244,251.63 | 5.13% | 64.07% | |
| Manufacturing costs | 10,722,052.01 | 7.66% | 7,987,573.22 | 7.81% | 34.23% | |
| Energy | 5,717,968.26 | 4.08% | 3,560,851.30 | 3.48% | 60.58% | |
| Subtotal | 140,060,716.89 | 100.00% | 102,209,089.46 | 100.00% | 37.03% | |
| Other Products | Raw material | 16,618,594.08 | 68.83% | 9,711,872.04 | 53.32% | 71.12% |
| Labor | 370,795.25 | 1.54% | 2,120,072.79 | 11.64% | -82.51% | |
| Manufacturing costs | 5,180,564.15 | 21.46% | 4,704,686.01 | 25.83% | 10.11% | |
| Energy | 1,973,589.92 | 8.17% | 1,677,783.33 | 9.21% | 17.63% | |
| Subtotal | 24,143,543.40 | 100.00% | 18,214,414.17 | 100.00% | 32.55% | |
Notes
① “Film products” include BOPP cigarette film, BOPP flat film and lithium-ion battery separator film products.
② “Other products” referred to in the “Breakdown of operating income” and “Breakdown of operating cost” in Section IV of thisReport mainly include holographic electrochemical aluminum, film products, manual packaging film and other irregular products anddisposed products. This category has a smaller sales volume, smaller proportion in the total sales, so is classified as other productswithin the main business.
③ “Other businesses” referred to in the “Breakdown of operating income” in Section IV of this Report mainly refers to theCompany's income from material sales, asset leasing and scrap sales outside of the main business.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
(6) Changes in the scope of the consolidated financial statements for the Reporting Period
√ Yes □ No
Compared with the previous period, 8 new entities were included in and 2 entities were removed from theconsolidated financial statements for the Reporting Period:
1)New subsidiaries included in the consolidated financial statements in the Reporting Period:
| Name | Reason for change |
| Suzhou Green Power New Energy Materials Co., Ltd. | Business combination not under the common control |
| Foshan Donghang Photoelectric Technology Co., Ltd. | Business combination not under the common control |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | Business combination not under the common control |
| Guangdong Energy New Material Institute Co., Ltd. | Newly established |
| Yuxi Feiermu Trading Co., Ltd. | Newly established |
| Hainan Energy Investment Co., Ltd. | Newly established |
| SEMCORP Global Holdings Kft. | Newly established |
| SEMCORP Hungary Kft. | Newly established |
Note: 1.The Company completed the acquisition of 100% equity of Suzhou Green Power in March 2020, and thentransferred 100% equity of Suzhou Green Power to Shanghai Energy in September 2020;
2. Shanghai Energy completed the acquisition of 70% equity of Donghang Photoelectric and 76.3574%equity of Newmi Tech in the Reporting Period.
2)Subsidiaries removed from the consolidated financial statements in the Reporting Period:
| Name | Reason for change |
| Shanghai Energy Information Technology Co., Ltd. | Canceled |
| Shanghai Fengzhou Trading Co., Ltd. | Canceled |
(7) Major changes or adjustments in the business, products or services in the Reporting Period
□ Applicable √ N/A
(8) Major customers and suppliers
Major customers of the Company
| Total Revenue from the top five customer sales (RMB) | 2,242,262,780.93 |
| Total Revenue from the top five customers in proportion of total revenue | 52.35% |
| Total Revenue from related parties in the top five customers in proportion of total revenue | 0.00% |
Information on top 5 customers
| No. | Customer Name | Sales (RMB) | As a percentage of the total sales revenue for the Year |
| 1 | Customer 1 | 948,656,129.57 | 22.15% |
| 2 | Customer 2 | 845,986,449.56 | 19.75% |
| 3 | Customer 3 | 163,393,134.40 | 3.81% |
| 4 | Customer 4 | 147,060,609.99 | 3.43% |
| 5 | Customer 5 | 137,166,457.41 | 3.20% |
| Total | -- | 2,242,262,780.93 | 52.35% |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Other information on major customers
□ Applicable √ N/A
Major suppliers of the Company
| Total purchase amount of the top five suppliers (RMB) | 609,011,852.70 |
| Total purchase amount of the top five suppliers in proportion of total annual purchase amount | 15.18% |
| Total purchase amount of related parties of the top five suppliers in proportion of total annual purchase amount | 0.00% |
Information on top five suppliers
| No. | Supplier Name | Purchase Amount (RMB) | As a percentage of the total purchase amount for the Year |
| 1 | Supplier 1 | 155,992,167.01 | 3.89% |
| 2 | Supplier 2 | 149,862,423.26 | 3.74% |
| 3 | Supplier 3 | 107,179,139.37 | 2.67% |
| 4 | Supplier 4 | 105,644,105.37 | 2.63% |
| 5 | Supplier 5 | 90,334,017.69 | 2.25% |
| Total | -- | 609,011,852.70 | 15.18% |
Other information on major suppliers
□ Applicable √ N/A
3. Expense
Unit: RMB
| 2020 | 2019 | Year-on-year increase or decrease | Explanation on any material change | |
| Selling expenses | 56,365,549.96 | 67,250,207.94 | -16.19% | Mainly due to the recognition of transportation and handling expenses as contract performance cost in the cost of main business as required by the new income standard the Company began to implement in 2020 |
| Administrative expenses | 155,800,391.65 | 122,867,832.09 | 26.80% | |
| Financial expenses | 188,876,241.53 | 98,965,867.78 | 90.85% | Mainly due to 1) the expansion of lithium-ion battery separator film business and expansion of the financing scale 2) inclusion of Suzhou Green Power in the consolidated financial statements of the Company during the Reporting Period. |
| R&D expenses | 178,243,333.28 | 154,913,207.75 | 15.06% |
4. R&D investment
√ Applicable □ N/A
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
The Company had the following R&D projects in 2020:
| No. | Project name | Progress | Objectives to be achieved | Expected impact on the future development of the Company |
| 1 | Development of base films with lower shut-down temperature and high strength at simultaneous lines | Pilot test | The shut-down temperature and the puncture strength are 3℃ lower and 15% higher than those of conventional products, respectively. | Improve the safety of the lithium-ion battery separator and increase the oversea market share of high level lithium-ion batteries |
| 2 | Development of special base films for batteries with high safety and high rate | Batch production and start to supply | To meet customers’ special requirements for impact strength | Increase the market share of the lithium-ion battery separator that can be applied to machine tools and increase the oversea market share of high-level lithium-ion batteries |
| 3 | Development of 7 μm base film with ultra-high strength | Batch production and supply | 20% increase in puncture strength | Expand the sales of our lithium-ion battery separator and strengthen our technical advantages |
| 4 | Development of base films with ultra-low shut-down temperature and high safety | Completed | The shut-down temperature is 5℃ lower than that of conventional products | Optimize product structure, improve the corporate profit, and strengthen the position and brand recognition in the international market |
| 5 | Development of solvent-based coated power battery | Trial production | To complete mass production introduction according to customer requirements | Create economic and brand benefits and enhance the Company's overseas sales volume of lithium-ion battery separator films |
| 6 | Development of coated film with ultra-high strength and low moisture | Mass production and supply started | Strength is 15% higher than conventional products, and moisture is less than 900 ppm | Create economic and brand benefits and enhance the Company's overseas sales volume of lithium-ion battery separator films |
| 7 | Development of high adhesion solvent-based coating products | Completed | To complete formula development and reach the stage of mass production | Increase solvent-based product categories and enhance the Company’s product competitiveness |
| 8 | Development of a method to test the separator film hardness | Completed | To realize the measurement and application of separator film hardness | Provide guidance for new product development of the Company |
| 9 | Development of ultra-thin water-based low-cost gumming formula and process | Completed | To complete project mass production process research to meet specific customer needs and reach the mass production stage | Reserve mass production technology for next generation new products |
| 10 | Development of oil recycling process for solvent based film waste granulation | Completed | To complete the development of granulation oil recycling process | Increase the recycling rate, reduce the cost of waste liquid treatment, and improve the Company's economic efficiency |
| 11 | Treatment of waste liquid from solvent-based film production | Completed | To recycle waste liquid and optimize the treatment process | Reduce material costs, reduce energy consumption, save recycling cost, improve the Company's economic benefits |
| 12 | Study on semi-solid electrolyte separator film | Industry research, feasibility experiment and | Industry research and feasibility experiment verification | Prospective research, technological reserve |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| sample production carried out | ||||
| 13 | Mass production of regular aluminum plastic film | Completed | To realize mass production and delivery | Expand the Company's business areas, enhance the overall competitiveness of the Company |
| 14 | Research and development of separator films for water treatment | Enter the field of household water purification, realize mass production and delivery | To realize mass production and delivery | Expand the Company's business areas, enhance the overall competitiveness of the Company |
| 15 | Development of 2um water-based coated film with high resistance to up to 150 ℃ temperature | To complete the feasibility test on the mass production line, and meet the target of MD & TD thermal shrinkage @150℃/h<5%. | To pass the mass production feasibility verification | To upgrade the Company's product performance and ensure the Company's technological leadership |
| 16 | Research and development of new-type packaging box suitable for microwave heating | Under development | To solve the drawback that the traditional aluminum foil is easy to fold and break, and achieve the direct microwave heating by using new high toughness and high barrier materials instead of traditional aluminum foil | Provide convenience for consumers, expand the scope of application of the Company's products, enhance the competitiveness of the Company's products and expand the market of the Company's products |
| 17 | Research and development of new-type gable top packaging box | Under development | High-barrier gable top package combining high-barrier transparent film and opening paper box to visualize the contents while safeguarding product quality |
| 18 | Refining of the print of gable top package products | Completed and order formed | To eliminate “turtle” grain and rose spot on the print; with good color reproduction effect, high definition, high color stability | Enhance the competitiveness of the Company's products, benefit the market development and sales expansion of the Company's gable top package series products |
| 19 | Application of cold foil printing technology on paper cups and milky tea cups | Completed and order formed | Cold gold stamping technology uses cold press technology to transfer the electrochemical aluminum, without the need of metal stamping plate and without the need of heating, and as a result, save energy and costs; electrochemical aluminum stamping is firm, with good gloss, no fading of color, powder or aluminum; the product's quality and safety indicators meet the food packaging requirements | It can save energy and cost, benefit the market development of the Company's series of paper cup and paper bowl, can enhance the competitiveness of the Company's products and expand the sales market of the Company's products |
| 20 | Research and development of double stretch base film | Completed | Through the unique one-time double stretch wire composite design, it can meet the requirements of convenient packaging and unpacking for customers, improve the consumer | Improve the market competitiveness of the Company’s products and increase the economic benefits of the Company |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| experience, and adapt to the full flip packaging of various product boxes | ||||
| 21 | Research and development of new-type degradable film materials | Under research | To develop degradable film materials | It is in line with the requirement for ecological and environmental protection and complies with relevant regulations and policies, and benefits the improvement of the market competitiveness of the Company's products and enhancing its economic benefits |
Information about R&D investment
| 2020 | 2019 | Year-on-year change (%) | |
| Number of R&D Personnel | 369 | 381 | -3.15% |
| R&D personnel as a percentage in total employees | 7.32% | 9.72% | -2.40% |
| R&D Investment (RMB) | 178,243,333.28 | 154,913,207.75 | 15.06% |
| R&D investment as a percentage in operating income | 4.16% | 4.90% | -0.74% |
| Capitalized R&D investment (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D investment as a percentage in total R&D investment | 0.00% | 0.00% | 0.00% |
Reason for any significant year-on-year change in the percentage of the R&D investment in the operating income
□ Applicable √ N/A
Reason for any sharp variation in the percentage of the capitalized R&D investment and rationale
□ Applicable √ N/A
5. Cash flow
Unit: RMB
| Item | 2020 | 2019 | Year-on-year increase or decrease |
| Subtotal of cash inflows from operating activities | 3,780,284,210.92 | 3,309,747,737.65 | 14.22% |
| Subtotal of cash outflows due to operating activities | 2,725,104,197.73 | 2,546,450,729.88 | 7.02% |
| Net cash flows from operating activities | 1,055,180,013.19 | 763,297,007.77 | 38.24% |
| Subtotal of cash inflows from investment activities | 873,613,933.13 | 52,295,255.92 | 1,570.54% |
| Subtotal of cash outflows due to investment activities | 6,149,118,177.71 | 3,126,243,760.37 | 96.69% |
| Net cash flows from investment activities | -5,275,504,244.58 | -3,073,948,504.45 | 71.62% |
| Subtotal of cash inflows from | 13,221,955,416.70 | 5,427,097,775.55 | 143.63% |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| financing activities | |||
| Subtotal of cash outflows from financing activities | 7,662,371,315.54 | 2,646,402,569.35 | 189.54% |
| Net cash flows from financing activities | 5,559,584,101.16 | 2,780,695,206.20 | 99.94% |
| Net increase in cash and cash equivalents | 1,339,259,869.77 | 470,043,709.52 | 184.92% |
Explanation of main reasons for any significant year-on-year change in the data above
√ Applicable □ N/A
(1) The significant year-on-year increase in net cash outflow from investment activities is mainly due to the Company’s use oftemporarily unused proceeds for cash management.
(2) The significant year-on-year increase in cash outflow from financing activities is mainly due to the increase in the principal andinterest of the Company’s bank loans.
(3) The significant year-on-year increase in cash inflow from financing activities, net cash flow from financing activities and the netincrease in cash and cash equivalents is mainly due to the receipt by the Company of the proceeds from the offering of convertiblecorporate bonds and non-public offering of shares during the Reporting Period.Explanation of main reasons leading to the material difference between net cash flow from operating activities during the ReportingPeriod and net profit for the Year
□ Applicable √ N/A
III. Analysis of Non-Core Business
□ Applicable √ N/A
IV. Analysis of Assets and Liabilities
1. Material changes of asset items
The Company implemented the new income standard or new lease standard for the first time in 2020, and adjusted the relevantbeginning items in the financial statements for the current year.Applicable
Unit: RMB
| End of 2020 | Beginning of 2020 | Increase or decrease in percentage | Explanation on any material change | |||
| Amount | As a percentage of total assets | Amount | As a percentage of total assets | |||
| Monetary capital | 2,374,743, 862.70 | 11.54% | 1,011,554,636.06 | 8.30% | 3.24% | Primarily driven by receipt by the Company of the proceeds from the offering of convertible corporate bonds, and the proceeds from the non-public offering of shares during the Reporting Period |
| Accounts receivable | 2,328,215,706.27 | 11.32% | 1,424,354,132.31 | 11.68% | -0.36% | |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Inventories | 1,157,030,660.71 | 5.62% | 759,230,046.85 | 6.23% | -0.61% | |
| Investment properties | 9,467,762.78 | 0.05% | 10,001,993.90 | 0.08% | -0.03% | |
| Long-term equity investments | 3,375,208.87 | 0.02% | 3,343,466.01 | 0.03% | -0.01% | |
| Fixed assets | 8,420,764,216.20 | 40.93% | 4,936,597,979.17 | 40.49% | 0.44% | |
| Construction in progress | 1,639,803,967.92 | 7.97% | 1,554,274,795.85 | 12.75% | -4.78% | Primarily driven by the increase in total assets due to receipt by the Company of the proceeds from the offering of convertible corporate bonds, and the proceeds from the non-public offering of shares during the Reporting Period |
| Short-term borrowings | 1,795,679,528.91 | 8.73% | 2,670,365,032.83 | 21.90% | -13.17% | Primarily driven by the increase in total assets due to receipt by the Company of the proceeds from the offering of convertible corporate bonds, and the proceeds from the non-public offering of shares during the Reporting Period |
| Long-term borrowings | 2,666,911,132.37 | 12.96% | 1,967,813,815.80 | 16.14% | -3.18% | Primarily driven by the increase in total assets due to receipt by the Company of the proceeds from the offering of convertible corporate bonds, and the proceeds from the non-public offering of shares during the Reporting Period |
2. Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit: RMB
| Item | Beginning amount | Gain or loss from change in fair value during the current period | Accumulated changes in fair value recognized in equity | Provision for impairment for the current period | Amount of purchase during the current period | Amount of sales during the current period | Other changes | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial | 10,951,914.18 | 1,329,600,000.00 | 1,340,551,914.18 | |||||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| assets) | ||||||||
| Others | 182,535,597.54 | 2,622,000.00 | 402,174,829.70 | 182,535,597.54 | 399,552,829.70 | |||
| Of which: bank acceptance draft | 9,886,495.00 | 22,174,829.70 | 9,886,495.00 | 22,174,829.70 | ||||
| Commercial acceptance draft | 172,649,102.54 | 172,649,102.54 | ||||||
| Accounts receivable | 2,622,000.00 | 380,000,000.00 | 377,378,000.00 | |||||
| Total of the above items | 182,535,597.54 | 10,951,914.18 | 2,622,000.00 | 1,731,774,829.70 | 182,535,597.54 | 1,740,104,744.00 | ||
| Financial liabilities | 0.00 | 0.00 |
Other changesWhether there are any significant changes in the measurement attributes of the Company's major assets during the Reporting Period
□ Yes √ No
3. Restricted asset rights as of the end of the Reporting Period
| Item | Balance | Reason for restriction |
| Monetary capital | 319,032,411.48 | Bank draft deposit, L/C deposit |
| Trading financial assets | 129,600,000.00 | Pledged loan |
| Receivable financing | 22,174,829.70 | Pledged loan |
| Fixed assets | 2, 606,449,712.93 | Mortgaged loan |
| Construction in progress | 174,466,109.97 | Mortgaged loan |
| Intangible assets | 229,456,843.79 | Mortgaged loan |
| Total | 3, 481,179,907.87 |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
V. Analysis of Investments Made
1. Summary
√ Applicable □ N/A
| Total investment amount during the Reporting Period (RMB) | Total investment amount in the last year (RMB) | Change (%) |
| 3,919,952,513.22 | 2,600,533,524.81 | 50.74% |
2. Significant equity investment made in the Reporting Period
√ Applicable □ N/A
Unit: RMB
| Investee | Main business | Way of investment | Amount of investment | The Company’s stake in investee | Source of investment capital | Joint investor | Term of investment | Type of investment | Investment progress as of balance sheet date | Projected earnings | Return on investment in Reporting Period | Litigation involved | Disclosure date (if any) | Index to disclosed information (if any) |
| Suzhou Green Power | Lithium-ion Battery Separator Film | Acquisition | 1,800,800,000.00 | 100.00% | Self owned and self raised funds | -- | Long-lasting | Lithium-ion Battery Separator Film | Transfer registration procedure completed | -- | 222,641,161.50 | None | March 6, 2020 | Announcement on Progress of Acquisition of 100% Equity of Suzhou Green Power New Energy Materials Co., Ltd. (No. 2020-026) disclosed on cninfo.com |
| Total | -- | -- | 1,800,800,000.00 | -- | -- | -- | -- | -- | -- | -- | 222,641,161.50 | -- | -- | -- |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
3. Significant non-equity investments ongoing in the Reporting Period
√ Applicable □ N/A
Unit: RMB
| Item | Way of investment | Whether or not investment in fixed assets | Industry involved in the investment project | Actual investment amount in the Reporting Period | Accumulative actual investment as at the end of the Reporting Period | Source of fund | Progress of project | Projected earnings | Accumulative income realized as at the end of the Reporting Period | Reasons for the failure to make the planned progress and receive the projected earnings | Disclosure date (if any) | Index to disclosed information (if any) |
| Wuxi Energy New Material Industrial Base | Self-construction | Yes | Lithium-ion Battery Separator Film | 98,883,457.53 | 1,904,361,820.78 | ①self owned and self raised funds; ② raise funds by convertible bonds | 90.00% | 0.00 | 97,905,055.17 | N/A | Wednesday, July 4, 2018 | Please refer to the Announcement on Implementation of Wuxi Energy New Material Industrial Base by Wuxi Energy (No.:2018-062) disclosed on cninfo.com. |
| Wuxi Energy New Material Industrial Base Phase II | Self-construction | Yes | Lithium-ion Battery Separator Film | 716,878,985.42 | 716,878,985.42 | ①self owned and self raised funds; ② raise funds by way of non-public offering | 30.00% | 0.00 | 0.00 | N/A | Tuesday, July 2, 2019 | Please refer to the Announcement on Capital Increase by Shanghai Energy to Wuxi Energy by Way of Investment in Wuxi Energy New Material Industrial Base Phase II - Lithium-ion Battery Separator Film (No.: 2019-076) disclosed on cninfo.com |
| Zhuhai Energy Phase II | Self-construction | Yes | Lithium-ion Battery Separator Film | 1,060,380,755.62 | 1,205,459,673.08 | Self owned and self raised funds | 95.00% | 0.00 | 0.00 | N/A | Friday, March 15, 2019 | Please refer to the Announcement on Investment by Zhuhai Energy in Lithium-ion Battery Separator Film Project Phase II (No.: 2019-042) disclosed on cninfo.com |
| Jiangxi Tonry Phase I | Self-construction | Yes | Lithium-ion Battery Separator Film | 104,058,668.98 | 1,701,216,740.23 | ①self owned and self raised funds; ② raise | 89.71% | 0.00 | 99,020,055.94 | N/A | Friday, November 2, 2018 | Please refer to the Announcement on A Controlled Subsidiary’s Acquisition of 100% |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| funds by convertible bonds | Equity of Jiangxi Tonry New Energy Technology Development Co., Ltd.(No.: 2018-141) disclosed on cninfo.com | |||||||||||
| Jiangxi Tonry Phase I Expansion | Self-construction | Yes | Lithium-ion Battery Separator Film | 139,404,996.71 | 139,404,996.71 | ①self owned and self raised funds; ② raise funds by way of non-public offering | 20.59% | 0.00 | 0.00 | N/A | Tuesday，March 24, 2020 | Please refer to the Announcement on Plan for Non-public Offering of A Shares in 2020 (No.:2020-050) disclosed on cninfo.com |
| Total | -- | -- | -- | 2,119,606,864.26 | 5,667,322,216.22 | -- | -- | 0.00 | 196,925,111.11 | -- | -- | -- |
4. Financial investments
(1) Securities investments
□ Applicable √ N/A
No such cases in the Reporting Period.
(2) Derivatives investments
□ Applicable √ N/A
No such cases in the Reporting Period.
5. Use of funds raised
√ Applicable □ N/A
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
(1) Overall use of funds raised
√ Applicable □ N/A
Unit: RMB0’000
| Year of raising | Way of raising | Total amount of funds raised | Total amount used from the funds raised in the Year | Total amount accumulatively used from the funds raised | Total amount used from the funds raised during the Reporting Period for the purposes other than those specified at the time of raising the funds | Total amount accumulatively used from the funds raised for the purposes other than those specified at the time of raising the funds | Percentage of the total amount accumulatively used from the funds raised for the purposes other than those specified at the time of raising the funds | Total amount of unused funds raised | Purpose and investment direction of unused funds raised | Amount of funds raised that have been idle for more than two years |
| 2016 | Initial public offering | 74,776.7 | 0 | 64,188.02 | 0 | 10,588.68 | 14.16% | 10,588.68 | Deposited in the bank's special account for raised funds | 10,588.68 |
| 2020 | Public offering of convertible corporate bonds in 2020 | 158,612.26 | 158,612.26 | 158,612.26 | 0 | 0 | 0.00% | 0 | N/A | 0 |
| 2020 | Non-public offering of shares in 2020 | 498,250.46 | 225,352.89 | 225,352.89 | 0 | 0 | 0.00% | 272,897.57 | As of December 31, 2020, out of the unused funds raised, RMB 1.2 billion was used to purchase wealth management products, RMB 800 million was added to the current capital, and RMB 990.6632 million was deposited in the bank’s special account for raised funds. | 0 |
| Total | -- | 731,639.42 | 383,965.15 | 448,153.17 | 0 | 10,588.68 | 1.45% | 283,486.25 | -- | 10,588.68 |
| Explanation on the general use of the funds raised | ||||||||||
| I. Initial Public Offering With the approval of CSRC ZJXK [2016] No. 1886, the Company made its initial public offering of 33.48 million RMB-denominated ordinary shares. China Merchants Securities Co., Ltd., the main underwriter, issued 33.48 million shares by combining offline inquiry and allotment to investors and online subscription based on market value to public investors. This issuance is all new shares, without transfer of old shares. Among them, 3.348 million shares were allotted offline, 30.1320 million shares were issued online at a price of RMB23.41/share. In addition, after deducting RMB3,599.98 of newly increased external expenses directly related to the issuance of equity securities, such as online issuance fee, prospectus printing fee, reporting accountant fee, lawyer fee and evaluation fee, the net amount of raised funds was RMB747.767 million. The availability of the above raised funds was verified by Dahua CPAs (SGP) with the capital verification report of "DHYZ [2016] No. 000897". As | ||||||||||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
(2) Projects with committed use of funds raised
√ Applicable □ N/A
Unit: RMB0’000
of September 30, 2016, the self-owned funds invested for the projects for which funds were raised reached RMB236.6591 million, which was audited by Dahua CPAs (SGP) with the appraisal report of DHHZ [2016] No. 004562. In 2017, the totalamount of used funds raised was RMB26,067,736.89; in 2018, the total amount of used funds raised was RMB36,288,006.85; in 2019, the total amount of used funds raised was RMB24,728,775.11; in this year, the total amount of used funds raised wasRMB0.00. As of December 31, 2020, the balance of funds raised is RMB112,000,382.05 (including the net amount of RMB6,113,618.10 as interest income of raised funds after deducting bank charges).
II. Public Offering of Convertible Corporate Bonds in 2020Upon approval from the CSRC with the Reply to Yunnan Energy New Material Co., Ltd. to Approve Its Public Offering of Convertible Corporate Bonds (ZJXK [2019] No. 2701), the Company publicly issued 16 million convertible corporate bonds onFebruary 11, 2020, with a face value of RMB 100 each bond and a total amount of RMB1,600,000,000. After deducting the underwriting and sponsorship fees (excluding tax) of RMB9,433,962.26 and other offering expenses (excluding tax) ofRMB4,443,396.23 from the total amount of proceeds from public offering of convertible corporate bonds, the net amount of proceeds from offering by the Company was RMB1,586,122,641.51. The availability of funds raised this time was verified byDahua CPAs (SGP) with the capital verification report of "DHYZ [2020] No. 000047". As of March 16, 2020, the self-owned funds invested for the projects for which funds were raised reached RMB1,697,984,425.54, which was replaced fully with theRMB1,586,122,641.51 of funds raised through issuing convertible corporate bonds, and was audited by Dahua CPAs (SGP) with the appraisal report of DHHZ [2020]001799. As of December 31, 2020, the Company's proceeds from offering ofconvertible corporate bonds were all replaced, and the balance of the special account was RMB0.00. The Company completed the cancellation procedure for the special account.
III. Non-public Offering of Shares in 2020Upon approval from the CSRC with the Reply to Yunnan Energy New Material Co., Ltd. to Approve Its Non-public Offering of Shares (ZJXK [2019] No. 2701), the Company non-publicly issued 69,444,444 RMB-denominated ordinary shares to 22specific investors on August 17, 2020, with a face value of RMB 1.00 each share, at the price of RMB 72.00/share, and the total proceeds from this offering was RMB 4,999,999,968.00. After deducting the underwriting and sponsorship fees (excludingtax) of RMB14,150,943.40 and other offering expenses (excluding tax) of RMB3,344,470.11 from the total amount of proceeds from this offering, the net amount of proceeds from this offering by the Company was RMB4,982,504,554.49. Theavailability of funds raised through this offering was verified by Dahua CPAs (SGP) with the capital verification report of "DHYZ [2020] No. 000460". As of December 31, 2020, the Company invested accumulatively RMB2,253,528,906.32 for theproject for which funds were raised, including RMB254,221,260.11 that was invested with its own funds before the funds raised were available; during the accounting period from September 8, 2020 to December 31, 2020, RMB1,999,307,646.21 wasused out of the funds raised. In addition, out of funds raised, RMB800,000,000.00 was added to the current capital, and RMB 1,200,000,000.00 was used to purchase wealth management products. As of December 31, 2020, the balance in the specialaccount for the funds raised should be RMB743,941,164.38 (including the net amount of RMB14,965,516.21 as interest income of raised funds after deducting bank charges). Because some investment in the projects for which funds were raised was paidby way of bank acceptance draft, and the equivalent amount should be transferred from the special account for funds raised to its own account of the Company, totaling RMB246,721,995.21, the actual balance in the special account for funds raised wasRMB990,663,159.59 as of December 31, 2020.Project with committed use of funds raised and
allocation of funds excessively raised
| Project with committed use of funds raised and allocation of funds excessively raised | Whether the project has been changed, including part change | Total committed investment amount | Total investment amount after adjustment (1) | Actual investment amount in the Reporting Period | Accumulative investment amount as at the end of the Reporting Period (2) | Investment progress as at the end of the Reporting Period (3)＝(2)/(1) | Date of project reaching intended usable condition | Benefits achieved in the Reporting Period | Whether the expected benefits are achieved | Whether the feasibility of the project has changed significantly |
| Project with committed investment | ||||||||||
| 1. Reconstruction and expansion project of color packaging boxes with 3 billion pieces annual production output | No | 28,414.7 | 28,414.7 | 28,414.7 | 100.00% | August 15, 2019 | 4,641.55 | No | No | |
| 2. Reconstruction and expansion project of high-grade environmental-friendly special paper with 13,000 tons annual production output | Yes | 10,684.57 | 3,617.5 | 3,617.5 | 100.00% | N/A | Yes | |||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| 3. R&D center construction project | Yes | 4,993.17 | 1,471.56 | 1,471.56 | 100.00% | N/A | Yes | |||
| 4. Repayment of bank loans | No | 20,000 | 20,000 | 20,000 | 100.00% | Yes | No | |||
| 5. Addition to current capital (IPO) | No | 10,684.26 | 10,684.26 | 10,684.26 | 100.00% | Yes | No | |||
| 6. Lithium-ion battery separator film project (Phase I) with annual production output of 400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd. | No | 58,612.26 | 58,612.26 | 58,612.26 | 58,612.26 | 97.69% | December 31, 2019 | 3,994.56 | No | No |
| 7. Wuxi Energy New Material Industrial Base | No | 100,000 | 100,000 | 100,000 | 100,000 | 100.00% | September 30, 2020 | 4,613.7 | No | No |
| 8. Expansion of lithium-ion battery separator film project (Phase I) of Jiangxi Tonry New Energy Technology Development Co., Ltd. | No | 148,250.46 | 148,250.46 | 40,389.13 | 40,389.13 | 26.93% | March 31, 2022 | No | No | |
| 9. Expansion of Wuxi Energy New Material Industrial Base Phase II | No | 200,000 | 200,000 | 34,963.76 | 34,963.76 | 17.48% | Sunday, October 31, 2021 | No | No | |
| 10. Addition to current capital (non-public offering) | No | 150,000 | 150,000 | 150,000 | 150,000 | 100.00% | Yes | None | ||
| Subtotal of committed investment projects | -- | 731,639.42 | 721,050.74 | 383,965.15 | 448,153.17 | -- | -- | 13,249.81 | -- | -- |
| Investment direction of funds excessively raised | ||||||||||
| None | ||||||||||
| Total | -- | 731,639.42 | 721,050.74 | 383,965.15 | 448,153.17 | -- | -- | 13,249.81 | -- | -- |
| Status of and reason for the failure to make planned progress or projected earnings (by specific project) | The projected earnings are the estimated annual net profit when the project reaches a usable state and the production capacity is fully released. As of December 31, 2020, the reconstruction and expansion project of color packaging boxes with 3 billion pieces annual production output has not fully reached the production capacity; the lithium-ion battery separator film project (Phase I) with annual production output of 400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd., and the Wuxi Energy New Material Industrial Base project are in the climbing up stage; the expansion of lithium-ion battery separator film project (Phase I) of Jiangxi Tonry New Energy Technology Development Co., Ltd., and the expansion of Wuxi Energy New Material Industrial Base Phase II have not been completed. | |||||||||
| Significant changes in the feasibility of projects | I. Initial Public Offering 1. The “the reconstruction and expansion project of color packaging boxes with 3 billion pieces annual production output” was planned by the Company based on the market situation and the Company's production capacity before listing. As time goes by, the market has changed dramatically. Since 2016, the purchase mode of downstream tobacco manufacturers for special paper products was adjusted from quantity allocation by cigarette manufacturers to the independent purchasing mode through centralized bidding or commercial negotiation by cigarette label printing enterprises. Cigarette-related enterprises can expand the bargaining range from region to the whole country by means of bidding or the commercial negotiation mode of public market inquiry and price negotiation by themselves, breaking the original competition pattern featuring fixed share and region. As a result, special paper manufacturers taken active competition strategies like price reduction to seize orders, and the industry pattern changed. As a result of the above industrial policy adjustment, the special paper industry has formed a new pattern featuring full market competition, with more fierce market competition and sharp drop in price. If the project went on as scheduled previously, it may face the risks that the utilization rate of raised funds will decline and the expected investment objective may not be achieved. Therefore, the Company terminated the implementation of this project in 2019. 2. “R&D center construction project” was to meet the demand of the R&D for the main business before listing. With the completion of the Company's major asset restructuring in 2018, the Company's main business covered lithium-ion battery separator film, which has high technological requirements. The manufacturing of lithium-ion battery has a high requirement for the characteristics of separator film materials, especially the consistency, and also for the uniformity of the size and distribution of separator film micropores. Based on the Company's business development plan and market demand, in order to better implement the Company's development strategy, the Company planned to integrate the technology centers currently scattered in each subordinate Company, so as to ensure that the Company's R & D technology can further improve production efficiency, product quality and new product development capacity. The above change was approved at the 27th meeting of the third Board of Directors of the Company, the 22nd Meeting of the third Supervisory Committee and the 2018 General Meeting of Shareholders. | |||||||||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| Amount, purpose and actual use of funds excessively raised | N/A |
| Change in location to implement the projects with investments out of the funds raised | Applicable |
| Change in previous year | |
| Upon the deliberation and approval for the Proposal on Changing Some Projects with Investments Out of the Funds Raised at the 27 meeting of the 3rd Board of Directors of the Company, it was agreed to terminate the “reconstruction and expansion project of high-grade environmental-friendly special paper with 13,000 tons annual production output” and the “R&D center construction project”, and invest the balance of the funds raised for these two projects, totaling RMB105.8868 million, and the interest income, in the new project - Energy Technology Research Institute. The Company will invest to establish a wholly-owned subsidiary (which has not been registered so far, subject to the approval of the business registry) as the entity to implement the project of Energy Technology Research Institute, and lease the experimental building in the factory area of Shanghai Energy. The location to implement the project is changed to 155 Nanlu Road, Pudong New Area, Shanghai. | |
| Adjustment to the implementation method of projects with investment out of funds raised | N/A |
| Preliminary investment in projects and replacement with the funds raised | Applicable |
| I. Initial Public Offering With the deliberation and approval at the 18th meeting of the second Board of Directors of the Company on the Proposal on Use of Funds Raised to Replace the Preliminarily Invested Self-raised Funds, it is agreed to replace the self-raised funds of RMB236,659,100 that have been invested in the projects for which the funds were raised through IPO. RMB197,935,700 was preliminarily invested in the “the reconstruction and expansion project of color packaging boxes with 3 billion pieces annual production output”, RMB24,213,800 was preliminarily invested in the “reconstruction and expansion project of high-grade environmental-friendly special paper with 13,000 tons annual production output”, and RMB14,509,600 was preliminarily invested in the “R&D center construction project”. II. Public Offering of Convertible Corporate Bonds in 2020 At the 42nd meeting of the third Board of Directors of the Company, the Proposal on the Use of Proceeds from Offering of Convertible Corporate Bonds to Replace Self-raised Funds Preliminarily Invested in Fund-raising Investment Projects was deliberated and approved, and it was agreed that the Company used the proceeds from this offering to replace self-raised funds already invested in the projects. As of March 16, 2020, the Company accumulatively used self-raised funds of RMB1.6979844 billion for the projects, and the net amount of proceeds from this offering of convertible corporate bonds was RMB1.5861226 billion, which was used fully to replace the preliminarily invested self-raised funds, including RMB596.8886 million invested for “Wuxi Energy New Material Industrial Base” and replaced with the proceeds of RMB 586.1226 million; RMB1.1010959 billion invested for the “lithium-ion battery separator film project (Phase I) with annual production output of 400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd.” and replaced with the proceeds of RMB1.00 billion. The replacement with funds raised was completed in November 2020. III. Non-public Offering of Shares in 2020 At the 11st meeting of the fourth Board of Directors and the 11st meeting of the fourth Supervisory Committee, the Proposal on Replacement of Preliminarily Invested Self-raised Funds with the Proceeds from the Non-public Offering of A Shares in 2020 was deliberated and approved, and it was agreed to replace the self-raised funds of RMB254.42213 million already invested in the projects with the proceeds. RMB157.1693 million was preliminarily invested in the “expansion project of lithium-ion battery separator film (Phase I) of Jiangxi Tonry New Energy Technology Development Co., Ltd.”; RMB97.0520 million was preliminarily invested in the “expansion project of Wuxi Energy New Material Industrial Base Phase II”. | |
| Unused proceeds temporarily added to current capital | Applicable |
| I. Initial Public Offering On February 24, 2020, at the 41st meeting of the third Board of Directors, and the 36th meeting of the third Supervisory Committee, the Proposal on Use of Part Unused Proceeds to Temporarily Supplement the Current Capital was deliberated and approved, and it was agreed to use the unused proceeds to the extent of not more than RMB110 million to temporarily supplement the current capital within 12 months from the date the above proposal was approved, and the independent directors and sponsor also expressed the opinion to agree upon the proposal. On August 26, 2020, the Company transferred RMB110 million to the special account for the funds raised, and informed the sponsor CITIC Securities and its representative of such transfer. II. Non-public Offering of Shares in 2020 |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| On September 7, 2020, at the 11st meeting of the fourth Board of Directors and the 11st meeting of the fourth Supervisory Committee, the Proposal on Use of Part Unused Proceeds to Temporarily Supplement the Current Capital was deliberated and approved, and it was agreed to use the unused proceeds from the non-public offering of shares in 2020 to the extent of not more than RMB800 million to temporarily supplement the current capital for the production and operation related to the main business within 12 months from the date the sixth Extraordinary General Meeting of Shareholders of 2020 approved the proposal. The independent directors and sponsor also expressed the opinion to agree upon the proposal. | |
| Amount and reason for any balance of the funds raised after the project implementation | N/A |
| Purpose and allocation of the unused funds raised | I. The unused proceeds from IPO RMB of RMB105.8868 million is deposited in the special bank account. II. As at the end of the Reporting Period, the proceeds from the public offering of convertible corporate bonds in 2020 were fully used. III. As at the end of the Reporting Period, out of the unused proceeds from the non-public offering of shares, RMB 1.2 billion was used to purchase wealth management products, RMB 800 million was added temporarily to the current capital, and RMB 990.66315959 million was deposited in the bank’s special account for funds raised. |
| Defects and other problems in utilization and disclosure of the Raised Funds | None |
(3) Project with changed use of funds raised
√ Applicable □ N/A
Unit: RMB0’000
| Project after change | Project before change | Total amount of intended investment from the funds raised in the changed project (1) | Actual investment amount in the Reporting Period | Actual accumulative investment amount as at the end of the Reporting Period (2) | Investment progress as at the end of the Reporting Period (3)=(2)/(1) | Date of project reaching intended usable condition | Benefits achieved in the Reporting Period | Whether the expected benefits are achieved | Whether the feasibility of the changed project has changed significantly |
| Project of Energy Research Institute | 1. Reconstruction and expansion project of high-grade environmental-friendly special paper with 13,000 tons annual production output; 2. R&D center construction project | 10,588.68 | 0 | 0 | 0.00% | 0 | N/A | No | |
| Total | -- | 10,588.68 | 0 | 0 | -- | -- | 0 | -- | -- |
| Reason for change, decision making procedure and information disclosure (by specific project) | 1. The “the reconstruction and expansion project of color packaging boxes with 3 billion pieces annual production output” was planned by the Company based on the market situation and the Company's production capacity before listing. As time goes by, the market has changed dramatically. Since 2016, the purchase mode of downstream tobacco manufacturers for special paper products was adjusted from quantity allocation by cigarette manufacturers to the independent purchasing mode through centralized bidding or commercial negotiation by cigarette label printing enterprises. Cigarette-related enterprises can expand the bargaining range from region to the whole country by means of bidding or the commercial negotiation mode of public market inquiry and price negotiation by themselves, breaking the original competition pattern featuring fixed share and region. As a result, special paper manufacturers taken active competition strategies like price reduction to seize orders, and the industry pattern changed. As a result of the above industrial policy adjustment, the special paper industry has formed a new pattern featuring full market competition, with more fierce market competition and sharp drop in price. If the project went on as scheduled previously, it may face the risks that the utilization rate of raised funds will decline and the expected investment objective may not be achieved. Therefore, the Company terminated the implementation of this project in 2019. 2. “R&D center construction project” was to meet the demand of the R&D for the main business before listing. With the completion of the Company's major asset restructuring in 2018, the Company's | ||||||||
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
| main business covered lithium-ion battery separator film, which has high technological requirements. The manufacturing of lithium-ion battery has a high requirement for the characteristics of separator film materials, especially the consistency, and also for the uniformity of the size and distribution of separator film micropores. Based on the Company's business development plan and market demand, in order to better implement the Company's development strategy, the Company planned to integrate the technology centers currently scattered in each subordinate Company, so as to ensure that the Company's R & D technology can further improve production efficiency, product quality and new product development capacity. The above change was approved at the 27th meeting of the third Board of Directors of the Company, the 22nd Meeting of the third Supervisory Committee and the 2018 General Meeting of Shareholders. For details, please refer to the Announcement on Changing Part Projects for Which Funds Were Raised (No.: 2019-041) published by the Company on cninfo.com on April 26, 2019. | |
| Status of and reason for the failure to make planned progress or projected earnings (by specific project) | N/A |
| Description of major changes in project feasibility after changes | N/A |
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
VI. Sale of Significant Assets and Equity Interests
1. Sale of significant assets
□ Applicable √ N/A
The Company did not sell any significant assets during the Reporting Period.
2. Sale of significant equity interests
□ Applicable √ N/A
VII. Analysis of Major Holding Companies and Joint Stock Companies
√ Applicable □ N/A
Major subsidiaries and joint stock companies that contribute over 10% of net profits to the Company
Unit: RMB0’000
| Company name | Company Type | Main Business | Registered Capital | Total Assets | Net Assets | Operating Income | Operating Profit | Net Profit |
| Shanghai Energy | Subsidiary | Lithium-ion Battery Separator Film | 38921.0834 | 1,618,432.26 | 424,981.55 | 264,765.19 | 109,876.36 | 96,157.22 |
Acquisition and disposal of subsidiaries during the Reporting Period
√ Applicable □ N/A
| Company name | Acquisition or Disposal of Subsidiaries During the Reporting Period | Impact on Overall Production Operations and Performance |
| Suzhou Green Power | Business combination not under common control | Suzhou Green Power achieved a total net profit of RMB176 million in 2020. After Suzhou Green Power was included in the consolidated financial statements of the Company in March 2020, it contributed RMB 223 million to the net profit of the listed Company as at the end of the Reporting Period. |
| Donghang Photoelectric | Business combination not under common control | Donghang Photoelectric was included in the consolidated financial statements of the Company in March 2020, it had no material impact on the net profit of the Company for the Reporting Period. |
| Newmi Tech | Business combination not under common control | Newmi Tech was included in the consolidated financial statements of the Company in December 2020, it had no impact on the net profit of the Company for the Reporting Period. |
Explanation on major holding companies and joint-stock companiesShanghai Energy is a controlled subsidiary of the Company. As at the end of the Reporting Period, the Company held its 95.22%equity, its major product is lithium-ion battery separator film, and its major subordinate companies include Zhuhai Energy, WuxiEnergy, Jiangxi Tonry and Suzhou Green Power. With the constant increase of the production capacity of the Company in lithium-ionbattery separator film, Shanghai Energy achieved an operating income of RMB2.648 billion in 2020, up 35.63% year on year, and anet profit of RMB 0.96 billion, up 11.26% year-on-year.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
VIII. Structured Bodies Controlled by the Company
□ Applicable √ N/A
IX. Outlook for the Company’s Future Prospects
1. Corporate strategy
The Company will focus on the lithium-ion battery separator film sector, march towards thevision to become a “world-class polymer material research, development and production enterprise”and bear in mind the philosophy of creating values for customers with quality, price and service.The Company will continuously scale up the capacity, improve product quality, and strengthenresearch and development. The Company will enrich the product matrix, seek cost reduction andbenefit enhancement through lean management, build up technical innovation capacity to identifynew profit growth drives. The Company will integrate global technical and professional resources,actively expand domestic and overseas markets, improve the core market competitiveness, activelycapture development opportunities in the new energy sector, and dedicate itself to creating valuesfor customers. At the same time, the Company will attack the sterile package, cigarette label, BOPPseparator film and special-purpose paper sectors to become the most competitive new materialproducer in China.
2. Operating plan for 2021
The global new energy sector is now thriving. As a leader in the wet-process lithium-ionbattery separator film sector, the Company has expanded its business reach from the market ofpower lithium-ion battery separator film to the market of lithium-ion battery separator film in the3C field after acquiring 100% of the equities in Suzhou Green Power and 76.3574% of the equitiesin Chongqing Yuntianhua Newmi Technological Co., Ltd. In addition, the Company has joinedhands with the global leader Celgard in the dry-process separator film sector to carry forward thedry-process separator film cooperation project, edge into the energy storage market and furtherrefine the strategic presence in the separator film field. In future, the Company will continue toexpand the capacity, continue independent research and development and continuous innovationand consolidate its industrial position with its comprehensive advantages in technology, capacity,product quality, cost and market.
(1) The Company will procure the international most advanced production equipment andbuild seven separator film production bases in China and overseas regions. In 2021, the Companywill accelerate the expansion of phase I of Jiangxi Tonry Li-ion Battery Separator film Project, theexpansion of phase II of Wuxi Energy New Material Industrial Base, the wet-process lithium-ionbattery separator film production line and supporting plant project in Hungary, the separator filmexpansion project in Chongqing and the dry-process separator film cooperation project with JiangxiMingyang to further expanded the capacity for lithium-ion battery separator film. The expansionplan of the company matches the large-scale expansion plan of the downstream main customers ofthe company in the future. After the completion of the project, the market share of the company willbe further improved and the leading position of the industry will be consolidated. Besides, theexclusively-owned subsidiary Hongta Plastics of the Company is carrying forward its BOPPseparator film upgrade and expansion project. In the technical upgrade, it will relocate two formerBOPP separator film production lines and build one new BOPP separator film production line andsupporting equipment to develop the annual capacity for 70,000 tons of functional film.
(2) The Company will promote lean management. In 2021, the Company will build thesupplier management platform and budget management platform as a powerful move to increase theinternal management efficiency and achieve the medium and long-term development goals. Inaddition, the Company will continuously improve its equipment, process and quality to ensure itcan increase the production efficiency and enhance the product quality without cease. The Companywill continue to scale up the research and development spending, cooperate with domestic researchinstitutes and foreign universities, reinforce the technical research, development and conversion
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
capacity and gradually establish an integral and high-efficiency research and development system toensure the Company can further increase the production efficiency through technical research anddevelopment, enhance the product quality and new product development capacity, provide a mightytechnical support for the Company’s implementation of functional polymer separator film productsand provide new profit growth engines powering the future development.
3. Risks the Company may face
(1) Regulatory risk relating to lithium-ion battery separator film businessChina will gradually annul the financial assistance policies as the new energy vehicle industrydevelops to a certain extent, which will change the demands of the downstream customers and thusadversely change the results of the Company. If the downstream segments, such as new energyvehicle and lithium-ion battery manufacturing, are unable to improve their competitiveness throughtechnological advancement, scale effect or otherwise, the future possible adjustments to theassistance policies will have a negative impact on each link of the whole industry chain of newenergy vehicle, including the lithium-ion battery separator film as an upstream segment.
Countermeasures: By actively investing in the R&D of new applications of film, the Companywill explore its new commercial application market. At the same time, the company also investsresources to distribute new product projects to diversify business risks and reduce the impact ofpolicy fluctuations on the company to a certain extent.
(2) Market competition risk
The rapid growth of the new energy vehicle industry has driven the development of lithium-ionbattery separator film in the upstream part. The fierce competition in this segment is driving therapid increase in the supply, and thus the decrease in price. The increasingly fierce competition willhave an adverse impact on the results of the Company if it can’t deeply understand the law ofindustrial development and make constant efforts for technological innovation and operationalmanagement improvement to improve product quality and reduce production costs.
Countermeasures: The Company’s lithium ion battery film business has formed certainadvantages in production capacity, R&D capacity, product quality, lean management, businesschannels and other aspects. The company will continue to reduce costs and increase efficiency, anddevelop diversified customer groups in overseas markets to reduce the impact of domestic marketfluctuations on the company's performance.
(3) Risk of price fluctuation of major raw materials
The major raw materials used by the Company are subjected to price fluctuation to someextent, especially polyethylene and polypropylene, whose prices are affected by the strongfluctuations of the international crude oil price. The results of the Company may be adverselyaffected by the gross profit margin which may be affected to some extent if the prices of major rawmaterials fluctuate sharply due to the macroeconomic fluctuations, the demand and supply relationfor enterprises in the upstream and downstream parts and other factors.
Countermeasures: the company has established long-term and stable cooperative relations withmajor suppliers, established a strategic procurement system as a whole, and improved thebargaining power and reduced the cost of raw materials by means of large-scale procurement. Thecompany will also reduce the proportion of raw material cost in production cost throughtechnological innovation, process equipment process transformation, production efficiencyimprovement and loss reduction.
(4) Risk relating to construction in progress
Current construction in progress includes the production lines of Jiangxi Tonry, Wuxi Energyproduction bases and other, which require a large amount of capital. If the Company fails to raisefunds in time, complete and put into operation on schedule, it will have a negative impact on thesubsequent production and operation and future profits.
Countermeasures: The Company has made reasonable arrangements for future investmentplans (including funds) by issuing convertible bonds, making private offering of A shares andincreasing cooperation with financial institutions, and improving bank credit lines.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
(5) Risk of technical loss and loss of core personnel
An enterprise engaging in lithium-ion battery separator film requires advanced technology andprocess, rich management experience and deep understanding of the industry. To ensure the abilityof constant innovation and the steady growth of business, the Company should have teamsconsisting of steady high-quality employees in scientific research, management and sale. TheCompany constantly improves the mechanisms for talent cultivation, incentive, promotion andrestriction, but there is still the possibility of the outflow of core employees from the Company. Incase of leakage of the core technology or the departure of core employees, the production andoperation of the Company may be adversely affected.
Countermeasures: the company has implemented equity incentive to the core employees, sothat the employees can share the value of the growth of the enterprise, but also make the interests ofthe company and the interests of employees deeply tied. The company will continue to increase theintroduction and training of core technical personnel, further maintain the stability of coreemployees, continue to maintain the company's industry-leading technical level.
(6) Technological progress and product substitution risk
Lithium-ion battery is mainly used for electronics and electrical appliances, new energyvehicles, and energy storage power stations. As the alternatives to lithium-ion battery,nickel-cadmium batteries, nickel-hydrogen batteries, fuel cells and lead-acid batteries can also beused for the industries above-mentioned. Although the lithium-ion battery is currently the firstchoice for electronics, electrical appliances and new energy vehicles, the demands of the industriesabove-mentioned for lithium-ion battery will decline when technological progress improves theperformance and reduce the production costs of these alternatives or creates batteries with betterperformance, and the lithium-ion battery separator film in the upstream part of the industry chainwill also be affected adversely.
Countermeasures: After years of R & D investment and technology accumulation, thecompany has strong research on new products and prospective technology reserves. The R & DDepartment of the company continues to pay attention to the market development trend, andorganizes a discussion group on film technology development, develops project development plansfor R & D, and actively develops other functional film new products and technologies. In addition,the company strengthens strategic cooperation with well-known lithium-ion battery manufacturersat home and abroad, develops products together with customers in-depth cooperation, timely graspsthe technical development trend and complies with the market demand.
(7) Risk of exchange rate fluctuation
The export sales volume of the Company increases constantly as the Company expands itsbusiness scale and gradually strengthens the development in the international market. If the RMBexchange rate and the foreign exchange rate in the countries where our products were sold fluctuatesharply in the future, the results of the Company may be affected to some extent.
Countermeasures: The Company will avoid or reduce the exchange risk with such measures asclosely watching the exchange rate, adjusting the product prices in time based on the exchange rate,strengthening cost control and conducting the foreign exchange derivatives trading for the purposeof hedging.
(8) Risk of China-US trade friction
Since 2018, the U.S. has restricted import of Chinese products by means of tariff increases toreduce the trade deficit with China. Lithium-ion batteries are also among the products subject to thetariff increase. From the perspective of supply chain, the total revenue of the Company has beenless affected by the China-US trade disputes because the exports to US account for a very smallproportion in the total revenue of the Company. However, if the demands of the downstreamcustomers change due to the China-US trade friction, the results of the Company may be affectedadversely. In addition, some of the Company's raw materials and mechanical equipment areimported from overseas. If the trade friction between the U.S. and China intensifies and results inchanges in the global trading environment, but the Company fails to make timely adjustments, thestability of the Company's supply chain may be adversely affected.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
Countermeasures: The current business portfolio of the Company, including printing productand paper product, mainly targets the domestic market and domestic customers, so it will suffer alimited impact from the China-US trade friction. As to the lithium battery film business, China’slithium-ion battery industrial chain is getting increasingly sound, and the global lithium-ion batteryindustry is gradually shifting to China. At the same time, Europe and China have continuouslyimproved their market statuses in the new energy vehicle sector, and downstream power batterycustomers of the Company, which are getting increasingly concentrated, mainly come from China,Japan and South Korea, and the China-US trade friction is expected not to deliver a materialadverse impact on the lithium-ion battery separator film business. However, the Company willcontinuously pay attention to the research, development and technical upgrade of products underdifferent business lines, and improve product quality and production efficiency. The Company willstrengthen market expansion in China and overseas regions while carrying forward cost reductionand efficiency enhancement, and actively establish stable business relations with global customers.
(9) Risk of COVID-19 Epidemic
Since2020, the COVID-19 epidemic broke out in China and other parts of the world, andspread rapidly. China’s new energy vehicle industry and upstream industries have been affected bythe epidemic, and the demand for lithium-ion battery separator film has been affected accordingly.The Company has resumed normal production and operation in all respects, among other enterprises.However, there exists still great uncertainty about the global epidemic situation and its control, andthe overseas spread also imposes risk of importing cases to China. If the international epidemiccan’t be controlled effectively in the future and spread continuously for a long time, the globaleconomy and new energy vehicle industry will be affected adversely, and the results of theCompany will be affected negatively.
Countermeasures: While conducting the COVID-19 epidemic prevention and control in earnest,the Company and its subsidiaries will do the work in every aspect with a focus on the establishedannual operating plans in accordance with the general arrangements made by the governments inthe regions of the Company and its subsidiaries. The Company will take multiple effective measuresto stabilize production, maintain continuous production, research and development spending. TheCompany will deepen cooperation and communication with customers, and strengthen the effort toincrease the management level and cost control, and minimize the impact of the epidemic on theproduction and operation of the Company. While the global epidemic is further coming undereffective control, the market demand has recovered to some extent, and the negative impact of theepidemic on the production and operation of the Company will be further reduced.
(10) Management risk after expansion of business scale
With the development of the Company’s business, the scale of the Company’s assets andbusiness will be further expanded, which raises higher requirements for the management level ofthe Company. The management risk arises if the capabilities of the Company to manage theproduction, sales, quality control and risks can’t meet the requirements for scale expansion, and thesystems for talent cultivation and management, and the organizational structure are not furtherimproved.
Countermeasures: The Company will continuously refine its management system, assureefficient operation of different operation elements, including production, quality control, sales andmanagement. At the same time, the Company will strengthen talent cultivation, establish aneffective incentive mechanism, and safeguard the Company's development with multiple measures,including share incentive and cultivation of management members.
2020 Annual Report of Yunnan Energy New Material Co., Ltd. No. 2021-053
X. Reception of Visitors to the Company for Purposes of Research, Communication,Interview
1. Registration form for reception of visitors to the Company for the purposes of research,communication, interview during the Reporting Period
√ Applicable □ N/A
| Reception Date | Reception Place | Reception Mode | Type of Received Visitor | Received Visitor | Major Discussion and Materials Provided | Index to Main Inquiry Information |
| August 26, 2020 | Meeting room of Jiangxi Tonry | Field research | Organization | 36 visitors from institutional investors, such as Su Chen and Zou Lingling from Zhongtai Securities, Xie Wenchao from Orient Asset Management, Zheng Xiaolei from China Universal Asset Management, Yan Anqi from Nuode Asset Management | The Company's new technology in equipment transformation and product process; the advantages and technical difficulties of online coating and its impact on the development of the industry | Please refer to the “Record on Investor Relation Activities on August 26, 2020” disclosed on cninfo.com. |
Section 5 Significant Events
I. Profit Distribution and Conversion of Capital Reserve into Share Capital for CommonShareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common shareholders in theReporting Period
√ Applicable □ N/A
(I) According to the Articles of Association, the Company's profit distribution policy is as follows:
1. The Company's profit distribution policy shall pay attention to the reasonable investment return to investors, take into accountthe sustainable development of the Company, reflect the strong awareness of rewarding shareholders, and maintain continuity andstability.
2. Form of profit distribution, proportion of cash dividends: the Company pays dividends in cash or by shares in a positivemanner. Where the Company's audited net profit is positive and no significant investment plan or significant cash expenditure in ayear, the Company shall include the cash distribution in its profit distribution scheme for that year. The annual cash dividend of theCompany shall not be less than 20% of the distributable profit realized in the current year (excluding the undistributed profit at thebeginning of the year). Where available, the Company may distribute interim cash dividends. If the Company's revenue growsrapidly and the Board of Directors considers that the stock price of the Company does not match the size of the Company's sharecapital, it may make a Plan for dividend distribution by stock while satisfying the requirement for cash dividend distribution.
3. Interval for profit distribution: subject to the satisfaction of the cash dividend conditions stipulated in paragraph 4 below, theCompany shall, in principle, pay cash dividends once a year, and the Board of Directors of the Company may propose an interimcash dividends based on the profit status and capital demands of the Company.
The Board of Directors of the Company shall, taking into account the characteristics of the industry in which it operates, itsdevelopment stage, its own business model, its profitability level, and any plan of its significant capital expenditure, distinguish thefollowing circumstances and propose a differentiated cash dividend policy in accordance with the procedures set forth in the Articlesof Association of the Company:
(1) If the Company is in a maturity stage and has no plan of significant expenditure, the proportion of cash dividends in theoverall profit distribution shall account for at least 80%;
(2) If the Company is in a maturity stage and has any plan of significant expenditure, the proportion of cash dividends in theoverall profit distribution shall account for at least 40%;
(3) If the Company is in a growth stage and has any plan of significant expenditure, the proportion of cash dividends in theoverall profit distribution shall account for at least 20%;
If the Company is in an unidentifiable stage and has any plan of significant expenditure, the above paragraphs shall apply.
4. Conditions for distributing cash dividends
(1) The remaining distributable profit of the Company is positive after the profit achieved in the current year is used for makingup for the losses of previous years and making provision for surplus reserves.
(2) The auditor of the Company issues a standard unqualified audit report on the financial statements of the Company in thecurrent year.
(3) The Company has no significant investment plans or significant cash expenditure.
Significant investment plan or significant cash expenditure means that the accumulative expenditure of the Company for theproposed external investment, assets acquisition or equipment purchase within the next twelve months reaches or exceeds 30% of theCompany's latest audited net assets and exceeds RMB 300 million.
5. Conditions for distributing stock dividends: where the Company is well-run, with rapid growth of operating income and net profit,and the Board of Directors believes that the Company is in the growth stage, the level of the Company’s net assets is high and thestock price does not match the size of the share capital, it may propose a Plan for stock dividend distribution, subject to theconsideration and approval at the general meeting of shareholders of the Company. Stock dividend may be distributed separately orin conjunction with cash dividend.
(II) The Company will disclose the profit distribution Plan in a timely manner in strict accordance with the relevant provisionsof the China Securities Regulatory Commission and Shenzhen Stock Exchange, and disclose the profit distribution Plan and theimplementation of the profit distribution Plan in the periodic report accordingly.
(III) During the Reporting Period, the Company implemented the 2019 equity distribution in compliance with the relevantprovisions of the Articles of Association, in full consideration of the reasonable demands of investors and with full protection of thelegitimate rights and interests of small and medium-sized investors. On March 16, 2020, the Company held the 42nd meeting of thethird Board of Directors to deliberate and approve the Proposal on 2019 Profit Distribution Plan. The independent directors expressedtheir independent opinions to agree upon the Plan. The 2019 general meeting of the Company was held on April 8, 2020 where thePlan was deliberated and approved for implementation. For details, please refer to the Announcement on 2019 Profit DistributionPlan published on the cninfo.com (www.cninfo.com.cn) (announcement No.: 2020-031).
| Special explanation on cash dividend distribution policy | |
| Whether or not the policy is in compliance with the provisions of the Articles of Association or requirements of the resolutions of the general meeting of shareholders of the Company: | Yes |
| Whether or not the standard and proportion of dividends is clear and defined: | Yes |
| Whether or not the relevant decision-making process and mechanism is complete: | Yes |
| Whether or not the independent directors fully perform their duties and play their roles: | Yes |
| Whether or not small and medium-sized shareholders have channels to voice their opinions and demands, and whether or not their legitimate rights and interests are fully protected: | Yes |
| If the cash dividend policy is adjusted or amended, whether or not the conditions and procedures are compliant and transparent: | Yes |
Schemes (Plans) of dividends distribution to common shareholders in latest three years (including the Reporting Period), andschemes (Plans) of conversion of capital reserve into share capital
1. The Company’s 2018 plan of profit distribution and conversion of capital reserve into share capital: based on its total of473,867,912 shares as of December 31, 2018, the Company distributed a cash dividend of RMB3.79 (tax inclusive) per 10 shares toall shareholders, representing a total cash dividend payment of RMB179.5959 million; meanwhile, the capital reserve was convertedinto share capital, with 7 shares increased for every 10 shares to all shareholders, and the total share capitals of the Company wasincreased to 805,575,450 after the conversion.
2. The Company’s 2019 plan of profit distribution and conversion of capital reserve into share capital: based on its total of805,370,770 shares as of December 31, 2019, the Company distributed a cash dividend of RMB1.25 (tax inclusive) per 10 shares toall shareholders, representing a total cash dividend payment of RMB100.6713 million.
3. The Company’s 2020 plan of profit distribution and conversion of capital reserve into share capital: based on its total of886,566,151 shares as of December 31, 2020, the Company will distribute a cash dividend of RMB1.70 (tax inclusive) per 10 sharesto all shareholders, representing a total cash dividend payment of RMB150.7162 million.
Form of cash dividends distribution to common shareholders in latest three years (including the Reporting Period)
Unit: RMB
| Year of distribution | Amount of cash dividend (including tax) | Net profit attributable to common shareholders of the listed Company in the | Proportion of cash dividend in the net profit attributable to common shareholders | Cash dividend by other ways (such as share repurchase) | Proportion of cash dividend distributed by other ways in the net profit | Total amount of cash dividend (including those distributed by other | Proportion of the total amount of cash dividend (including those |
| consolidated statements for the year of distribution | of the listed Company in consolidated statements | attributable to common shareholders of the listed Company in consolidated statements | ways) | distributed by other ways) in the net profit attributable to common shareholders of the listed Company in consolidated statements | |||
| 2020 | 150,716,245.67 | 1,115, 604,020.47 | 13.51% | 0.00 | 0.00% | 150,716,245.67 | 13.51% |
| 2019 | 100,671,346.25 | 849,837,425.81 | 11.85% | 0.00 | 0.00% | 100,671,346.25 | 11.85% |
| 2018 | 179,595,938.65 | 518,439,455.43 | 34.64% | 0.00 | 0.00% | 179,595,938.65 | 34.64% |
The Company made a profit in the Reporting Period and the profit distributable to the common shareholders of the parent Companywas positive, but it did not put forward a plan for cash dividend distribution to common shareholders
□ Applicable √ N/A
II. Profit distribution and conversion of capital reserve into share capital for the ReportingPeriod
√ Applicable □ N/A
| Number of bonus shares distributed per 10 shares held | 0 |
| Number of dividends per 10 shares (RMB) (Inclusive of tax) | 1.7 |
| Base of share capital for distribution plan (share) | 886,566,151 |
| Amount of cash dividends (RMB) (inclusive of tax) | 150,716,245.67 |
| Amount of cash dividends by other ways (such as share repurchase) (RMB) | 0.00 |
| Total amount of cash dividends by other ways (RMB) | 150,716,245.67 |
| Distributable profit (RMB) | 202,255,720.52 |
| Percentage of total amount of cash dividends (including that by other ways) in the total amount of profit distribution | 74.52% |
| Cash dividend policy | |
| For profit distribution of companies with unclear stage of development but significant capital expenditure arrangement, the percentage of cash dividend shall represent at least 20% of the profit’s distribution for the current year. | |
| Particulars of profit distribution and conversion of capital reserves into share capital | |
| Based on the total share capital of 886,566,151 shares as on December 31, 2020, the Company will distribute a cash dividend of RMB1.70 (inclusive of tax) for every 10 shares to all shareholders, totaling RMB150,716,245.67. If a change happens to the total share capital of the Company due to new share listing, exercise of share incentive, conversion of convertible bonds, share repurchase and other factors after the disclosure of the preliminary distribution plan, the distribution ratio will be accordingly adjusted given no change in the total distribution. | |
III. Performance of commitments
1. Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other commitment makersperformed in the Reporting Period or ongoing at the end of the Reporting Period
√ Applicable □ N/A
| Commitment | Giver of commitment | Type of commitment | Details of commitment | Time of commitment | Term of commitment | Performance of commitment |
| Commitments on share reform | ||||||
| Commitments contained in the acquisition report or equity change report | ||||||
| Commitments made during asset restructuring | Energy Technology and all directors, supervisors and senior management | Commitment to submit true, accurate and complete information | 1. There are no false records, misleading statements or major omissions in the information disclosed and application documents submitted by Energy Technology, and the givers shall be jointly and severally liable for the authenticity, accuracy and integrity of such documents 2. If the information provided or disclosed for this major assets restructuring contains false records, misleading statements or major omissions, and is put on file by the judicial organ for investigation or by the CSRC for investigation, before the conclusion of the investigation is made, the givers will not transfer the shares with interests in Energy Technology, and will submit the application for suspending the transfer and share accounts to the Board of Directors of the Energy Technology within two trading days after receiving the notice of the investigation, and the Board of Directors shall apply for locking to the stock exchange and the registration and clearing Company on behalf of the givers; if the Board of Directors fails to submit the locking application within two trading days, it will authorize the Board of Directors to directly submit the identity and account information of the givers to the stock exchange and the registration and clearing Company after verification and apply for locking; if the Board of Directors fails to submit the identity and account information of the givers to the stock exchange and the registration and clearing Company, the givers will authorize the stock exchange and the registration and clearing Company to directly lock the related shares. If the investigation found that there is any violation of law or regulation, the givers promise to use voluntarily the locked shares to compensate the related investors. | June 13, 2017 | Long term | Strictly performed |
| The Company | Commitment on legal compliance | 1. The Company and its controlling shareholder and actual controller have not been investigated by judicial authorities for suspected crimes or investigated by the CSRC for suspected violations of laws and | June 13, 2017 | Long term | Strictly performed |
| regulations in recent 3 years; 2. the Company and its controlling shareholders and actual controllers have not been publicly censured by the stock exchange and have no other major acts of dishonesty in the past 12 months; 3. The Company and its incumbent directors and senior management have not been investigated by judicial authorities for suspected crimes or investigated by the CSRC for suspected violations of laws and regulations. | |||||
| Directors and senior management of Energy Technology | Commitment on dilution of current return and remedial measures | 1. I hereby commit neither to tunnel to other units or individuals without compensation or under unfair conditions, nor to damage the Company’s interests in other ways; 2. I hereby commit to restrict my position-related consumption activities; 3. I hereby commit not to use the Company’s assets for investment and consumption activities not related to execution of my duties; 4. I hereby commit to link the remuneration system formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of the Company with the execution of the return recovery measures; 5. I hereby commit to link the vesting conditions with the implementation of the return recovery measures if the Company will implement any share incentive scheme in the future; 6. Since the date of this commitment up to completion of this major asset restructuring, if the CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. | May 25, 2017 | Long term | Strictly performed |
| Counterparty | Commitment to submit true, accurate and complete information | The counterparty will timely provide Energy Technology with information related to restructuring, and guarantee the authenticity, accuracy and completeness of the information provided. In case of any false record, misleading statement or major omission of the information provided, resulting in any loss to Energy Technology or investors, it shall be liable for compensation according to law. In case of any false record, misleading statement or major omission in the information provided or disclosed in this material assets restructuring, which is put on file by the judicial organ for investigation or by the CSRC for investigation, the counterparty will suspend the transfer of the shares with interests in Energy Technology until the case investigation conclusion is clear. | June 13, 2017 | Long term | Strictly performed |
| Counterparties | Commitment on legal compliance | 1. Gao Xiang was the CFO of Shanghai Lvxin Packaging Materials Co., Ltd. (Shunhao). Due to Shunhao's failure to disclose related transactions with related natural persons according to law, in violation of the relevant provisions on information disclosure in the Securities Law and the Administrative Measures for Information Disclosure of Listed Companies, on July 27, 2016, Shanghai Securities Regulatory Bureau issued a warning to Shunhao and related parties, including Gao Xiang, and imposed an administrative penalty of RMB30,000 yuan on Gao Xiang; on January 5, 2017, Shenzhen Stock Exchange made the | June 13, 2017 | Long term | Strictly performed |
| Decision on Criticism to Shanghai Shunhao New Materials Technology Co., Ltd. and Related Parties Through Circulating Notices, and circulated notification of criticism to Shunhao and related parties, including Gao Xiang. In addition, other counterparties have not been subject to administrative or criminal penalties related to the securities market in the past five years, and have not involved in major civil litigation or arbitration related to economic disputes. 2. Counterparties are eligible to purchase shares not publicly offered by Energy Technology, and are not under any circumstances where they are not allowed to purchase shares not publicly offered by Energy Technology as stipulated by laws, regulations, rules or normative documents. 3. Over the last five years, the counterparties have not failed to repay a large amount of debts as scheduled, failed to fulfill its declaration, been subject to administrative measures by the CSRC or disciplined by the stock exchange and there are no ongoing or threatened administrative or judicial proceedings for investigation against my material violation of laws or regulations. | |||||
| Counterparties | Commitment on stock locking period | 1. Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua (dead), Sherry Lee and Zhuhai Hengjie hereby commit that if their compensation obligations (if any) under the profit forecast compensation agreement have been performed at the end of 36 months since the date of listing of their consideration shares, their consideration shares can be unlocked; Within 6 months after the completion of this major asset restructuring, if the closing price of Energy Technology shares is lower than the issuing price for 20 consecutive trading days, or the closing price is lower than the issuing price at the end of 6 months after the completion of the transaction, the lock-in period of the consideration shares held by Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua, Sherry Lee and Zhuhai Hengjie will be automatically extended for at least 6 months. 2. As of the date when the consideration shares are registered in the name of the counterparties, except Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua (dead), Sherry Lee and Zhuhai Hengjie, if the shares of Shanghai Energy used by other counterparties to subscribe for Energy Technology have been continuously owned for less than 12 months from the date of registration in their names, the consideration shares obtained through this major asset reconstruction shall not be listed for trading or transferred within 36 months from the date of registration of the shares in their names. Except the consideration shares mentioned above, the remaining consideration shares obtained by other counterparties through this major asset restructuring shall not be listed for trading or transfer within 12 months from the date of registration of the shares in their names; in order to ensure the performance of the performance commitment obligations in the Profit Forecast and Compensation Agreement, other counterparties (except Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua (dead), Sherry Lee, Zhuhai Hengjie and Future Industry Investment Fund mentioned | June 13, 2017 | From August 15, 2018 to August 14, 2021 for Paul Xiaoming Lee, Li Xiaohua, Wang Yuhua(dead), Sherry Lee and Zhuhai Hengjie ; the performance period for 75% of the shares of Energy Technology acquired through the major asset restructuring held by other counterparti | Within the performance period, strictly performed |
| above) commit that at least 25% of the consideration shares held by each of them shall not be listed for trading or transferred to external parties within 36 months from the date of registration of the relevant shares of Energy Technology in their names until their compensation obligations under the Profit Forecast and Compensation Agreement, if any, have been fully discharged before they can be listed for trading or transferred to external parties; Future Industry Investment Fund commits that at least 25% of the shares of Energy Technology acquired through the major assets restructuring with the 1.0563% equity interest in Shanghai Energy held by it and subject to its own profit forecast compensation obligations shall not be listed for trading or transferred to external parties within 36 months from the date of registration of the relevant shares of Energy Technology in its name, until the compensation obligations of Future Industry Investment Fund under the Profit Forecast and Compensation Agreement, if any, have been fully performed. 3. After the completion of the implementation of the major assets restructuring, the additional shares of Energy Technology held by the counterparties as a result of bonus shares and conversion of share capital of Energy Technology shall also be subject to the above commitments. 4. Upon the expiration of the locking period, the transfer and trading of the shares of Energy Technology acquired by the counterparties through the major assets restructuring shall be conducted in accordance with the laws and regulations and the rules of the Shenzhen Stock Exchange in force at the time . | es and Future Industry Investment Fund, which shall bear their own profit forecast and compensation obligations and account for 1.0563% equity of Shanghai Energy, is from August 15, 2018 to August 14, 2019, and the performance period for the remaining 25% is from August 15, 2018 to August 14, 2021; the performance period for the shares of Energy Technology acquired through the major asset restructuring held by the Future Industry Investment Fund, which shall bear their own |
| profit forecast and compensation obligations, is from August 15, 2018 to August 15, 2019. | |||||
| Counterparties | Performance commitments and compensation arrangements | All parties to this major asset restructuring transaction have unanimously confirmed that the compensation period for this major asset restructuring is December 31 of the third fiscal year after the completion date of this major asset restructuring, and the year of the completion date of the major asset restructuring shall be counted as the first fiscal year, i.e. the compensation period shall be the year of the completion date of the major asset restructuring and two consecutive fiscal years thereafter. In other words, the counterparties commit that if this major asset restructuring is completed in 2017, the compensation period will be 2017, 2018 and 2019, and the net profits in 2017, 2018 and 2019 will not be less than RMB 378 million, RMB555 million and RMB763 million respectively. If the major asset restructuring is completed in 2018, the compensation period is 2018, 2019 and 2020, and the net profits in 2018, 2019 and 2020 are not less than RMB555 million, RMB763 million and RMB852 million respectively. Energy Technology shall review the difference between the actual net profit and the net profit forecast of Shanghai Energy during the audit made each fiscal year within the compensation period, and employ an accounting firm with qualifications related to securities and futures business to issue a special audit opinion (the special audit opinion shall be based on the consolidated report of Shanghai Energy prepared for examination issued in accordance with the Accounting Standards for Business Enterprises). The balance of net profit will be calculated based on the net profit forecast minus the actual net profit, subject to the special audit results issued by the accounting firm. The above net profits are all attributable to the parent Company (consistent with the caliber for the net profits in the evaluation report), net of the non-recurring gains or losses and free from the impact of the management expenses the supporting fund-raising projects accrued due to stock ownership incentive scheme implemented by Shanghai Energy in 2017. If the accumulated actual net profit of Shanghai Energy as of the end of any year within the compensation period is lower than the accumulated net profit commitment as at the end of the current year, counterparties will make up such difference according to the Profit Forecast and Compensation Agreement; if the actual net profit is higher than or equal to the committed net profit, the counterparties do not | May 2, 2017 | May 2, 2017 to December 31, 2020 | Already performed fully |
| need to make up. | |||||
| Counterparties | Commitment on integrity of asset ownership | 1. Shares of Shanghai Energy held by counterparties according to law Counter party has performed its contribution obligation to Shanghai Energy in accordance with the law, and there is no false contribution, delayed contribution, withdrawal of capital and other acts in violation of its obligations and responsibilities as a shareholder, and there is no situation that may affect the legal survival of Shanghai Energy. The equity of Shanghai Energy held by counter party is actually legally owned, there is no ownership dispute, there is no trust, entrusted shareholding or similar arrangement, and there is no pledge, freezing, sealing, property preservation or other rights restrictions on the equity of Shanghai Energy held by counter party. | June 13, 2017 | Long term | Strictly performed |
| Counterparties | Commitment on no insider trading | I/the enterprise and its main management do not leak any insider information of Energy Technology or leverage insider information to conduct insider trading. If the above commitments are violated, all losses caused to the listed Company will be borne. | June 13, 2017 | Long term | Strictly performed |
| Heyi Investment, Paul Xiaoming Lee family | Commitment to regulate related transactions | After the completion of the major asset restructuring, the enterprises that are committed by the controlling party will avoid and reduce the related transactions with Energy Technology as far as possible. For those related transactions that cannot be avoided or have reasonable reasons, the enterprises that are committed to control will be Energy Technology shall sign agreements and perform legal procedures in accordance with the principles of fairness, fairness and compensation for equal value, and shall, in accordance with the provisions of relevant laws, regulations, other normative documents and the articles of association of Yunnan Energy Technology Co., Ltd., perform relevant internal decision-making approval procedures in accordance with the law and timely perform information disclosure obligations, guarantee not to trade with energy technology under unfair conditions compared with the market, guarantee not to illegally transfer the funds and profits of energy technology by using related party transactions, and do not use such transactions to engage in any behavior that damages the legitimate rights and interests of Energy Technology and other shareholders. If a breach of the above commitment results in damage to the interests of Energy Technology, the undertaking will compensate the Energy Technology for the losses caused by the above acts to Energy Technology. | June 13, 2017 | Long term | Strictly performed |
| Heyi Investment, Paul Xiaoming Lee family | Commitment to avoid horizontal competition | 1. At present, the commitment givers are not directly or indirectly engaged in the same or similar business with the existing business of Energy Technology or Shanghai Energy through other operating entities directly or indirectly controlled by it or in the name of natural person, nor is it engaged in the same or similar business with Energy Technology or any other business entity of the same or similar main business in Shanghai, or any other form of consultant, or any other competition with Energy Technology or Shanghai Energy. 2. The giver | June 13, 2017 | Long term | Strictly performed |
| guarantees that after the completion of this major asset restructuring, it will not carry out or operate the same or similar business with the main business of Energy Technology or Shanghai Energy in its own way, directly or indirectly through other business entities under its direct or indirect control; do not hold any position or act as any kind of consultant in any operating entity with the same or similar business with energy technology or Shanghai Energy; do not provide technical services for existing customers of Energy Technology or Shanghai Energy in the name of other than Energy Technology or Shanghai Energy; avoid any horizontal competition. 3. If any loss is caused to Energy Technology or Shanghai Energy due to the commitment person's breach of the above commitments, the operating profit obtained shall be owned by energy technology and all losses suffered by Energy Technology or Shanghai Energy shall be compensated. | |||||
| Heyi Investment, Paul Xiaoming Lee family | Commitment on ensuring the independence of the listed Company | Before this major asset restructuring, Energy Technology has been completely separated from other enterprises controlled by the undertaking in terms of business, assets, institutions, personnel and finance. Energy Technology's business, assets, institutions, personnel and finance are independent. After the completion of this major asset restructuring, the commitment person undertakes not to use the identity of the controlling shareholder or actual controller of energy technology to affect the independence of energy technology, and to ensure the independence of energy technology in business, assets, institutions, personnel and finance as far as possible. | June 13, 2017 | Long term | Strictly performed |
| Paul Xiaoming Lee family | Commitment on the existence of previous administrative penalty | There were administrative punishments in fire control and water affairs in Shanghai Energy. As of the date of this letter of commitment, Shanghai Energy and its subsidiaries do not have any administrative penalty that has not been implemented or rectified. In November 2015, Shanghai Pudong New Area Administration of work safety ordered Shanghai Energy to rectify the three dichloromethane storage tanks within a time limit. Shanghai Energy has completed the rectification, but has not completed the safety acceptance after the rectification. If Shanghai Energy and its subordinate companies are located at any time, the relevant competent departments of Shanghai Energy and its subordinate companies have made fire control, water service or the three dichloromethane tanks and other issues shall be subject to administrative punishment. The commitment person promises to make cash compensation for all economic losses suffered by Shanghai Energy or its subsidiaries within 30 days after the actual punishment or loss amount is determined, so as to ensure that it will not have a material impact on the production, operation and financial situation of Shanghai Energy and its subsidiaries. Joint and several liability shall be borne by the commitment givers. | May 25, 2017 | Long term | Strictly performed |
| Paul Xiaoming Lee family | Commitment on no other | The commitment givers undertake that there are no other related parties and related transactions in Shanghai Energy except for the related | May 25, 2017 | Long term | Strictly performed |
| related transactions | transactions that have been publicly disclosed in the restructuring report, legal opinion and audit report. | ||||
| All partners of Zhuhai Hengjie | Letter of commitment on stock locking period | Within 36 months from the date of the registration of Energy Technology's shares in the name of Zhuhai Hengjie, I promise that I will not require the shares of Energy Technology held by Zhuhai Hengjie to be listed or transferred, and I promise not to transfer the property shares of Zhuhai Hengjie until Zhuhai Hengjie's compensation obligations (if any) under the profit forecast compensation agreement after the performance is completed, it can be traded or transferred externally. | June 13, 2017 | June 13, 2017 to August 15, 2021 | Within the performance period, strictly performed |
| Li Xiaohua | Commitment on capital source of Shanghai Energy | Although I hold the certificate of permanent residence right of the United States, I have not changed my nationality, I am still a Chinese nationality; my own investment in Shanghai is all China's income, and does not involve the contribution of foreign exchange or foreign assets. | June 13, 2017 | Long term | Strictly performed |
| Zhuhai Hengjie | Commitment of enterprises not belonging to private investment funds or private fund managers | This enterprise is the employee stock ownership platform of Shanghai Energy, and the enterprise does not exist to raise funds in a non-public way to qualified investors. There is no asset management by the fund manager or general partner, nor does it serve as the manager of any private equity fund. Therefore, the enterprise does not belong to the private investment funds or private fund managers in the Interim Measures for the supervision and administration of private investment funds and the measures for the registration and filing of private investment fund managers (for Trial Implementation), and does not need to follow the Interim Measures for the supervision and administration of private investment funds and the measures for the registration and filing of private investment fund managers (for Trial Implementation) and other relevant laws and regulations to fulfill the registration and filing procedures. | June 13, 2017 | Long term | Strictly performed |
| Huachen Investment | Commitment of enterprises not belonging to private investment funds or private fund managers | The Company is not established by raising funds from qualified investors in a non-public way, or the assets are managed by the fund manager or the general partner, or the manager of any private investment fund. Therefore, the Company does not belong to the private investment funds or private fund managers in the Interim Measures for the supervision and administration of private investment funds and the measures for the registration and filing of private investment fund managers (for Trial Implementation), and does not need to follow the Interim Measures for the supervision and administration of private investment funds and the measures for the registration and filing of private investment fund managers (for Trial Implementation) and other relevant laws and regulations to fulfill the registration and filing procedures. | June 13, 2017 | Long term | Strictly performed |
| Paul Xiaoming Lee, Li Xiaohua | Commitment of term of | Within 3 years from the closing date, he shall continue to serve in Shanghai Energy and fulfill his due diligence obligations. If he voluntarily proposes to leave Shanghai Energy before the expiration of | May 2, 2017 | July 31, 2018 to July | Within the performance period, |
| service | his term of office (except for the case with the consent of Energy Technology), or gives to Energy Technology due to dereliction of duty, malpractice or other acts that damage the interests of Shanghai Energy. If Energy Technology or Shanghai Energy causes serious losses and is dismissed by Shanghai Energy according to law, it shall bear the liability for breach of contract to Energy Technology. Energy technology has the right to require the defaulting party to pay the consideration it has obtained in this purchase of assets to Energy Technology as compensation, as follows: 1. If the term of office is less than 12 months since the closing date, the defaulting party shall pay 50% of the total consideration obtained in this purchase of assets to the listed Company in cash as compensation; 2. If the term of office has expired from 12 months to 24 months since the closing date, the defaulting party shall pay 40% of the total consideration obtained in this purchase of assets to the listed Company in cash as compensation; 3. If he has worked for 24 months but less than 36 months since the closing date, the defaulting party shall pay 30% of the total consideration obtained in this purchase of assets to the listed Company in cash as compensation. | 30, 2021 | strictly performed | ||
| Paul Xiaoming Lee, Li Xiaohua | Non-competition commitment | During the term of office of Shanghai Energy or within 2 years after the resignation of Shanghai Energy, it will not directly or indirectly operate the same or similar business with Energy Technology or Shanghai Energy on its own or in the name of others, nor will it operate the same or similar business with Energy Technology or Shanghai Energy have the same or similar business entities to hold any post or provide any service for them; if they violate the aforesaid non-competition commitment, they shall pay a penalty of 5 million yuan to Energy Technology, and shall turn over all the operating profits, wages, remuneration and other income earned by them due to the violation of the commitment to Energy Technology. The aforesaid compensation still cannot make up for Energy Technology therefore, Energy Technology has the right to request the breach party to be liable for the loss suffered by Energy Technology. | May 2, 2017 | Term of service and within two years after resignation | Within the performance period, strictly performed |
| Paul Xiaoming Lee, Li Xiaohua | Commitment on no part-time work | During the term of office of Shanghai Energy, without the consent of Energy Technology, it is not allowed to work part-time (except for directors and supervisors) in other companies, and the income violating the prohibition of concurrent operation shall be owned by Innovation Co., Ltd. | May 2, 2017 | Term of service | Within the performance period, strictly performed |
| Jerry Yang Li | Commitment on the locking period | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 | October 25, 2018 | October 25, 2018 to August 14, 2021 | Within the performance period, strictly performed |
| shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. As one of the counter parties, Ms. Wang Yuhua directly holds the Company's shares and purchases the shares of Shanghai Energy through the Company's issuance of shares. Therefore, with regard to the lock-in period of the Company's shares directly held by me, I hereby commit as follows: I have obtained the new shares of the listed Company through this restructuring, and the shares shall not be traded or transferred abroad within 36 months from the date of the end of this issue. Until the compensation obligation under the Profit Forecast and Compensation Agreement (if any) is performed, the shares can be traded or transferred externally. At the same time, the shares of the listed Company held by me before the restructuring shall not be transferred within 12 months after the completion of this transaction; if the closing price of the shares of the listed Company is lower than the issuing price for 20 consecutive trading days within 6 months after the completion of this transaction, or the closing price is lower than the issuing price at the end of 6 months after the completion of the transaction, the lock-in period of the shares of the Company held by me shall be automatically extended for at least 6 months. If the transaction is put on file by the judicial organ or the CSRC for investigation due to the false records, misleading statements or major omissions of the information provided or disclosed, before the case investigation conclusion is clear, the shares in the listed Company owned by myself shall not be transferred. | |||||
| Jerry Yang Li | Commitment to legal compliance | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding shares is acquired by Ms. Wang Yuhua as one of Counter party, through purchasing the equity of Shanghai Energy New Material Technology Co., Ltd. through issuing shares of the Company, I hereby commit as follows: 1. I have not been subject to administrative or criminal penalties related to the securities market in the past five years, and have not involved in major civil litigation or arbitration related to economic disputes; 2. I am eligible to purchase shares not publicly offered by Energy Technology, and are not under any circumstances where they are not allowed to purchase shares not publicly offered by Energy Technology as stipulated by laws, regulations, rules or normative documents; 3. Over the last five years, I have not failed to repay a large amount of debts as scheduled, failed to fulfill its declaration, been subject to administrative measures by the CSRC or disciplined by the stock exchange and there are no ongoing or threatened administrative | October 25, 2018 | Long term | Strictly performed |
| or judicial proceedings for investigation against my material violation of laws or regulations. | |||||
| Jerry Yang Li | Commitment to ensure the independence of listed companies | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding shares is acquired by Ms. Wang Yuhua as one of Counter party, through purchasing the equity of Shanghai Energy New Material Technology Co., Ltd. through issuing shares of the Company. Therefore, with regard to the independence of listed companies involved in this restructuring, I hereby make the following confirmation and commitment: before this restructuring, Shanghai Energy has been completely separated from other enterprises under my control in terms of business, assets, institutions, personnel and finance, and Shanghai Energy's business, assets, institutions, personnel and finance are independent. After the completion of this restructuring, I promise not to use the identity of the actual controller of the listed Company to affect the independence of the listed Company, and to ensure the independence of the listed Company in business, assets, institutions, personnel and finance as far as possible. | October 25, 2018 | Long term | Strictly performed |
| Jerry Yang Li | Commitment on regulating related transactions | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding shares is acquired by Ms. Wang Yuhua as one of Counter party, through purchasing the equity of Shanghai Energy New Material Technology Co., Ltd. through issuing shares of the Company. In order to reduce and standardize the related transactions that may occur with the listed Company, I hereby make the following commitments: after the completion of this restructuring, the enterprises under my control will avoid and reduce the elated transactions with the listed Company as much as possible. For the elated transactions that cannot be avoided or have reasonable reasons, the enterprises under my control will follow the principles of fairness, fairness, equal value and compensation with the listed Company in accordance with the law sign the agreement, perform the legal procedures, and in accordance with the provisions of relevant laws, regulations, other normative documents and the articles of association of Yunnan Energy Technology Co., Ltd., perform the | October 25, 2018 | Long term | Strictly performed |
| relevant internal decision-making approval procedures in accordance with the law and timely perform the obligation of information disclosure, ensure that transactions with listed companies will not be conducted in a fair manner compared with the market, and that the funds and profits of listed companies should not be transferred illegally by related transactions, nor will they engage in any act that damages the legitimate rights and interests of listed companies and other shareholders. If there is any violation of the above commitments, resulting in damages to the interests of the listed Company, I will compensate the listed Company for the losses caused by the foregoing behavior to the listed Company. | |||||
| Jerry Yang Li | Commitment on avoiding horizontal competition | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding shares is acquired by Ms. Wang Yuhua as one of Counter party, through purchasing the equity of Shanghai Energy New Material Technology Co., Ltd. through issuing shares of the Company. Therefore, in order to protect the legitimate rights and interests of the listed Company and other shareholders and avoid horizontal competition with the listed Company, I hereby make the following solemn commitment: 1. At present, I have not directly or indirectly engaged in the same or similar business with the existing business of the listed Company or Shanghai Energy through other business entities directly or indirectly controlled by me or in the name of natural persons, has not held any position or acted as any kind of consultant in any business entity with the same or similar main business as the listed Company or Shanghai Energy, or any other situation of horizontal competition with the listed Company or Shanghai Energy. 2. I guarantee that after the completion of this transaction, I will not carry out or operate the same or similar business with the main business of the listed Company and Shanghai Energy through other business entities directly or indirectly controlled by myself, directly or indirectly; I will not hold any position or serve as any form of consultant in any business entity with the same or similar business with the listed Company or Shanghai Energy ; do not provide technical services for listed companies or existing customers of Shanghai Energy in the name of listed companies or other than Shanghai Energy; avoid any horizontal competition. 3. If any loss is caused to the listed Company or Shanghai Energy due to my violation of the above commitments, the operating profit obtained shall be owned by the listed Company and all losses suffered by the listed Company or Shanghai Energy shall be compensated. | October 25, 2018 | Long term | Strictly performed |
| Jerry Yang Li | Commitment on loss compensation | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. After succession, I directly and indirectly hold 54,655,167 shares of the Company through Heyi Investment, accounting for 11.53% of the total share capital of the Company. My directly holding shares is acquired by Ms. Wang Yuhua as one of Counter party, through purchasing the equity of Shanghai Energy New Material Technology Co., Ltd. through issuing shares of the Company. Therefore, I hereby committed as follows: according to the Profit Forecast and Compensation Agreement signed by the Company and the parties to the transaction, if the transaction is completed in 2017, the compensation period is 2017, 2018 and 2019, and the net profits in 2017, 2018 and 2019 are not less than RMB378 million, RMB555 million and RMB763 million respectively. If the transaction is completed in 2018, the compensation period is 2018, 2019 and 2020, and the net profits in 2018, 2019 and 2020 are not less than RMB555 million, RMB763 million and RMB852 million respectively. In addition, the fund-raising related project in this transaction is “phase I of five wet process separator film production lines with an annual output of 41,666.67 square meters of Zhuhai Energy, a subsidiary of Shanghai Energy. Whereas the five wet production lines of Zhuhai Energy are not covered by the above performance commitment, the commitment givers undertake that if the five wet production lines of Zhuhai Energy have losses during the performance commitment period, the commitment givers will make cash compensation to Shanghai Energy within 30 days after the loss amount is determined, so as to ensure that the above performance commitment made by the commitment person will not be avoided. I am jointly and severally liable with other givers. | October 25, 2018 | October 25, 2018 to December 31, 2020 | Already performed fully |
| Sherry Lee | Commitment on the locking period | The 15,624,033 shares I inherited from Ms. Wang Yuhua were acquired by Ms. Wang Yuhua through this restructuring, Therefore, the lock-in period of the Company's shares directly held by me through this restructuring (including my 11,596,884 shares and 15,624,033 shares inherited from Ms. Wang Yuhua), I hereby committed as follows: the newly increased shares of the listed Company obtained by me through this restructuring shall not be traded on the market or transferred to the outside world within 36 months from the date of the end of this issuance until all the compensation obligations (if any) under the profit forecast compensation agreement have been performed. At the same time, the shares of the listed Company held by me before this restructuring shall not be transferred within 12 months after the completion of this transaction. If the closing price of the listed Company's shares is lower than the issuing price for 20 consecutive trading days within 6 months after the completion of this transaction, or | October 25, 2018 | October 25, 2018 to August 14, 2021 | Within the performance period, strictly performed |
| the closing price is lower than the issuing price at the end of 6 months after the completion of the transaction, the lock-in period of the Company's shares held by myself will be automatically extended for at least 6 months. If the transaction is put on file by the judicial organ or the CSRC for investigation due to the false records, misleading statements or major omissions of the information provided or disclosed, before the case investigation conclusion is clear, the shares in the listed Company owned by myself shall not be transferred. | ||||||
| Commitments made at the time of IPO or refinancing | Company, controlling shareholder and actual controller, director and senior management | Commitment on authenticity, accuracy and completeness of documents related to IPO | I. Company’s commitment: 1. there are no false records, misleading statements or major omissions in the prospectus of the Company's initial public offering. 2. If any competent authority finds that the initial prospectus issued by the Company has false records, misleading statements or major omissions, it will make a substantial and substantial impact on judging whether it meets the requirements of the law, and the Company will repurchase all the new shares of the IPO in accordance with the law. 3. Within 10 trading days after the competent authority determines that the prospectus of the Company has false records, misleading statements or major omissions that have a significant and substantial impact on the judgment of whether the Company complies with the issuance conditions stipulated by the law, the board of directors of the Company shall formulate the share repurchase plan and submit it to the general meeting of shareholders for deliberation and approval, and after it is approved, approved or filed by the relevant competent department (if necessary), to start share repurchase measures, all new shares of the initial public offering will be repurchased according to law; the repurchase price (in case of ex-right and ex-dividend due to cash dividend, share distribution, conversion to share capital, new share issuance, etc., the right shall be restored in accordance with the relevant provisions of Shenzhen Stock Exchange, the same below) shall be determined according to relevant laws and regulations, and shall not be lower than the issuance price of the initial public offering shares. 4. If the prospectus of the Company's initial public offering contains false records, misleading statements or major omissions, which causes investors to suffer losses in securities trading, the Company will compensate investors for losses according to law. II. commitment of the controlling shareholder and actual controller of the Company: 1. there are no false records, misleading statements or major omissions in the prospectus of the Company's initial public offering. 2. If any competent authority determines that there are false records, misleading statements or major omissions in the prospectus of the Company's initial public offering, which have a significant and substantial impact on the judgment of whether it meets the issuance conditions prescribed by law, Heyi Investment and the family will buy back the transferred original restricted shares according to law; Heyi Investment and the family will formulate shares within 10 trading days after the above matters are identified the original restricted shares | September 14, 2016 | Long term | Strictly performed |
| issued by the Company's shareholders at the time of initial public offering shall be repurchased in accordance with the law by means of centralized bidding transaction in secondary market, bulk transaction, agreement transfer, tender offer, etc. The repurchase price is determined according to the negotiated price or secondary market price, but not lower than the original transfer price and the price determined according to relevant laws and regulations and regulatory rules. If Heyi Investment and the family buy back the original restricted shares that have been transferred to trigger the tender offer conditions, Heyi Investment and the family will perform the tender offer procedures in accordance with the law and perform the corresponding information disclosure obligations. 3. If the prospectus of the Company's initial public offering contains false records, misleading statements or major omissions, which causes investors to suffer losses in securities trading, Heyi Investment and the family will compensate investors for losses according to law. III. Commitment of directors, supervisors and senior managers of the Company: 1. the prospectus of the issuer's initial public offering doesn’t contain false records, misleading statements or major omissions, and I am jointly and severally liable for its authenticity, accuracy and completeness. 2. If the prospectus of the issuer's initial public offering contains false records, misleading statements or major omissions, which causes investors to suffer losses in securities trading, I will compensate investors for losses according to law. | |||||
| Controlling shareholder, actual controller, and Shanghai Guohe, a shareholder holding more than 5% shares | About shareholding intention and reduction intention | I. commitment of controlling shareholders and actual controllers' shareholding intention and reduction intention: 1. as the controlling shareholder and actual controller of the Company, Heyi Investment and the family hold the Company's shares in strict accordance with the provisions of laws, regulations, normative documents and regulatory requirements, and abide by the share locking period; after the expiration of the locking period, the Company's shares held by Heyi Investment and the family's reduction shall comply with the requirements of relevant laws, regulations, normative documents and rules of the stock exchange; 2. Heyi Investment and the family shall not reduce the shares of the Company directly held within three years after the Company's listing; after the Company's listing for three years, the shares of the Company directly or indirectly held by Heyi Investment and the family transferred each year shall not exceed 25% of the total shares of the Company directly or indirectly held by them 3. Within two years after the expiration of the equity lock-in period promised by Heyi Investment and the family, the shares of the Company shall be reduced at a price not lower than the issue price of the Company's initial public offering shares (in case of ex-right and ex-dividend matters, the issue price shall be treated as ex-right and ex-dividend accordingly) Within two years after the expiration of the lock up period, the total number of shares held by Heyi Investment and | September 14, 2016 | Share holding period | Within the performance period, strictly performed |
| the family shall not exceed 30% of the total shares held by Heyi Investment and the family directly or indirectly before the issuance. 4. Within two years after the expiration of the shareholding lock-in period of Heyi Investment and the family's commitment, the price of shares of the Company reduced by Heyi Investment and the family through the secondary market will be determined according to the market price at that time on the premise of meeting the commitments made by Heyi Investment and the family, and the specific reduction plan will be formulated according to the market situation at that time. 5. Heyi Investment and the family promise to make an announcement through the Company three trading days in advance when carrying out the reduction, and complete the announcement within six months, and fulfill the obligation of information disclosure accurately and completely in accordance with the rules of the stock exchange. II. Shanghai Guohe's commitment to shareholding intention and reduction intention: 1. Within two years after the expiration of the shareholding locking period promised by the Company, the Company intends to reduce its shareholding by means of, including but not limited to, secondary market centralized competitive trading, block trading, agreement-based transfer, etc. The reduction price will not be lower than the price of net assets per share, and the specific reduction price will be determined according to the market price at the time of the reduction on the premise of meeting the commitments made by the Company; the specific reduction plan will be based on the market conditions at that time. The specific reduction plan will be formulated in accordance with the market conditions and the operating condition of the Company. 2. The enterprise commit that it will announce the Company's three days ahead of schedule in the implementation of the reduction. At the same time, it will fulfill the obligation of information disclosure accurately and completely in accordance with the rules of the stock exchange, except when it holds shares less than 5% equity of the Company. 3. The enterprise will strictly fulfill the above commitments, and promise to abide by the following binding measures: (1) if it fails to fulfill the above commitments, the Company's cash dividends I should receive will be withheld by the Company and owned by the Company; (2) if it fails to fulfill the above commitments, it will bear relevant legal liabilities according to laws and regulations. | |||||
| Energy Technology | Commitment on remedial measures for breaking faith | 1. If the Company fails to take the specific measures promised to stabilize the stock price, the Company undertakes to accept the following binding measures: (1) the Company will publicly explain the specific reasons for not taking the above measures in the general meeting of shareholders and the newspapers designated by the CSRC, and apologize to the shareholders of the Company and the public investors; (2) If the investor suffers losses in the securities trading due to the failure to fulfill the commitments, the Company will compensate the investor for the losses according to law after being recognized by | September 14, 2016 | Long term | Strictly performed |
| the CSRC, the stock exchange or the judicial organ; (3) The commitment of stock price stability is the true meaning of the Company. The responsible parties voluntarily accept the supervision of the regulatory body, self-discipline organization and the public. If the violation of the relevant commitments, the main body will bear corresponding responsibilities according to law. 2. If the controlling shareholder and the actual controller have delivered the notice of increase to the Company, but failed to fulfill the obligation of increasing the obligation, the Company has the right to detain the equal amount of the cash dividends payable to the controlling shareholder and the actual controller until the controlling shareholder and the actual controller fulfill their obligation to increase. 3. If a Company director or senior manager fails to fulfill his obligation to increase his or her duties, the Company shall have the right to detain directors and senior management salaries and cash dividends until the directors and senior managers fulfill their obligations to increase their holdings. 4. If there are any false records, misleading statements or major omissions in the prospectus of this public offering of shares, the Company will make a timely announcement, and the Company will disclose in its regular report that the Company, its controlling shareholders, actual controllers, and its directors, supervisors and senior management buy back shares due to information disclosure violations, performance of commitments such as acquisition of shares and compensation for losses, as well as remediation and correction in case of failure to perform commitments. 5. If the Company fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of the Company, such as changes in relevant laws and regulations, policies, natural disasters and other force majeure, the Company shall take the following measures: (1) Timely and fully disclose the specific reasons for the Company's failure, failure or failure to fulfill its commitments on schedule; (2) make supplementary or alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as possible. | |||||
| Controlling shareholder, actual controller | Commitment on remedial measures for breaking faith | 1. If the controlling shareholder and the actual controller have delivered the notice of increase to the Company, but failed to fulfill the obligation of increasing the obligation, the Company has the right to detain the equal amount of the cash dividends payable to the controlling shareholder and the actual controller until the controlling shareholder and the actual controller fulfill their obligation to increase. 2. The controlling shareholder and the actual controller have signed the commitment letter of false record, misleading statement or major omission in the prospectus of this public offering of shares. The controlling shareholder and the actual controller take the profit distribution enjoyed by the controlling shareholder and the actual | September 14, 2016 | Long term | Strictly performed |
| controller in the Company's profit distribution plan of the current year and the following years as the performance guarantee of the above commitment, and if the controlling shareholder and the actual controller fails to fulfill the above-mentioned obligation of acquisition or compensation, the shares of the Company held by the controlling shareholder and the actual controller shall not be transferred before fulfilling the above-mentioned commitment. 3. The controlling shareholder and the actual controller have signed the promise of controlling shareholder and actual controller's shareholding intention and reduction intention. The controlling shareholder and the actual controller will strictly carry out the above commitments and promise to abide by the following restraint measures: (1) If the above commitments are not performed, the cash dividends to be obtained by the controlling shareholder and the actual controller shall be withheld by the Company and owned by the Company; (2) if the above commitments are not performed, the controlling shareholder and the actual controller shall extend the lock-in period for six months after the lock-in period they promised; (3) The remuneration that the employees in the Company should receive from the Company shall be withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the investors suffer losses in the securities trading, the controlling shareholder and the actual controller will compensate the investors for the losses according to law. 4. If the Company fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of the Company, such as changes in relevant laws and regulations, policies, natural disasters and other force majeure, the Company shall take the following measures: (1) Timely and fully disclose the specific reasons for the Company's failure, failure or failure to fulfill its commitments on schedule; (2) make supplementary or alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as possible. | |||||
| Directors, supervisors and senior managers | Commitment on remedial measures for breaking faith | 1. If any director or senior management of the Company fails to fulfill his obligation to increase his or her duties, the Company shall have the right to detain directors and senior management salaries and cash dividends until the directors and senior managers fulfill their obligations to increase their holdings. 2. The directors, supervisors and senior managers have made corresponding commitments on the information disclosure of IPO and listing. The directors, supervisors and senior managers take the dividend of the Company in the current year and the following years obtained by holding the Company's shares directly or indirectly and the salary received from the Company in the current year and the following years as the performance guarantee of the above commitments. If the director, supervisor or senior manager | September 14, 2016 | Long term | Strictly performed |
| fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of the director, supervisor or senior manager such as changes in relevant laws and regulations, policies, natural disasters and other force majeure, the director, supervisor or senior manager shall take the following measures: (1) Timely and fully disclose the specific reasons for the Company's failure, failure or failure to fulfill its commitments on schedule; (2) make supplementary or alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as possible. | |||||
| Paul Xiaoming Lee family, Heyi Investment and Heli Investment | Commitment on avoiding horizontal competition | 1. The giver does not, and will not, directly or indirectly engage in any activity that constitutes horizontal competition with the existing and future business of the Company and its holding subsidiaries, and is willing to assume compensation liability for the economic losses caused to the Company due to violation of the above commitments. 2. For other enterprises directly and indirectly controlled by the commitment person, the commitment person will adopt the representative office and personnel (including but not limited to directors, general managers, etc.) and the controlling position of the giver in such enterprises, to ensure that such enterprises perform the same obligations as the giver in this letter of commitment, to ensure that such enterprises do not compete with the Company and its holding subsidiaries in the same industry, and the giver is willing to bear all compensation liabilities for the economic losses caused to the Company due to violation of the above commitments. 3. If the Company further expands its business scope on the basis of its existing business, and this commitment person and the enterprise controlled by this commitment person have carried out production and operation on this, this commitment person promises to transfer the possible horizontal competition business or equity held by this enterprise, and agrees that the Company has the priority to acquire and operate under the same commercial conditions. 4. Expect for the investment in the Company, the commitment person will not invest in or operate the products (or similar products, or products with alternative function) developed, produced or operated by the Company and its holding subsidiaries in any way in any place. | November 10, 2012 | Long term | Strictly performed |
| Company, controlling shareholder and actual controller, director and senior management | The commitment that the Company's compensation measures can be effectively performed | 1. The Company and its controlling shareholder and the actual controller make a commitment to the Company's ability to fill in the return measures. It does not exceed the authority to interfere in the Company's management activities and does not occupy the Company's interests. 2. Directors and senior managers make a commitment to fulfill the Company's return measures: (1) Promise not to transfer interests to other units or individuals free of charge or under unfair conditions, and not to damage the interests of the Company in other | September 14, 2016 | Long term | Strictly performed |
| ways; (2) Promise to restrict the post consumption behavior of directors and senior managers; (3) Promise not to use the Company's assets to engage in investment and consumption activities unrelated to the performance of its duties; (4) Commit that the remuneration system formulated by the board of directors or remuneration committee is linked to the implementation of the Company's measures to fill the return; (5) Promised that the exercise conditions of the Company's equity incentive to be announced are linked to the implementation of the Company's compensation measures. | |||||
| Paul Xiaoming Lee family member, the controller of the Company Heyi Investment | Commitment on avoiding occupation of the Company’s funds | The giver, close relative and the affiliated enterprise under control strictly restrict the funds of the Company and its subsidiary companies in the operating capital transactions between the Company and its subsidiaries; the Company and its subsidiaries shall not be required to pay wages, welfare, insurance, advertising and other expenses; the Company and its subsidiary funds are not directly or indirectly provided to the undertaking, close relatives and controlled affiliated enterprises, including: 1. to lend funds to the giver, close relatives and controlled affiliated enterprises for use with compensation or free of charge; 2. to provide entrusted loans without commercial substance to the giver, close relatives and controlled affiliated enterprises through banks or non-bank financial institutions; 3. Entrust the giver, close relatives and controlled affiliated enterprises to carry out investment activities without commercial substance; 4. To issue commercial acceptance bills without real transaction background for the giver, close relatives and controlled affiliated enterprises; 5. Repay debts on behalf of the giver, close relatives and controlled affiliated enterprises; 6. Provide funds to the promisee, close relatives and controlled affiliated enterprises in other ways without consideration for goods and services; 7. Other methods recognized by China Securities Regulatory Commission. | September 14, 2016 | Long term | Strictly performed |
| Jerry Yang Li | Commitment on remedial measures for breaking faith | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of the Company's controlling shareholder Heyi Investment of RMB17.955 million. I promise that I will strictly fulfill the commitments disclosed in the initial public offering and listing prospectus of the controlling shareholder and actual controller. If the commitments of the controlling shareholder and actual controller are not performed, cannot be performed or cannot be performed on schedule (except for objective reasons beyond the control of controlling shareholders and actual controllers such as changes in relevant laws and regulations, policies, natural disasters and another force majeure), I promise to strictly abide by the following measures: 1. If the controlling shareholder or the actual controller has served the Company with the increase notice but failed to fulfill the increase obligation, the Company has the right to | October 25, 2018 | Long term | Strictly performed |
| withhold the cash dividends payable to the same amount until the controlling shareholder or the actual controller fulfills the increase obligation; 2. The controlling shareholder and the actual controller have signed the commitment letter of false record, misleading statement or major omission in the prospectus of this public offering of shares. The controlling shareholder and the actual controller take the profit distribution enjoyed by the controlling shareholder and the actual controller in the Company's profit distribution plan of the current year and the following years as the performance guarantee of the above commitment, and if the controlling shareholder and the actual controller fails to perform the above-mentioned acquisition or compensation obligations, the shares of the Company held by the controlling shareholder and the actual controller shall not be transferred before the above-mentioned commitments are performed; 3. The controlling shareholder and the actual controller have signed the commitment of the controlling shareholder and the actual controller's shareholding intention and reduction intention. The controlling shareholder and the actual controller will strictly perform the above commitments and promise to abide by the following binding measures: (1) If the above commitments are not performed, the cash dividends to be obtained by the controlling shareholder and the actual controller shall be withheld by the Company and owned by the Company; (2) if the above commitments are not performed, the controlling shareholder and the actual controller shall extend the lock-in period for half a year; (3) The remuneration that the employees in the Company should receive from the Company shall be withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the investors suffer losses in the securities trading, the controlling shareholder and the actual controller will compensate the investors for the losses according to law; 4. If the Company fails to perform, has failed to perform or fails to perform on schedule due to objective reasons beyond the control of the Company, such as changes in relevant laws and regulations, policies, natural disasters and other force majeure, the Company shall take the following measures: (1) Timely and fully disclose the specific reasons for the Company's failure, failure or failure to fulfill its commitments on schedule; (2) make supplementary or alternative commitments to the investors of the Company (relevant commitments shall be subject to relevant approval procedures in accordance with laws, regulations and the articles of association), so as to protect the rights and interests of investors as much as possible. | |||||
| Jerry Yang Li | Commitment on avoiding horizontal competition with Energy | 1. The giver commits that he does not, and will not, directly or indirectly engage in any activity that constitutes horizontal competition with the existing and future business of the Company and its holding subsidiaries, and is willing to assume compensation liability for the economic losses caused to the Company due to violation of the above | October 25, 2018 | Long term | Strictly performed |
| Technology | commitments; 2. For other enterprises directly or indirectly holding by this undertaking, the undertaking will pass the dispatched offices and personnel (including but not limited to directors, general managers, etc.), as well as the controlling position of the underwriter in such enterprises, to ensure that such enterprises carry out the same obligations as the Underwriters in this commitment letter, and ensure that such enterprises do not compete with the Company and its controlling subsidiaries in the same industry, the underwriters are willing to take full responsibility for the economic losses incurred by the Company in violation of the above commitments; 3. If the Company further expands its business scope on the basis of its existing business, and the commitment person and the enterprise controlled by the commitment person have carried out production and operation on this, th2 commitment person promises to transfer the possible horizontal competition business or equity held by this enterprise, and agrees that the Company has the priority to purchase and operate under the same commercial conditions; 4. In addition to the investment in the Company, the commitment person will not invest in or operate in any way the products (or similar products, or products with substitute function) developed, produced or operated by the Company's holding subsidiaries in any place; 5. This letter of commitment is an effective commitment during the period when this commitment giver and the Company controlled by the commitment giver have an associated relationship with the Company. | ||||
| Jerry Yang Li | Commitment on reduction intention | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 10,416,022 shares of the Company held by her according to her will and the contribution of RMB17.955 million by the Company's controlling shareholder Heyi Investment. With respect to the Company's shares directly and indirectly held by me through Heyi Investment, my shareholding intention and reduction intention are as follows: 1. as the actual controller of the Company, I hold the Company's shares in strict accordance with the provisions of laws, regulations, normative documents and regulatory requirements, and abide by the share locking period; after the expiration of the locking period, I shall reduce my holding of the Company's shares in accordance with the requirements of relevant laws, regulations, normative documents and rules of the stock exchange; 2. within three years after the listing of the Company, I will not reduce the shares of the Company I directly hold; upon expiry of three years after the listing of the Company, I will transfer the shares of the Company I directly hold each year no more than 25% of the total shares of the Company I directly hold; 3. within two years after the locking period I committed, the Company's shares will be reduced at a price not lower than the initial public offering price of the Company. If the Company's shares are subject to ex-right and ex-dividend during | October 25, 2018 | Holding period | Still in performance, strictly perform |
| the period, such as dividend distribution, stock distribution, capital reserve converted to share capital, the issue price shall be ex-right and ex-dividend accordingly; 4. After two years after the expiration of my commitment to hold shares, I will, through the reduction of the price of the Company's shares in the two class market, meet the commitments made on the basis of the market price, and the specific reduction plan will be drawn up according to the market situation at that time; 5. I promise that I will announce the Company's three days ahead of schedule in the implementation of the reduction, and complete the announcement within six months. at the same time, I will fulfill the obligation of information disclosure accurately and completely in accordance with the rules of the stock exchange; I will strictly fulfill the above commitments, and promise to abide by the following binding measures: (1) if I fail to fulfill the above commitments, the Company's cash dividends I should receive will be withheld by the Company and owned by the Company; (2) the Company will own the profits I get from reducing the shares held in violation of the above commitments; (3) The remuneration that the employees in the Company should receive from the Company shall be withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the investors suffer losses in the securities trading, I will compensate the investors for the losses in accordance with the law. | |||||
| Jerry Yang Li | Commitment on avoiding capital occupation of Energy Technology | (1) Except for the capital occupation disclosed in writing to the relevant intermediary institutions, there is no other capital occupation that shall be disclosed but not disclosed in accordance with the laws and regulations and the relevant provisions of the CSRC for the time being by the commitment party, close relatives, controlled affiliated enterprises and the Company and its subsidiaries; (2) The commitment person, close relatives and controlled affiliated enterprises will strictly limit the occupation of funds of the Company and its subsidiaries in the operational capital transactions with the Company and its subsidiaries; (3) The giver, close relatives and controlled affiliated enterprises shall not require the Company and its subsidiaries to advance wages, welfare, insurance, advertising and other expenses, or require the Company and its subsidiaries to bear costs and other expenses on behalf of them; (4) The giver, close relatives and controlled affiliated enterprises do not seek to provide the funds of the Company and its subsidiaries directly or indirectly to the giver, close relatives and controlled affiliated enterprises in the following ways, including: a. To lend funds to the giver, close relatives and controlled affiliated enterprises for use with compensation or free of charge; b. Providing entrusted loans without commercial substance to the giver, close relatives and controlled affiliated enterprises through banks or non-bank financial institutions; c. Entrust the giver, close relatives and controlled affiliated enterprises to carry out investment activities without commercial substance; d. To issue commercial acceptance bills | October 25, 2018 | Long term | Strictly performed |
| without real transaction background for the giver, close relatives and controlled affiliated enterprises; e. Repay debts on behalf of the giver, close relatives and controlled affiliated enterprises; f. Provide funds to the giver, close relatives and controlled affiliated enterprises in other ways without consideration for goods and services; g. Other methods recognized by China Securities Regulatory Commission; (5) If the giver, close relatives and controlled affiliated enterprises occupy the funds of the Company and its subsidiaries and require the Company and its subsidiaries to provide guarantees in violation of laws and regulations, the Company's board of directors shall not transfer the shares of the Company held and controlled before all the occupied funds are returned and all the illegal guarantees are released, and handle the procedures of share locking for the relevant parties. The board of directors of the Company shall, within 5 trading days from the date of knowing the fact that the giver, close relatives and controlled affiliated enterprises occupy the funds of the Company and its subsidiaries, and the Company and its subsidiaries provide guarantees in violation of laws and regulations, handle the locking procedures. | |||||
| Sherry Lee | Commitment on reduction intention | Due to the death of Ms. Wang Yuhua, a member of Paul Xiaoming Lee's family who is the shareholder and actual controller of the Company, I, as one of the heirs, inherited 15,624,033 shares of the Company held by her according to her will and the contribution of RMB9.045 million by the Company's controlling shareholder Heyi Investment. Before inheritance, I have held 27,593,884 shares of the Company, of which 15,997,000 shares were held at the time of IPO and listing of the Company, 11,596,884 shares of the Company acquired by the Company's issuance of shares to purchase shares of Shanghai Energy. After inheritance, I hold directly and indirectly through Heyi Investment 65,503,802 shares of the Company, accounting for 13.82% of the total share capital of the Company. With respect to locking period for the Company's shares directly and indirectly held by me, I commit as follows: 1. as the actual controller of the Company, I hold the Company's shares in strict accordance with the provisions of laws, regulations, normative documents and regulatory requirements, and abide by the share locking period; after the expiration of the locking period, I shall reduce my holding of the Company's shares in accordance with the requirements of relevant laws, regulations, normative documents and rules of the stock exchange; 2. within three years after the listing of the Company, I will not reduce the shares of the Company I directly hold; upon expiry of three years after the listing of the Company, I will transfer the shares of the Company I directly hold each year no more than 25% of the total shares of the Company I directly hold; 3. within two years after the locking period I committed, the Company's shares will be reduced at a price not lower than the initial public offering price of the Company. If the Company's shares are subject to ex-right and ex-dividend during the period, such as | October 25, 2018 | Share holding period | Within the performance period, strictly performed |
| dividend distribution, stock distribution, capital reserve converted to share capital, the issue price shall be ex-right and ex-dividend accordingly; 4. After two years after the expiration of my commitment to hold shares, I will, through the reduction of the price of the Company's shares in the two class market, meet the commitments made on the basis of the market price, and the specific reduction plan will be drawn up according to the market situation at that time; 5. I promise that I will announce the Company's three days ahead of schedule in the implementation of the reduction, and complete the announcement within six months. at the same time, I will fulfill the obligation of information disclosure accurately and completely in accordance with the rules of the stock exchange; I will strictly fulfill the above commitments, and promise to abide by the following binding measures: (1) if I fail to fulfill the above commitments, the Company's cash dividends I should receive will be withheld by the Company and owned by the Company; (2) the Company will own the profits I get from reducing the shares held in violation of the above commitments; (3) The remuneration that the employees in the Company should receive from the Company shall be withheld by the Company and owned by the Company; (4) if the above commitments are not performed and the investors suffer losses in the securities trading, I will compensate the investors for the losses in accordance with the law. | ||
| Directors and senior management of the Company |
| 1. neither to tunnel to other units or individuals without compensation or under unfair conditions, nor to damage the Company’s interests in other ways; 2. to restrict my position-related consumption activities; 3. not to use the Company’s assets for investment and consumption activities not related to execution of my duties; 4. to link the remuneration system formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of the Company with the execution of the return recovery measures; 5. to link the vesting conditions with the implementation of the return recovery measures if the Company will implement any share incentive scheme in the future; 6. since the date of this commitment up to completion of this public offering of convertible corporate bonds, if the CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. In order to ensure the proper implementation of the return recovery measures, I commit to strictly perform the above commitments. If I breach or refuse to fulfill the above commitments, I will perform obligations of interpretation and apology as required under the Guiding Opinions on Matters relating to the Dilution on Current Returns as a result of Initial Public Offering, Refinancing and Major Asset Restructuring (CSRC Announcement [2015] No. 31), and agree that | May 14, 2019 | Long term | Strictly performed |
| relevant regulatory or self-regulation measures shall be imposed or taken in accordance with the relevant provisions and rules specified or published by CSRC and Shenzhen Stock Exchange; if the Company or investors suffered losses as a result of my breach or refusal, I am willing to assume relevant liability for compensation. | ||
| Company's actual controller and controlling shareholder |
| 1. not interfere with the operation and management activities of the Company beyond the authority, and not encroach on the interests of the Company; 2. since the date of this commitment up to completion of this public offering of convertible corporate bonds, if the CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. In order to ensure the proper implementation of the return recovery measures, I commit to strictly perform the above commitments. If I breach or refuse to fulfill the above commitments, I will perform obligations of interpretation and apology as required under the Guiding Opinions on Matters relating to the Dilution on Current Returns as a result of Initial Public Offering, Refinancing and Major Asset Restructuring (CSRC Announcement [2015] No. 31), and agree that relevant regulatory or self-regulation measures shall be imposed or taken in accordance with the relevant provisions and rules specified or published by CSRC and Shenzhen Stock Exchange; if the Company or investors suffered losses as a result of my breach or refusal, I am willing to assume relevant liability for compensation. | May 14, 2019 | Long term | Strictly performed | ||
| All directors of Energy Technology | Commitment on the authenticity, accuracy and completeness of information submitted in connection with the non-public offering of A shares in 2020 | All directors of the Company commit that the report on this offering (the announcement on listing) doesn’t contain false records, misleading statements or major omissions, and they will jointly and severally liable for its authenticity, accuracy and completeness. | September 3, 2020 | Long term | Strictly performed |
| Controlling shareholder and actual controller of the Company | Commitment on dilution on current returns as a result of the non-public offering of A shares in 2020, and the | 1. I commit to not interfere with the operation and management activities of the Company beyond the authority, and not encroach on the interests of the Company; 2. I commit to properly implementation of the current return recovery measures formulated by the Company, and assume the liability for compensation to the Company or investors according to law if I violate such commitments and as a result cause any loss to the Company or investors; 3. since the date of this commitment up to completion of this non-public offering of shares by | March 23, 2020 | Long term | Strictly performed |
| return recovery measures | Energy Technology, if the CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. | |||||
| Directors and senior management of the Company | Commitment on dilution on current returns as a result of the non-public offering of A shares in 2020, and the return recovery measures | 1. I commit to not tunnel to other units or individuals without compensation or under unfair conditions, or to damage the Company’s interests in other ways; 2. I commit to restrict my position-related consumption activities; 3. I commit to not use the Company’s assets for investment and consumption activities not related to execution of my duties; 4. I commit to link the remuneration system formulated by the Board of Directors or the Remuneration Committee or Assessment Committee of the Company with the execution of the return recovery measures; 5. I commit to link the vesting conditions with the implementation of the return recovery measures if the Company will implement any share incentive scheme in the future; 6. since the date of this commitment up to completion of this non-public offering of shares, if the CSRC imposes other new regulatory requirements in relation to the return recovery measures and its commitments and such commitments cannot meet such rules of the CSRC, I commit to issue supplemental undertakings in accordance with the latest requirements of the CSRC. | March 23, 2020 | Long term | Strictly performed | |
| 22 shareholders subscribing shares not publicly offered in 2020 | Commitment on share locking | 1. The Company agrees to not transfer the subscribed shares for a period of six months from the date of completion of this offering of shares of Energy Technology (meaning the date of listing of the shares in this offering) and entrusts the Board of Directors of Energy Technology to apply to Shenzhen Branch of China Securities Depository and Clearing Company Limited for locking the above subscribed shares of the Company, so as to ensure that the above shares held by the Company will not be transferred for a period of six months from the date of completion of this offering. 2. Guarantee to compensate other shareholders for any losses suffered by them as a result of non-performance or incomplete performance of the above commitment. If there is any sales transaction in violation of the commitment, the Company will authorize the Shenzhen Branch of China Securities Depository and Clearing Company Limited to transfer the proceeds from such transaction to the account of the listed Company for the benefit of all shareholders. 3. The Company declares that it will faithfully fulfill its commitments and bear the corresponding legal responsibilities. | August 13, 2020 | September 4, 2020 to March 3, 2021 | Within the performance period, strictly performed | |
| Commitment on stock ownership incentive scheme | The Company | Commitment on stock ownership incentive scheme | The Company commits to not provide loans and other forms of financial assistance, including providing guarantee for their loans, for the participants to obtain relevant rights and interests. | March 30, 2017 | During the implementation of stock ownership incentive | Already performed fully |
| scheme | |||||||
| Participants | Participants | 1. If the information disclosure documents of the Company contain false records, misleading statements or major omissions, resulting in non-compliance with the granted rights and interests or the exercise of rights and interests arrangement, the participants will return all the benefits obtained from the incentive scheme to the Company after the relevant information disclosure documents are confirmed to contain false records, misleading statements or major omissions; 2. the restricted shares granted to the participants shall not be transferred, guaranteed or used to repay debts before the lifting of the restriction. 3. If the participants are directors and senior management of the Company, they shall not transfer more than 25% of their total shares in the Company on an annual basis during their term of office, and shall not be allowed transfer any of their shares in the Company within half a year after they leave the Company; 4. If the participants are directors and senior management of the Company, and sell their shares in the Company within six months after buying the same, or buy them back within six months after selling them, and the proceeds from such selling shall be owned by the Company, and the Board of Directors of the Company will take back the proceeds. | March 30, 2017 | During the implementation of stock ownership incentive scheme | Already performed fully | ||
| Other commitments to small and medium shareholders of the Company | The Company | Shareholder return plan in the next three years | The Company pays dividends in cash or by shares in a positive manner. Where the Company's audited net profit is positive and no significant investment plan or significant cash expenditure in a year, the Company shall include the cash distribution in its profit distribution scheme for that year. The annual cash dividend of the Company shall not be less than 20% of the distributable profit realized in the current year (excluding the undistributed profit at the beginning of the year). Where available, the Company may distribute interim cash dividends. If the Company's revenue grows rapidly and the Board of Directors considers that the stock price of the Company does not match the size of the Company's share capital, it may make a plan for dividend distribution by stock while satisfying the requirement for cash dividend distribution. | May 14, 2019 | May 14, 2019 to May 14, 2021 | Within the performance period, strictly performed | |
| Whether the commitment is performed on time | Yes | ||||||
| If any commitment is not performed beyond the time limit, please specific the reasons for such failure and plan for the next step | N/A | ||||||
2. Where any earnings forecast was made for any of the Company’s assets or projects and the ReportingPeriod is still within the forecast period, the Company shall explain whether the performance of the asset orproject reaches the earnings forecast and why
√Applicable □N/A RMB0’000
| Name of asset or project subject to earnings forecast | Start time of forecast | End time of forecast | Current performance forecasted | Actual current performance | Reason for failure to reach the forecast (if applicable) | Disclosure date of the original forecast | Index to disclosure of the original forecast |
| Shanghai Energy | January 1, 2018 | December 31, 2018 | 555.00 million | 584.87 million | N/A | May 3, 2017 | Please refer to the Report on Issuance of Shares to Purchase Assets and Raise Supporting Funds and Related Transactions (draft) disclosed on cninfo.com. |
| Shanghai Energy | January 1, 2019 | December 31, 2019 | 763.00 million | 775.37 million | N/A | May 3, 2017 | |
| Shanghai Energy | January 1, 2020 | December 31, 2020 | 852.00 million | 860.24 million | N/A | May 3, 2017 |
Commitments made by shareholders and counterparties in the report year with respect to the annual operating results
√Applicable □N/A
In 2018, the Company completed acquisition of Shanghai Energy's 90.08% equity. According to the "Profit Forecast andCompensation Agreement" and its supplementary agreement between the Company and the counterparties, if the major assetrestructuring is completed in 2017, the counterparty compensation period is 2017, 2018 and 2019. The net profits of Shanghai Energyin 2017, 2018 and 2019 are not less than RMB378 million, RMB555 million and RMB763 million respectively. If the major assetrestructuring is completed in 2018, the compensation period is 2018, 2019 and 2020. The net profit of Shanghai Energy in 2018,2019 and 2020 is not less than RMB555 million, RMB763 million and RMB852 million respectively. The net profit difference shallbe calculated according to the net profit forecast minus the actual net profit, subject to the special audit result issued by theaccounting firm. The above net profits are net profits attributable to the parent Company (the net profits are the same as those in the"assessment report", which refer to the deduction of non-recurring profits and losses and the deduction of the impact of managementexpenses and supporting fund raising items on the net profits due to the implementation of equity incentive plan and withdrawal ofShanghai Energy in 2017). If the accumulated actual net profit of Shanghai Energy as of the end of any year within the compensationperiod is lower than the accumulated net profit commitment as of the end of that year, the compensation obligor will compensatesuch difference according to the agreement on profit forecast compensation; if the actual net profit is higher than or equal to the netprofit commitment, the compensation obligor does not need to make compensation.The "current actual performance" in the above table refers to the net profit attributable to the owner of the parent Company afterdeducting the non-recurring profit and loss and excluding the management expenses accrued due to the equity incentive implementedby Shanghai Energy in 2017 and the impact of the supporting raised capital project on the net profit.Dahua CPAs issued a special audit opinion on the above performance commitment: Shanghai Energy's audited net profit attributableto the parent Company in 2020 was RMB966 million, excluding the non-recurring profit and loss and the impact on the net profit ofthe management fees and supporting fund-raising projects accrued due to the equity incentive implemented by Shanghai Energy in2017, and the net profit attributable to the parent Company in 2020 was RMB860 million.The committed net profit was RMB852million, exceeding the net profit of RMB8 million, and 100.94% of the promised net profit this year. From 2018 to 2020, afterdeducting non-recurring profit and loss and excluding the impact of management fees and supporting fund raising projects due toequity incentive of Shanghai Energy in 2017, the accumulated net profit attributable to the parent Company is RMB2.22 billion , theaccumulated committed net profit is RMB2.170 billion, exceeding the accumulated committed net profit by RMB50 million, andachieving 102.30% of the committed net profit.
The completion of performance commitments and their impact on the goodwill impairment testThe net profit attributable to the parent Company after deducting the non-recurring profit and loss in 2020 and the impact on the netprofit caused by the management expenses and supporting fund-raising projects implemented by Shanghai Energy in 2017 isRMB860 million. The non-recurring profit and loss and the management expenses and supporting fund-raising items implemented byShanghai Energy in 2017 are deducted from 2018 to 2020, the net profit attributable to the parent Company is RMB2.220 billion, andthe performance commitment is completed during the reporting period. The major asset restructuring - acquisition of 90.08% equityof Shanghai Energy - is the business combination under common control, and thus there is no goodwill, or goodwill impairment.
IV. Occupation of the Listed Company’s Capital by the Controlling Shareholder or ItsRelated Parties for Non-Operating Purposes
□ Applicable √ N/A
In the Reporting Period, no controlling shareholder or its related party occupied capital of the listed Company for non-operatingpurposes.V. Explanation of the Board of Directors, the Supervisory Committee and IndependentDirectors (If Any) Regarding the "Non-standard Audit Report" Issued by the AccountingFirm for the Reporting Period
□ Applicable √ N/A
VI. Reason for Changes in Accounting Policies, Accounting Estimates and AccountingMethods as Compared to the Financial Report for the Previous Fiscal Year
√ Applicable □ N/A
1. The “Proposal on Changes in Accounting Policies” was reviewed and approved on the 1st meeting of the fourth board of directorson April 24, 2020.Before the change, the Company implemented the “Accounting Standards for Business Enterprises - Basic Standards” (ASBEs) andvarious specific accounting standards, business accounting standards application guidelines, interpretation of accounting standardsfor business enterprises and other relevant regulations which issued by the Ministry of Finance (MOF).After the change, since January 1, 2020, the Company has implemented the accounting policies in accordance with the relevantprovisions of the “Notice of the Ministry of Finance on the Revision and Distribution of the Accounting Standards for BusinessEnterprises NO. 14 - Income (CK[2017] No. 22)issued by MOF on July 5, 2017; since June 17, 2019, the Company has implementedthe accounting policies in accordance with the relevant provisions of the Notice of the Ministry of Finance on the Revision andDistribution of the Accounting Standards for Business Enterprises NO. 12 - Debt Restructuring (CK[2019] No. 9)issued by MOF onMay 16, 2019. Except the above changes, other parts remain unchanged. The Company continues the implementation of the“Accounting Standards for Business Enterprises - Basic Standards” (ASBEs) and various specific accounting standards, ASBEssubsequently issued and revised, business accounting standards application guidelines, interpretations of accounting standards forbusiness enterprises and other relevant regulations, as issued by the Ministry of Finance (MOF).
1. Impact of the “New Income Standard” on the Company
(1) The New Income Standard consolidates the revenue recognition models in the old ASBE -income and in the old ASBE –Construction Contracts into one unified model;
(2)The New Income Standard emphasizes the transfer of control, instead of the transfer of significant risks and rewards, as thekey criterion to recognize income;
(3) Enterprises are required to identify separate performance obligations in a contract and recognizes income separately afterperformance;
(4)The New Income Standard provides clearer guidance on accounting treatments when a contract contains two or moretransaction arrangements;
(5) The New Income Standard provides clear provision on income recognition and measurement for some specific transactions(or matters).
The New Income Standard is effective as of January 1, 2020, and the Company should adjust the amount of opening retainedearnings and other related items in the financial statements based on the cumulative effect of the first implementation of the standard,without adjusting the data for comparable periods. The above changes in accounting policies have no material impact on theCompany's financial position, operating results and cash flows.
2. Impact of the “New Debt Restructuring Standard” on the Company
The New Debt Restructuring Standard revises the definition of debt restructuring, clarifies the application of standards, such asAccounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments, for debtrestructuring involving financial instruments, clarifies that assets other than financial assets transferred to creditors are initiallymeasured at cost, and clarifies that debtors no longer distinguish between gains or losses from disposal of assets and gains or lossesfrom debt restructuring when they settle their debts with assets. The Company has had no debt restructuring, and the implementationof the New Debt Restructuring Standard will not have a significant impact on the Company's financial statements.
VII. Reason for Retrospective Restatement of Major Accounting Errors during the ReportingPeriod
□ Applicable √ N/A
No such cases in the Reporting Period.VIII. Reason for Changes in Scope of the Consolidated Financial Statements as Compared tothe Financial Report for the Previous Fiscal Year
√ Applicable □ N/A
22 entities are included in the consolidated financial statements of 2020, namely the Company, Hongta Plastic, Chengdu HongtaPlastic, Dexin Paper, Hongchuang Packaging, Hong Kong Chuangxin, Shanghai Energy, Zhuhai Energy, Wuxi Energy, Jiangxi Tonry,Energy Trading, Shenzhen Qingsong, Hunan Qingsong, Jiangxi Ruijie, Suzhou Green Power, Donghang Photoelectric, Newmi Tech,Guangdong Energy New Material Institute Co., Ltd., Yuxi Feiermu Trading Co., Ltd., Hainan Energy Investment Co., Ltd.,SEMCORP Global Holdings Kft. and SEMCORP Hungary Kft. The number of entities included in the scope of consolidatedfinancial statements in 2020 increased by 8 and decreased by 2 compared to the previous year, of which:
1. New subsidiaries included in the consolidated financial statements in the Reporting Period
| Name | Reason for change |
| Suzhou Green Power New Energy Materials Co., Ltd. | Business combination not under the common control |
| Foshan Donghang Photoelectric Technology Co., Ltd. | Business combination not under the common control |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | Business combination not under the common control |
| Guangdong Energy New Material Institute Co., Ltd. | Newly established |
| Yuxi Feiermu Trading Co., Ltd. | Newly established |
| Hainan Energy Investment Co., Ltd. | Newly established |
| SEMCORP Global Holdings Kft. | Newly established |
| SEMCORP Hungary Kft. | Newly established |
Note: ① The Company completed the acquisition of 100% equity of Suzhou Green Power in March 2020, andthen transferred 100% equity of Suzhou Green Power to Shanghai Energy in September 2020;
② Shanghai Energy completed the acquisition of 70% equity of Donghang Photoelectric and 76.3574%equity of Newmi Tech in the Reporting Period.
2. Subsidiaries removed from the consolidated financial statements in the Reporting Period
| Name | Reason for change |
| Shanghai Energy Information Technology Co., Ltd. | Canceled |
| Shanghai Fengzhou Trading Co., Ltd. | Canceled |
IX. Engagement and Disengagement of CPAs FirmCPA firm at present
| Name of the domestic CPA firm | Dahua CPAs (SGP) |
| Fee for domestic auditor (RMB0’000) | 160 |
| Consecutive years of audit services provided by the domestic auditor | 9 years |
| Names of the certified public accountants from auditor | Tang Rongzhou, Yao Rui |
| Consecutive years of audit services provided by the Certified Public Accountants of domestic auditor | Tang Rongzhou – 2 year, Yao Rui – 1 years |
Whether the CPAs firm was changed in the current period
□ Yes √ No
Engagement of any CPAs firm for internal control audit, financial advisor or sponsor
□ Applicable √ N/A
Possibility of Delisting after Disclosure of this Annual Report
□ Applicable √ N/A
XI. Matters Related to Bankruptcy and Reorganization
□ Applicable √ N/A
No such cases in the Reporting Period.
XII. Material Litigation and Arbitration
□ Applicable √ N/A
No such cases in the Reporting Period.
XIII. Punishments and Rectifications
√ Applicable □ N/A
| Name | Type | Reason | Type of investigation and punishment | Conclusion (if any) | Disclosure date | Disclosure index |
| Zhuhai Energy | Other | Mortgage over duty-free equipment under customs custody without customs approval | Other | It was fined RMB 850,000 as it was not a material violation. |
Explanation on the rectification
√ Applicable □ N/A
Zhuhai Energy completed the rectification and paid the fine in a timely manner. The above administrative fine has not affected theproduction and operation of Zhuhai Energy as it was not a material violation.XIV. Credit Conditions of the Company as well as Its Controlling Shareholder and ActualController
√ Applicable □ N/A
During the Reporting Period, the Company and its controlling shareholder and the actual controller were in good standing, and therewere no cases of non-performance of court judgments in force or large debts due but unpaid.
XV. Implementation of any Equity Incentive Scheme, Employee Stock Ownership Scheme orOther Incentive Measures for Employees
√ Applicable □ N/A
1. Implementation of the restricted stock incentive plan introduced in 2017
(1) On March 30, 2017, the 20
th
meeting of the second Board of Directors of the Company deliberated and approved theProposal on the 2017 Restricted Stock Incentive Plan (Draft) and Abstract and other related proposals, as well as the Proposal toRequest the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters Related to the 2017 RestrictedStock Incentive Plan. The Company's independent directors agreed on the 2017 Restricted Stock Incentive Plan (Draft) and otherrelated information. On March 30, 2017, the 11
th
meeting of the second Supervisory Committee deliberated and approved theProposal on the 2017 Restricted Stock Incentive Plan (Draft) and Abstract, the Proposal on Verifying the List of Participants in the2017 Restricted Stock Incentive Plan (Draft). For details, please refer to the Announcement on the Resolution Approved at the 20
th
Meeting of the Second Board of Directors (No.: 2017-017). For details, please refer to the Announcement on the ResolutionApproved at the 11
thMeeting of the Second Supervisory Committee (No.:2017-030) published on March 31, 2017 on the mediadesignated for information disclosure. The 2017 Restricted Stock Incentive Plan (Draft) was disclosed on the cninfo.com.
(2) The Company published internally the list of participants in this incentive plan, including their names and titles, fromMarch 31, 2017 to April 10, 2017. During the internal publication period, the Company did not receive any objection to theemployees included in the list so published. For details, please refer to the Explanation of the Supervisory Committee on theVerification Opinions and Publication Regarding the List of Participants in the 2017 Restricted Stock Incentive Plan (AnnouncementNo.: 2017-039) disclosed by the Company on April 13, 2017 on the media designated for information disclosure.
(3) On April 20, 2017, the 2016 General Meeting of Shareholders deliberated and approved the Proposal on the 2017 RestrictedStock Incentive Plan (Draft) and Abstract and the Proposal to Request the General Meeting of Shareholders to Authorize the Board ofDirectors to Handle Matters Related to the 2017 Restricted Stock Incentive Plan, and other related proposals. For details, please referto the Announcement on the Resolution Approved at the 2016 Annual General Meeting (No.:2017-043) published on April 21, 2017on the media designated for information disclosure.
(4) On June 1, 2017, the 4
thmeeting of the third Board of Directors deliberated and approved the Proposal on the Adjustment ofthe List of Participants in the Restricted Stock Incentive Plan and the Adjustment of the Number of Granted Stocks, and the Proposalon Granting Restricted Stocks to Participants in the 2017 Restricted Stock Incentive Plan. According to these proposals, the numberof participants changed from 92 to 84 and the number of stocks proposed to grant changed from 3.0650 million to 2.57 million. Theindependent directors expressed their agreement on the proposals above. On June 1, 2017, the 3
rdmeeting of the third SupervisoryCommittee deliberated and approved the Proposal on the Adjustment of the List of Participants in the Restricted Stock Incentive Planand the Adjustment of the Number of Granted Stocks, and the Proposal on Granting Restricted Stocks to Participants in the 2017Restricted Stock Incentive Plan; verified this list of participants in the restricted stock incentive plan and issued the VerificationOpinion of the Supervisory Committee on the List of Participants in the 2017 Restricted Stock Incentive Plan As of the Grant Day.For details, please refer to the Announcement on the Adjustment of the List of Participants in the 2017 Restricted Stock IncentivePlan and the Adjustment of the Number of Granted Stocks (No.: 2017-073), the Announcement on Granting Restricted Stocks toParticipants in the 2017 Restricted Stock Incentive Plan (No.: 2017-074) and the Announcement on Verification Opinion on the Listof Participants in the 2017 Restricted Stock Incentive Plan As of the Grant Day (No.: 2017-076) disclosed by the Company on June 2,2017 on the media designated for information disclosure.
(5) On June 8, 2017, the Company completed the registration for granting 2017 restricted stocks which were listed on June 9,2017. The number of the restricted stocks granted was 2.57 million, accounting for 1.9196% of the total share capital of the listedCompany before the grant. For details, please refer to the Announcement on Completion of the Registration for Granting 2017Restricted Stocks (No.: 2017-079) disclosed on June 8, 2017 on the media designated for information disclosure.
(6) On July 9, 2018, the 13th meeting of the third Board of Directors of the Company deliberated and approved the Proposal onAdjusting the Number and Repurchase Price of Restricted Stocks under the 2017 Restricted Stock Incentive Plan, the Proposal on theFulfillment of Conditions for Unlocking within the First Unlocking Period under the 2017 Restricted Stock Incentive Plan, theProposal on Repurchase and Cancellation of Part Incentive Stocks under the 2017 Restricted Stock Incentive Plan, and other relatedproposals. For details, please refer to the Announcement on Adjusting the Number and Repurchase Price of Restricted Stocks underthe 2017 Restricted Stock Incentive Plan (No.:2018-066), Announcement on the Fulfillment of Conditions for Unlocking within theFirst Unlocking Period under the 2017 Restricted Stock Incentive Plan (No.:2018-067), the Announcement on Repurchase andCancellation of Part Incentive Stocks under the 2017 Restricted Stock Incentive Plan (No.:2018-068), and other relatedannouncements disclosed on July 10, 2018 on the media designated for information disclosure.
(7) At the first unlocking under the 2017 Restricted Stock Incentive Plan, seven participants were assessed “good”, so theCompany repurchased and canceled part restricted stocks granted to but not yet unlocked by those participants. This repurchase andcancellation involved 55,800 restricted stocks and the repurchase price was RMB 14.325 per stock. Procedures for this repurchaseand cancellation were completed on September 27, 2018. For details, please refer to the Announcement on Completion of theRepurchase and Cancellation of Part Restricted Stocks (No.:2018-123) disclosed on September 28, 2018 on the media designated for
information disclosure. (8) On July 12, 2019, the 31
st
meeting of the third Board of Directors and the 26th meeting of the third Supervisory Committee ofthe Company deliberated and approved the Proposal on Adjusting the Number and Repurchase Price of Restricted Stocks under the2017 Restricted Stock Incentive Plan, the Proposal on the Fulfillment of Conditions for Unlocking within the Second UnlockingPeriod under the 2017 Restricted Stock Incentive Plan, the Proposal on Repurchase and Cancellation of Part Incentive Stocks underthe 2017 Restricted Stock Incentive Plan, and other related proposals. For details, please refer to the Announcement on Adjusting theNumber and Repurchase Price of Restricted Stocks under the 2017 Restricted Stock Incentive Plan (No.:2019-084), theAnnouncement on Repurchase and Cancellation of Part Incentive Stocks under the 2017 Restricted Stock Incentive Plan(No.:2019-085), the Announcement on the Fulfillment of Conditions for Unlocking within the Second Unlocking Period under the2017 Restricted Stock Incentive Plan (No.:2019-090) and other related announcements disclosed on July 13, 2019 on the mediadesignated for information disclosure.
(9) On July 30, 2019, the 33rd meeting of the third Board of Directors of the Company deliberated and approved the Proposalon Repurchase of Stock Rights of Departing Employees, and agreed to repurchase and cancel the 68,000 restricted stocks that weregranted to but not yet unlocked by the departing employee Li Jianchun. For details, please refer to the Announcement on Repurchaseof Stock Rights of Departing Employees (No.:2019-104) disclosed on July 31, 2019 on the media designated for informationdisclosure.
(10) On August 15, 2019, the seventh Extraordinary General Meeting of Shareholders of 2019 deliberated and approved theProposal on Repurchase and Cancellation of Part Incentive Stocks under the 2017 Restricted Stock Incentive Plan and the Proposalon Repurchase of Stock Rights of Departing Employees. For details, please refer to the Announcement on the Resolution of the 7
th
Extraordinary General Meeting of Shareholders of 2019 (No.: 2019-119) disclosed on August 16, 2019 on the media designated forinformation disclosure.
(11) At the second unlocking under the 2017 Restricted Stock Incentive Plan, 17 participants were assessed “good”, and thedeparting employee Li Jianchun was among them for repurchase and cancellation within the second unlocking period. Therefore, thisrepurchase and cancellation involved part restricted stocks granted to but not yet unlocked by those 17 participants. This repurchaseand cancellation involved 204,680 restricted stocks and the repurchase price was RMB 8.426 per stock. Procedures for thisrepurchase and cancellation were completed on Friday, August 30, 2019. For details, please refer to the Announcement onCompletion of the Repurchase and Cancellation of Part Restricted Stocks (No.: 2019-132) disclosed on Saturday, August 31, 2019 onthe media designated for information disclosure.
2. The Company had no employee stock ownership scheme or its implementation during the Reporting Period.
3. On July 13, 2020, the 5th meeting of the fourth Board of Directors and the 5th meeting of the fourth Supervisory Committeeof the Company deliberated and approved the Proposal on the Fulfillment of Conditions for Unlocking within the Third UnlockingPeriod under the 2017 Restricted Stock Incentive Plan, the Proposal on Repurchase and Cancellation of Part Incentive Stocks underthe 2017 Restricted Stock Incentive Plan, and other related proposals. For details, please refer to the Announcement on Repurchaseand Cancellation of Part Incentive Stocks under the 2017 Restricted Stock Incentive Plan (No.: 2 2020-113), the Announcement onthe Fulfillment of Conditions for Unlocking within the Third Unlocking Period under the 2017 Restricted Stock Incentive Plan(No.:2020-112) and other related announcements disclosed on July 13, 2019 on the media designated for information disclosure. Theabove matters were deliberated and approved at the fourth extraordinary general meeting of shareholders of the Company in 2020.
4. At the third unlocking under the 2017 Restricted Stock Incentive Plan, four participants were assessed “good”, so the Companyrepurchased and canceled part restricted stocks granted to but not yet unlocked by those participants. This repurchase andcancellation involved 23,120 restricted stocks and the repurchase price was RMB 8.426 per stock. According to the Company Law,the Company published the Announcement on Capital Decrease Due to Repurchase and Cancellation of Part Restricted Stocks(No.:2020-129) on July 31, 2020 on the media designated for information disclosure, to notify creditors that within forty-five daysfrom the date of this announcement, they have the right to request the Company to clear off their debts or provide correspondingguarantees, that if the creditors do not exercise the above right within the prescribed period, the Company will continue to implementthis repurchase and cancellation and complete the reduction of registered capital in accordance with the statutory procedures.Procedures for this repurchase and cancellation were completed on Monday, September 28, 2020. For details, please refer to theAnnouncement on Completion of the Repurchase and Cancellation of Part Restricted Stocks (No.: 2020-181) disclosed on Monday,September 28, 2020 on the media designated for information disclosure.
XVI. Significant related transactions
1. Related transactions arising from routine operation
√ Applicable □ N/A
| Related transaction party | Relation | Type of related transaction | Details of related transaction | Pricing principle of the related transaction | Related transaction price | Related transaction amount(RMB0’000) | Proportion in the total amount of transaction of the same type | Approved transaction limit(RMB0’000) | Whether or not the transaction limited exceeded | Settlement mode for related transaction | Obtainable market price for the transaction of the same type | Disclosure date | Index to disclosed information |
| Kunshasi | Joint-stock Company | Purchase of raw materials from related parties | Purchase of additives | Agreed by both parties based on market price | -- | 3,661.77 | 66.22% | 4,000 | No | Bank deposit or acceptance draft | RMB15.71/kg | March 17, 2020 | For details, please refer to the Announcement on the Expected Related Transactions Arising from Routine Operation in 2020 (No.: 2020-036) disclosed on cninfo.com. |
| Sale of products and commodities to related parties | Sale of raw materials | Agreed by both parties based on market price | -- | 1,413.7 | 67.02% | 2,000 | No | Bank deposit or acceptance draft | RMB9.93 /kg | March 17, 2020 | For details, please refer to the Announcement on the Expected Related Transactions Arising from Routine Operation in 2020 (No.: 2020-036) disclosed on cninfo.com. | ||
| Lease to related parties | Lease of workshop | Agreed by both parties based on market price | -- | 2.4 | 2.09% | 2.4 | None | Bank deposit or acceptance bill | -- | March 17, 2020 | For details, please refer to the Announcement on the Expected Related Transactions Arising from Routine Operation in 2020 (No.: 2020-036) disclosed on cninfo.com. | ||
| Heyi Investment | Controlling shareholder of the Company | Lease to related parties | Lease of office | Agreed by both parties based on market price | -- | 0.33 | 0.22% | 0.33 | No | Bank deposit or acceptance draft | -- | March 17, 2020 | For details, please refer to the Announcement on the Expected Related Transactions Arising from Routine Operation in 2020 (No.: 2020-036) disclosed on cninfo.com. |
| Heli Investment | Shareholder of the Company | Lease to related parties | Lease of office | Agreed by both parties based on market price | -- | 0.24 | 0.21% | 0.24 | No | Bank deposit or acceptance draft | -- | March 17, 2020 | For details, please refer to the Announcement on the Expected Related Transactions Arising from Routine Operation in 2020 (No.: 2020-036) disclosed on cninfo.com. |
| Industrial | The | Loan with | Loan | Market | -- | 144,000 | 20.65% | 336,000 | No | -- | -- | August | For details, please refer to the |
| and Commercial Bank of China | spouse of Ms. Zheng Haiying, who is an independent director of the Company, is a non-executive director of the Industrial and Commercial Bank of China. | related bank (including application for comprehensive facility, acceptance draft, letter of credit, bank guarantee, etc.) | pricing, not higher than the loan benchmark interest rate for the same period or the market interest rate level under the same conditions | 29, 2020 | Announcement on the Expected Deposit, Loan and Guarantee with Related Bank in 2020 (No.: 2020-149) disclosed on cninfo.com. | ||||||||||
| Loan with related bank (including demand deposits, time deposits, call deposits, etc.) | Deposit | Market pricing, not higher than the deposit benchmark interest rate for the same period | -- | 5,611.64 | 2.36% | 19,000 | No | -- | -- | August 29, 2020 | For details, please refer to the Announcement on the Expected Deposit, Loan and Guarantee with Related Bank in 2020 (No.: 2020-149) disclosed on cninfo.com. | ||||
| Mutual guarantees between companies within the scope of the Company's consolidated financial statements through the related bank | Guarantee | Agreed by both parties based on market price | -- | 356,000 | 27.70% | 400,000 | No | -- | -- | Saturday, August 29, 2020 | For details, please refer to the Announcement on the Expected Deposit, Loan and Guarantee with Related Bank in 2020 (No.: 2020-149) disclosed on cninfo.com. | ||||
| Total | -- | -- | 510,690.08 | -- | 761,002.97 | -- | -- | -- | -- | -- | |||||
| Details of any sales return of a large amount | No | ||||||||||||||
| Give the actual situation in the Reporting Period (if any) where a forecast had been made | In the year, the actual routine transaction amount between the Company and the related parties did not exceed the total amount of routine | ||||||||||||||
| for the total amounts of routine related transactions by type to occur in the current period | related transactions estimated by the Company by type. |
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A |
2. Related-party transactions relevant to purchases and sales of assets
□ Applicable √ N/A
No such cases in the Reporting Period.
3. Related-party transactions with joint investments
□ Applicable √ N/A
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
√ Applicable □ N/A
Whether there were any credits or liabilities with related parties for non-operating purposes
□ Yes √ No
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ N/A
No such cases in the Reporting Period.
XVII. Significant contracts and their execution
1. Trusteeships, Contracts, and Leases
(1) Trusteeships
□ Applicable √ N/A
No such cases in the Reporting Period.
(2) Contracts
□ Applicable √ N/A
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ N/A
No such cases in the Reporting Period.
2. Significant guarantees
√ Applicable □ N/A
(1) Guarantees
Unit: RMB0’000
| Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries) | ||||||||
| Guaranteed party | Disclosure date of the guarantee line announcement | Guarantee line | Actual occurrence date | Actual guarantee amount | Type of guarantee | Period of guarantee | Due or not | Guarantee for a related party or not |
| None | ||||||||
| Guarantees provided by the Company for its subsidiaries | ||||||||
| Guaranteed party | Disclosure date of the guarantee line announcement | Guarantee line | Actual occurrence date | Actual guarantee amount | Type of guarantee | Period of guarantee | Due or not | Guarantee for a related party or not |
| Hongta Plastic | March 17, 2020 | 4,400 | November 4, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Hongta Plastic | March 17, 2020 | 7,800 | October 19, 2018 | 100 | Joint liability guarantee | 3 Years | No | Yes |
| Hongta Plastic | March 17, 2020 | 3,000 | October 23, 2020 | 700 | Joint liability guarantee | 1 Year | No | Yes |
| Hongta Plastic | March | 4,000 | August 23, | Joint liability | 1 Year | No | Yes | |
| 17, 2020 | 2019 | guarantee | ||||||
| Hongta Plastic | March 17, 2020 | 4,000 | November 2, 2020 | 47.42 | Joint liability guarantee | 2 Years | No | Yes |
| Hongta Plastic | March 17, 2020 | 21,000 | November 10, 2020 | 4,389.42 | Joint liability guarantee | 5 Years | No | Yes |
| Hongta Plastic | March 17, 2020 | 4,000 | November 9, 2020 | Joint liability guarantee | 5 Years | No | Yes | |
| Hongta Plastic | March 17, 2020 | 4,000 | March 23, 2020 | 1,820 | Joint liability guarantee | 1 Year | No | Yes |
| Chengdu Hongta Plastic | March 17, 2020 | 2,000 | December 28, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Hongchuang Packaging | March 17, 2020 | 2,000 | April 16, 2020 | Joint liability guarantee | 2 Years | No | Yes | |
| Hongchuang Packaging | March 17, 2020 | 3,000 | June 17, 2020 | 1,300 | Joint liability guarantee | 1 Year | No | Yes |
| Hongchuang Packaging | March 17, 2020 | 6,600 | November 30, 2020 | 115.47 | Joint liability guarantee | 1 Year | No | Yes |
| Hongchuang Packaging | March 17, 2020 | 3,000 | October 23, 2020 | 629.74 | Joint liability guarantee | 1 Year | No | Yes |
| Dexin Paper | March 17, 2020 | 2,230 | November 13, 2019 | 350 | Joint liability guarantee | 3 Years | No | Yes |
| Dexin Paper | March 17, 2020 | 500 | June 16, 2020 | 100 | Joint liability guarantee | 1 Year | No | Yes |
| Dexin Paper | March 17, 2020 | 1,000 | October 23, 2020 | 280 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 30,000 | October 30, 2020 | 17,567.83 | Joint liability guarantee | 3 Years | No | Yes |
| Shanghai Energy | March 17, 2020 | 10,000 | January 21, 2019 | 7,740 | Joint liability guarantee | 6 Years | No | Yes |
| Shanghai Energy | March 17, 2020 | 30,000 | July 14, 2020 | Joint liability guarantee | 3 Years | No | Yes | |
| Shanghai Energy | March 17, 2020 | 15,000 | September 25, 2020 | 2,964.5 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 51,000 | April 27, 2019 | 18,193.75 | Joint liability guarantee | 5 Years | No | Yes |
| Shanghai Energy | March 17, 2020 | 10,000 | August 0 6, 2020 | 27.92 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 11,000 | September 22, 2020 | 0 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 21,000 | June 23, 2020 | 14,417.17 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 9,000 | December 6, 2019 | Joint liability guarantee | 3 Years | No | Yes | |
| Shanghai Energy | March 17, 2020 | 10,000 | December 3, 2019 | Joint liability guarantee | 5 Years | No | Yes | |
| Shanghai Energy | March 17, 2020 | 22,000 | December 13, 2019 | 2,750.41 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 11,000 | November 30, 2020 | 0 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March 17, 2020 | 55,000 | December 23, 2019 | 30,000 | Joint liability guarantee | 3 Years | No | Yes |
| Shanghai Energy | March 17, 2020 | 10,000 | December 27, 2019 | Joint liability guarantee | 2 Years | No | Yes | |
| Shanghai Energy | March 17, 2020 | 15,000 | January 13, 2020 | 8,000 | Joint liability guarantee | 1 Year | No | Yes |
| Shanghai Energy | March | 85,600 | September 26, | 85,600 | Joint liability | 7 Years | No | Yes |
| 17, 2020 | 2020 | guarantee | ||||||
| Shanghai Energy | March 17, 2020 | 8,000 | September 27, 2020 | 0 | Joint liability guarantee | 2 Years | No | Yes |
| Shanghai Energy | March 17, 2020 | 10,000 | October 29, 2020 | 1,511.17 | Joint liability guarantee | 1 Year | No | Yes |
| Wuxi Energy | March 17, 2020 | 130,000 | May 17, 2019 | 106,368.26 | Joint liability guarantee | 7 Years | No | Yes |
| Wuxi Energy | March 17, 2020 | 10,000 | February 26, 2020 | 2,354.8 | Joint liability guarantee | 4 Years | No | Yes |
| Wuxi Energy | March 17, 2020 | 5,000 | April 15, 2020 | 1,915.9 | Joint liability guarantee | 1 Year | No | Yes |
| Wuxi Energy | March 17, 2020 | 12,000 | December 18, 2020 | 117.95 | Joint liability guarantee | 3 Years | No | Yes |
| Wuxi Energy | March 17, 2020 | 116,000 | November 16, 2020 | Joint liability guarantee | 9 Years | No | Yes | |
| Jiangxi Tonry | March 17, 2020 | 150,000 | September 17, 2019 | Joint liability guarantee | 5 Years | No | Yes | |
| Jiangxi Tonry | March 17, 2020 | 10,000 | December 11, 2020 | 10,000 | Joint liability guarantee | 1 Year | No | Yes |
| Jiangxi Tonry | March 17, 2020 | 27,750 | July 29, 2020 | 10,215.6 | Joint liability guarantee | 1 Year | No | Yes |
| Jiangxi Tonry | March 17, 2020 | 5,000 | October 28, 2020 | Joint liability guarantee | 2 Years | No | Yes | |
| Zhuhai Energy | March 17, 2020 | 100,000 | August 14, 2017 | 22,319.65 | Joint liability guarantee | 9 Years | No | Yes |
| Zhuhai Energy | March 17, 2020 | 75,000 | August 1, 2019 | 70,000 | Joint liability guarantee | 6 Years | No | Yes |
| Zhuhai Energy | March 17, 2020 | 8,000 | July 14, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Zhuhai Energy | March 17, 2020 | 22,000 | September 21, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Zhuhai Energy | March 17, 2020 | 7,000 | March 16, 2020 | 4,900 | Joint liability guarantee | 1 Year | No | Yes |
| Zhuhai Energy | March 17, 2020 | 3,500 | December 2, 2019 | 2,900 | Joint liability guarantee | 1 Year | No | Yes |
| Zhuhai Energy | March 17, 2020 | 5,000 | December 10, 2019 | 2,485.46 | Joint liability guarantee | 5 Years | No | Yes |
| Zhuhai Energy | March 17, 2020 | 10,000 | April 13, 2020 | 9,870 | Joint liability guarantee | 1 Year | No | Yes |
| Zhuhai Energy | March 17, 2020 | 20,000 | May 8, 2020 | 8,400 | Joint liability guarantee | 3 Years | No | Yes |
| Zhuhai Energy | March 17, 2020 | 10,000 | May 17, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Zhuhai Energy | March 17, 2020 | 8,000 | May 24, 2020 | Joint liability guarantee | 5 Years | No | Yes | |
| Zhuhai Energy | March 17, 2020 | 10,000 | March 30, 2020 | 5,010.6 | Joint liability guarantee | 1 Year | No | Yes |
| Zhuhai Energy | March 17, 2020 | 15,000 | December 30, 2020 | Joint liability guarantee | 1 Year | No | Yes | |
| Suzhou Green Power | March 17, 2020 | 15,000 | May 21, 2020 | 922.56 | Joint liability guarantee | 3 Years | No | Yes |
| Suzhou Green Power | March 17, 2020 | 10,000 | September 27, 2020 | 468.37 | Joint liability guarantee | 1 Year | No | Yes |
| Total guarantee quota approved for subsidiaries during the reporting period (B1) | 1,777,600 | Total actual amount of guarantees for subsidiaries during the reporting period (B2) | 456,853.93 | |||||
| Total guarantee quota approved for the subsidiaries at the end of the reporting period (B3) | 1,777,600 | Total actual guarantee balance for subsidiaries at the end of the reporting period (B4) | 456,853.93 | |||||
| Guarantees provided by the Company for its subsidiaries | ||||||||
| Guaranteed party | Disclosure date of the guarantee line announcement | Guarantee line | Actual occurrence date | Actual guarantee amount | Type of guarantee | Period of guarantee | Due or not | Guarantee for a related party or not |
| None | ||||||||
| Total guarantee amount provided by the Company (sum of the aforesaid three categories) | ||||||||
| Total guarantee quota approved during the reporting period (A1+B1+C1) | 1,777,600 | Total actual amount of guarantee during the reporting period (A2+B2+C2) | 456,853.93 | |||||
| Total guarantee quota approved at the end of the reporting period (A3+B3+C3) | 1,777,600 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 456,853.93 | |||||
| Total guarantee amount (A4+B4+C4) to net assets of the Company | 41.15% | |||||||
| Including: | ||||||||
| Balance of guarantee provided to shareholders, beneficial owners and their related parties (D) | 0.00 | |||||||
| Amount of debt guarantee provided for guaranteed party whose asset-liability ratio is not less than 70% directly or indirectly (E) | 300,920.58 | |||||||
| Amount of total guarantee over 50% of net assets (F) | 1,222,455.97 | |||||||
| Total amount of the above three guarantees (D+E+F) | 1,523,376.54 | |||||||
| Explanation of warranty liability or possible joint liquidation (if any) | No | |||||||
| Explanation of provision of guarantees for external parties in violation of the prescribed procedure (if any) | No | |||||||
Explanation on guarantees provided by combined mode: No
(2) Illegal provision of guarantees for external parties
□ Applicable √ N/A
No such cases in the Reporting Period.
3. Entrusted cash assets management
(1) Entrusted wealth management
√ Applicable □ N/A
Overview of wealth management entrustment during the Reporting Period
Unit: RMB0’000
| Type | Source of capital under the entrusted wealth management | Amount of the entrusted wealth management | Undue amount | Unrecovered overdue amount |
| Bank wealth management products | Total amount of funds raised | 120,000 | 120,000 | 0 |
| Bank wealth management products | Self-owned fund | 50,000 | 20,000 | 0 |
| Total | 170,000 | 140,000 | 0 | |
Particulars of high-risk wealth management entrustment with significant single amount or low security, low liquidity, or withoutbreakeven
□ Applicable √ N/A
Whether there is the case where the principal cannot be recovered at maturity or other case where impairment may occur
□ Applicable √ N/A
(2) Entrusted loans
□ Applicable √ N/A
No such cases in the Reporting Period.
4. Significant contracts arising from routine operation
√ Applicable □ N/A
| Name of signatory Company | Name of counterparty | Subject | Total contract price | Progress of contract performance | Amount of sales income recognized for the Reporting Period or accumulatively | Collection of accounts receivable |
| Shanghai Energy | LG Chem, Ltd. | Lithium-ion Battery Separator Film | No more than US$ 617 million | Normal performance | The sales income recognized in 2020 was RMB0.47 billion; cumulative sales revenue recognized as at the end of 2020 was RMB0.71 billion. | As at the end of 2020, the balance of accounts receivable was RMB0.22 billion. The amount recovered accumulatively after the Reporting Period as of March 17, 2020 was RMB0.12 billion, accounting for 55.04%, representing a normal progress of recovery. |
The material contract progress is materially different from the stipulation in the contract and affects more than 30% of the contractamount.
□ Applicable √ N/A
5. Other significant contracts
√ Applicable □ N/A
| Name of | Name of counterpa | Subject | Signing | Book value | Appraisal | Name of appraisa | Appraisal | Pricing | Transactio | Whether | Relation | Execution as at the end of the | Date of | Index |
| signatory Company | rty | date | of assets involved in the contract (RMB0’000) | value of assets involved in the contract (RMB0’000) | l institution | base date | principle | n price (RMB0’000) | related transaction or not | Reporting Period | disclosure | |||
| The Company | Suzhou Victory Precision Manufacturing Technology Co. Ltd. | 100% equity of Suzhou Green Power | August 4, 2019 | 25,397.08 | 66,500 | China United Assets Appraisal Group | June 30, 2019 | Agreed by both parties | 180,080 | No | No | The Company completed the acquisition of100% equity of Suzhou Green Power within the Reporting Period | August 5, 2019 | cninfo.com |
XVIII. Social Responsibility
1. Performance of social responsibility
For details, please refer to the 2020 Environment, Society and Governance Report (ESG Report) disclosed on March 18, 2021 oncninfo.com.
2. Performance of social responsibility for targeted poverty alleviation
During the reporting period, the Company did not carry out any Targeted Poverty Alleviation Program, and has no any plan for thecoming future.
3. Environmental protection
Whether the listed company and its subsidiaries are declared heavily polluting business by the environmental protection authorities.
√Yes □ No
| Name of the Company or Subsidiary | Name of main pollutant and industry-specific pollutant | Type of emission | Number of discharge outlet | Distribution of discharge outlet | Emission concentration | Pollutant emission standard implemented | Total actual emissions | Total approved emissions | Excessive emissions |
| Suzhou Green Power | Dichloromethane | Discharge at an altitude of 15 meters | 5 | Inside the factory | 11mg/m? | DB31/933-2015 | 6.732t/a | 12.6t/a | Up to standard |
| Suzhou Green Power | VOCs | Discharge at an altitude of 15 meters | 8 | Inside the factory | 0.918mg/m? | DB12/524-2014 | 0.096192t/a | 6.152t/a | Up to standard |
| Suzhou | Particulat | Discharge at an altitude of | 4 | Inside the | 2mg/m? | GB13271- | 0.4913t/a | 1.449t/a | Up to |
| Green Power | es | 8 meters | factory | 2014 | standard | ||||
| Suzhou Green Power | Nitrogen oxides | Discharge at an altitude of 8 meters | 4 | Inside the factory | 34mg/m? | GB13271-2014 | 7.86t/a | 9.139t/a | Up to standard |
Construction and operation of pollution prevention and treatment facilities:
Industrial wastewater produced by the Company is subject to pretreatment in the wastewater treatment station inside the Companyinstead of direct discharge, and the pretreated wastewater is then discharged to town-level industrial wastewater treatment plant.Domestic sewage, such as ammonia nitrogen and other pollutants, are discharged into the municipal pipe network and then intoZhenze Town Domestic Sewage Treatment Plant for treatment. The discharge of industrial waste gas is well organized, and theparticulates in the waste gas are subject to the secondary standard as shown in the Table 2 of the Comprehensive Emission Standardfor Air Pollutants (GB16297-1996).Information on environmental impact assessment for construction projects and other administrative permits for environmentalprotection:
Requirement for environmental impact assessment and "three simultaneous stages" acceptance procedures are strictly followed for allconstruction projects of the Company.Environmental emergency response plan:
The Company has prepared its Environmental Emergency Response Plan and reported it to the competent environmental regulatoryagency for filing in August 2019.Environmental self-monitoring scheme:
The Company has commissioned a qualified institution to regularly monitor the pollutant emissions.Other discloseable information on environmental protectionNoneOther information relating to environmental protectionFor details, please refer to the 2020 Environment, Society and Governance Report (ESG Report) disclosed on March 18, 2021 oncninfo.com.
XIX. Other Significant Events
√ Applicable □ N/A
Mr. Paul Xiaoming Lee and Ms. Sherry Lee, who are shareholders of the Company and members of Xiaoming Lee's family and thede facto controllers of the Company, signed the Power of Attorney for Shareholding on January 14, 2020, by which Ms. Sherry Leefully delegated the shareholders' rights, such as rights to question, proposal and vote, in connection with 73,470,459 shares she heldin the Company, to her father Mr. Paul Xiaoming Lee, for a period of three years from the date of the Power of Attorney. After the
signing of the above-mentioned Power of Attorney for Shareholding, Mr. Paul Xiaoming Lee becomes the singleshareholder of the Company with the most voting shares, and the controlling shareholder of the Company ischanged from Heyi Investment to Mr. Paul Xiaoming Lee. As both Mr. PAUL XIAOMING LEE and Ms. SherryLee are members of the Li Xiaoming family, the actual controller of the Company, so the actual controller of theCompany remains unchanged and the change in equity has no material impact on the stability of the control of theCompany. For details, please refer to the "Prompt Announcement on the Signing of Power of Attorney forShareholding by the Actual Controller & Change in Controlling Shareholder" (No. 2020-003), the "Short FormReport on Change in Equity" and the "Detailed Report on Change in Equity" disclosed by the Company oncninfo.com.
2. On September 30, 2020, Pang Qizhi resigned from the position of Chief Financial Officer of the Company dueto employment adjustment and continued to serve the Company after his resignation as the assistant to thechairman of the Board of Directors. The Board of Directors of the Company agreed to appoint Mr. Li Jian as thenew Chief Financial Officer of the Company. For details, please refer to Announcement on Resignation of OldChief Finance Officer and Engagement of New Chief Finance Officer (No.: 2020-186) disclosed by the Companyon cninfo.com.XX. Significant Events of Subsidiaries
√ Applicable □ N/A
1. During the Reporting Period, Tan Kim Chwee, a shareholder of Shanghai Energy, transferred his 0.84%equity of Shanghai Energy to Yin Hongqiang. For details, please refer to the “Announcement on the Completionof Business Registration Change and Filing of Holding Subsidiary” (No. 2020-017) disclosed by the Company oncninfo.com.
2. During the Reporting Period, due to business needs Shanghai Energy acquired 70% equity of FoshanDonghang Optic-Electric Technology Co., Ltd. with its own funds. After the completion of the equity transferDonghang Optic-Electric becomes a controlling subsidiary of Shanghai Energy and was included in the scope ofthe Company's consolidated statements. For details, please refer to the Announcement on the Completion ofBusiness Registration Change and Filing of Subordinate Company (No. 2020-045) disclosed by the Company oncninfo.com.
3. During the Reporting Period, the Company completed the acquisition of 100% equity of Suzhou GreenPower, and on March 5, 2020, Suzhou Green Power completed procedures for business registration change andfiling in connection with the equity acquisition. For details, please refer to the Announcement on Progress ofAcquisition of 100% Equity of Suzhou Green Power New Energy Materials Co., Ltd. (No. 2020-026) disclosed bythe Company on cninfo.com.
4. During the Reporting Period, Dexin Paper, Wuxi Energy, Zhuhai Energy, and Jiangxi Tonry completedprocedures for business registration change and filing due to the need to increase the business scope. For details,please refer to the Announcement on the Completion of Business Registration Change and Filing ofWholly-owned Subsidiary (No. 2020-061), the Announcement on the Completion of Business RegistrationChange and Filing of Subordinate Company (No. 2020-068), and ), the Announcement on the Completion ofBusiness Registration Change and Filing of Subordinate Company (No. 2020-069) disclosed by the Company oncninfo.com.
5. On April 24, 2020, the 1
stmeeting of the fourth Board of Directors of the Company deliberated andapproved the Proposal on Entry into a Framework Agreement with Tan Kim Chwee and Yin HongqiangRegarding the Equity Transfer of Shanghai Energy New Material Technology Co., Ltd.. The preliminary valuation(provisional valuation only, not final valuation) of Shanghai Energy was considered to be RMB9.544 billion, andon this basis, the Company intended to consider acquiring 4.30% equity held by Tan Kim Chwee in ShanghaiEnergy at the estimated transaction price of RMB410,401,431 and 0.84% equity held by Yin Hongqiang inShanghai Energy at the estimated transaction price of RMB80,155,821 with its own and self-financing funds.Other shareholders of Shanghai Energy, namely Yan Ma and Alex Cheng, voluntary waived the right of firstrefusal for this equity transfer. For details, please refer to the Announcement on Entry into a FrameworkAgreement with Shareholders of Shanghai Energy New Material Technology Co., Ltd. Regarding the EquityTransfer (No.:2020-075) disclosed by the Company on cninfo.com. On July 24, 2020, the seventh meeting of thefourth Board of Directors of the Company deliberated and approved the Proposal on Entry into an Equity TransferAgreement with Tan Kim Chwee and Yin Hongqiang, and agree to acquire 4.30% equity held by Tan Kim Chweein Shanghai Energy at the price of RMB410,401,431 and 0.84% equity held by Yin Hongqiang in ShanghaiEnergy at the price of RMB80,155,821 with its own and self-financing funds, by reference to the appraised equityvalue RMB962,900.00 of Shanghai Energy on December 31, 2019 as the appraisal base date as shown in theappraisal report issued by Shanghai Zhonghua Assets Appraisal Co., Ltd.. After the completion of this transaction,Shanghai Energy remained as a controlled subsidiary of the Company, and the Company holds 95.22% equity inShanghai Energy. For details, please refer to the Announcement on Entry into an Equity Transfer Agreement withShareholders of Shanghai Energy New Material Technology Co., Ltd.(No.:2020-125) disclosed by the Companyon cninfo.com. On August 10, 2020, Shanghai Energy completed the procedures for business registration changeand filing with respect to the aforesaid equity transfer. For details, please refer to the “Announcement onCompletion of the Procedures for Business Registration Change and Filing By the Controlled Subsidiary ShanghaiEnergy” (No. 2020-134) disclosed by the Company on cninfo.com.
6. Funds raised for the “lithium-ion battery separator film project (Phase I) with annual production output of400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd.” and “project ofWuxi Energy New Material Industrial Base” were fully used, and the Company completed the procedure forcanceling the special account for the funds raised. The raised fund supervision agreement signed between theCompany, Jiangxi Tonry, Wuxi Energy, CITIC Securities and the opening bank was also terminated accordingly.For details, please refer to the Announcement on Canceling the Special Account for Part Funds Raised(No.:2020-079).
7. On June 21, 2020, the 4th meeting of the 4th Board of Directors of the Company deliberated and approvedthe "Proposal on Pledging the Equity of a Wholly-owned Subsidiary of the Company for Getting Loan” and it wasagreed that the Company applied for a M&A loan of not more than RMB 876 million to Shanghai RuralCommercial Bank Co., Ltd. Nanhui Sub-branch for a term of seven years, and pledged the 100% equity of Suzhou
Green Power to Shanghai Rural Commercial Bank Co., Ltd. Nanhui Sub-branch. In addition, Shanghai Energyprovided joint and several liability guarantee for this M&A loan equal to RMB 876 million. Please refer to the"Announcement on Pledging the Equity of a Wholly-owned Subsidiary of the Company for Getting Loan" (No.2020-102) disclosed by the Company on cninfo.com. The Company repaid the aforesaid loan in advance andreceived the "Notice of Cancellation of Registration of Equity Pledge" from Administrative Approval Bureau ofSuzhou Wujiang District on September 21, 2020, and the Company released the aforesaid pledge of the pledgeequity. For details, please refer to the "Announcement on Repayment of M&A Loan and Release of Pledge ofSubsidiary’s Equity" (No. 2020-175) disclosed by the Company on cninfo.com.
8. On June 21, 2020, the 4th meeting of the 4th Board of Directors of the Company deliberated and approvedthe Proposal on Providing Financial Assistance to the Controlled Subsidiary and its Subsidiaries, and it wasagreed that the Company and its subsidiary provided financial assistance to its controlled subsidiary ShanghaiEnergy and its subsidiaries in a total amount not exceeding RMB1 billion. For details, please refer to the"Announcement on Providing Financial Assistance to the Controlled Subsidiary and its Subsidiaries" (No.2020-103) disclosed by the Company on cninfo.com.
9. On July 24, 2020, the seventh meeting of the fourth Board of Directors of the Company deliberated andapproved the Proposal on Entry into an Equity Transfer Agreement with Tan Kim Chwee and Yin Hongqiang, andagree to acquire 4.30% equity held by Tan Kim Chwee in Shanghai Energy at the price of RMB410,401,431 and
0.84% equity held by Yin Hongqiang in Shanghai Energy at the price of RMB80,155,821 with its own andself-financing funds. After the completion of the transaction, Shanghai Energy is still a controlled subsidiary ofthe Company, and the Company holds 95.22% equity in Shanghai Energy. For details, please refer to theAnnouncement on Entry into an Equity Transfer Agreement with Tan Kim Chwee and Yin Hongqiang (No.:
2020-125), and the Announcement on Completion of Business Registration Change and Filing by the ControlledSubsidiary - Shanghai Energy (No.: 2020-134) disclosed by the Company on cninfo.com.
10. On July 24, 2020, the seventh meeting of the fourth Board of Directors of the Company deliberated andapproved the Proposal on Conducting Foreign Exchange Derivatives Trading, and agreed that Shanghai Energy, acontrolled subsidiary of the Company, and its subsidiaries conduct foreign exchange derivatives trading in a totalamount of no more than RMB 800 million (or equivalent foreign currency) within 12 months from the date ofdeliberation and approval by the Board of Directors. The above amount can be used on a cyclic basis within theapproved time limit. For details, please refer to the Announcement on Conducting Foreign Exchange DerivativesTrading (No.:2020-126) disclosed by the Company on cninfo.com.
11. On August 28, 2020, the 10th meeting of the fourth Board of Directors of the Company deliberated andapproved the Proposal on Equity Transfer of Subordinate Companies, agreed that the Company signed the EquityTransfer Agreement with the controlled subsidiary Shanghai Energy. It was determined through negotiation thatthe 100% equity of Suzhou Green Power was transferred at the consideration of RMB739,219,511.67, andShanghai Energy bore the arrears of RMB844,418,916.21 owed by Shanghai Energy to Suzhou Green Power as ofJune 30, 2020. Shanghai Energy will pay the aforesaid equity transfer consideration with self-owned andself-raised funds. After the completion of this equity transfer, the Company will no longer directly hold equity inSuzhou Green Power, and Suzhou Green Power will become a controlled sub-subsidiary of the Company throughthe share of Shanghai Energy in it. For details, please refer to the Announcement on Equity Transfer ofSubordinate Company (No.:2020-148), and the Announcement on Completion of Business Registration Changeand Filing of Subordinate Subsidiary (No.:2020-176) disclosed by the Company on cninfo.com.
12. The 43rd meeting of the 3rd Board of Directors of the Company deliberated and approved the Proposalon Opening A Special Account for Funds Raised, and agreed that the Company deposits the proceeds from theIPO in the special account determined by the Board of Directors. This special account is separately managed andcan not be used for depositing any funds other than the raised funds or for other purposes. The Company, theproject implementation entities Jiangxi Tonry and Wuxi Energy and CITIC Securities signed a Raised FundsFour-party Supervision Agreement. For details, please refer to the Announcement on Entry Into A Raised FundsFour-party Supervision Agreement (No.:2020-168) disclosed by the Company on cninfo.com.
13. On September 25, 2020, the twelfth meeting of the 4th Board of Directors of the Company deliberatedand approved the "Proposal on Pledging the Equity of a Subordinate Subsidiary of the Company for GettingLoan”, and agreed that Shanghai Energy applied for a M&A loan of not more than RMB 856 million to ShanghaiRural Commercial Bank Co., Ltd. Shanghai Pilot Free Trade Zone Lingang New Area Sub-branch for a term ofseven years, and pledged the 100% equity of Suzhou Green Power held by it to Shanghai Rural Commercial BankCo., Ltd. Lingang New Area Sub-branch. In addition, the Company provided joint and several liability guaranteefor this M&A loan equal to RMB 856 million. Please refer to the "Announcement on Pledging the Equity of aSubordinate Subsidiary of the Company for Getting Loan" (No. 2020-179) disclosed by the Company oncninfo.com.
14. On November 10, 2020, the 16th meeting of the fourth Board of Directors of the Company deliberatedand approved the Proposal on Starting the Project of Wet-process Lithium-ion Battery Separator Film in Hungary,and the Proposal on Signing Hungary Project Contract, and agreed that the subordinate Company SEMCORPHungary Kft invests in the construction of production line and supporting factory of wet-process lithium-ionbattery separator film in Debrecen, Hungary, and signed Preliminary Sale and Purchase Agreement withDebreceni Vagyonkezel? Zártk?r?en M?k?d? Részvénytársaság, the subordinate wholly owned subsidiary ofDebrecen Government, Hungary. For details, please refer to the Announcement on Starting the Project ofWet-process Lithium-ion Battery Separator Film in Hungary (No.: 2020-204) disclosed by the Company oncninfo.com.
15. During the Reporting Period, Hongchuang Packaging completed procedures for business registrationchange and filing due to the need to increase the business scope and obtained the business license renewed byYuxi Municipal Administration for Market Supervision. For details, please refer to the Announcement on theCompletion of Business Registration Change and Filing by Controlled Subsidiary (No. 2020-208) disclosed by theCompany on cninfo.com.
16. On November 23, 2020, the 18th meeting of the fourth Board of Directors of the Company deliberatedand approved the Proposal on the Controlled Subsidiary Shanghai Energy’s Participation in the PublicDelisting-based Acquisition of 76.3574% Equity of Newmi Tech, and agreed that Shanghai Energy, as theinterested party, participated in the transfer of 76.3574% equity of Newmi Tech, including 54.7629% equity ofNewmi Tech held by Yuntianhua Group and 21.5945% equity of Newmi Tech held by Yuntianhua Company. Fordetails, please refer to the Announcement on the Controlled Subsidiary Shanghai Energy’s Participation in thePublic Delisting-based Acquisition of 76.3574% Equity of Newmi Tech (No.:2020-212) disclosed by theCompany on cninfo.com. On December 21, 2020, the 19th meeting of the fourth Board of Directors deliberatedand approved the Proposal on Signing Property Transaction Contract and Supplementary Agreement by theControlled Subsidiary Shanghai Energy, and agreed that Shanghai Energy signed a Property Transaction Contractwith Yuntianhua Group and Yuntianhua Group, and signed a supplementary agreement to the Property TransactionAgreement with Yuntianhua Group and Yunnan Yuntianhua Group Finance Co., Ltd.. For details, please refer tothe Announcement on Signing Property Transaction Contract and Supplementary Agreement by the ControlledSubsidiary Shanghai Energy (No.:2020-221) disclosed by the Company on cninfo.com.On December 24, 2020, the 12th meeting of the fourth Board of Directors deliberated and approved the Proposalon Provision of Guarantee to Newmi Tech, and the Proposal on Provision of Financial Assistance to Newmi Tech,and agreed that the Company will provide guarantee to Newmi Tech in the sum of no more than RMB550 millionand Shanghai Energy will provide financial assistance to Newmi Tech in the sum of no more than RMB400million, for a term of one year. For details, please refer to the Announcement on Provision of Guarantee to NewmiTech (No.:2020-224 ) and Announcement on Provision of Financial Assistance to Newmi Tech (No.:2020-225)disclosed by the Company on cninfo.com.
Section 6 Share Changes and Shareholder Details
I. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increase or decrease (+,-) | After the change | |||||||
| Number of shares | Proportion | New shares issued | Bonus issuance | Conversion of reserve into share | Others | Subtotal | Number of shares | Proportion | |
| I. Shares subject to restrictions on sale | 284,249,934 | 35.29% | 69,444,444 | 0 | 0 | -3,591,218 | 65,853,227 | 350,103,161 | 39.49% |
| 1. Shares held by state | 0 | 0.00% | 0 | 0 | 0 | 0.00% | |||
| 2. Shares held by state-owned legal persons | 0 | 0.00% | 7,113,896 | 7,113,896 | 7,113,896 | 0.80% | |||
| 3. Shares held by domestic investors | 117,521,700 | 14.59% | 8,333,333 | 0 | 0 | -3,591,218 | 4,742,115 | 122,263,815 | 13.79% |
| Including: Shares held by domestic legal persons | 26,009,166 | 3.23% | 8,333,333 | 8,333,333 | 34,342,499 | 3.87% | |||
| Shares held by domestic natural persons | 91,512,534 | 11.36% | -3,591,218 | -3,591,218 | 87,921,316 | 9.92% | |||
| 4. Shares held by overseas investors | 166,728,234 | 20.70% | 13,608,330 | 0 | 0 | 0 | 13,608,331 | 180,336,565 | 20.34% |
| Including: Shares held by overseas legal persons | 0 | 0.00% | 13,608,330 | 13,608,330 | 13,608,330 | 1.53% | |||
| Shares held by overseas natural persons | 166,728,234 | 20.70% | 1 | 166,728,235 | 18.81% | ||||
| 5. Fund and wealth management products | 0.00% | 40,388,885 | 40,388,885 | 40,388,885 | 4.56% | ||||
| II. Shares Not Subject to Restrictions on Sale | 521,120,836 | 64.71% | 0 | 0 | 0 | 15,342,154 | 15,342,154 | 536,462,990 | 60.51% |
| 1. Renminbi denominated common shares | 521,120,836 | 64.71% | 15,342,154 | 15,342,154 | 536,462,990 | 60.51% | |||
| 2. Domestically-listed foreign shares | 0.00% | 0 | 0.00% | ||||||
| 3. Foreign shares listed overseas | 0.00% | 0 | 0.00% | ||||||
| 4. Others | 0.00% | 0 | 0.00% | ||||||
| III. Total shares | 805,370,770 | 100.00% | 69,444,444 | 0 | 0 | 11,750,936 | 81,195,381 | 886,566,151 | 100.00% |
Reasons of share changes
√ Applicable □ N/A
(1) Shares unlocked in the third unlocking period of 2017 Restricted Share Incentive Plan of the CompanyAt the Fifth Session on July 13, 2020, the Fourth Board of Directors of the Company deliberated and adopted the Proposal on theFulfillment of the Unlocking Condition for the Third Unlocking Period of the 2017 Restricted Share Incentive Plan of the Company.This time, a total of 83 incentive beneficiaries satisfied the unlocking conditions and can apply to unlock and trade a total of3,404,080 restricted shares. The unlocking date of the restricted shares to be unlocked this time (namely, listing and trading date) isJuly 23, 2020.
(2) The Company has bought back and written off some restricted shares that were awarded but not unlocked during the thirdunlocking period of 2017 Restricted Share Incentive Plan of the CompanyAt the Fifth Meeting on July 12, 2019, the Fourth Board of Directors of the Company deliberated and adopted the Proposal onBuying Back and Writing Off Some Incentive Shares under the 2017 Restricted Share Incentive Plan. 4 incentive beneficiaries weregiven an evaluation level of “Good” during the third unlocking period of the 2017 Restricted Share Incentive Plan of the Company,and the Company has bought back and written off some restricted shares, namely 23,120 shares, that have been awarded to these 4incentive beneficiaries but not unlocked at a repurchasing price of RMB8.426/share. As of September 28, 2020, the Company hasbought back and written off the aforesaid 23,120 restricted shares.
(3) Private offering of A shares in 2020
Under the approval granted by China Securities Regulatory Commission under the Approval of Private Share Offering by YunnanEnergy New Material Co., Ltd. (CSRC License [2020] No. 1476), the Company made a private offering of 69,444,444 shares (Ashares) to 22 specific investors, and completed the registration procedure for these new shares with China Clear Shenzhen Branch onAugust 21, 2020. These shares started trading with a lock-up period of 6 months as of the listing date at Shenzhen Stock Exchange onSeptember 4, 2020.
(4) Conversion of convertible corporate bonds into shares
Under the approval granted by China Securities Regulatory Commission under the Approval of Convertible Corporate Bonds byYunnan Energy New Material Co., Ltd. (CSRC License [2019] No. 2701), the Company made a public offering of 16 millionconvertible corporate bonds (bonds abbreviation: Energy Convertible Bond, bonds code: 128095) with a face value of RMB100.00each, a total amount of RMB1.6 billion and a term of 6 years on February 11, 2020. Under the approval of Shenzhen Stock Exchangein the document “Shenzhen Stock Exchange Listing [2020] No. 109), the convertible corporate bonds of the Company worthRMB1.6 billion started trading at Shenzhen Stock Exchange on February 28, 2020. The conversion period of “Energy ConvertibleBonds” started on August 17, 2020. During the Reporting Period, a total of 11,774,057 shares were converted from the bonds, and bythe end of the Reporting Period, a total of 11,774,057 shares were converted from the bonds.
(5) Changes in locked shares held by senior executives of the Company
Corresponding changes have taken place to the locked shares of senior executives in the shares held by the Chairman Paul XiaomingLee, Director Xu Ming, Board Secretary Xiong Wei and former Chief Financial Officer Pang Qizhi of the Company at the beginningof 2020 and during the third unlocking period of 2017 Restricted Share Incentive Plan of the Company. Mr. Pang Qizhi resignedfrom the Chief Financial Officer of the Company in September 2020, and the Company shares he holds have been locked inaccordance with related provisions in the Listing Rules of Shenzhen Stock Exchange, the Guide of Shenzhen Stock Exchange toCompliant Operation of Listed Companies (Revised in 2020), the Several Provisions Regarding Share Reduction by Shareholders,Directors, Supervisors and Senior Executives of Listed Companies, the Implementation Rules of Shenzhen Stock ExchangeRegarding Share Reduction by Shareholders, Directors, Supervisors and Senior Executives of Listed Companies and otherdocuments.Approval of share changes
√ Applicable □ N/A
(1) The Company has unlocked the shares in the third unlocking period of 2017 Restricted Share Incentive Plan of the Company, andbought back and written off some restricted sharesAt the Fifth Session on July 13, 2020, the Fourth Board of Directors and the Fifth Board of Supervisors of the Company deliberatedand adopted the Proposal on the Fulfillment of the Unlocking Condition for the Third Unlocking Period of the 2017 Restricted Share
Incentive Plan of the Company and the Proposal on Buying Back and Writing Off Some Incentive Shares under the 2017 RestrictedShare Incentive Plan of the Company. The Board of Directors thinks that the Company has fulfilled the unlocking condition for thethird unlocking period set under the 2017 Restricted Share Incentive Plan of the Company. This time, a total of 83 incentivebeneficiaries have satisfied the unlocking conditions and can apply to unlock and trade a total of 3,404,080 restricted shares. Theunlocked shares started listing and circulation on July 23, 2020. At the same time, the Board of Directors and the Board ofSupervisors have agreed to buy back and write off 23,120 shares that have been awarded to these 4 incentive beneficiaries with anevaluation level of “Good” but not unlocked. The decision to buy back and write off the aforesaid proportion of restricted shares wasdeliberated and adopted at the Fourth Extraordinary General Meeting of Shareholders of the Company in 2020. As of September 28,2020, the Company has bought back and written off the aforesaid 23,120 restricted shares.
(2) Private offering of A shares in 2020
At the forty-third session on March 23, 2020, the Third Board of Directors of the Company deliberated and adopted a number ofproposals, including the Proposal on the Company’s Fulfillment of Private Share Offering, the Proposal on the Private Share OfferingPlan of the Company, the Proposal on 2020 Private Share Offering Plan of the Company and the Proposal on Requesting the GeneralMeeting of Shareholders Authorize the Board of Directors to Handle Relevant Affairs in Private Share Offering of the Company. TheCompany has proposed to offer shares to no more than 35 specific investors and raise a total of no more than RMB5.0 billion(including issuance expenses). The aforesaid proposals have been deliberated and adopted at the First Extraordinary General Meetingof Shareholders of the Company in 2020. At the third session on June 1, 2020, the Fourth Board of Directors of the Companydeliberated and adopted the Proposal on Private Share Offering Plan of the Company in 2020 (Revision).Under the approval granted by China Securities Regulatory Commission under the Approval of Private Share Offering by YunnanEnergy New Material Co., Ltd. (CSRC License [2020] No. 1476), the Company made a private offering of 69,444,444 shares (Ashares) to 22 specific investors, and completed the registration procedure for these new shares with China Clear Shenzhen Branch onAugust 21, 2020. These shares started trading with a lock-up period of 6 months as of the listing date at Shenzhen Stock Exchange onSeptember 4, 2020.
(3) Conversion of convertible corporate bonds into shares
Under the approval granted by China Securities Regulatory Commission under the Approval of Convertible Corporate Bonds byYunnan Energy New Material Co., Ltd. (CSRC License [2019] No. 2701), the Company made a public offering of 16 millionconvertible corporate bonds (bonds abbreviation: Energy Convertible Bond, bonds code: 128095) with a face value of RMB100.00each, a total amount of RMB1.6 billion and a term of 6 years on February 11, 2020. Under the approval of Shenzhen Stock Exchangein the document “Shenzhen Stock Exchange Listing [2020] No. 109), the convertible corporate bonds of the Company worthRMB1.6 billion started trading at Shenzhen Stock Exchange on February 28, 2020. The conversion period of “Energy ConvertibleBonds” started on August 17, 2020.Transfer of share ownership
√ Applicable □ N/A
(1) Shares unlocked in the third unlocking period of 2017 Restricted Share Incentive Plan of the CompanyThe Company has handled the unlocking procedure for the restricted shares with China Clear Shenzhen Branch. The unlocking dateof the restricted shares to be unlocked this time (namely, listing and trading date) is July 23, 2020, a total of 3,404,080 restrictedshares have been unlocked and a total of 83 persons have benefited from the unlocking.
(2) The Company has bought back and written off some restricted shares that were awarded but not unlocked during the thirdunlocking period of 2017 Restricted Share Incentive Plan of the CompanyUntil September 28, 2020, the Company has bought back and written off some restricted shares, totaling 23,120 shares, that wereawarded but not unlocked during the third unlocking period of 2017 Restricted Share Incentive Plan of the Company and completedthe buyback and write-off procedure with China Clear Shenzhen Branch, and the buyback price is RMB8.426/share.
(3) Private offering of A shares in 2020
After applying to China Clear Shenzhen Branch, the Company made a private offering of 69,444,444 shares (A shares) to 22 specificinvestors, and completed the registration procedure for these new shares with China Clear Shenzhen Branch on August 21, 2020.These shares started trading with a lock-up period of 6 months as of the listing date at Shenzhen Stock Exchange on September 4,2020.
(3) Conversion of convertible corporate bonds into shares
16 million convertible corporate bonds “Energy Convertible Bonds” of the Company started trading at Shenzhen Stock Exchange onFebruary 28, 2020. The conversion period of “Energy Convertible Bonds” started on August 17, 2020. By the end of the ReportingPeriod, a total of 11,774,057 shares were converted from the bonds.Implementation progress of share repurchase
□ Applicable √ N/A
Implementation of share reduction through aggregate auction
□ Applicable √ N/A
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to ordinary shareholders of the Company,
and other financial indicators for the last year and the last Reporting Period
√ Applicable □ N/A
(1) The Company has bought back and written off a small number of restricted shares that were awarded to the incentivebeneficiaries with an evaluation level of “Good” but not unlocked during the third unlocking period of 2017 Restricted ShareIncentive Plan of the Company, and these shares have delivered a minor impact on the basic earnings per share and net assets pershare due to a small number.
(2) During the Reporting Period, the conversion of 11,774,057 shares from the “Energy Convertible Bonds” and the private offeringof 69,444,444 shares have affected the basic earnings per share by RMB0.05/share, affected the diluted earnings per share by someRMB0/share and affected the net assets per share by some RMB0.26/share.Other contents that the Company considers necessary, or are required by the security’s regulatory authorities, to disclose
□ Applicable √ N/A
2. Changes in restricted shares
√ Applicable □ N/A
Unit: Share
| Name of shareholder | Balance of shares subject to restrictions at beginning of period | Increase of shares subject to restrictions on sale in current period | Number of restricted shares unlocked in current period | Balance of shares subject to restrictions on sale at the year-end | Reason for restriction | Date of relief |
| Paul Xiaoming Lee | 102,745,438 | 1 | 102,745,439 | ① By the end of the Reporting Period, the shares obtained from the material asset restructuring in 2018 still remain in the restriction period; ② Locked shares of senior executives. | ① The restricted shares obtained from the material asset restructuring in 2018 will be unlocked on August 15, 2021; ② A director can unlock 25% of total shares he or she holds every year. | |
| Sherry Lee | 46,275,559 | 46,275,559 | By the end of the Reporting Period, in 2019, the inherited shares obtained by Ms. Wang Yuhua from the material asset restructuring in 2018 still remain in the restriction period. | The shares obtained from the material asset restructuring in 2018 will be unlocked on August 15, 2021. | ||
| Li Xiaohua | 69,833,759 | 69,833,759 |
| The shares obtained from the material asset restructuring in 2018 will be unlocked on August 15, 2021. | ||||||
| JERRY YANG LI | 17,707,237 | 17,707,237 | By the end of the Reporting Period, in 2019, the inherited shares obtained by Ms. Wang Yuhua from the material asset restructuring in 2018 still remain in the restriction period. | The shares obtained from the material asset restructuring in 2018 will be unlocked on August 15, 2021. |
| Xu Ming | 1,835,873 | 458,968 | 1,376,905 | Locked shares held by senior executives. | A director can unlock 25% of total shares he or she holds every year. | |
| Pang Qizhi | 395,250 | 152,350 | 217,600 | 330,000 | ① Incentive shares under 2017 Share Incentive Plan; ② Locked shares held by senior executives. | ① The shares unlocked in the third unlocking period of the 2017 Share Incentive Plan started listing and circulation on July 23, 2020; ② As the Chief Financial Officer, he can unlock 25% of total shares he or she holds every year; ③ He resigned from the position of the Chief Financial Officer in September 2020, and during the term determined when he held the position and within six months after the expiration of the term, he shall not transfer the Company’s shares he holds within half year after resignation, and the shares transferred every year shall be no higher than 25% of the total shares of the Company he holds. |
| Xiong Wei | 344,250 | 142,600 | 217,600 | 269,250 | ① Incentive shares under 2017 Share Incentive Plan; ② Locked shares held by senior executives. | ① The shares unlocked in the third unlocking period of the 2017 Share Incentive Plan started listing and circulation on July 23, 2020; ② As the Board Secretary, he can unlock 25% of total shares he or she holds every year. |
| Total of other share incentive targets (81 persons) | 2,992,000 | 2,992,000 | 0 | Incentive shares under 2017 Share Incentive Plan. | The shares unlocked in the third unlocking period of the 2017 Share Incentive Plan started listing and circulation on July 23, 2020. | |
| Kunming Huachen Investment Co., Ltd. | 9,480,539 | 9,480,539 | By the end of the Reporting Period, some shares obtained from the material asset restructuring in 2018 still remain in the restriction | Of the shares obtained from the material asset restructuring in 2018, 75% were unlocked in 2019, and the remaining 25% will be unlocked |
| period | on August 15, 2021. | |||||
| Future Industry Investment Fund (Limited Partnership) | 1,001,810 | 1,001,810 |
| Of the shares obtained from the material asset restructuring in 2018, 75% were unlocked in 2019, and the remaining 25% will be unlocked on August 15, 2021. | ||||||
| Zhuhai Hengjie | 15,526,817 | 15,526,817 | By the end of the Reporting Period, the shares obtained from the material asset restructuring in 2018 still remain in the restriction period | The shares obtained from the material asset restructuring in 2018 will be unlocked on August 15, 2021. | ||
| Total of the other former domestic natural person shareholders before material asset restructuring (14 persons) | 16,111,402 | 16,111,402 | By the end of the Reporting Period, the shares obtained from the material asset restructuring in 2018 still remain in the restriction period | Of the shares obtained from the material asset restructuring in 2018, 75% were unlocked in 2019, and the remaining 25% will be unlocked on August 15, 2021. | ||
| Total of shareholders participating in private offering of A shares in 2020 (22 investors) | 0 | 69,444,444 | 69,444,444 | By the end of the Reporting Period, the shares obtained from the private offering of A shares of the Company in 2020 still remain in the restriction period | The shares obtained from the private offering of A shares of the Company in 2020 will be unlocked on March 4, 2021. | |
| Total | 284,249,934 | 69,739,395 | 3,886,168 | 350,103,161 | -- | -- |
II. Issuance and Listing of Securities
1. Issuance of securities (excluding preferred shares) during the Reporting Period
√ Applicable □ N/A
| Name of share and its derivative securities | Issue date | Issue price (or interest rate) | Number of shares to be issued | Listing date | Number of shares approved for listing | Transaction termination date | Disclosure index | Disclosure date |
| Shares | ||||||||
| Energy Technology (Private offering of A shares in 2020) | August 17, 2020 | RMB72/share | 69,444,444 | September 4, 2020 | 69,444,444 | Private A-share Offering Report and Listing Announcement (Announcement No.: 2020-153) on cninfo.com | September 3, 2020 | |
| Convertible corporate bonds, separately traded convertible corporate bonds, corporate bonds | ||||||||
| Convertible corporate bonds of Yunnan Energy New Material Co., Ltd. | February 11, 2020 | RMB100/bond (coupon rate: 0.40% in the first year, 0.60% in the second year, 1.00% in the third year, 1.50% in the fourth year, 1.80% in the fifth year and 2.00% in the sixth year) | 16,000,000 | February 28, 2020 | 16,000,000 | February 11, 2026 | Public Offering and Listing Announcement on Convertible Corporate Bonds (Announcement No.: 2020-022) on cninfo.com | February 27, 2020 |
| Other derivative securities | ||||||||
Explanations on issuance of securities (excluding preferred shares) during the Reporting Period
1. Share issues in the Reporting Period
Under the approval granted by China Securities Regulatory Commission under the Approval of Private Share Offering by YunnanEnergy New Material Co., Ltd. (CSRC License [2020] No. 1476), the Company made a private offering of 69,444,444 shares (Ashares) to 22 specific investors, and completed the registration procedure for these new shares with China Clear Shenzhen Branch onAugust 21, 2020. These shares started trading with a lock-up period of 6 months as of the listing date at Shenzhen Stock Exchange onSeptember 4, 2020.
2. Convertible corporate bonds issues in the Reporting Period
Under the approval granted by China Securities Regulatory Commission under the Approval of Convertible Corporate Bonds byYunnan Energy New Material Co., Ltd. (CSRC License [2019] No. 2701), the Company made a public offering of 16 millionconvertible corporate bonds (bonds abbreviation: Energy Convertible Bond, bonds code: 128095) with a face value of RMB100.00each, a total amount of RMB1.6 billion and a term of 6 years on February 11, 2020. Under the approval of Shenzhen Stock Exchangein the document “Shenzhen Stock Exchange Listing [2020] No. 109), the convertible corporate bonds of the Company worthRMB1.6 billion started trading at Shenzhen Stock Exchange on February 28, 2020. The initial conversion price of "convertiblecorporate bonds of Yunnan Energy New Material Co., Ltd." was RMB64.61 per share.In May 2020, the Company implemented the 2019 annual profit distribution plan: based on the Company’s total share capital of805,370,770 shares, a cash dividend of RMB1.25 (tax inclusive) per 10 shares was declared to all shareholders, totalingRMB100,671,346.25 (tax inclusive). No bonus shares were awarded and no capital reserve was converted into share capital. Theex-right and ex-dividend date was on May 21, 2020. In accordance with the relevant terms regarding the adjustment to the conversionprice of convertible corporate bonds, the Company adjusted the conversion price of "convertible corporate bonds of Yunnan EnergyNew Material Co., Ltd." accordingly. Before the adjustment, the conversion price of "convertible corporate bonds of Yunnan EnergyNew Material Co., Ltd." was RMB64.61 per share; after the adjustment, the conversion price was RMB64.49 per share, which tookeffect from May 21, 2020.In September 2020, under the approval granted by China Securities Regulatory Commission under the Approval of Private ShareOffering by Yunnan Energy New Material Co., Ltd. (CSRC License [2020] No. 1476), the Company made a private offering of69,444,444 shares (A shares) to 22 specific investors. These shares started trading at an issuing price of RMB72.00/share at ShenzhenStock Exchange on September 4, 2020. In accordance with the relevant terms regarding the adjustment to the conversion price ofconvertible corporate bonds, the Company adjusted the conversion price of "convertible corporate bonds of Yunnan Energy NewMaterial Co., Ltd." accordingly. Before the adjustment, the conversion price of "convertible corporate bonds of Yunnan Energy NewMaterial Co., Ltd." was RMB64.49 per share; after the adjustment, the conversion price was RMB65.09 per share, which took effectfrom September 4, 2020.In September 2020, the Company repurchased and canceled a total of 23,120 restricted shares held by 4 participants with a personalassessment rating of "good" when the 2017 Restricted Stock Incentive Plan was unlocked for the third time. The repurchase pricewas RMB8.426 per share. Due to the small number of shares canceled in this repurchase, the conversion price of "convertiblecorporate bonds of Yunnan Energy New Material Co., Ltd." remained unchanged at RMB65.09 per share after calculating inaccordance with the relevant terms regarding the adjustment to the conversion price of convertible corporate bonds.
2. Statement on changes in total shares and shareholder structure of the Company, and changes in assetsand liabilities of the Company
√ Applicable □ N/A
At the beginning of period, the Company recorded the total share capital of 805,370,770 shares and a balance sheet of 59.97%.During the Reporting Period, under the approval granted by China Securities Regulatory Commission under the Approval of PrivateShare Offering by Yunnan Energy New Material Co., Ltd. (CSRC License [2020] No. 1476), the Company made a private offering of
69,444,444 shares (A shares) to 22 specific investors, and completed the registration procedure for these new shares with China ClearShenzhen Branch on August 21, 2020. These shares started trading at Shenzhen Stock Exchange on September 4, 2020. This hasincreased the total share capital of the Company by 69,444,444 shares. The Company has bought back and written off some restrictedshares, totaling 23,120 shares, that were awarded to 4 incentive targets with an evaluation level of “Good” during the third unlockingperiod of 2017 Restricted Share Incentive Plan of the Company and completed the buyback and write-off procedure with China ClearShenzhen Branch on September 28, 2020, which has reduced the total share capital of the Company by 23,120 shares. Under theapproval granted by China Securities Regulatory Commission in the CSRC License [2019] No. 2701, the Company made a publicoffering of 16 million “Energy Convertible Bonds” on February 11, 2020. The “Energy Convertible Bonds” started listing andtrading at Shenzhen Stock Exchange on February 28, 2020 and were convertible into the Company’s shares as of August 17, 2020.From August 17, 2020 to December 31, 2020, the “Energy Convertible Bonds” were converted into 12,291,976 shares, which hasincreased the total share capital of the Company by 12,291,976 shares. As at the end of the Reporting Period, the Company recordedthe total share capital of 886,566,151 shares and a balance sheet of 43.60%.
3. Existing shares held by internal employees of the Company
□ Applicable √ N/A
III. Details of Shareholders and Actual Controllers
1. Number of shareholders and their shareholdings
Unit: share
| Total ordinary shareholders at the end of Reporting Period | 21,652 | Total ordinary shareholders at the end of previous month before annual report disclosure date | 44,848 | Total preferred shareholders resuming voting right at end of Reporting Period (if any) (see Note 8) | 0 | Total preferred shareholders resuming voting right prior to annual report disclosure date (if any) (see Note 8) | 0 | |||||||
| Shareholders holding more than 5% of shares or shares of the top 10 shareholders | ||||||||||||||
| Name of shareholder | Type of shareholder | Shareholding ratio | Number of shares held at the end of the Reporting Period | Increase or decrease of shares during the Reporting Period | Number of restricted shares held | Number of non-restricted shares held | Pledged or frozen | |||||||
| Status of shares | Number of shares | |||||||||||||
| Paul Xiaoming Lee | Overseas natural persons | 14.41% | 127,792,657 | 9,201,262 | 102,745,439 | 25,047,218 | ||||||||
| Yuxi Heyi Investment Co., Ltd. | Domestic non-state-owned legal person | 13.47% | 119,449,535 | 6,208,855 | 0 | 119,449,535 | Pledge | 26,078,000 | ||||||
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 8.71% | 77,233,138 | 61,836,087 | 0 | 77,233,138 | ||||||||
| Sherry Lee | Overseas natural persons | 8.29% | 73,470,459 | 0 | 46,275,559 | 27,194,900 | ||
| Li Xiaohua | Domestic natural person | 7.88% | 69,837,889 | 232,000 | 69,833,759 | 4,130 | ||
| Kunming Huachen Investment Co., Ltd. | Domestic non-state-owned legal person | 2.64% | 23,383,775 | 10,241,245 | 9,480,539 | 13,903,236 | ||
| JERRY YANG LI | Overseas natural persons | 2.00% | 17,707,237 | 0 | 17,707,237 | 0 | ||
| Zhang Yong | Domestic natural person | 1.84% | 16,332,107 | 0 | 0 | 16,332,107 | ||
| Zhuhai Hengjie Enterprise Management Office (Limited Partnership) | Domestic non-state-owned legal person | 1.75% | 15,526,817 | 0 | 15,526,817 | 0 | ||
| Tianjin Liren Investment Management Partnership (Limited Partnership) - Zhuoyue Changqing Private Securities Investment Fund | Others | 1.41% | 12,500,000 | 12,500,000 | 12,500,000 | 0 | ||
| Strategic investors or general legal persons who have become top 10 shareholders due to share allotment (if any) (see Note 3) | None | |||||||
| Statement on related party relationship or concerted action between above-mentioned shareholders | Paul Xiaoming Lee, Sherry Lee, Li Xiaohua and Jerry Yang Li are all the family members of the Company’s actual controller Paul Xiaoming Lee and represent the persons acting in concert. Heyi Investment, Zhuhai Hengjie Enterprise Management Office and Heli Investment are the enterprises under control by the family of the actual controller Paul Xiaoming Lee. The other shareholders are not known as to whether they have the related party relationships between them or constitute the persons acting in concert. | |||||||
| Explanation of delegation/acceptance of voting right and waiver of voting right involving the above shareholders | Mr. Paul Xiaoming Lee and Ms. Sherry Lee, who are shareholders of the Company and members of Xiaoming Lee's family and the de facto controllers of the Company, signed the Power of Attorney for Shareholding on January 14, 2020, by which Ms. Sherry Lee fully delegated the shareholders' rights, such as rights to question, proposal and vote, in connection with 73,470,459 shares she held in the Company, to her father Mr. Paul Xiaoming Lee, for a period of three years from the date of the Power of Attorney. | |||||||
| Top 10 shareholders holding unrestricted shares | ||||||||
| Name of shareholder | Number of unrestricted shares held at the end of the Reporting Period | Type of shares | ||||||
| Type of shares | Number of shares | |||||||
| Yuxi Heyi Investment Co., Ltd. | 119,449,535 | Renminbi denominated common shares | 119,449,535 | |||||
| Hong Kong Securities Clearing | 77,233,138 | Renminbi denominated | 77,233,138 | |||||
| Company Limited | common shares | ||
| Sherry Lee | 27,194,900 | Renminbi denominated common shares | 27,194,900 |
| Paul Xiaoming Lee | 25,047,218 | Renminbi denominated common shares | 25,047,218 |
| Zhang Yong | 16,332,107 | Renminbi denominated common shares | 16,332,107 |
| Kunming Huachen Investment Co., Ltd. | 13,903,236 | Renminbi denominated common shares | 13,903,236 |
| Yuxi Heli Investment Co., Ltd. | 9,558,686 | Renminbi denominated common shares | 9,558,686 |
| National Social Security Fund 110 Portfolio | 7,732,965 | Renminbi denominated common shares | 7,732,965 |
| Future Industry Investment Fund (Limited Partnership) | 6,763,159 | Renminbi denominated common shares | 6,763,159 |
| Huang Shuhua | 5,546,166 | Renminbi denominated common shares | 5,546,166 |
| Statement on related party relationships or concerted action between top 10 circulating shareholders without sales restriction and between top 10 circulating shareholders without sales restriction and top 10 shareholders | Heyi Investment and Heli Investment are the enterprises under control by the family of the actual controller Paul Xiaoming Lee. The other shareholders are not known as to whether they have the related party relationships between them or constitute the persons acting in concert. | ||
| Statement on top 10 ordinary shareholders’ participation in marginal trading (if any) (see Note 4) | N/A | ||
Did any of the top 10 ordinary shareholders or top 10 ordinary shareholders with unrestricted shares of the Company conduct anypromissory repurchase during the Reporting Period
□ Yes √ No
Top 10 ordinary shareholders and top 10 ordinary shareholders without sales restriction didn’t conduct the agreed repurchasetransactions during the Reporting Period.
2. Details about the controlling shareholder
Nature of controlling shareholder: The nature of the controlling entity is unclearType of controlling shareholder: Natural person
| Controlling shareholder’s name | Nationality | Acquisition of right of residence in other countries or regions |
| Paul Xiaoming Lee | America | Yes |
| Yan Ma | America | Yes |
| Sherry Lee | America | Yes |
| Li Xiaohua | China | Yes |
| Yanyang Hui | America | Yes |
| JERRY YANG LI | America | Yes |
| Major Occupation and Position | Paul Xiaoming Lee serves as the Chairman of the Company, Li Xiaohua serves as the Vice Chairman and General Manager of the Company, Yan Ma serves as the | |
| Director of the Company, and Yanyang Hui, Sherry Lee and JERRY YANG LI take no positions at the Company. | |
| Equities in other domestic and overseas listed companies under control and with participation during the Reporting Period | None |
Change of controlling shareholder during the Reporting Period
□ Applicable √ N/A
The controlling shareholder of the Company has not changed during the Reporting Period.
3. Details about the actual controller and persons acting in concert
Nature of actual controller: Domestic natural person; overseas natural personType of actual controller: Natural person
| Name of actual controller | Relationship with actual controller | Nationality | Acquisition of right of residence in other countries or regions |
| Paul Xiaoming Lee | Act in concert (including agreement, kinship and common control) | America | Yes |
| Yan Ma | Act in concert (including agreement, kinship and common control) | America | Yes |
| Sherry Lee | Act in concert (including agreement, kinship and common control) | America | Yes |
| Li Xiaohua | Act in concert (including agreement, kinship and common control) | China | Yes |
| Yanyang Hui | Act in concert (including agreement, kinship and common control) | America | Yes |
| Jerry Yang Li | Act in concert (including agreement, kinship and common control) | America | Yes |
| Major Occupation and Position | Paul Xiaoming Lee serves as the Chairman of the Company, Li Xiaohua serves as the Vice Chairman and General Manager of the Company, Yan Ma serves as the Director of the Company, and Sherry Lee, Jerry Yang Li and Yanyang Hui take no positions at the Company. | ||
| Control over domestic and overseas listed companies over past 10 years | None | ||
Change of actual controller during the Reporting Period
□ Applicable √ N/A
The actual controller of the Company has not changed during the Reporting Period.A block diagram of the property rights and control relationship between the Company and the actual controller
The actual controller controls the Company through trust or other asset management methods
□ Applicable √ N/A
4. Other corporate shareholders holding more than 10% of the shares
√ Applicable □ N/A
| Name of legal person shareholder | Legal Representative/Principal of Organization | Date of Incorporation | Registered Capital | Major operating activities or management activities |
| Heyi Investment | Paul Xiaoming Lee | November 10, 2010 | RMB30 million | Conduct venture capital activities with free capital; make project investment and manage investment project; investment management, investment consulting and social and economic consultation. (Business activities that require approval in accordance with the law shall be subject to the business scope approved by the relevant authorities.) |
5. Details about restrictions on shareholdings of controlling shareholders, actual controllers, restructuringparties, and other entities making commitments
□ Applicable √ N/A
Section 7 Details about Preferred Shares
□ Applicable √ N/A
During the Reporting Period, there were no preferred shares in the Company.
Section 8 Details about Convertible Corporate Bonds
√ Applicable □ N/A
I. All Previous Adjustments to the Conversion PriceThe initial conversion price of "convertible corporate bonds of Yunnan Energy New Material Co.,Ltd." was RMB64.61 per share.In May 2020, the Company implemented the annual profit distribution plan for 2019: Based on thetotal share capital of the Company, namely 805,370,770 shares, distribute RMB1.25 in cash(inclusive of tax) for every 10 shares to all shareholders, distribute a total cash dividend ofRMB100,671,346.25 (inclusive of tax), distribute no dividend shares, convert no surplus reserveinto share capital, and set the ex-dividend date as May 21, 2020. Pursuant to related articlesconcerning the adjustment of the conversion price for the convertible corporate bonds, the Companyhas made corresponding adjustment to the conversion price of “Energy Convertible Bonds” fromRMB64.61/share before the adjustment to RMB64.49/share after adjustment, and the conversionprice after adjustment took effect on May 21, 2020.In September 2020, under the approval granted by China Securities Regulatory Commission underthe Approval of Private Share Offering by Yunnan Energy New Material Co., Ltd. (CSRC License[2020] No. 1476), the Company made a private offering of 69,444,444 shares (A shares) to 22specific investors. These shares started trading at an issuing price of RMB72.00/share at ShenzhenStock Exchange on September 4, 2020. Pursuant to related articles concerning the adjustment of theconversion price for the convertible corporate bonds, the Company has made correspondingadjustment to the conversion price of “Energy Convertible Bonds” from RMB64.49/share beforethe adjustment to RMB65.09/share after adjustment, and the conversion price after adjustment tookeffect on September 4, 2020.In September 2020, the Company repurchased and canceled a total of 23,120 restricted shares heldby 4 participants with a personal assessment rating of "good" when the 2017 Restricted StockIncentive Plan was unlocked for the third time. The repurchase price was RMB8.426 per share. Dueto the small number of shares canceled in this repurchase, the conversion price of "convertiblecorporate bonds of Yunnan Energy New Material Co., Ltd." remained unchanged at RMB65.09 pershare after calculating in accordance with the relevant terms regarding the adjustment to theconversion price of convertible corporate bonds.II. Cumulative Share Conversion
√ Applicable □ N/A
| Abbreviation for convertible bond | Start and end date of share conversion | Total volume of bond issuance (number of bonds) | Total amount of issuance | Cumulative conversion amount (RMB) | Cumulative number of shares converted (shares) | Ratio of the number of shares converted to the total issued | Amount of shares not yet converted (RMB) | Ratio of amount of shares not yet converted to the total |
| shares of the Company before the start of the conversion | amount of issuance | |||||||
| Convertible corporate bonds of Yunnan Energy New Material Co., Ltd. | August 17, 2020 | 16,000,000 | 1,600,000,000.00 | 766,421,900.00 | 11,774,057 | 1.46% | 833,578,100.00 | 52.10% |
III. Top Ten Holders of Convertible Bonds
Unit: share
| SN | Name of holder of convertible bonds | Nature of holder of convertible bonds | Number of convertible bonds held at the end of the Reporting Period (number of convertible bonds) | Amount of convertible bonds held at the end of the Reporting Period (RMB) | Percentage of convertible bonds held at the end of the Reporting Period |
| 1 | National Social Security Fund-203 Portfolio | Other | 348,070 | 34,807,000.00 | 4.18% |
| 2 | Ping An Select Value-Added No. 1 Hybrid Pension Product - Industrial and Commercial Bank of China Limited | Other | 332,480 | 33,248,000.00 | 3.99% |
| 3 | Agricultural Bank of China Limited - Southern Xiyuan Convertible Bond Securities Investment Fund | Other | 284,760 | 28,476,000.00 | 3.42% |
| 4 | Everbright Securities Company Limited | Other | 262,830 | 26,283,000.00 | 3.15% |
| 5 | Agricultural Bank of China Limited - Wells Fargo Convertible Bond Securities Investment Fund | Other | 255,740 | 25,574,000.00 | 3.07% |
| 6 | Industrial and Commercial Bank of China Limited - Hongde Yuxiang Bond Securities Investment Fund | Other | 220,359 | 22,035,900.00 | 2.64% |
| 7 | Zhongtai Securities Co., Ltd. | State-owned legal person | 220,000 | 22,000,000.00 | 2.64% |
| 8 | Basic Pension Insurance Fund-106 Portfolio | Other | 210,520 | 21,052,000.00 | 2.53% |
| 9 | Bank of China - E Fund Stable Growth Securities Investment Fund | Other | 200,000 | 20,000,000.00 | 2.40% |
| 10 | Basic Pension Insurance Fund-103 Portfolio | Other | 190,004 | 19,000,400.00 | 2.28% |
IV. Significant Changes in the Guarantor’s Profitability, Asset Status, and Credit Status
□ Applicable √ N/A
V. The Company’s Liabilities at the End of the Reporting Period, Credit Changes, and CashArrangements for Debt Repayment in Future Years
1. The Company's liabilities: relevant indicators such as the asset-liability ratio, interest coverage multiple, and loan repayment rate atthe end of the Reporting Period, and year-on-year changes are detailed in the "Section 11 Corporate Bonds" of this report.
2. Changes in the Company's credit standing: According to the Follow-up Rating Report on Public Offering of Convertible CorporateBonds by Yunnan Energy New Material Co., Ltd. (No.: Follow-up Rating on Corporate Bonds by Shanghai Brilliance (2020) 100053)issued by the credit rating agency - Shanghai Brilliance Credit Rating & Investors Service Co, Ltd., the credit rating of the Companyon the whole was AA, the credit rating of “convertible corporate bonds of Yunnan Energy New Material Co., Ltd.” was AA, and thesaid bonds were affirmed with a “stable” outlook. The above-mentioned follow-up rating results have not changed compared with theprevious rating results. For details about the above-mentioned follow-up rating reports, refer to http://www.cninfo.com.cn/.
3. Cash arrangements for debt repayment in future years: The Company's credit status is good, the asset-liability structure isreasonable, and banks and other financial institutions grant sufficient comprehensive credit to the Company. The Company canquickly and effectively obtain financing support from financial institutions. The Company has stable operations and goodperformance, and can obtain stable operating cash flow through endogenous growth. At the same time, the Company activelypromotes the implementation of fundraising projects through convertible corporate bonds to further enhance its profitability. If theCompany meets the put provision and redemption clauses and repayment of principal and interest when due as disclosed in theprospectus of convertible corporate bonds, the Company can pay the bondholders' principal and interest with its own funds andfinancing.
Section 9 Directors, Supervisors, Senior Management and EmployeesI. Changes in Shares Held by Directors, Supervisors, and Senior Management
| Name | Title | Service status | Gender | Age | Start date | End date | Shares held at the beginning of the period (share) | Quantity Of shares increased in the current period (share) | Quantity of shares decreased in the current period (share) | Other increased or decreased changes (share) | Quantity of shares held at the end of the period (share) |
| Paul Xiaoming Lee | Chairman | Current | Male | 63 | April 20, 2011 | April 7, 2023 | 136,993,919 | 9,201,262 | 127,792,657 | ||
| Li Xiaohua | Vice Chairman and General Manager | Current | Male | 59 | April 20, 2011 | April 7, 2023 | 70,069,889 | 232,000 | 69,837,889 | ||
| Yan Ma | Director | Current | Female | 62 | April 20, 2011 | April 7, 2023 | 0 | 0 | |||
| Xu Ming | Director | Current | Male | 46 | August 31, 2013 | April 7, 2023 | 1,835,873 | 120,000 | 1,715,873 | ||
| Alex Cheng | Director | Current | Male | 63 | April 8, 2020 | April 7, 2023 | 0 | ||||
| Feng Jie | Director | Current | Male | 57 | January 4, 2017 | April 7, 2023 | 0 | 0 | |||
| Lin Haijian | Director | Resigned | Male | 48 | August 31, 2013 | April 8, 2020 | 0 | 0 | |||
| Lu Jiankai | Independent Director | Current | Male | 43 | April 20, 2017 | April 7, 2023 | 0 | 0 | |||
| Tang Changjiang | Independent Director | Current | Male | 51 | April 8, 2020 | April 7, 2023 | 0 | ||||
| Zheng Haiying | Independent Director | Current | Female | 58 | April 8, 2020 | April 7, 2023 | 0 | ||||
| Song Kungang | Independent Director | Resigned | Male | 73 | January 4, 2017 | April 8, 2020 | 0 | 0 |
| Wang Ping | Independent Director | Resigned | Male | 51 | April 20, 2017 | April 8, 2020 | 0 | 0 | |||
| Chen Tao | Supervisor | Current | Male | 43 | April 20, 2011 | April 7, 2023 | 0 | 0 | |||
| Zhang Tao | Chairman of Board of Supervisors | Current | Male | 44 | January 3, 2019 | April 7, 2023 | 0 | 0 | |||
| Kang Wenting | Supervisor | Current | Female | 34 | April 8, 2020 | April 7, 2023 | 0 | ||||
| Huang Jianglan | Chairman of Board of Supervisors | Resigned | Female | 44 | April 20, 2011 | April 8, 2020 | 0 | 0 | |||
| Xiong Wei | Vice General Manager and Board Secretary | Current | Male | 51 | March 23, 2012 | April 7, 2023 | 359,000 | 89,000 | 270,000 | ||
| Li Jian | Chief Financial Officer | Current | Male | 43 | September 30, 2020 | April 7, 2023 | 0 | ||||
| Pang Qizhi | Chief Financial Officer | Resigned | Male | 42 | October 27, 2016 | September 30, 2020 | 427,000 | 97,000 | 330,000 | ||
| Total | -- | -- | -- | -- | -- | -- | 209,685,681 | 0 | 9,739,262 | 199,946,419 |
II. Changes of Directors, Supervisors, and Senior Management
√ Applicable □ N/A
| Name | Assumed Position | Type | Date | Reason |
| Song Kungang | Independent Director | Resigned after expiration of term | April 8, 2020 | Resigned after expiration of term |
| Wang Ping | Independent Director | Resigned after expiration of term | April 8, 2020 | Resigned after expiration of term |
| Huang Jianglan | Supervisor | Resigned after expiration of term | April 8, 2020 | Resigned after expiration of term |
| Pang Qizhi | Chief Financial Officer | Dismissed | September 30, 2020 | Change in work |
| Lin Haijian | Director | Resigned after expiration of term | April 8, 2020 | Resigned after expiration of term |
| Alex Cheng | Director | Elected | April 8, 2020 | Reelected |
| Tang Changjiang | Independent Director | Elected | April 8, 2020 | Reelected |
| Zheng Haiying | Independent Director | Elected | April 8, 2020 | Reelected |
| Kang Wenting | Supervisor | Elected | April 8, 2020 | Reelected |
| Li Jian | Chief Financial Officer | Elected | September 30, 2020 | Engaged |
III. Positions HeldProfessional background, main working experience and main duties in the Company of current directors, supervisors, and seniormanagement of the Company(I) Members of the Board of Directors
1. Paul Xiaoming Lee, Chairman of the Company, male, born in 1958, American nationality with the right of residence in foreigncountry, and master’s degree. Joined Kunming Plastic Research Institute of China in 1982, acted as the Vice President from 1984 to1989, graduated from the polymer material discipline at the University of Massachusetts of America in December 1992, served as theManager of the Technical Department of Inteplast Corporation in America from 1992 to 1995. Since April 1996 to now, he hassuccessively served as the Vice General Manager, General Manager, Vice Chairman and Chairman of Hongta Plastics, Chairman andGeneral Manager of Dexin Paper, and Chairman of Chengdu Hongta. Joined Innovative Color Printing as the Chairman in 2006.Now, serves as the Chairman of the Company.
2. Li Xiaohua, Vice Chairman of the Company, male, born in 1962, Chinese nationality with the right of residence in foreign country,and master’s degree. Graduated from the polymer material discipline at the University of Massachusetts of America in February 1993,and worked at World-Pak Corporation from 1993 to 1996. Since April 1996 to now, he has successively served as the Vice GeneralManager and Vice Chairman of Hongta Plastics, the Vice Chairman of Dexin Paper, and the Vice Chairman and General Manager ofChengdu Hongta. Joined Innovative Color Printing as the Vice Chairman and General Manager in 2006. Now, serves as the ViceChairman and General Manager of the Company.
3. Yan Ma, Director of the Company, female, born in 1959, American nationality with the right of residence in foreign country, andjunior college’s degree. Worked at Kunming Yan’an Hospital from 1981 to 1990, and since April 2011, she has served as the Directorof the Company. Now, serves as the Director of the Company.
4. Feng Jie, male, born in 1964, Chinese nationality, without the right of residence in foreign country, bachelor’s degree and mediumindustrial economist. Worked at Simao Industrial and Commercial Bank of China from 1981 to 1984; served as a statistician of theComprehensive Management Section, Director of the Computer Center and the Secretary of the Communist Youth League at YunnanOptical Instrument Factory from 1989 to 1997; served as a technician, statistical officer and Director of the General Manager’s Officeat Yunnan Hongta Plastics Co., Ltd. from 1997 to 2005; served as the Director of Chengdu Office of Yunnan Hongta Plastics Co., Ltd.from 2005 to 2009; since 2009, he has served as the Director of the Sales Department, the Vice General Manager and GeneralManager’s Office of Hongta Plastics (Chengdu) Co., Ltd. He is now the Director of the Company as well as the Director of the SalesDepartment and General Manager of Hongta Plastics (Chengdu) Co., Ltd.
5. Xu Ming, Director of the Company, male, born in 1975, Chinese nationality without the right of residence in foreign country, andjunior college’s degree. Served as the Director of Global Color Printing Workshop from 1995 to 2002, and since 2002, he has actedas the Workshop Director and Chief Technical Officer of Innovative Color Printing. He is now the General Manager of YunnanHongchuang Package Co., Ltd. and the Director of the Company.
6. Alex Cheng, male, born in 1958, American nationality with the right of residence in foreign country, master’s degree in plasticengineering conferred by the University of Massachusetts, and doctor’s degree conferred by the Northeast Agricultural University.Acted as the Technical Manager of Inteplast Corporation in America from September 1993 to September 2011. Served as the GeneralManager of Shanghai Energy New Material Technology Co., Ltd. from February 2012 to June 2019. Now, serves as the President ofthe Research Institute of Shanghai Energy New Material Technology Co., Ltd.
7. Lu Jiankai, male, born in 1978, Chinese nationality, master’s degree, Chinese Certified Public Accountant, is now the ExecutivePresident, Partner and Legal Representative of Shanghai Yangyue Investment Management Co., Ltd. He worked at Ernst & YoungDahua Accounting Firm (Shanghai) as an auditor in 2001 to 2004. He worked at Deloitte Huayong Accounting Firm (Shanghai) as anauditor in 2004 to 2008. He served as the Vice President of the Real Estate and Equity Investment Division of Zhejiang LongshengGroup Co., Ltd. in 2009 to 2011. He served as the Officer of the Investment and Financing Department of Jiangsu Changfa GroupCo., Ltd. in 2011 to 2013. He served as the Investment Officer of Shanghai Jingbang Equity Investment Management Co., Ltd. in2013 to 2015. Now is an Independent Director of the Company.
8. Tang Changjiang, male, born in 1970, Chinese nationality, Executive Master of Business Administration at Tsinghua Universityand Master of Business Administration (MBA) at the University of Victoria of Switzerland. Served as the Vice General Manager ofKelin Side (Huizhou) Co., Ltd. from August 1994 to October 1996. Served as the Deputy Secretary-General of Shenzhen ElectronicIndustry Association from March 1998 to May 2002. Served as the Managing Director of Shenzhen Tangshi Electronic Co., Ltd.from January 2003 to June 2013. Served as the Director of Shenzhen Xinyuhuan Test Co., Ltd. from July 2013 to May 2019. Now isan Independent Director of the Company.
9. Zheng Haiying, female, born in 1963,Chinese nationality, Doctor, Master’s Tutor and Professor at the Accounting School of theCentral University of Finance and Economics, Chinese Certified Public Accountant (CICPA) and a member of the senior certifiedpublic accountants’ associations (ACCA and FCCA). Taught at the Accounting Department of the Central Fiscal ManagementCadres’ College from July 1988 to April 1994 and worked on a part-time basis at the former Zhongzhou Certified Public Accountantsin the same period. Engaged in the audit work at M.B.LEE & CO LTD of Hong Kong from April 1994 to April 1996. Taught at theAccounting Department of the Central Fiscal Management Cadres’ College from April 1996 to April 1999. Since April 1999, has
taught at the Accounting School of the Central University of Finance and Economics with the interest in financial accounting. Now isan Independent Director of the Company.(II) Members of the Board of Supervisors
1. Zhang Tao, male, born in 1977, Chinese nationality without the right of permanent resident in foreign country, and master’s degree.Worked as a financial analyst at the Financial Center of Beijing Marketing Company of Haci Co., Ltd. from July 2000 to January2001; worked as an accountant at the Finance Department of Yunnan Hongta Plastics Co., Ltd. from August 2001 to August 2006;and since September 2006, has served as the Manager of the Finance Department of Yunnan Dexin Paper Co., Ltd. Now serves as theDeputy Chief Financial Officer and Supervisor of the Company.
2. Chen Tao, male, born in 1978, Chinese nationality without the right of residence in foreign country, and junior college’s degree.Served as the technician of Global Color Printing from 1998 to 2003, joined Innovative Color Printing in 2004, and has acted as thetechnician, Deputy Director and Director of the Technical Center. Now is the Vice General Manager of Yunnan Hongchuang PackageCo., Ltd. and the Supervisor of the Company.
3. Kang Wenting, female, born in 1987, Chinese nationality without the right of permanent resident in foreign country, and bachelor’sdegree. Served as the Personnel Supervisor of Kunming Xinghe Spa Resort & Hotel from 2013 to 2014, and since 2015, has servedas the Personnel Supervisor of the Human Resources Department and the Supervisor of the Human Resources Planning Departmentof the Company. Now, is the manager of the Operation Support Department and Supervisor of the Company.(III) Senior Management
1. Li Xiaohua, Vice Chairman of the Company, male, born in 1962, Chinese nationality with the right of residence in foreign country,and master’s degree. Graduated from the polymer material discipline at the University of Massachusetts of America in February 1993,and worked at World-Pak Corporation from 1993 to 1996. Since April 1996 to now, he has successively served as the Vice GeneralManager and Vice Chairman of Hongta Plastics, the Vice Chairman of Dexin Paper, and the Vice Chairman and General Manager ofChengdu Hongta. Joined Innovative Color Printing as the Vice Chairman and General Manager in 2006. Now, serves as the ViceChairman and General Manager of the Company.
2. Xiong Wei, Vice General Manager and Board Secretary, male, born in 1970, Chinese nationality without the right of residence inforeign country, and MBA. Served as Senior Manager of Hong Kong & Macau Securities, the Investment Manager of Sichuan(America) Small & Medium Enterprise Investment Fund, the Investment Manager of Chengdu Technology Venture Capital Co., Ltd.and the Vice General Manager of Chengdu Caisheng Investment Co., Ltd. from 1994 to 2010. Joined the Company as the BoardSecretary in October 2010. Now is the Vice General Manager and Board Secretary of the Company.
3. Li Jian, male, Han, born in March 1978, Chinese nationality, bachelor’s degree, Chinese Certified Public Accountant and ChineseCertified Tax Agent. Since 1997, has served as the General Budget Accountant at Liujiaqiao Fiscal Office of the Finance Bureau ofChongren County, Jiangxi Province, the Financial Manager of Shunde Ouyadian Building Material Co., Ltd., the Project Manager ofShenzhen Pengcheng Accounting Firm, the Assistant to the Chief Financial Officer of Jiangsu Safety Steel Rope Co., Ltd. and theChief Financial Officer of Suzhou ALTON Electric Industry Co., Ltd. Since October 2016, has served as the Chief Financial Officerof Shanghai Energy New Material Technology Co., Ltd. Now, serves as the Chief Financial Officer of the Company.
Positions held at the shareholder’s entity
√ Applicable □ N/A
| Name | Shareholder’s Name | Position in shareholder | Start date | End date | Receiving remuneration and allowance at shareholder |
| Paul Xiaoming Lee | Heyi Investment | Chairman | November 3, 2010 | March 17, 2021 | None |
| Paul Xiaoming Lee | Heli Investment | Director | December 8, 2010 | March 17, 2021 | None |
| Li Xiaohua | Heyi Investment | Director | November 3, 2010 | March 17, 2021 | None |
| Li Xiaohua | Heli Investment | Chairman | December 8, 2010 | March 17, 2021 | None |
| Li Xiaohua | Zhuhai Hengjie | Executive Partner | December 1, 2016 | March 17, 2021 | None |
Positions held at other entities
√ Applicable □ N/A
| Name | Other Organization Names | Positions in other organizations | Start date | End date | Receiving remuneration and allowance at other organizations |
| Paul Xiaoming Lee | Kunshasi | Vice Chairman | May 1, 1996 | March 17, 2021 | None |
| Paul Xiaoming Lee | Shanghai Ruiji New Material Technology Co., Ltd. | Director | January 20, 2020 | March 17, 2021 | None |
| Li Xiaohua | Kunshasi | Director and General Manager | May 1, 1996 | March 17, 2021 | None |
| Li Xiaohua | Shanghai Ruiji New Material Technology Co., Ltd. | Chairman | January 20, 2020 | March 17, 2021 | None |
| Alex Cheng | Shanghai Ruiji New Material Technology Co., Ltd. | Director | January 20, 2020 | March 17, 2021 | None |
| Lu Jiankai | Fuzhou Shanghe Electronics Co., Ltd. | Director | November 5, 2015 | November 4, 2021 | None |
| Lu Jiankai | Anqiu Huahang Environmental Technology Co., Ltd. | Executive Director and General Manager | October 13, 2020 | October 12, 2023 | None |
| Lu Jiankai | Dezhou Shayun Electronic Commerce Co., Ltd. | Director | October 30, 2019 | October 29, 2022 | None |
| Lu Jiankai | Qingdao Huahang Environmental Technology Co., Ltd. | Chairman | June 19, 2017 | June 18, 2023 | None |
| Lu Jiankai | Shanghai Yangyue Investment Partners (Limited Partnership) | Executive President and Partner | July 12, 2012 | July 11, 2021 | None |
| Lu Jiankai | Qingdao Bopu Photoelectric Technology Co., Ltd. | Executive Director and General Manager | August 3, 2016 | August 2, 2022 | None |
| Lu Jiankai | Shanghai Yangyue Investment Management Co., Ltd. | Executive Director and General Manager | February 13, 2019 | February 12, 2022 | Yes |
| Lu Jiankai | Shanghai Shengu Investment Management Co., Ltd. | Executive Director | August 16, 2012 | August 15, 2021 | None |
| Lu Jiankai | Shanghai Qikai Investment Management Co., Ltd. | Executive Director | May 18, 2012 | May 17, 2021 | None |
| Tang Changjiang | Guangdong Battery Association | Secretary-General | June 29, 2019 | March 17, 2021 | Yes |
| Zheng Haiying | Beijing Borui Hongyuan Data Technology Co., Ltd. | Independent Director | February 1, 2016 | January 21, 2021 | Yes |
| Zheng Haiying | Central China Media Co., Ltd. | Independent Director | April 21, 2017 | March 17, 2021 | Yes |
| Zheng Haiying | Beijing Automic Technology Co., Ltd. | Independent Director | March 9, 2018 | March 17, 2021 | Yes |
| Zheng Haiying | Shandong Keyuan Pharmaceutical Co., Ltd. | Independent Director | April 23, 2019 | March 17, 2021 | Yes |
| Zheng Haiying | Arizon Radio Frequency Technology Co., Ltd. | Independent Director | April 23, 2019 | March 17, 2021 | Yes |
| Zheng Haiying | Orient Group | Independent Director | December 23, 2019 | March 17, 2021 | Yes |
Penalties to the current directors, supervisors and senior management of the Company and those leaving office during the ReportingPeriod by securities regulatory agencies in the past three years
□ Applicable √ N/A
IV. Remuneration for Directors, Supervisors, and Senior ManagementDecision-making procedures, determination basis and actual payment of remuneration for directors, supervisors, and seniormanagement
1. Decision-making procedure for remunerations of directors, supervisors and senior management: The Remuneration &Evaluation Committee of the Board of Directors of the Company studies and establishes the evaluation standard, remuneration policyand plan for the directors, General Manager and other senior management members of the Company, the Board of Directors reviewsthe remunerations for the senior management, the General Meeting of Shareholders reviews the remunerations of the directors andthe supervisors, and the Human Resources Department and the Finance Department of the Company assist the Remuneration &Evaluation Committee of the Board of Directors to implement the remuneration plan for the directors and the senior management ofthe Company.
2. Basis for determining the remunerations of directors, supervisors and senior management: The remunerations for the directorsand supervisors are determined in line with the actual working status of the Company and in combination of the current marketsituation. The remunerations of the senior management are determined in line with related provisions of the Company and incombination of the operating objectives of the Company in 2020 and concrete job responsibilities the senior management members ofthe Company take to complete the annual operating objectives.
3. Actual payment of remunerations to the directors, supervisors and senior management: The remunerations of the IndependentDirectors are paid to personal accounts based on the standard and schedule every quarter. The remunerations of other people are paidbased on respective evaluation result on a monthly basis or at the time specified by the remuneration payment policy.
Remuneration for directors, supervisors, and senior management during the Reporting Period
Unit: RMB0’000
| Name | Title | Gender | Age | Service status | Total pre-tax remunerations received from the Company | Whether remuneration was received from related parties of the Company |
| Paul Xiaoming Lee | Chairman | Male | 63 | Incumbent | 118.34 | None |
| Li Xiaohua | Director | Male | 59 | Incumbent | 120.29 | None |
| Yan Ma | Director | Female | 62 | Incumbent | 0 | None |
| Alex Cheng | Director | Male | 63 | Incumbent | 6.19 | None |
| Xu Ming | Director | Male | 46 | Incumbent | 28.11 | None |
| Feng Jie | Director | Male | 57 | Incumbent | 27.94 | None |
| Lin Haijian | Director | Male | 48 | Resigned | 0 | None |
| Song Kungang | Independent Director | Male | 73 | Resigned | 1.36 | None |
| Wang Ping | Independent Director | Male | 51 | Resigned | 1.36 | None |
| Lu Jiankai | Independent Director | Male | 43 | Incumbent | 5 | None |
| Tang Changjiang | Independent Director | Male | 51 | Incumbent | 3.64 | None |
| Zheng Haiying | Independent Director | Female | 58 | Incumbent | 3.64 | None |
| Zhang Tao | Chairman of Board of Supervisors | Male | 44 | Incumbent | 18.85 | None |
| Chen Tao | Supervisor | Male | 43 | Incumbent | 21.19 | None |
| Huang Jianglan | Chairman of Board of Supervisors | Female | 44 | Resigned | 5.99 | None |
| Kang Wenting | Supervisor | Female | 34 | Incumbent | 6.78 | None |
| Xiong Wei | Board Secretary | Male | 51 | Incumbent | 37.95 | None |
| Li Jian | Chief Financial | Male | 43 | Incumbent | 7.39 | None |
| Officer | ||||||
| Pang Qizhi | Chief Financial Officer | Male | 42 | Resigned | 29.12 | None |
| Total | -- | -- | -- | -- | 443.14 | -- |
Equity incentives granted to directors and senior management during the Reporting Period
□ Applicable √ N/A
V. Employees of the Company
1. Number of employees, composition by profession, and educational level
| Incumbent staff of parent company (person) | 229 |
| Incumbent staff of major subsidiary (person) | 3,908 |
| Total incumbent staff (person) | 5,040 |
| Total staff receiving remunerations in current period (person) | 7,168 |
| Number of retirees whose expenses shall be borne by the parent company and major subsidiaries (person) | 0 |
| Composition by profession | |
| Category of profession | Number of profession (person) |
| Production staff | 3,984 |
| Sales people | 94 |
| Technician | 369 |
| Financial staff | 86 |
| Administrative staff | 507 |
| Total | 5,040 |
| Education level | |
| Category of education level | Number (person) |
| Doctor’s degree and above | 8 |
| Master’s degree | 77 |
| Bachelor’s degree | 538 |
| Junior college | 1,124 |
| Middle vocational school and below | 3,293 |
| Total | 5,040 |
2. Remuneration policy
During the Reporting Period, the Company observed the principles of distribution based on labor, efficiency priority combiningfairness and sustainable development, and on this basis, the Company made detailed policies in respect of staff’s remuneration, fringebenefit, performance evaluation and other aspects. The Company built a new salary architecture featuring a wide range and“hierarchical ladder”, and implemented the two-level salary distribution mechanism. At the same time, the Company has linked thesalary and bonus to the working time at the Company, output, cost, fixed staff of every position, equipment maintenance and otherfactors, and established a reasonable evaluation mechanism. The Company has taken multifaceted measures, including diversificationof internal remuneration structure, to attract high-quality human resources. These measures have helped the Company improve theoverall performance, realized a sustainable development of the Company and made the Company more competitive in the market.The Company has actively explored and continuously deepened the income distribution system. In future, the Company will make amoderate adjustment to the remuneration system based on its performance, market situation and industry trend.
3. Training plan
During the Reporting Period, the Company kept taking in excellent talents, actively strengthened internal personnel training,established a sound training system and enhanced the professional development ability of employees. The Company has recorded atotal of 2,968 training events, including 2,865 internal trainings and 103 external trainings, and recorded a total of 66,557 class hours.These trainings have benefited a total of 65,869 people. These trainings cover new employee training, job skill training, generalmanagement training, certification training and reserve talent training.
4. Labor outsourcing
□ Applicable √ N/A
Section 10 Corporate GovernanceI. Basic Information of Corporate GovernanceDuring the Reporting Period, the Company established and improved the modern enterprise system in strict accordance with theCompany Law, Securities Law, Shenzhen Stock Exchange Listing Rules, Code of Corporate Governance for Listed Companies inChina and other relevant laws and regulations, and constantly improved the corporate governance structure, improved the internalcontrol system and standardized the Company's operation.During the Reporting Period, the Company held 7 shareholders' meetings, 25 board meetings, 22 meetings of Board of Supervisors,etc. The procedures for holding the meetings are legal and the resolutions are legal and effective.Were there any significant differences between the Company’s actual governance status and the regulatory documents issued byCSRC on listed company governance
□ Yes √ No
There was no difference between the Company’s governance status and the Company Law and relevant rules of CSRC.II. Details of the Company’s separation from the controlling shareholder with respect tobusiness, personnel, assets, organization, and financial affairsThe Company is independent of its shareholders in terms of business, assets, personnel, institutions, financial affairs, etc., has anindependent and complete business system and market-oriented independent operation ability, and has a complete supply, productionand sales system.
1. Assets integrity
The Company has independent and complete business assets that can be used for business activities. The Company has complete sites,facilities, instruments and equipment, trademarks, patents, etc. required for production independent of shareholders and other relatedparties. The Company's assets are strictly separated from the shareholders and actual controllers, and there is no case that theshareholders and actual controllers encroach on the Company's assets.
2. Personnel independence
The General Manager, Deputy General Manager, Chief Financial Officer, Secretary of the Board and other senior managers of theCompany are all full-time working in the Company and receiving remuneration, and there is no case that they hold any post otherthan director or supervisor at the controlling shareholder, actual controller and other enterprises under their control, or hold anyposition in other enterprises with the same or similar business with the Company. The Company's financial personnel are not doingpart-time job in the controlling shareholders, actual controllers and other enterprises under their control. The Company is completelyindependent in terms of social security and salary.
3. Finance independence
The Company has set up an independent financial department, and established an independent and complete financial accountingsystem according to the current accounting standards and relevant laws and regulations, which can help make financial decisionsindependently. The Company has a standardized financial accounting system and financial management system. The Company hasset up an independent bank account and, as an independent taxpayer, has gone through tax registration with the tax bureau of YuxiHigh-tech Zone. The Company does not guarantee the debts of shareholders or other related parties with the Company's assets,interests or reputation. The Company has complete control over all assets, and there is no case that monetary funds or other assets areoccupied by shareholders and damage the Company's interests.
4. Institutional independence
The Company has a production and operation place and organization independent of the controlling shareholder, and there is nomixed operation or joint office with the controlling shareholder. There is no interference of the controlling shareholders and any otherunits or individuals in the Company's organizational structure. In accordance with the requirements of the Company Law, theCompany has established and improved the organizational structure system of the general meeting of shareholders, the Board ofDirectors, the Board of Supervisors and the management, and is completely independent of the affiliated enterprises in terms ofinstitutional setting. The shareholder unit nominates directors to participate in the management of the Company in accordance withthe provisions of the Company Law and the Articles of Association, and does not directly interfere with the production and operationactivities of the Company
5. Business independence
The Company has an independent production, supply and marketing system, and independently carries out various businesses. There
is no case of relying on or entrusting shareholders or other related parties to sell products, or relying on or entrusting shareholders orother related parties to purchase raw materials. There is no horizontal competition with the controlling shareholders, actualcontrollers and the enterprises under their control. The actual controller of the Company, Paul Xiaoming Lee's family, controllingshareholder Heyi Investment and shareholder Heli Investment have all made commitments to avoid horizontal competition. Fordetails, please refer to Section 5-III-1 "Commitments made by the Company’s actual controllers, shareholders, related parties,purchasers, and others that were fulfilled during the Reporting Period and those not fulfilled as of the end of the Reporting Period".III. Horizontal Competition
□ Applicable √ N/A
IV. Details about the Annual General Meeting and Extraordinary General Meeting ofShareholders Convened during the Reporting Period
1. Details about the shareholders’ general meeting during the Reporting Period
| Meeting | Meeting Type | Investor Participation | Date Convened | Disclosure Date | Disclosure index |
| Annual General Meeting of Shareholders of 2019 | Annual General Meeting of Shareholders | 62.33% | April 8, 2020 | April 9, 2020 | Announcement on Resolutions of the Annual General Meeting of Shareholders of 2019 (Announcement No.: 2020-062) on cninfo.com |
| First Extraordinary General Meeting of Shareholders in 2020 | Extraordinary General Meeting of Shareholders | 64.21% | April 9, 2020 | April 10, 2020 | Announcement on Resolutions of the First Extraordinary General Meeting of Shareholders in 2020 (Announcement No.: 2020-063) on cninfo.com |
| Second Extraordinary General Meeting of Shareholders in 2020 | Extraordinary General Meeting of Shareholders | 59.98% | June 10, 2020 | June 11, 2020 | Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in 2020 (Announcement No.: 2020-091) on cninfo.com |
| Third Extraordinary General Meeting of Shareholders in 2020 | Extraordinary General Meeting of Shareholders | 64.83% | July 8, 2020 | July 9, 2020 | Announcement on Resolutions of the Third Extraordinary General Meeting of Shareholders in 2020 (Announcement No.: 2020-110) on cninfo.com |
| Fourth Extraordinary General Meeting | Extraordinary General Meeting of Shareholders | 61.75% | July 30, 2020 | July 31, 2020 | Announcement on Resolutions of the Fourth Extraordinary |
| of Shareholders in 2020 | General Meeting of Shareholders in 2020 (Announcement No.: 2020-128) on cninfo.com | ||||
| Fifth Extraordinary General Meeting of Shareholders in 2020 | Extraordinary General Meeting of Shareholders | 57.63% | September 14, 2020 | September 15, 2020 | Announcement on Resolutions of the Fifth Extraordinary General Meeting of Shareholders in 2020 (Announcement No.: 2020-170) on cninfo.com |
| Sixth Extraordinary General Meeting of Shareholders in 2020 | Extraordinary General Meeting of Shareholders | 59.07% | September 24, 2020 | September 25, 2020 | Announcement on Resolutions of the Sixth Extraordinary General Meeting of Shareholders in 2020 (Announcement No.: 2020-177) on cninfo.com |
2. Extraordinary general meeting requested by the preferred shareholder with restitution of voting rights
□ Applicable √ N/A
V. Performance of Independent Directors during the Reporting Period
1. Details of independent directors’ attendance at board meetings and shareholders’ general meetings
| Details of independent directors’ attendance at board meetings and shareholders’ general meetings | |||||||
| Name of independent director | Meetings required to attend during the Reporting Period (times) | Attendance in person (times) | Attendance by way of telecommunication (times) | Entrusted presence (times) | Absence (times) | Non-attendance in person for two consecutive times or not | Attendance in shareholders’ general meeting |
| Lu Jiankai | 25 | 1 | 24 | 0 | 0 | None | 7 |
| Tang Changjiang | 20 | 1 | 19 | 0 | 0 | None | 6 |
| Zheng Haiying | 20 | 1 | 19 | 0 | 0 | None | 6 |
| Song Kungang | 5 | 0 | 5 | 0 | 0 | None | 1 |
| Wang Ping | 5 | 0 | 5 | 0 | 0 | None | 1 |
Explanations for non-attendance in person for two consecutive times
2. Details on independent directors’ objection to relevant events
Did independent directors object to relevant events of the Company
□ Yes √ No
During the Reporting Period, no independent directors objected to relevant events of the Company.
3. Other details about the performance of independent directors
Was advice to the Company from independent directors adopted
□ Yes √ No
Explanation of advice to the Company from independent directors adopted or notDuring the Reporting Period, independent directors of the Company were diligent, conscientious, honest and self-disciplined, andfaithfully performed the responsibilities as the independent director. The independent directors carefully listened to the report of theCompany's relevant principals on project construction, development strategy, profit distribution plan, effectiveness of internal control,appointment of financial audit institutions, etc., and actively expressed opinions on the Board of Directors. During the ReportingPeriod, the independent directors issued independent, fair and objective opinions on issues that need independent directors’ opinions,actively and effectively performed the responsibilities of independent directors, improved the Company's supervision mechanism,and safeguarded the legitimate rights and interests of the Company and small and medium-sized shareholders.
VI. Performance of Special Committees under the Board of Directors during the ReportingPeriodDuring the Reporting Period, each member of the special committee under the Board of Directors performed his/her duties diligently,gave full play to his/her own professional expertise, skills and experience, reported important matters discussed at the meeting to theBoard of Directors or submitted them to the Board of Directors for deliberation, so as to provide positive help for the scientificdecision-making of the Board of Directors.
VII. Details on the Work of the Board of Supervisors
Were there any risks in the Company according to the supervision of the Board of Supervisors during the Reporting Period
□ Yes √ No
The Board of Supervisors raised no objection to matters under supervision during the Reporting Period.
VIII. Assessment and Incentive Mechanisms for Senior ManagementThe Company has set up a performance assessment mechanism that is consistent with the modern enterprise management system. Itcarried out annual target responsibility assessment for all employees, including senior management, and determined the payment andadjustment of senior management in accordance with the fulfillment of the Company's annual business objectives and annualpersonal assessment results. The Board of Directors set up a Remuneration and Appraisal Committee. According to the Rules ofProcedure for the Remuneration and Appraisal Committee of the Board of Directors, the Remuneration and Appraisal Committeereviewed the performance of the Company's senior management at the operation level, strengthened the performance assessment ofthe senior management, and effectively mobilized the work enthusiasm and creativity of the senior management.In 2018, the Company's equity incentive plan achieved the first phase of unlocking conditions, unlocking a total of 1,486,200 sharesof restricted shares in the first phase for middle and senior management, core technology (business) personnel, etc. totaling 84persons, who met the performance assessment requirements, and repurchased and canceled some of the authorized but lockedrestricted shares of 7 incentives with a personal assessment level of "good", repurchasing 55,800 restricted shares.In 2019, the Company's equity incentive plan achieved the second phase of unlocking conditions, unlocking a total of 2,484,720shares of restricted shares in the second phase for middle and senior management, core technology (business) personnel, etc. totaling84 persons, who met the performance assessment requirements, and repurchased and canceled some of the authorized but lockedrestricted shares of 17 incentives with a personal assessment level of "good", repurchasing 136,680 restricted shares.During the Reporting Period, the Company's equity incentive plan achieved the third phase of unlocking conditions, unlocking a totalof 3,404,080 shares of restricted shares in the third phase for middle and senior management, core technology (business) personnel,etc. totaling 83 persons, who met the performance assessment requirements, and repurchased and canceled some of the authorizedbut locked restricted shares of 4 incentives with a personal assessment level of "good", repurchasing 23,120 restricted shares.
IX. Internal Control Assessment Report
1. Details on material weakness in the Company’s internal control during the Reporting Period
□ Yes √ No
2. Self-assessment report on internal control
| Disclosure date of the assessment report on internal control | March 18, 2021 | |
| Disclosure index of the assessment report on internal control | 2020 Assessment Report on Internal Control disclosed on cninfo.com on March 18, 2021 | |
| Ratio of total assets of the unit included in the assessment scope to the total assets of the Company's consolidated financial statements | 100.00% | |
| Ratio of operating income of the unit included in the assessment scope to the operating income of the Company's consolidated financial statements | 100.00% | |
| Defect identification standards | ||
| Type | Financial report | Non-financial report |
| Qualitative criteria | General defects: There is little possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. Material defects: There is some possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. Major defects: There is the possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. | General defects: There is little possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. Material defects: There is some possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. Major defects: There is the possibility that a failure to take any action will result in potential misstatement, economic loss or unachieved business objectives. |
| Quantitative criteria | General defects: < 0.25% of Total Assets, < 0.5% of Operating Income; material defects: ≥ 0.25% of Total Assets and < 1% of Total Assets, ≥ 0.5% of Operating Income and < 1.5% of Operating Income; major defects: ≥ 1% of Total Assets, ≥ 1.5% of Operating Income. | General defects: < 0.25% of Total Assets, < 0.5% of Operating Income; material defects: ≥ 0.25% of Total Assets and <1% of Total Assets, ≥ 0.5% of Operating Income and < 1.5% of Operating Income; major defects: ≥ 1% of Total Assets, ≥ 1.5% of Operating Income. |
| Number of major defects in the financial report | 0 | |
| Number of major defects in the non-financial report | 0 | |
| Number of material defects in the financial report | 0 | |
| Number of material defects in the non-financial report | 0 | |
X. Audit Report or Authentication Report on Internal ControlAuthentication report on internal control
| Audit opinion in the audit report on internal control | |
| According to the identification of major defects in the internal control of the Company's financial report, there were no major defects in the internal control of the financial report on the base date of the internal control assessment report. The Board of Directors believed that the Company maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise internal control standard system and related regulations. According to the identification of major defects in the internal control of the Company's non-financial report, there were no major defects in the internal control of the non-financial report on the base date of the internal control assessment report. From the base date of the internal control assessment report to the issuance of the internal control assessment report, no factors affecting the assessment conclusion of the effectiveness of internal control occurred. | |
| Particulars about authentication report on internal control | Disclosure |
| Disclosure date of the authentication report on internal control | March 18, 2021 |
| Disclosure index of the authentication report on internal control | The Yunnan Energy New Material Co., Ltd. Authentication Report on Internal Control Da Hua Nei Zi [2021] No. 001377 disclosed by the Company on cninfo.com on March 18, 2021 |
| Type of opinion on internal control assurance report | Standard unqualified opinion |
| Material deficiency in non-financial report | None |
Did the accounting firm issue a qualified authentication report on internal control
□ Yes √ No
Was the authentication report on internal control issued by the accounting firm consistent with the self-assessment report from theBoard of Directors
√ Yes □ No
Section 11 Corporate BondsDid the Company have any corporate bonds that were publicly issued and listed on the stock exchange that were not due or not fullypaid when due on the date of approval of the annual reportYesI. General Information of Corporate Bonds
| Name of bond | Abbreviation of bond | Bond code | Issuance date | Maturity | Balance (RMB0’000) | Coupon rate | Way of repayment of principal and interest |
| Convertible corporate bonds of Yunnan Energy New Material Co., Ltd. | Convertible corporate bonds of Yunnan Energy New Material Co., Ltd. | 128095 | February 11, 2020 | February 11, 2026 | 83,357.81 | 0.40% for the first year, 0.60% for the second year, 1.00% for the third year, 1.50% for the fifth year, and 2.00 for the sixth year | Interest payment annually and payment of principal and the interest of the last year upon maturity |
| Trading venue for corporate bond listing or transfer | Shenzhen Stock Exchange | ||||||
| Investor suitability arrangements | N/A | ||||||
| Interests payment and bonds repayment of the Company during the Reporting Period | None | ||||||
| Execution details of relevant clauses during the Reporting Period where the corporate bond carries any issuer or investor option clause, interchangeable clause or other special clauses (if applicable) | 1. "Convertible corporate bonds of Yunnan Energy New Material Co., Ltd." entered the conversion period on August 17, 2020. As of the end of the Reporting Period, some holders of "convertible corporate bonds of Yunnan Energy New Material Co., Ltd." converted RMB766,421,900 of convertible bonds into 11,774,057 shares of the Company. 2. As of September 29, 2020, "convertible corporate bonds of Yunnan Energy New Material Co., Ltd." triggered conditional redemption clauses, but the Company did not exercise the right for early redemption of "convertible corporate bonds of Yunnan Energy New Material Co., Ltd.” during the Reporting Period and did not redeem the "convertible corporate bonds of Yunnan Energy New Material Co., Ltd." in advance considering the relatively short conversion period for "convertible corporate bonds of Yunnan Energy New Material Co., Ltd.", and the market conditions. | ||||||
II. Bond Trustee and Credit Rating Agency
| Bond trustee: None | |||
| Credit rating agency which conducted follow-up ratings for corporate bonds during the Reporting Period: | |||
| Name | Shanghai Brilliance Credit Rating & Investors Service Co, Ltd. | Office address | 14F, Huasheng Building, 398 Hankou Road, Shanghai |
| Reasons for change, procedures performed, impact on investors’ interests, etc. where the bond trustee or credit rating agency changed during the Reporting Period (if applicable) | N/A |
III. Use of Proceeds from Bond Offering
| Use of proceeds from bond offering and procedures performed | At the 40th meeting of the third Board of Directors of the Company, the Proposal on Opening a Special Account for Proceeds from Offering of Convertible Corporate Bonds and Signing a Regulatory Agreement for Proceeds was reviewed and passed. The Company opened a special account for proceeds from offering in Qianxing Road Sub-branch, Kunming Branch of China Merchants Bank, to deposit the proceeds from offering of convertible corporate bonds, and signed the Tripartite Supervision Agreement on Proceeds with Kunming Branch of China Merchants Bank and CITIC Securities Company Limited (Sponsor). After deducting RMB10 million of underwriting and sponsorship fees from the proceeds from offering of convertible corporate bonds, the balance of RMB1.59 billion was remitted by the sponsor (lead underwriter) to the special deposit account of proceeds designated by the Company on February 17, 2020. After deducting the underwriting and sponsorship fees (excluding tax) of RMB9,433,962.26 and other offering expenses (excluding tax) of RMB4,443,396.23 from the total amount of proceeds from public offering of convertible corporate bonds, the net amount of proceeds from offering of the Company was RMB1,586,122,641.51. Dahua CPAs (SGP) verified the receipt of the proceeds and issued the Verification Report (DHYZ [2020] No. 000047). At the 42nd meeting of the third Board of Directors of the Company, the Proposal on the Use of Proceeds from Offering of Convertible Corporate Bonds to Replace Self-raised Funds Invested in Fund-raising Investment Projects in Advance was considered and approved, agreeing to use of proceeds to replace self-raised funds invested in fund-raising investment projects in advance, with a total replacement amount of RMB1,586,122,641.51. At the 42nd meeting of the third Board of Directors of the Company, the Proposal on the Use of Proceeds from Offering of Convertible Corporate Bonds to Replace Self-raised Funds Invested in Fund-raising Investment Projects in Advance was considered and approved, agreeing to use of proceeds to replace self-raised funds invested in fund-raising investment projects in advance, with a total replacement amount of RMB1,586,122,641.51. As of April 30, 2020, the Company's proceeds from offering of convertible corporate bonds were all replaced. |
| Balance at the end of the year (RMB0’000) | 0 |
| Operation of special account for proceeds | The Company opened a special account for proceeds from offering in Qianxing Road Sub-branch, Kunming Branch of China Merchants Bank, to deposit the proceeds from offering of convertible corporate bonds, and signed the Tripartite Supervision Agreement on Proceeds with Kunming Branch of China Merchants Bank and CITIC Securities Company Limited (Sponsor). Jiangxi Tonry opened a special account for proceeds from offering in Yichun Gao’an Sub-branch of Industrial Bank Co., Ltd., to deposit the proceeds from offering of convertible corporate bonds of project " lithium-ion battery separator film project with an annual output of 400 million square meters of Jiangxi Tonry New Energy Technology Development Co., Ltd. (phase I)". The Company, Jiangxi Tonry, Yichun Gao’an Sub-branch of Industrial Bank Co., Ltd. and CITIC Securities signed the Quadripartite Supervision Agreement on Proceeds. Wuxi Energy opened a special account for proceeds from offering in Nanjing Branch of Bank of Shanghai Co., Ltd. and Xishan Sub-branch of Wuxi Branch of Industrial and Commercial Bank of China, to deposit the proceeds from offering of convertible corporate bonds of "Wuxi Energy new material industry base project". The Company, Wuxi Energy, Nanjing Branch of Bank of Shanghai Co., Ltd. and CITIC Securities signed the Quadripartite Supervision Agreement on Proceeds. The Company, Wuxi Energy, Xishan Sub-branch of Wuxi Branch of Industrial and Commercial Bank of China and CITIC Securities signed the Quadripartite |
| Supervision Agreement on Proceeds. At the 42nd meeting of the third Board of Directors of the Company, the Proposal on the Use of Proceeds from Offering of Convertible Corporate Bonds to Replace Self-raised Funds Invested in Fund-raising Investment Projects in Advance was considered and approved, agreeing to use of proceeds to replace self-raised funds invested in fund-raising investment projects in advance, with a total replacement amount of RMB1,586,122,641.51. As of April 30, 2020, the Company's proceeds from offering of convertible corporate bonds were all replaced, and the balance of the special account was RMB0. The Company completed the account cancellation procedures for the special account as required by special account management. | |
| Whether the use of proceeds was in line with that mentioned in the prospectus, the plan for use and other agreements | Yes |
IV. Rating Results of Corporate Bonds
The rating was implemented on July 18, 2019 for the first time. According to the Credit Rating Report on Public Offering ofConvertible Corporate Bonds by Yunnan Energy New Material Co., Ltd. (No.: Credit Rating on Corporate Bonds by ShanghaiBrilliance (2019) 010759) issued by Shanghai Brilliance Credit Rating & Investors Service Co, Ltd., the credit rating of the Companyon the whole was AA, the credit rating of “convertible corporate bonds of Yunnan Energy New Material Co., Ltd.” was AA, and thesaid bonds were affirmed with a “stable” outlook.The follow-up rating was implemented on May 15, 2020. According to the Follow-up Rating Report on Public Offering ofConvertible Corporate Bonds by Yunnan Energy New Material Co., Ltd. (No.: Follow-up Rating on Corporate Bonds by ShanghaiBrilliance (2020) 100053) issued by Shanghai Brilliance Credit Rating & Investors Service Co, Ltd., the credit rating of the Companyon the whole was AA, the credit rating of “convertible corporate bonds of Yunnan Energy New Material Co., Ltd.” was AA, and thesaid bonds were affirmed with a “stable” outlook.
V. Credit Enhancement Mechanism, Repayment Plans and Other Repayment GuaranteeMeasures
1. Regarding the convertible bonds issued this time, interest payment annually and payment of principal and the interest of the lastyear upon maturity shall be adopted. According to the current interest enjoyed by the holders of total par value of convertible bondsfor each full year since the first day of convertible bond offering, the coupon rate of the Company's convertible bond is 0.40% in thefirst year, 0.60% in the second year, 1.00% in the third year, 1.50% in the fourth year, 1.80% in the fifth year and 2.00% in the sixthyear. Within 5 business days after the maturity date of the convertible bonds, the Company will repay all the principal and interest ofthe last year for the convertible bonds which are not yet transferred.
2. The convertible bonds of the Company are unsecured.
3. Put provision of convertible bonds of the Company
(1) Conditional put provision: In the last two interest-bearing years of the convertible bonds issued this time, if the closing price ofthe Company's shares is lower than 70% of the current conversion price in any 30 consecutive trading days, the holders of theconvertible bonds have the right to put-back all or part of the convertible bonds held by them to the Company in the par value plusthe current accrued interest. In case of any adjustment to share conversion price within the aforesaid trading day due to thedistribution of stock dividends, conversion of capital reserve into share capital, new share issuance (excluding the share capitalincrease due to the conversion of convertible bonds to shares) , allotment of shares and distribution of cash dividends, etc., theconversion price and closing price before adjustment shall be adopted on the trading day before the adjustment day, while theadjusted conversion price and closing price shall be adopted on the trading day on and after the adjustment day. If there is adownward revision of the conversion price, the said "30 consecutive trading days” shall be recalculated at the revised conversionprice after the first trading day after the adjustment of the conversion price. Holders of convertible bonds in the last twointerest-bearing years can exercise the put options once each year after the put provision is met for the first time. If the put provisionis met for the first time while the holders of convertible bonds do not make an announcement or implement the put-back during theput-back Reporting Period of the Company, the put option cannot be exercised in that interest-bearing year. The holders ofconvertible bonds cannot exercise partial put options multiple times.
(2) Additional put provision: If the implementation of the investment project with proceeds from offering of convertible corporatebonds of the Company is not in line with the Company's commitment in the prospectus, and the inconformity is identified by theChina Securities Regulatory Commission as a change in the use of the proceeds, holders of convertible bonds may enjoy the put
option once. Holders of convertible bonds have the right to carry out put-back of all or part of the convertible bonds they hold to theCompany at the price of the par value of the bonds plus the accrued interest of the current period. Holders of convertible bonds cancarry out the put-back within the additional put-back Reporting Period as stated in the Company's announcement after the additionalput-back conditions are met. If the put-back is not carried out during the additional put-back Reporting Period, the additionalput-back right will be automatically lost.VI. Meetings of Holders of Convertible Bonds during the Reporting PeriodNo meeting of holders of convertible bonds was convened during the Reporting Period.
VII. Performance of Duties by Bond Trustee during the Reporting PeriodN/AVIII. Major Accounting Data and Financial Indicators for the Recent Two Years as of theEnd of the Reporting Period
Unit: RMB0’000
| Item | 2020 | 2019 | Rate of change over the same period |
| EBITDA | 207,897.22 | 146,402.75 | 42.00% |
| Current ratio | 203.00% | 118.77% | 84.23% |
| Asset-liability ratio | 43.63% | 59.97% | -16.34% |
| Quick ratio | 159.37% | 85.96% | 73.41% |
| Debt to EBITDA ratio | 23.16% | 20.02% | 3.14% |
| Interest coverage ratio | 5.13 | 7.25 | -29.24% |
| Cash interest coverage ratio | 4.98 | 6.87 | -.27.51% |
| EBITDA interest coverage ratio | 7.03 | 9.15 | -23.17% |
| Debt service ratio | 100.00% | 100.00% | 0.00% |
| Interest coverage rate | 100.00% | 100.00% | 0.00% |
Explanation of why the aforementioned accounting data and financial Indicators registered a year-on-year change of over 30%
√ Applicable □ N/A
(1) The significant year-on-year change in earnings before interest, tax, depreciation and amortization is mainly driven by the greatgrowth of the Company’s profit during the Reporting Period;
(2) The significant year-on-year change in current ratio and quick ratio is mainly driven by high liquidity of assets due to the receiptby the Company of the proceeds from the offering of convertible corporate bonds;
(3) The significant year-on-year change in interest coverage multiple and cash interest coverage multiple is mainly driven by theincrease in long-term loans of the Company during the Reporting Period.
IX. Principal Repayment and Interest Payment of Other Bonds and Debt FinancingInstruments during the Reporting PeriodNone
X. Credit Lines Granted by Banks, Their Utilization and Repayment of Bank Loans duringthe Reporting PeriodThe Company has maintained a good credit standing, business relations with multiple banks and good reputation. As of the end of theReporting Period, the Company has obtained a total line of credit up to RMB18.10 billion from several commercial banks andrecorded an actual balance of RMB5.09 billion in use. During the Reporting Period, the Company repaid the principal plus interesttotaling RMB5,56 billion on time and incurred no extension, reduction and exemption.XI. Fulfillment of Agreements or Commitments Made in Bond Prospectuses of the Companyduring the Reporting PeriodDuring the Reporting Period, the Company strictly implemented the relevant agreements or commitments made in the bondprospectus, and there was no breach of agreements or commitments that damaged the interests of bondholders.XII. Significant Events during the Reporting PeriodThe Company issued convertible bonds on February 11, 2020. During the Reporting Period, the Company expanded the businessscale of lithium-ion battery separator film. As of the end of the Reporting Period, the short-term borrowings of the Company hasdeclined by RMB874,685,500 from the beginning of period, and the long-term borrowings have risen by RMB699,097,300 from thebeginning of period, and the increase was equivalent to 15.36% of the net assets attributable to the shareholders of the listed company.The Company maintains good operation conditions, and the increase of the above borrowings will not have a significant impact onthe Company's solvency.XIII. Guarantor for Corporate Bonds
□ Yes √ No
Section 12 Financial ReportI. Audit Report
| Type of audit opinion | Standard unqualified opinion |
| Audit report signing date | March 17, 2021 |
| Audit organization name | Dahua CPAs (SGP) |
| Audit report No. | Da Hua Shen Zi [2021] No. 001534 |
| Name of Certified Public Accountant | Tang Rongzhou, Yao Rui |
Body of the audit report
To all shareholders of Yunnan Energy New Material Co., Ltd.:
I. Audit Opinions
We have audited the financial statements of Yunnan Energy New MaterialCo., Ltd., (“the Company”), including the consolidated and the parent company’sbalance sheets as of December 31, 2020, the consolidated and parent company’sincome statement, the consolidated and the parent company’s cash flow statement,the consolidated and the parent company’s statement of changes in equity for 2020,and the relevant notes to financial statements.
In our opinion, the enclosed financial statements were prepared in accordancewith the Accounting Standards for Business Enterprises in all material aspects andfairly reflected the Company’s consolidated and the parent company’s financialpositions as of December 31, 2020 as well as the consolidated and the parentcompany’s operation results and cash flow for 2020.II. Basis for Audit Opinions
We carried out the audit work according to the Auditing Standards forChinese CPA. Our responsibilities under the Standards are further described underthe section titled "responsibilities of CPA for auditing financial statements" in thisaudit report. We are independent from the Company and have fulfilled theobligations in terms of professional ethics according to Code of ProfessionalConduct for Chinese CPAs. We believe that the evidences we obtained areadequate and proper, and lay a solid foundation for the audit opinion.III. Key Audit Matters
Key audit matters are those that we believe are of most significance in the auditof the financial statements of the current period based on professional judgment.These matters are addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinionon these matters.We have determined that the following matters are key audit matters to becommunicated in the audit report.
1. Revenue recognition
2. Provision for bad debts of accounts receivable
(I) Revenue recognition
1. Description of matters
Please refer to Note IV-(33) and Note VI-40 of the consolidated financialstatements for the accounting policies and book amount information of therevenue recognition of the Company in this year.
The operating income of the Company in 2020 amounted toRMB4,283,007,600, which was the main source of its profit and affects its keyperformance indicators. In addition, according to the industry practice, aftersigning the sales order with customer, the Company arranges production based oncustomer's requirements, delivers it to customers pursuant to the agreed deliverymethod, obtains the customer's evidence on the transfer of the ownership of goods,and then recognizes the sales revenue. Since the time of revenue recognition islater than the product delivery, and the delivery time and delivery documentrecognition are all dependent on the customer, there may be significant risk ofmisstatement if the sales revenue is fully included in the appropriate accountingperiod. Therefore, we recognize revenue as a key audit matter.
2. Audit Response
Our key audit procedures for revenue recognition include:
(1) Understand and evaluate the design of internal control of revenue recognition bythe management, and test the effectiveness of key control implementation;
(2) Obtain a major business contract, identify terms and conditions related to thetransfer of commodity ownership, and assess whether the income recognitionpolicy of the Company is in line with the relevant provisions of the enterpriseaccounting standards;
(3) Understand the background and basic information of the main customers, identify
whether they are related parties, and confirm the accounts receivable balance andsales amount of the main customers by confirmation letters;
(4) Select samples from the sales revenue ledger, check the relevant documents suchas contracts (orders), invoices, delivery documents, pay attention to the deliverytime, and check the revenue recognition time point;
(5) Check the sales revenue recognized before and after the balance sheet date withsupporting documents of sales revenue recognition, and implement the cut-off testand subsequent inspection procedures for revenue recognition;
(6) Assess whether the management's disclosure of income statement is appropriate.
According to the audit procedures and the evidence we have obtained, webelieve that the income of the Company is real and recorded correctly during theaccounting period.(II) Provision for bad debts of accounts receivable
1. Description of matters
Please refer to Note IV-(12) and Note VI- 3 of the consolidated financialstatements for the accounting policies and book value amount of accounts receivablesof the Company in this year.
On December 31, 2020, the original book value of accounts receivable of theCompany was RMB2,440,789,300, the bad debt provision was RMB112,573,600,and the net value was RMB2,328,215,700, accounting for 11.32% of the total assetsat the end of the period.
Based on the financial situation of the counterparty, the management evaluatesthe guarantee obtained to the accounts receivable, the aging of the accountsreceivable, the credit rating and historical repayment record of the counterparty, andwith reference to the historical credit loss experience, combined with the current
situation and the forecast of the future economic situation, the management considersto accrue bad debt for the accounts receivable according to the expected credit loss inthe whole duration. As the determination of the amount of bad debt provision requiresthe management to use significant accounting estimates and judgments, and accountsreceivable is important to the financial statements, therefore, we regard the bad debtprovision of accounts receivable as a key audit matter.
2. Audit response
(1) Understand and evaluate the management's key internal control over thedaily management and provision for accounts receivable, and carry out thecorresponding walk through test;
(2) For accounts receivable with significant single amount and credit impairmentoccurred after initial recognition, all the bases for the management's assessment of theexpected future available cash flow shall be reviewed to analyze whether it isreasonable;
(3) For the accounts receivable of bad debt provision withdrawn by themanagement according to the combination of credit risk characteristics, combinedwith the credit risk characteristics and aging analysis, evaluate the rationality of thewithdrawal of bad debt provision by the management;
(4) The adequacy of the management's provision for bad debt is evaluated incombination with the check of payment collection after the period;
(5) Assess whether the management's disclosure of accounts receivable financialstatements is appropriate.
Based on the audit procedures we have implemented and the evidence we haveobtained, we believe that the accounting estimates of the bad debt provision ofaccounts receivable made by the Company are fully reasonable.IV. Other Information
The Company’s management is responsible for the other information. Theother information comprises all of the information included in the financial reportother than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility isto read the other information and, in doing so, consider whether the otherinformation is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact. We havenothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance forFinancial Statements
The Company’s management is responsible for the preparation of the financialstatements that give a fair view in accordance with CAS, and for designing,implementing and maintaining such internal control as the managementdetermines is necessary to enable the preparation of financial statements that arefree from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible forassessing the Company’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using the going concern basis ofaccounting unless the management either intends to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing theCompany’s financial reporting process.VI. Responsibilities of CPA for Auditing Financial StatementsOur objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditor’s report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted inaccordance with CAS will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgmentand maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to providea basis for our opinion. The risk of not detecting a material misstatement resultingfrom fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override ofinternal control.
2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by the management.
4. Conclude on the appropriateness of the management’s use of the going concernbasis of accounting. Based on the audit evidence obtained, Conclude on whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company’s ability to continue as a going concern. If we concludethat a material uncertainty exists, we are required by CAS to draw users’ attentionin our auditor’s report to the related disclosures in the financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Company to cease to continue as agoing concern.
5. Evaluate the overall presentation, structure and content of the financial statements,and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financialinformation of the entities or business activities within the Company to express anopinion on the financial statements. We are responsible for the direction,supervision and performance of the Company audit. We remain solely responsiblefor our audit opinion.
We communicate with those charged with governance regarding, among othermatters, the planned scope and timing of the audit and significant audit findings,including any noteworthy deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence, and
communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these mattersin our auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.II. Financial StatementsThe unit of notes to financial statements is: RMB
1. Consolidated balance sheet
Prepared by: Yunnan Energy New Material Co., Ltd.
December 31, 2020
Unit: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 2,374,743,862.70 | 1,011,554,636.06 |
| Settlement reserves | ||
| Loans to banks and other financial institutions | ||
| Held-for-trading financial assets | 1,340,551,914.18 | |
| Derivative financial assets | ||
| Notes receivable | 379,739,323.94 | 185,281,908.27 |
| Accounts receivable | 2,328,215,706.27 | 1,424,354,132.31 |
| Receivable financing | 399,552,829.70 | 182,535,597.54 |
| Prepayments | 180,532,055.58 | 105,308,597.08 |
| Premiums receivable | ||
| Reinsurance premium receivable | ||
| Reinsurance contract provision receivable | ||
| Other receivables | 10,861,029.53 | 831,637,318.80 |
| Including: Interest receivable | ||
| Dividends receivable | 1,188,900.87 | |
| Financial assets held under resale agreements | ||
| Inventories | 1,157,030,660.71 | 759,230,046.85 |
| Contractual assets | ||
| Held-for-sales assets | ||
| Non-current assets due within one year | 2,956,802.29 | |
| Other current assets | 533,769,875.20 | 523,124,562.78 |
| Total current assets | 8,707,954,060.10 | 5,023,026,799.69 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Debt investment | ||
| Other debt investment | ||
| Long-term receivables | ||
| Long-term equity investments | 3,375,208.87 | 3,343,466.01 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment properties | 9,467,762.78 | 10,001,993.90 |
| Fixed assets | 8,420,764,216.20 | 4,936,597,979.17 |
| Construction in progress | 1,639,803,967.92 | 1,554,274,795.85 |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 461,898,594.16 | 298,768,420.95 |
| Development expenditures | ||
| Goodwill | 520,230,679.65 | 44,154,633.34 |
| Long-term unamortized expenses | 6,645,427.28 | 2,603,725.01 |
| Deferred income tax assets | 202,903,996.37 | 94,713,958.19 |
| Other non-current assets | 599,190,933.07 | 225,702,589.31 |
| Total non-current assets | 11,864,280,786.30 | 7,170,161,561.73 |
| Total assets | 20,572,234,846.40 | 12,193,188,361.42 |
| Current liabilities: | ||
| Short-term borrowings | 1,795,679,528.91 | 2,670,365,032.83 |
| Borrowings from the central bank | ||
| Placements from banks and other financial institutions | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 695,426,539.69 | 522,674,089.50 |
| Accounts payable | 471,076,518.22 | 382,691,559.85 |
| Advances from customers | 9,241,127.99 | |
| Contractual liabilities | 7,677,129.87 | |
| Financial assets sold under repurchase agreements | ||
| Customer bank deposits and due to banks and other financial institutions | ||
| Customer brokerage deposits | ||
| Securities underwriting brokerage deposits | ||
| Employee benefits payable | 28,144,817.99 | 20,194,051.89 |
| Taxes payable | 178,984,075.44 | 77,254,716.63 |
| Other payables | 585,382,427.63 | 98,657,984.36 |
| Including: Interest payable |
| Dividends payable | 7,871,573.20 | 7,574,667.67 |
| Fees and commissions payable | ||
| Reinsurance amounts payable | ||
| Hold-for-sale liabilities | ||
| Non-current liabilities due within one year | 526,281,063.88 | 448,243,627.51 |
| Other current liabilities | 1,021,339.34 | |
| Total current liabilities | 4,289,673,440.97 | 4,229,322,190.56 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term borrowings | 2,666,911,132.37 | 1,967,813,815.80 |
| Bonds payable | 755,725,620.04 | |
| Including: preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | 708,255,614.66 | 435,042,080.77 |
| Deferred income tax liabilities | 100,406,057.96 | 60,696,969.12 |
| Other non-current liabilities | 455,517,694.55 | 619,187,419.79 |
| Total non-current liabilities | 4,686,816,119.58 | 3,082,740,285.48 |
| Total liabilities | 8,976,489,560.55 | 7,312,062,476.04 |
| Owners’ equity: | ||
| Share capital | 886,566,151.00 | 805,370,770.00 |
| Other equity instruments | 92,433,139.11 | |
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 7,229,135,825.83 | 1,894,027,132.14 |
| Less: treasury stock | 28,137,312.00 | |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 147,950,664.58 | 135,153,637.58 |
| General risk provision | ||
| Undistributed profits | 2,746,794,868.15 | 1,744,638,648.71 |
| Total owners’ equity attributable to parent company | 11,102,880,648.67 | 4,551,052,876.43 |
| Minority interests | 492,864,637.18 | 330,073,008.95 |
| Total owners’ equity | 11,595,745,285.85 | 4,881,125,885.38 |
| Total liabilities and owners’ equity | 20,572,234,846.40 | 12,193,188,361.42 |
Legal representative: PAUL XIAOMING LEE Person in charge of accounting work: Li Jian Person in charge of accountingdepartment: Liu Lianhua
2. Balance sheet of the parent company
Unit: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 1,356,011,083.93 | 173,535,371.19 |
| Held-for-trading financial assets | 1,210,015,416.66 | |
| Derivative financial assets | ||
| Notes receivable | 439,422,816.05 | 9,600,000.00 |
| Accounts receivable | 13,500,863.18 | 41,692,384.78 |
| Receivable financing | ||
| Prepayments | 424,285.77 | 1,230,107.09 |
| Other receivables | 4,145,526,029.74 | 1,101,125,909.57 |
| Including: Interest receivable | ||
| Dividends receivable | 241,040,000.00 | 272,540,000.00 |
| Inventories | 11,921,375.85 | 24,548,426.09 |
| Contractual assets | ||
| Held-for-sales assets | ||
| Non-current assets due within one year | ||
| Other current assets | 571,205.74 | 1,866,350.09 |
| Total current assets | 7,177,393,076.92 | 1,353,598,548.81 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investment | ||
| Long-term receivables | ||
| Long-term equity investments | 4,662,093,871.62 | 4,167,834,622.62 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment properties | ||
| Fixed assets | 72,475,302.27 | 78,899,091.13 |
| Construction in progress | 2,401,314.53 | |
| Productive biological assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 11,586,803.18 | 12,163,386.82 |
| Development expenditures | ||
| Goodwill | ||
| Long-term unamortized expenses | ||
| Deferred income tax assets | 35,786,244.88 | 9,915,678.59 |
| Other non-current assets | 7,703,156.51 | 8,416,961.95 |
| Total non-current assets | 4,789,645,378.46 | 4,279,631,055.64 |
| Total assets | 11,967,038,455.38 | 5,633,229,604.45 |
| Current liabilities: | ||
| Short-term borrowings | 23,027,741.64 | 181,264,450.04 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 111,564,400.00 | 178,321,179.75 |
| Accounts payable | 32,501,970.95 | 41,490,200.04 |
| Advances from customers | 688,175.71 | |
| Contractual liabilities | 306,389.38 | |
| Employee benefits payable | 198,382.51 | |
| Taxes payable | 3,921,261.63 | 5,190,155.03 |
| Other payables | 98,408,526.81 | 502,673,483.50 |
| Including: Interest payable | ||
| Dividends payable | ||
| Hold-for-sale liabilities | ||
| Non-current liabilities due within one year | 2,806,004.27 | |
| Other current liabilities | 39,830.62 | |
| Total current liabilities | 272,576,125.30 | 909,826,026.58 |
| Non-current liabilities: | ||
| Long-term borrowings | 290,000,000.00 | |
| Bonds payable | 755,725,620.04 | |
| Including: preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Estimated liabilities | ||
| Deferred income | ||
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 1,045,725,620.04 | |
| Total liabilities | 1,318,301,745.34 | 909,826,026.58 |
| Owners’ equity: | ||
| Share capital | 886,566,151.00 | 805,370,770.00 |
| Other equity instruments | 92,433,139.11 | |
| Including: preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 9,347,283,545.82 | 3,651,035,741.69 |
| Less: treasury stock | 28,137,312.00 | |
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 120,198,153.59 | 107,401,126.59 |
| Undistributed profits | 202,255,720.52 | 187,733,251.59 |
| Total owners’ equity | 10,648,736,710.04 | 4,723,403,577.87 |
| Total liabilities and owners’ equity | 11,967,038,455.38 | 5,633,229,604.45 |
3. Consolidated income statement
Unit: RMB
| Item | 2020 | 2019 |
| I. Total operating income | 4,283,007,589.11 | 3,159,561,554.91 |
| Including: Operating income | 4,283,007,589.11 | 3,159,561,554.91 |
| Interest income | ||
| Earned premium |
| Fee and commission incomes | ||
| II. Total operating cost | 3,068,774,846.93 | 2,189,218,723.03 |
| Including: operating cost | 2,456,998,310.23 | 1,730,301,164.11 |
| Interest expense | ||
| Fee and commissions expenses | ||
| Cash surrender amount | ||
| Net payments for insurance claims | ||
| Net provision for insurance liability contract reserves | ||
| Policy dividend expenses | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 32,491,020.28 | 14,920,443.36 |
| Selling expenses | 56,365,549.96 | 67,250,207.94 |
| Administrative expenses | 155,800,391.65 | 122,867,832.09 |
| R&D expenses | 178,243,333.28 | 154,913,207.75 |
| Financial expenses | 188,876,241.53 | 98,965,867.78 |
| Including: Interest expense | 203,597,658.74 | 98,286,877.98 |
| Interest income | 34,077,648.03 | 2,491,822.81 |
| Add: Other income | 139,662,812.37 | 122,210,168.05 |
| Investment income (loss is indicated with “-”) | 8,627,395.44 | 1,676,352.85 |
| Including: Income from investment in associates and joint ventures | 1,516,305.77 | 1,484,572.03 |
| Derecognized financial assets measured by amortized cost | ||
| Exchange gain (loss is indicated with “-”) | ||
| Net exposure hedging income (loss is indicated with “-”) | ||
| Income from changes in fair value (loss is indicated with “-”) | 10,951,914.18 | |
| Credit impairment losses (loss is indicated with “-”) | -38,744,542.00 | -26,343,860.48 |
| Asset impairment losses (loss is indicated with “-”) | -17,810,098.57 | -5,191,727.71 |
| Income from disposal of assets (loss is indicated with “-”) | -144,872.28 | 2,066.58 |
| III. Operating profit (loss is indicated with “-”) | 1,316,775,351.32 | 1,062,695,831.17 |
| Add: Non-operating income | 1,696,155.05 | 209,752.60 |
| Less: Non-operating expenses | 5,224,424.09 | 975,859.91 |
| IV. Total profit (total loss is indicated with “-”) | 1,313,247,082.28 | 1,061,929,723.86 |
| Less: Income tax expense | 137,597,621.36 | 126,360,948.02 |
| V. Net profit (net loss is indicated with “-”) | 1,175,649,460.92 | 935,568,775.84 |
| (I) Classified according to operating continuity |
| 1. Net profit from continuing operations (net loss is indicated with “-”) | 1,175,649,460.92 | 935,568,775.84 |
| 2. Net profit from discontinuing operations (net loss is indicated with “-”) | ||
| (II) Classified according to attribution of the ownership | ||
| 1. Net profit attributable to shareholders of the parent company | 1,115,604,020.47 | 849,837,425.81 |
| 2. Profit or loss of minority interest | 60,045,440.45 | 85,731,350.03 |
| VI. Other comprehensive income, net of tax | ||
| Other comprehensive income attributable to owners of parent company, net of tax | ||
| (I) Other comprehensive income that cannot be reclassified to profit or loss | ||
| 1. Changes arising from re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into profit or loss under the equity method | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of the enterprise’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | ||
| 1. Other comprehensive income that can be reclassified into profit or loss under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of the financial asset reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investment | ||
| 5. Cash flow hedging reserve | ||
| 6. Exchange differences from translation of statements denominated in foreign currencies | ||
| 7. Others | ||
| Other comprehensive income attributable to minority interests, net of tax | ||
| VII. Total comprehensive income | 1,175,649,460.92 | 935,568,775.84 |
| Total comprehensive income attributable to owners of parent company | 1,115,604,020.47 | 849,837,425.81 |
| Total comprehensive income | 60,045,440.45 | 85,731,350.03 |
| attributable to minority interests | ||
| VIII. Earnings per share: | ||
| (I) Basic earnings per share | 1.34 | 1.06 |
| (II) Diluted earnings per share | 1.34 | 1.06 |
Legal representative: PAUL XIAOMING LEE Person in charge of accounting work: Li Jian Person in charge ofaccounting department: Liu Lianhua
4. Income statement of parent company
Unit: RMB
| Item | 2020 | 2019 |
| I. Operating income | 234,623,935.16 | 435,495,970.14 |
| Less: Operating cost | 168,222,882.65 | 326,842,879.99 |
| Taxes and surcharges | 2,880,451.60 | 3,796,804.93 |
| Selling expenses | 448,512.10 | 13,460,720.37 |
| Administrative expenses | 19,514,060.89 | 41,219,833.24 |
| R&D expenses | 7,495,274.77 | 14,039,341.87 |
| Financial expenses | -4,489,911.90 | 1,981,921.71 |
| Including: Interest expense | 103,063,984.02 | 10,247,211.39 |
| Interest income | 107,278,598.69 | 7,882,890.73 |
| Add: Other income | 852,455.62 | 1,420,499.05 |
| Investment income (loss is indicated with “-”) | 58,000,000.00 | 160,000,000.00 |
| Including: Income from investment in associates and joint ventures | ||
| Derecognized financial assets measured by amortized cost (loss is indicated with “-”) | ||
| Net exposure hedging income (loss is indicated with “-”) | ||
| Income from changes in fair value (loss is indicated with “-”) | 10,015,416.66 | |
| Credit impairment losses (loss is indicated with “-”) | -7,013,346.63 | -2,862,924.22 |
| Asset impairment losses (loss is indicated with “-”) | ||
| Income from disposal of assets (loss is indicated with “-”) | -11,416.29 | |
| II. Operating profit (loss is indicated with “-”) | 102,395,774.41 | 192,712,042.86 |
| Add: Non-operating income | 305,202.78 | 22,800.87 |
| Less: Non-operating expenses | 601,273.52 | 196,959.99 |
| III. Total profit (total loss is indicated with “-”) | 102,099,703.67 | 192,537,883.74 |
| Less: Income tax expense | -25,870,566.29 | -1,463,417.32 |
| IV. Net profit (net loss is indicated with "-") | 127,970,269.96 | 194,001,301.06 |
| (I) Net profit from continuing | 127,970,269.96 | 194,001,301.06 |
| operations (net loss is indicated with "-") | ||
| (II) Net profit from discontinuing operations (net loss is indicated with "-") | ||
| V. Other comprehensive income, net of tax | ||
| (I) Other comprehensive income that cannot be reclassified to profit or loss | ||
| 1. Changes arising from re-measurement of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be reclassified into profit or loss under the equity method | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of the enterprise’s credit risk | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified subsequently to profit or loss | ||
| 1. Other comprehensive income that can be reclassified into profit or loss under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amount of the financial asset reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investment | ||
| 5. Cash flow hedging reserve | ||
| 6. Exchange differences from translation of statements denominated in foreign currencies | ||
| 7. Others | ||
| VI. Total comprehensive income | 127,970,269.96 | 194,001,301.06 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated cash flow statement
Unit: RMB
| Item | 2020 | 2019 |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods or rendering of services | 3,191,214,990.25 | 2,801,508,148.87 |
| Net increase in deposits from |
| customers and placements from corporations in the same industry | ||
| Net increase in borrowings from the central bank | ||
| Net increase in placements from other financial institutions | ||
| Cash received for receiving premium of original insurance contract | ||
| Net cash received from reinsurance business | ||
| Net increase in deposits of the insured and investment | ||
| Cash received from interests, fees and commissions | ||
| Net increase in placements from banks and other financial institutions | ||
| Net increase in repurchasing | ||
| Net cash received from acting sale of securities | ||
| Receipts of tax refunds | 245,563,708.07 | 67,271,303.44 |
| Other cash receipts related to operating activities | 343,505,512.60 | 440,968,285.34 |
| Subtotal of cash inflows from operating activities | 3,780,284,210.92 | 3,309,747,737.65 |
| Cash payments for goods purchased and services received | 1,980,955,396.48 | 1,579,794,759.70 |
| Net increase in loans and advances | ||
| Net increase in deposits in the Central Bank and other financial institutions | ||
| Cash paid for claim settlements on original insurance contract | ||
| Net increase in placements to banks and other financial institutions | ||
| Cash paid for interests, fees and commissions | ||
| Cash paid for policy dividends | ||
| Cash paid to and on behalf of employees | 375,257,883.44 | 337,831,154.53 |
| Payments of all types of taxes | 256,970,205.27 | 264,858,968.34 |
| Other cash payments relating to operating activities | 111,920,712.54 | 363,965,847.31 |
| Subtotal of cash outflows due to operating activities | 2,725,104,197.73 | 2,546,450,729.88 |
| Net cash flows from operating activities | 1,055,180,013.19 | 763,297,007.77 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 860,750,000.00 | 50,000,000.00 |
| Cash received from procuring investment income | 9,784,553.45 | 1,594,822.87 |
| Net amount of cash received from disposal of fixed assets, intangible assets and other long-term | 1,981,312.22 | 700,433.05 |
| assets | ||
| Net cash received from disposals of subsidiaries and other business units | ||
| Other cash received relating to investment activities | 1,098,067.46 | |
| Subtotal of cash inflows from investment activities | 873,613,933.13 | 52,295,255.92 |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 2,668,276,730.82 | 2,119,188,125.90 |
| Cash paid for acquisition of investments | 2,190,350,000.00 | 870,000,000.00 |
| Net increase in pledge loans | ||
| Net cash payments for acquisitions of subsidiaries and other business units | 768,910,958.56 | 137,055,634.47 |
| Other cash paid relating to investment activities | 521,580,488.33 | |
| Subtotal of cash outflows due to investment activities | 6,149,118,177.71 | 3,126,243,760.37 |
| Net cash flows from investment activities | -5,275,504,244.58 | -3,073,948,504.45 |
| III. Cash flows from financing activities: | ||
| Cash received from absorbing investment | 5,182,504,554.49 | |
| Including: Cash received from subsidiaries' absorbing minority shareholder investment | 200,000,000.00 | |
| Cash received from borrowings | 6,453,328,220.70 | 5,427,097,775.55 |
| Cash received from bond issuance | 1,586,122,641.51 | |
| Other cash received relating to financing activities | ||
| Subtotal of cash inflows from financing activities | 13,221,955,416.70 | 5,427,097,775.55 |
| Cash paid for debt repayment | 6,828,400,619.55 | 2,214,426,273.07 |
| Cash paid for distributing dividends and profits or paying interests | 337,184,434.87 | 337,658,144.35 |
| Including: Dividends and profits paid to minority shareholders by subsidiaries | ||
| Cash payments relating to other financing activities | 496,786,261.12 | 94,318,151.93 |
| Subtotal of cash outflows from financing activities | 7,662,371,315.54 | 2,646,402,569.35 |
| Net cash flows from financing activities | 5,559,584,101.16 | 2,780,695,206.20 |
| IV. Effect of changes in exchange rate on cash and cash equivalents | ||
| V. Net increase in cash and cash equivalents | 1,339,259,869.77 | 470,043,709.52 |
| Add: Opening balance of cash and cash equivalents | 715,655,914.78 | 245,612,205.26 |
| VI. Closing balance of cash and cash | 2,054,915,784.55 | 715,655,914.78 |
6. Cash flow statement of parent company
Unit: RMB
equivalentsItem
| Item | 2020 | 2019 |
| I. Cash flows from operating activities: | ||
| Cash received from the sale of goods or rendering of services | 195,880,806.69 | 340,079,958.02 |
| Receipts of tax refunds | 1,492,265.95 | |
| Other cash receipts related to operating activities | 83,978,889.93 | 54,597,180.52 |
| Subtotal of cash inflows from operating activities | 281,351,962.57 | 394,677,138.54 |
| Cash payments for goods purchased and services received | 58,371,825.94 | 28,410,232.07 |
| Cash paid to and on behalf of employees | 22,027,502.06 | 38,918,909.22 |
| Payments of all types of taxes | 11,770,532.86 | 11,038,509.62 |
| Other cash payments relating to operating activities | 16,850,138.72 | 108,541,985.69 |
| Subtotal of cash outflows due to operating activities | 109,019,999.58 | 186,909,636.60 |
| Net cash flows from operating activities | 172,331,962.99 | 207,767,501.94 |
| II. Cash flows from investment activities: | ||
| Cash received from disposal of investments | 739,219,511.67 | |
| Cash received from procuring investment income | 89,500,000.00 | 119,000,000.00 |
| Net amount of cash received from disposal of fixed assets, intangible assets and other long-term assets | 322,000.00 | |
| Net cash received from disposals of subsidiaries and other business units | ||
| Other cash received relating to investment activities | 1,764,000,000.00 | 1,011,286,111.70 |
| Subtotal of cash inflows from investment activities | 2,593,041,511.67 | 1,130,286,111.70 |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 1,261,033.67 | 25,091,422.59 |
| Cash paid for acquisition of investments | 2,433,478,760.67 | 860,009,113.00 |
| Net cash payments for acquisitions of subsidiaries and other business units | ||
| Other cash paid relating to investment activities | 6,928,358,826.63 | 497,691,126.81 |
| Subtotal of cash outflows due to investment activities | 9,363,098,620.97 | 1,382,791,662.40 |
| Net cash flows from investment activities | -6,770,057,109.30 | -252,505,550.70 |
| III. Cash flows from financing activities: | ||
| Cash received from absorbing investment | 4,982,504,554.49 | |
| Cash received from borrowings | 1,416,500,000.00 | 242,986,222.89 |
| Cash received from bond issuance | 1,586,122,641.51 | |
| Other cash received relating to financing activities | 2,207,533,096.38 | 302,510,000.00 |
| Subtotal of cash inflows from financing activities | 10,192,660,292.38 | 545,496,222.89 |
| Cash paid for debt repayment | 1,284,486,222.89 | 122,000,000.00 |
| Cash paid for distributing dividends and profits or paying interests | 124,393,256.17 | 186,196,599.90 |
| Cash payments relating to other financing activities | 982,525,785.13 | 148,385,108.73 |
| Subtotal of cash outflows from financing activities | 2,391,405,264.19 | 456,581,708.63 |
| Net cash flows from financing activities | 7,801,255,028.19 | 88,914,514.26 |
| IV. Effect of changes in exchange rate on cash and cash equivalents | ||
| V. Net increase in cash and cash equivalents | 1,203,529,881.88 | 44,176,465.50 |
| Add: Opening balance of cash and cash equivalents | 126,388,546.82 | 82,212,081.32 |
| VI. Closing balance of cash and cash equivalents | 1,329,918,428.70 | 126,388,546.82 |
7. Consolidated statement of changes in owners' equity
Amount of current period
Unit: RMB
| Item | 2020 | ||||||||||||||
| Owner's equity attributable to parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| I. Closing balance of the previous year | 805,370,770.00 | 1,894,027,132.14 | 28,137,312.00 | 135,153,637.58 | 1,744,638,648.71 | 4,551,052,876.43 | 330,073,008.95 | 4,881,125,885.38 | |||||||
| Add: Accounting policy changes | |||||||||||||||
| Correction of errors in the prior period | |||||||||||||||
| Merger of enterprises under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Opening balance of the current year | 805,370,770.00 | 1,894,027,132.14 | 28,137,312.00 | 135,153,637.58 | 1,744,638,648.71 | 4,551,052,876.43 | 330,073,008.95 | 4,881,125,885.38 | |||||||
| III. Increase/decrease for the period (decrease is indicated with "-") | 81,195,381.00 | 92,433,139.11 | 5,335,108,693.69 | -28,137,312.00 | 12,797,027.00 | 1,002,156,219.44 | 6,551,827,772.24 | 162,791,628.23 | 6,714,619,400.47 | ||||||
| (I) Total comprehensive income | 1,115,604,020.47 | 1,115,604,020.47 | 60,045,440.45 | 1,175,649,460.92 | |||||||||||
| (II) Contribution and withdrawal of capital by owners | 81,195,381.00 | 92,433,139.11 | 5,335,108,693.69 | -28,137,312.00 | 5,536,874,525.80 | 105,657,760.98 | 5,642,532,286.78 | ||||||||
| 1. Common shares invested by owner | 69,444,444.00 | 4,592,771,403.98 | 4,662,215,847.98 | 81,080,000.00 | 4,743,295,847.98 | ||||||||||
| 2. Capital invested by other equity instrument holders | 11,774,057.00 | 92,433,139.11 | 779,622,447.50 | 883,829,643.61 | 883,829,643.61 | ||||||||||
| 3. Amount of share payment credited to owner’s equity | 21,332,629.04 | 21,332,629.04 | 883,295.70 | 22,215,924.74 | |||||||||||
| 4. Other | -23,120.00 | -58,617,786.83 | -28,137,312.00 | -30,503,594.83 | 23,694,465.28 | -6,809,129.55 | |||||||||
| (III) Profit distribution | 12,797,027.00 | -113,447,801.03 | -100,650,774.03 | -2,911,573.20 | -103,562,347.23 | ||||||||||
| 1. Withdrawal of surplus reserve | 12,797,027.00 | -12,797,027.00 | |||||||||||||
| 2. Provision for general risk | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -100,650,774.03 | -100,650,774.03 | -2,911,573.20 | -103,562,347.23 | |||||||||||
| 4. Other | |||||||||||||||
| (IV) Transfers within the owners’ equity | |||||||||||||||
| 1. Conversion of capital reserve to capital (or share capital) | |||||||||||||||
| 2. Conversion of surplus reserve to capital (or share capital) |
| 3. Covering loss with surplus reserve | |||||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earning | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Provision for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance for the period | 886,566,151.00 | 92,433,139.11 | 7,229,135,825.83 | 147,950,664.58 | 2,746,794,868.15 | 11,102,880,648.67 | 492,864,637.18 | 11,595,745,285.85 |
Amount of previous period
Unit: RMB
| Item | 2019 | ||||||||||||||
| Owner's equity attributable to parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | General risk provision | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| I. Closing balance of the previous year | 473,867,912.00 | 2,198,120,658.09 | 50,217,436.50 | 115,753,507.47 | 1,093,630,310.62 | 3,831,154,951.68 | 241,047,201.74 | 4,072,202,153.42 | |||||||
| Add: Accounting policy changes | |||||||||||||||
| Correction of errors in the prior period | |||||||||||||||
| Merger of enterprises under common control | |||||||||||||||
| Other | |||||||||||||||
| II. Opening balance of the current year | 473,867,912.00 | 2,198,120,658.09 | 50,217,436.50 | 115,753,507.47 | 1,093,630,310.62 | 3,831,154,951.68 | 241,047,201.74 | 4,072,202,153.42 | |||||||
| III. Increase/decrease for the period | 331,502,858. | -304,093,5 | -22,080,12 | 19,400,130. | 651,008,33 | 719,897,92 | 89,025,807.21 | 808,923,731.96 | |||||||
| (decrease is indicated with "-") | 00 | 25.95 | 4.50 | 11 | 8.09 | 4.75 | |||||||||
| (I) Total comprehensive income | 849,837,425.81 | 849,837,425.81 | 85,731,350.03 | 935,568,775.84 | |||||||||||
| (II) Contribution and withdrawal of capital by owners | -204,680.00 | 27,614,012.05 | -22,080,124.50 | 49,489,456.55 | 3,294,457.18 | 52,783,913.73 | |||||||||
| 1. Common shares invested by owner | |||||||||||||||
| 2. Capital invested by other equity instrument holders | |||||||||||||||
| 3. Amount of share payment credited to owner’s equity | 29,162,578.32 | 29,162,578.32 | 1,833,115.76 | 30,995,694.08 | |||||||||||
| 4. Other | -204,680.00 | -1,548,566.27 | -22,080,124.50 | 20,326,878.23 | 1,461,341.42 | 21788219.65 | |||||||||
| (III) Profit distribution | 19,400,130.11 | -198,829,087.72 | -179,428,957.61 | -179,428,957.61 | |||||||||||
| 1. Withdrawal of surplus reserve | 19,400,130.11 | -19,400,130.11 | |||||||||||||
| 2. Provision for general risk | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -179,428,957.61 | -179,428,957.61 | -179,428,957.61 | ||||||||||||
| 4. Other | |||||||||||||||
| (IV) Transfers within the owners’ equity | 331,707,538.00 | -331,707,538.00 | |||||||||||||
| 1. Conversion of capital reserve to capital (or share capital) | 331,707,538.00 | -331,707,538.00 | |||||||||||||
| 2. Conversion of surplus reserve to capital (or share capital) | |||||||||||||||
| 3. Covering loss with surplus reserve | |||||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | |||||||||||||||
| 5. Other comprehensive income carried forward to retained earning |
| 6. Other | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Provision for the period | |||||||||||||||
| 2. Utilization for the period | |||||||||||||||
| (VI) Others | |||||||||||||||
| IV. Closing balance for the period | 805,370,770.00 | 1,894,027,132.14 | 28,137,312.00 | 135,153,637.58 | 1,744,638,648.71 | 4,551,052,876.43 | 330,073,008.95 | 4,881,125,885.38 |
8. Statement of changes in owners' equity of parent company
Amount of current period
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Other | Total owners’ equity | |||
| Preferred stock | Perpetual bonds | Other | ||||||||||
| I. Closing balance of the previous year | 805,370,770.00 | 3,651,035,741.69 | 28,137,312.00 | 107,401,126.59 | 187,733,251.59 | 4,723,403,577.87 | ||||||
| Add: Accounting policy changes | ||||||||||||
| Correction of errors in the prior period | ||||||||||||
| Other | ||||||||||||
| II. Opening balance of the current year | 805,370,770.00 | 3,651,035,741.69 | 28,137,312.00 | 107,401,126.59 | 187,733,251.59 | 4,723,403,577.87 | ||||||
| III. Increase/decrease for the period (decrease is indicated with "-") | 81,195,381.00 | 92,433,139.11 | 5,696,247,804.13 | -28,137,312.00 | 12,797,027.00 | 14,522,468.93 | 5,925,333,132.17 | |||||
| (I) Total comprehensive income | 127,970,269.96 | 127,970,269.96 | ||||||||||
| (II) Contribution and withdrawal of capital by owners | 81,195,381.00 | 92,433,139.11 | 5,696,247,804.13 | -28,137,312.00 | 5,898,013,636.24 | |||||||
| 1. Common shares invested by owner | 69,444,444.00 | 4,913,060,110.49 | 4,982,504,554.49 | |||||||||
| 2. Capital invested by other equity instrument holders | 11,774,057.00 | 92,433,139.11 | 779,622,447.50 | 883,829,643.61 | ||||||||
| 3. Amount of share payment credited to owner’s equity | 3,736,935.26 | 3,736,935.26 | ||||||||||
| 4. Other | -23,12 | -171,689 | -28,137, | 27,942,502 | ||||||||
| 0.00 | .12 | 312.00 | .88 | |||||||||
| (III) Profit distribution | 12,797,027.00 | -113,447,801.03 | -100,650,774.03 | |||||||||
| 1. Withdrawal of surplus reserve | 12,797,027.00 | -12,797,027.00 | ||||||||||
| 2. Distribution to owners (or shareholders) | -100,650,774.03 | -100,650,774.03 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Transfers within the owners’ equity | ||||||||||||
| 1. Conversion of capital reserve to capital (or share capital) | ||||||||||||
| 2. Conversion of surplus reserve to capital (or share capital) | ||||||||||||
| 3. Covering loss with surplus reserve | ||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | ||||||||||||
| 5. Other comprehensive income carried forward to retained earning | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Provision for the period | ||||||||||||
| 2. Utilization for the period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing balance for the period | 886,566,151.00 | 92,433,139.11 | 9,347,283,545.82 | 120,198,153.59 | 202,255,720.52 | 10,648,736,710.04 |
Amount of previous period
Unit: RMB
| Item | 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: treasury stock | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Other | Total owners’ equity | |||
| Preferred stock | Perpetual bonds | Other | ||||||||||
| I. Closing balance of the previous year | 473,867,912.00 | 3,971,775,141.36 | 50,217,436.50 | 88,000,996.48 | 192,561,038.25 | 4,675,987,651.59 | ||||||
| Add: Accounting policy changes | ||||||||||||
| Correction of | ||||||||||||
| errors in the prior period | ||||||||||||
| Other | ||||||||||||
| II. Opening balance of the current year | 473,867,912.00 | 3,971,775,141.36 | 50,217,436.50 | 88,000,996.48 | 192,561,038.25 | 4,675,987,651.59 | ||||||
| III. Increase/decrease for the period (decrease is indicated with "-") | 331,502,858.00 | -320,739,399.67 | -22,080,124.50 | 19,400,130.11 | -4,827,786.66 | 47,415,926.28 | ||||||
| (I) Total comprehensive income | 194,001,301.06 | 194,001,301.06 | ||||||||||
| (II) Contribution and withdrawal of capital by owners | -204,680.00 | 10,968,138.33 | -22,080,124.50 | 32,843,582.83 | ||||||||
| 1. Common shares invested by owner | ||||||||||||
| 2. Capital invested by other equity instrument holders | ||||||||||||
| 3. Amount of share payment credited to owner’s equity | 12,516,704.60 | 12,516,704.60 | ||||||||||
| 4. Other | -204,680.00 | -1,548,566.27 | -22,080,124.50 | 20,326,878.23 | ||||||||
| (III) Profit distribution | 19,400,130.11 | -198,829,087.72 | -179,428,957.61 | |||||||||
| 1. Withdrawal of surplus reserve | 19,400,130.11 | -19,400,130.11 | ||||||||||
| 2. Distribution to owners (or shareholders) | -179,428,957.61 | -179,428,957.61 | ||||||||||
| 3. Other | ||||||||||||
| (IV) Transfers within the owners’ equity | 331,707,538.00 | -331,707,538.00 | ||||||||||
| 1. Conversion of capital reserve to capital (or share capital) | 331,707,538.00 | -331,707,538.00 | ||||||||||
| 2. Conversion of surplus reserve to capital (or share capital) | ||||||||||||
| 3. Covering loss with surplus reserve | ||||||||||||
| 4. Change of defined benefit plan carried forward to retained earning | ||||||||||||
| 5. Other comprehensive |
| income carried forward to retained earning | ||||||||||||
| 6. Other | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Provision for the period | ||||||||||||
| 2. Utilization for the period | ||||||||||||
| (VI) Others | ||||||||||||
| IV. Closing balance for the period | 805,370,770.00 | 3,651,035,741.69 | 28,137,312.00 | 107,401,126.59 | 187,733,251.59 | 4,723,403,577.87 |
III. Corporate Information
Company registration address, organization form and headquarters address
Yunnan Energy New Material Co., Ltd. (hereinafter referred to as the "Company" or "our Company")was formerly Yunnan Yuxi Innovation Color Printing Co., Ltd. with the approval of Department of Commerceof Yunnan Province document YSZ [2011] No.50, the shareholders of the Company signed the sponsoragreement on March 28,2011, unanimously agreed to change the Company as a whole into a company limitedby share, and obtained the business license of enterprise legal person No.530400400000009 issued by YunnanProvincial Administration for Industry and Commerce, which is now changed to the unified social credit code91530000727317703K, with the registered address and headquarters address of No.125, Fuxian Road,High-tech Zone, Yuxi City, Yunnan Province. The Company's legal representative is PAUL XIAOMING LEE.
In accordance with the resolution of the first extraordinary general meeting of shareholders in 2014 heldin March 2014 and the revised articles of association of the Company, and the Approval of Initial PublicOffering of Shares of Yunnan Innovative New Materials Co., Ltd. (ZJXK [2016] No. 1886) issued by ChinaSecurities Regulatory Commission, the Company issued RMB-denominated ordinary shares (A shares) of33,480,000 to the public. It was priced and issued to the public investors on September 6, 2016, with a parvalue of RMB1.00 per share, a subscription price of RMB23.41 per share, and a total of RMB783,766,800.00raised funds. After deducting the issuance related expenses of RMB35,999,800.00, the actual net amount ofraised funds is RMB747,767,000.00 yuan, which is included share capital of RMB33,480,000.00 and capitalreserve share capital premium of RMB714,287,000.00. All the above contributions have been paid in placeand have been verified by Dahua CPAs (SGP) issuing the capital verification report (DHYZ [2016] No.000897).
According to the notice on the listing of RMB-denominated coordinating shares of Yunnan InnovativeNew Materials Co., Ltd. (SZS (2016) No.618) issued by Shenzhen Stock Exchange, the shares of theCompany were listed on Shenzhen Stock Exchange on September 14, 2016.
According to the fourth meeting of the third board of directors held on June 1, 2017, which deliberatedand passed the Proposal on Granting Restricted Shares to Participants of 2017 Restricted Stock Incentive Planof the Company, the Company issued 2.57 million RMB-denominated ordinary shares (issue price:
RMB28.65/share) to 84 employees qualified for participants of equity incentive plan, among them: theamount of share capital is RMB2,570,000.00, and capital reserve-share capital premium isRMB71,060,500.00. All the above capital contributions have been subscribed in place and have been verifiedby Dahua CPAs (SGP) issuing the capital verification report (DHYZ [2017] No.000338).
Whereas the Company has completed capital reserve converted to share capital, according to theresolution of the second extraordinary general meeting of shareholders in 2018 held on May 10, 2018 and therevised articles of association, the registered capital of the Company has increased from RMB136,450,000.00to RMB272,900,000.00.
In accordance with the resolution of the fourteenth meeting of the third board of directors held by theCompany on July 20, 2018 and the revised articles of association, and approved by China SecuritiesRegulatory Commission (hereinafter referred to as "CSRC") ZJXK [2018] No. 671 and Ministry ofCommerce of the People's Republic of China (hereinafter referred to as "Ministry of Commerce") SZCH[2018] No. 225, the Company issued 201,023,712 A-shares in private to Paul Xiaoming Lee, Li Xiaohua,Wang Yuhua, Kunming Huachen Investment Co., Ltd, Sherry Lee, Future Industry Investment Fund (LimitedPartnership), Zhuhai Hengjie Enterprise Management Firm (Limited Partnership) , Huang Shuhua, Zhang Tao,Gao Xiang, He Baohua, Huang Yuchen, Hu Jiadong, Wang Chizhou, Jiang Xinmin, Zhang Fang, Zhang Fan,Zheng Mei, Liu Wei, Du Jun and Cao Ben, with a par value of RMB1.00 per share and a subscription price ofRMB24.87 per share. After the issuance of the shares, the shareholders' equity assets ofRMB4,999,459,975.00 were actually received, and the registered capital of RMB201,023,712.00 was actuallypaid, and the mode of contribution was equity capital contribution. The newly increased share capital isRMB201,023,712.00, the newly increased capital reserve (share capital premium) is RMB4,798,436,263.00,and the registered capital after the change is RMB473,923,712.00, which has been verified by Dahua CPAs(SGP) with the capital verification report (DHYZ [2018] No. 000430).
According to the resolution of the fourth extraordinary general meeting of shareholders of 2018 held bythe Company on September 3, 2018 and the revised articles of association of the Company, the Companycanceled the repurchase of part of incentive shares, repurchased the shares subscribed by seven naturalpersons in the form of monetary capital, totaling RMB799,335.00, including: reducing share capital byRMB55,800.00, reducing capital reserve-share capital premium by RMB743,535.00. It has been verified bythe capital verification report (DHYZ [2018] No. 000514) issued by Dahua CPAs (SGP).
According to the resolution of the 19th meeting of the third board of directors held by the Company onSeptember 28, 2018 and the revised articles of association, the Company changed its name from YunnanInnovation New Material Co., Ltd. to Yunnan Energy New Material Co., Ltd.
Whereas the Company has completed the conversion of capital reserve to share capital, according to theresolution of the sixth extraordinary general meeting of shareholders in 2019 held on July 29, 2019 and therevised articles of association, the registered capital of the Company has increased from RMB473,867,912.00to RMB805,575,450.00.
According to the resolution of the sixth extraordinary general meeting of shareholders of 2019 held bythe Company on July 29, 2019, the resolution of the seventh extraordinary general meeting of shareholders of2019 held on August 15, 2019 and the amended articles of association, the Company repurchases and cancelspart of incentive shares, repurchases shares subscribed by 17 natural persons in monetary funds, with a totalamount of RMB1,151,665.68, including: reduction of share capital by RMB136,680.00, reducing capitalreserve-share capital premium by RMB1,014,985.68. In addition, according to the resolution of the seventhextraordinary general meeting of shareholders in 2019 held on August 15, 2019 and the revised articles ofassociation, the Company canceled the share buyback of the resigned participants, and repurchased the sharessubscribed by one natural person in the form of monetary capital, with a total amount of RMB601,580.59,including a decrease of share capital of RMB68,000.00 and a decrease of capital reserve-share capitalpremium of RMB533,580.59. It has been verified by the capital verification report (DHYZ [2019] No.000324) issued by Dahua CPAs (SGP).
According to the resolutions of the 43rd meeting of the third board of directors held on March 23, 2020,the resolutions of the 2020 first extraordinary general meeting of shareholders held on April 9, 2020, and theresolutions of the third meeting of fourth board of directors held on June 12, 2020 and the Approval of theNon-public Issuance of Shares by Yunnan Energy New Material Co., Ltd.” (ZJXK [2020] No. 1476), theCompany's non-public issuance shall not exceed 241,611,231 RMB-denominated ordinary shares. TheCompany non-publicly issued 69,444,444 RMB-denominated ordinary shares (A shares) to specific investorson August 17, 2020, with a par value of RMB1.00 per share, and a subscription price of RMB72.00 per share.A total of RMB4,999,999,968.00 was raised. Excluding the cost of RMB17,495,413.51 related to the issuance,the Company's actual net funds raised were RMB4,982,504,554.49, of which RMB69,444,444.00 was
included in the "share capital" and RMB4,913,060,110.49 was included in the "capital reserve-share capitalpremium". All the above capital contributions have been subscribed in place and have been verified by DahuaCPAs (SGP) issuing the capital verification report (DHYZ [2020] No. 000460).Approved by the Reply on Approval of Yunnan Energy New Materials Co., Ltd. to Issue ConvertibleCorporate Bonds Publicly (ZJXK [2019] No. 2701), the Company publicly issued 16 million convertiblecorporate bonds on February 11, 2020. The conversion period of convertible corporate bonds shall start fromthe first trading day six months after the end of the issuance to the maturity date of the convertible corporatebonds, that is, from August 17, 2020 to February 11, 2026. As of December 31, 2020, a total of 11,774,057.00shares of convertible corporate bonds were converted into shares.
According to the resolution of the fourth extraordinary general meeting of shareholders of 2020 held bythe Company on July 30, 2020 and the revised articles of association of the Company, the Company canceledthe repurchase of part of incentive shares, repurchased the shares subscribed by four persons in the form ofmonetary capital, totaling RMB194,809.12, including: reducing share capital by RMB23,120.00, reducingcapital reserve-share capital premium by RMB171,689.12. It has been verified by the capital verificationreport (DHYZ [2020] No. 000561) issued by Dahua CPAs (SGP).After years of distribution of bonus shares, allotment of new shares, conversion of share capital andissuance of new shares, as of December 31, 2020, the Company has issued a total of 886,566,151.00 shares ofshare capital, with a registered capital of RMB886,566,151.00.Business nature and main business activities of the Company
The business scope of the Company mainly includes: Packaging and decoration and other printingproducts printing; commodity trademark printing (including tobacco and drug trademarks), trademark design;packaging box production, processing and sales; color printing; paper products (excluding paper making),plastic products and other supporting products production, processing and sales; production, processing andsales of printing raw materials and auxiliary materials; production, processing, sale of plastic film andmodified plastics; production, processing and sale of laser transfer paper, gold and silver card paper, liquidpackaging paper, electrified aluminum, high-grade packaging paper; production, processing and marketing ofanti-counterfeiting labels, anti-counterfeiting materials; packaging machinery, packaging machinery spareparts design, manufacture, processing and marketing; production, processing and sale of new energy materialsand corresponding new technologies and new products development; import and export of goods (exceptthose with national restrictions and prohibition). (the above projects do not involve special managementmeasures for foreign investment access)(approvals from competent authorities shall be obtained for theoperation of the activities requiring approval in accordance with the laws)
The Company is a rubber and plastic products industry, the main products can be divided into threecategories: (1) film products, mainly including the production and manufacturing of lithium-ion separator film,BOPP film and special paper by wet process. Lithium-ion separator film products include base film andcoating film, and BOPP film products include smoke film and flat film; (2) packaging and printing products,mainly including cigarette label and aseptic packaging; (3) paper products packaging mainly includesspecialty paper products, holographic anti-counterfeiting electrified aluminium, transfer film and otherproducts. Special paper products include laser transfer anti-counterfeiting paper, direct plating paper andcoated paper.Authorization of financial statements for issueThese financial statements were authorized for issue by the Company’s Board of Directors on March 17, 2021.
There are 21 subsidiaries included in the consolidated financial statements in this period, including:
| Name of subsidiaries | Type of subsidiary | Tier | Shareholding ratio (%) | Voting ratio (%) |
| Yunnan Dexin Paper Co., Ltd. | Wholly-owned subsidiary | Tier 2 | 100.00 | 100.00 |
| Shenzhen Qingsong Jinze Technology Development Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Hunan Qingsong Jingze Technology Development Co., Ltd. | Wholly-owned subsidiary | Tier 4 | 100.00 | 100.00 |
| Yunnan Hongchuang Packaging Co., Ltd. | Wholly-owned subsidiary | Tier 2 | 100.00 | 100.00 |
| Wuxi Energy Trading Co., Ltd. | Wholly-owned subsidiary | Tier 2 | 100.00 | 100.00 |
| Yunnan Hongta Plastic Co., Ltd. | Wholly-owned subsidiary | Tier 2 | 100.00 | 100.00 |
| Hongta Plastic (Chengdu) Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Yuxi Feiermu Trading Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Shanghai Energy New Material Technology Co., Ltd. | Holding subsidiary | Tier 2 | 95.22 | 95.22 |
| Zhuhai Energy New Material Technology Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Guangdong Energy New Material Institute Co., Ltd. | Wholly-owned subsidiary | Tier 4 | 100.00 | 100.00 |
| Wuxi Energy New Material Technology Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Jiangxi Tonry New Energy Technology Development Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Jiangxi Ruijie New Material Technology Co., Ltd. | Holding subsidiary | Tier 4 | 82.00 | 82.00 |
| Suzhou Green Power New Energy Materials Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| Foshan Donghang Photoelectric Technology Co., Ltd. | Holding subsidiary | Tier 3 | 70.00 | 70.00 |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | Holding subsidiary | Tier 3 | 76.3574 | 76.3574 |
| Hainan Energy Investment Co., Ltd. | Wholly-owned subsidiary | Tier 3 | 100.00 | 100.00 |
| SEMCORP Global Holdings Kft. | Wholly-owned subsidiary | Tier 4 | 100.00 | 100.00 |
| SEMCORP Hungary Kft. | Wholly-owned subsidiary | Tier 5 | 100.00 | 100.00 |
| Innovative New Materials (Hong Kong) Co., Ltd | Wholly-owned subsidiary | Tier 2 | 100.00 | 100.00 |
Compared with the previous period, 8 new entities were included in and 2 entities were removed from theconsolidated financial statements for the Reporting Period:
New subsidiaries included in the consolidated financial statements in the Reporting Period
| Name | Reason for change |
| Suzhou Green Power New Energy Materials Co., Ltd. | Business combination not under the common control |
| Foshan Donghang Photoelectric Technology Co., Ltd. | Business combination not under the common control |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | Business combination not under the common control |
| Guangdong Energy New Material Institute Co., Ltd. | Newly established |
| Yuxi Feiermu Trading Co., Ltd. | Newly established |
| Hainan Energy Investment Co., Ltd. | Newly established |
| SEMCORP Global Holdings Kft. | Newly established |
| SEMCORP Hungary Kft. | Newly established |
Subsidiaries removed from the consolidated financial statements in the Reporting Period
| Name | Reason for change |
| Shanghai Energy Information Technology Co., Ltd. | Canceled |
| Shanghai Fengzhou Trading Co., Ltd. | Canceled |
See “VIII change of consolidation scope” for details of the subject of change of consolidationscope.
VI. Basis for Preparation of Financial Statements
1. Basis for preparation
The preparation of financial statements of the Company is based on the actual transactions and events inaccordance with the "Accounting Standards for Business Enterprises - Basic Standards" published by the Ministryof Finance and specific corporate accounting standards, application guidelines for corporate accounting standards,corporate accounting standards interpretations and other relevant regulations (hereinafter collectively referred toas "corporate accounting standards") for confirmation and measurement, combining the provisions of“Regulations on the Information Disclosure and Compilation of Companies Offering Securities to the Public No.15 - General Provisions on Financial Reports” (revised in 2014) published by CSRC.
2. Going concern basis
The Company has evaluated the ability to continue as a going concern for 12 months from the end of theReporting Period and has not identified any issues or circumstances that result in significant doubts about itsability to continue as a going concern. Therefore, the financial statements have been prepared on a going concernbasis.
3. Basis of bookkeeping and pricing principles
The Group's accounting is based on the accrual basis. Except for certain financial instruments that are measured atfair value, this financial statement uses historical cost as the measurement basis. If an asset is impaired, thecorresponding provision for impairment shall be made in accordance with relevant regulations.
V. Significant Accounting Policies and Accounting EstimatesReminders on specific accounting policies and accounting estimates:
According to the characteristics of actual production and operation, the Company has formulated specific accounting policies andaccounting estimates for such transactions or events as the provision for bad debts of accounts receivables, depreciation of fixedassets, amortization of intangible assets and revenue recognition.
1. Statement of compliance with the accounting standards for business enterprisesThe financial statements are in compliance with the requirements of accounting standards for business enterprises,and truly and completely reflect the financial status, operating results, cash flow and other relevant information ofthe Company during the Reporting Period.
2. Accounting period
The Company's accounting year starts on 1 January and ends on 31 December.
3. Operating cycle
Operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cashequivalents. The Company takes 12 months as an operating cycle and uses it as the standard for dividing theliquidity of assets and liabilities.
4. Functional currency
The Company's functional currency is Renminbi (RMB).
5. Accounting treatments for merger of enterprises under common control and not under common control
(1) When the terms, conditions and economic influence of transactions in the process of a step-by-stepcombination conform to one or more of the following, accounting for multiple transactions is treated asa package transaction.
1) These transactions are made simultaneously or with consideration of influence on each other;
2) These transactions can only achieve a complete business outcome when treated as a whole;
3) The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
4) A transaction is uneconomical when treated alone, but is economical when considered together withother transactions.
(2) Merger of enterprises under common control
The assets and liabilities acquired by the Company in business combinations are measured in accordancewith the book value of assets and liabilities of the combined party on the date of combination (including thegoodwill of the ultimate controlling party resulting from the acquisition of the combined party). Thedifference between the book value of net assets acquired in the combination and the book value of theconsideration paid for the combination (or the total par value of shares issued) is used to adjust the capitalstock premium in the capital reserve, and when the capital stock premium in the capital reserve is insufficientfor offset, it is used to adjust the retained earnings.
If there is a contingent consideration and it is necessary to confirm the estimated liabilities or assets, thedifference between the estimated amount of liabilities or assets and the settlement amount of subsequentcontingent consideration is used to adjust the capital reserve (capital premium or premium on capital stock),and when the capital reserve is insufficient, it is used to adjust the retained earnings.
For a business that is ultimately realized through multiple transactions, if it is a package transaction, eachtransaction is treated as a transaction that acquires control; if it is not a package transaction, on the date ofacquisition of control, the difference between the initial cost of long-term equity investment and the bookvalue of long-term equity investment before the combination plus the book value of the new paidconsideration on the date of combination is used to adjust the capital reserve; and when the capital reserve isinsufficient for offset, it is used to adjust the retained earnings. For equity investments held prior to the date ofcombination, no accounting treatment is carried out for other comprehensive income recognized by equityaccounting or financial instrument confirmation and measurement standards, and up to the disposal of theinvestment, the accounting treatment shall be based on the same basis as the direct disposal of the assets or
liabilities of the invested entity; other changes in owner's equity other than net profit or loss, othercomprehensive income or profit distribution of net assets of the invested company recognized by equitymethod are not subject to accounting, and will be transferred to the current profit and loss until the disposal ofthe investment.
(3) Business combination not under the common control
Purchase date refers to the date when the Company actually obtains the control right over the acquire,that is, the date when the control right over the net assets or production and operation decision is transferredto the Company When the following conditions are met at the same time, the Company generally considersthat the transfer of control right has been realized:
① The business combination contract or agreement has been approved by the internal authority of theCompany.
② The business combination matters that need to be examined and approved by the relevant competentdepartments of the state have been approved.
③ Necessary procedures for transfer of property rights have been completed.
④ The Company has paid most of the merger price, and has the ability and plan to pay the remainingamount.
⑤ In fact, the Company has controlled the financial and operational policies of the acquiree, enjoyedcorresponding benefits and assumed corresponding risks.
The assets paid and liabilities incurred or assumed of the Company as a consideration for the businesscombination are measured at fair value on the date of purchase, and the difference between the fair value andthe book value is recognized in profit or loss.
The difference between the higher combination cost and lower fair value of identifiable net assets of theacquiree gained in the combination is recognized as goodwill by the Company. In case that the cost ofcombination is less than the fair value of the identifiable net assets of the acquiree gained in the combination,the difference is included in the current profit and loss by the Company after review.
For the case where a business combination involving enterprises not under common control is finallyrealized through multiple transactions step by step, if it is a package transaction, each transaction is treated asa transaction for acquiring control; if it is not a package transaction, if the equity investment held before thedate of combination is accounted for by equity method, the sum of the book value of equity investment of theacquiree held before the date of acquisition plus the new investment cost on the date of acquisition isrecognized as the initial cost of the investment; the other comprehensive income confirmed by equity methodbefore the date of acquisition is accounted for, when the investment is disposed, on the same basis as those theinvested party adopted directly to dispose the relevant assets or liabilities. If the equity investment held beforethe date of combination is accounted for by financial instrument recognition and measurement criteria, thesum of the fair value of equity investment on the date of combination plus the new investment cost is taken asthe initial investment cost on the date of combination. The difference between the fair value and the bookvalue of the original equity interest, and the accumulated fair value changes originally included in othercomprehensive income should be transferred to investment income in the current period of combination date.
(4) Related expenses incurred for business combination
The agency fees paid for audits, legal services, assessments and other related expenses incurred in thebusiness combination are recognized in profit or loss in the period in which they are incurred. The transactioncosts for the issuance of equity securities for the business combination that may be directly attributed to equitytransactions can be deducted from equity.
6. Methods for preparation of the consolidated financial statements
(1) The scope of consolidation
The scope of consolidation of the Company's consolidated financial statements is determined on the basis ofcontrol, and all subsidiaries (including separate entities controlled by the Company as the parent) are included inthe consolidated financial statements.
(2) Procedures for consolidation
The Company prepares consolidated financial statements based on the financial statements of itself and itssubsidiaries and other relevant information. While preparing consolidated financial statements, the Companytreats the entire enterprise group as an accounting entity, and in accordance with the requirements for confirmation,measurement and presentation of relevant enterprise accounting standards, and based on unified accountingpolicies, reflects the overall financial status, operating results and cash flow of the enterprise group.
The accounting policies and accounting periods adopted by all subsidiaries included in the consolidatedfinancial statements are consistent with the Company. If the accounting policies or accounting periods adopted bythe subsidiaries are inconsistent with the Company, necessary adjustments will be made in accordance with theCompany's accounting policies and accounting periods when preparing consolidated financial statements.
The impact of internal transactions between the Company and its subsidiaries, and internal transactionsbetween subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flowstatement and consolidated statement of changes in shareholders’ equity is offset in the preparation ofconsolidated financial statements. If the determination of the same transaction is different from the perspective ofthe consolidated financial statements of the enterprise group and with the Company or subsidiaries as theaccounting entity, the transaction shall be adjusted from the perspective of the enterprise group.
Subsidiary owners' equity, current net profit and loss, and current comprehensive income of the minorityshareholders are separately presented under the owner's equity item in the consolidated balance sheet, the netprofit item in the consolidated income statement, and the total comprehensive income item. If the current lossesshared by the minority shareholders of a subsidiary exceed the share enjoyed by the minority shareholder in theinitial owner's equity of the subsidiary, the excess is deducted from the minority interests.
For subsidiaries acquired from a business combination involving enterprises under common control, theindividual financial statements of the subsidiaries shall be adjusted based on the book value of their assets andliabilities (including the goodwill arising from the ultimate controller’s acquisition of the subsidiary) in theultimate controller’s financial statements.
For subsidiaries acquired from a business combination involving enterprises not under common control, thefinancial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at theacquisition date.
1) Increase in subsidiary or business
During the reporting period, if a subsidiary or business is added due to a business combination undercommon control, the opening amount of the consolidated balance sheet shall be adjusted; the income,expenses and profits of the subsidiary or business combination from the beginning of the current period to theend of the reporting period shall be included in the consolidated income statement; the cash flow from thebeginning of the current period to the end of the reporting period of the subsidiary or business combination isincluded in the consolidated cash flow statement, and the relevant items in the comparative statement areadjusted at the same time, as if the consolidated reporting entity has been in existence since the ultimatecontroller begins the control.If the investee under the common control can be controlled due to additional investment or other reasons,
the parties involved in the merger shall be deemed to have made adjustments in their current state when theultimate controlling party begins the control. For the equity investment held by the merging entity prior toobtaining control over the merged entity, the relevant profit and loss, other comprehensive income and otherchanges to net assets recognized in the period from the date of acquiring the original equity or the date whenthe merging entity and merged entity are under common control, whichever is later, to the date of merger,shall be covered by writing down the opening retained earnings or current profit and loss of the comparisonperiod.During the Reporting Period, if a subsidiary or business is added due to a business combinationinvolving enterprises under non-common control, the opening balance of the consolidated balance sheet is notadjusted; the income, expenses and profits of the subsidiary and business from the date of acquisition to theend of the Reporting Period are included in the consolidated income statement; the cash flows of thesubsidiary and business from the date of acquisition to the end of the Reporting Period are included in theconsolidated cash flow statement.If the investee under the common control can be controlled due to additional investment or other reasons,the equity interest held in the acquiree prior to the date of acquisition is re-measured according to its fair valueat the date of acquisition. The difference between the fair value and the book value is recognized asinvestment income for the current period. If the equity held in the acquiree held before the acquisition dateinvolves other comprehensive income under the equity method and other changes in owner’s equity other thannet profit and loss, other comprehensive income and profit distribution, related other comprehensive income,and other changes in owner’s equity are converted into the investment income of the current period on theacquisition date, except for other comprehensive gains arising from the re-measurement of net liabilities ofthe defined benefit plan made by the invested party or changes in net assets.
2) Disposal of subsidiary or business
① General treatment method
During the Reporting Period, if the Company disposes of a subsidiary or business, the income, expensesand profits of the subsidiary or business from the beginning of the period to the disposal date are included inthe consolidated income statement; the cash flows of the subsidiary or business from the beginning of theReporting Period to the disposal date are included in the consolidated cash flow statement.When the Company loses control over the invested party due to disposal of part of the equity investmentor other reasons, the remaining equity investment after disposal will be re-measured according to its fair valueby the Company on the date of loss of control. The difference of the sum of the consideration obtained fromthe disposal of the equity and the fair value of the remaining equity, less the sum of the share of net assets andgoodwill of the original subsidiary that should be enjoyed in accordance with the original share-holding ratiosince the date of acquisition or combination, is accounted for the investment income in the current period ofloss of control. Other comprehensive income related to the equity investment of the original subsidiary orother changes in owner's equity other than net profit and loss, other comprehensive income and profitdistribution, will be converted into current investment income when control is lost, except for othercomprehensive gains arising from the re-measurement of net liabilities of the defined benefit plan made bythe invested party or changes in net assets.
② Disposal of subsidiaries in steps
If the equity investment in a subsidiary is disposed of in steps through multiple transactions until the lossof control, the terms, conditions, and economic impact of the disposal of the equity investment in thesubsidiary meet one or more of the following conditions, it usually indicates that multiple transactions shallbe accounted as a package deal:
A. These transactions are made simultaneously or with consideration of influence on each other;B. These transactions can only achieve a complete business outcome when treated as a whole;C. The occurrence of a transaction depends on the occurrence of at least one of the other transactions;D. A transaction is uneconomical when treated alone, but is economical when considered together withother transactions.If all transactions from disposal of equity investment in subsidiaries to loss of control belong to apackage deal, each transaction shall be treated as a transaction for disposal of equity investment insubsidiaries and loss of control. The difference between each disposal price and the share of the subsidiary'snet assets corresponding to the disposal investment before the loss of the control is recognized as othercomprehensive income in the consolidated financial statements, which is transferred into the current profitand loss when the control is lost.
If the disposal of the equity investment in the subsidiary until the loss of control is not a package deal,before the loss of control, the accounting treatment shall be carried out in accordance with the relevantpolicies for partial disposal of the equity investment of the subsidiary without loss of control; when thecontrol is lost, the accounting treatment shall be carried out in accordance with the general treatment methodfor the disposal of the subsidiary.3）Acquisition of minority' equity in subsidiaryThe difference between the additional long-term equity investment arising from the acquisition ofminority equity and the net assets of the subsidiary, which is calculated according to the new holdingproportion since the date of acquisition (or the date of merger) shall be covered by adjusting the equitypremium in capital reserve of the consolidated balance sheet; if the equity premium in capital reserve is notsufficient for write-off, retained earnings shall be adjusted.4）Partial disposal of the equity investment of the subsidiary without loss of controlIf the parent company disposes of part of its equity investment in the subsidiary without losing its control, thedifference between the disposal price and the net assets of the subsidiary corresponding to the equity investmentdisposed of since the date of acquisition or the date of merger shall be covered by adjusting the equity premium incapital reserve of the consolidated balance sheet; if the equity premium in capital reserve is not sufficient forwrite-off, retained earnings shall be adjusted.
7. Classification of joint venture arrangements and accounting treatment method for joint operations
（1）Classification of joint arrangements
The Company divides joint venture arrangements into joint operations and joint ventures based on factorssuch as the structure, legal form, and terms in the joint venture arrangement and other relevant facts andcircumstances.
Joint venture arrangements that are not reached through separate entities are classified as joint operations;joint arrangements reached through separate entities are usually classified as joint ventures; there is conclusiveevidence that joint arrangements that meet any of the following conditions and comply with relevant laws andregulations are classified as joint operations:
The legal form of the joint arrangement indicates that the joint venture party has the rights and obligations ofthe related assets and liabilities in the arrangement.
According to contractual terms of the joint arrangement, the joint venture party has the rights and obligationsof the related assets and liabilities in the arrangement.
Other relevant facts and circumstances indicate that the joint venture party has the rights and obligations ofthe related assets and liabilities in the arrangement. For example, the joint venture party enjoys almost all theoutput related to the joint venture arrangement, and the settlement of the liabilities in the arrangement continues torely on the support from the joint venture party.
（2）Accounting treatment for joint operations
The Group recognizes the following items related to the share of interests in joint operations and makesaccounting treatment according to the relevant ASBE:
Recognizes the assets held separately, and the assets held jointly according to its proportion;Recognizes the liabilities assumed separately, and the liabilities assumed jointly according to its proportion;Recognizes the income from the sales of its share in the outputs of joint operation;Recognizes the income from the sales of the outputs of joint operation according to is proportion;Recognizes the expenses incurred separately, and recognize the expenses incurred jointly according to itsproportion.
If the Company invests or sells assets, etc. to a joint operation (except that if the asset constitutes a business),before the asset, etc., is sold by the joint operation to a third party, only the profit and loss arising from thetransaction attributable to other participants in the joint operation is recognized. In the event of asset impairmentlosses complying with the "Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and otherprovisions of assets invested or sold, the Company shall recognize the loss in full.
If the Company purchases assets, etc. from a joint operation (except that if the asset constitutes a business),before the asset, etc., is sold to a third party, only the profit and loss arising from the transaction attributable toother participants in the joint operation is recognized. In the event of asset impairment losses complying with the"Accounting Standards for Business Enterprises No. 8 - Asset Impairment" and other provisions of assetspurchased, the Company shall recognize the loss based on the share it holds.The Company does not have joint control over the joint operation. If the Company enjoys the jointoperation-related assets and assumes the joint operation-related liabilities, the accounting treatment shall still becarried out in accordance with the above principles; otherwise, the accounting treatment shall be carried out inaccordance with the relevant corporate accounting standards.
8. Determination standards for cash and cash equivalents
In the preparation of the cash flow statement, the Company's cash on hand and deposits that can be readilyused for payment are recognized as cash. The investment that has the four conditions of short maturity (generallydue within three months from the date of purchase), strong liquidity, easy conversion into cash of a known amount,and low risk of value changes will be determined as cash equivalents.
9. Foreign currency business and foreign currency statement translation
（1）Foreign currency business
In the initial confirmation of foreign currency transactions, the spot exchange rate on the date ofoccurrence of the transaction shall be used as the conversion rate to convert into RMB for accounting.At the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on thebalance sheet date, and the resulting exchange differences are included in the current profit and loss, exceptfor the exchange differences arising from foreign currency special borrowings related to the acquisition and
construction of assets eligible for capitalization, which are treated in accordance with the principle ofcapitalization of borrowing costs. The foreign currency non-monetary items measured at historical cost arestill translated at the spot exchange rate on the date of transaction without changing the amount of recordingcurrency.Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rateon the date of determination of fair value. The difference between the translated amount of recording currencyand the original amount of recording currency shall be treated as fair value changes (including changes inexchange rate), and included in the current profit and loss or recognized as other comprehensive income.
（2）Translation of foreign currency financial statements
The assets and liabilities items in the balance sheet shall be treated at the spot exchange rate on the balancesheet date. Except for the "undistributed profit" items, other owner's equity items shall be translated at the spotexchange rate at the time of occurrence. The income and expense items in the income statement shall be translatedat the spot exchange rate on the date of transaction. The exchange differences on translation of foreign currencyfinancial statements generated in accordance with the above translation shall be included in other comprehensiveincome.When disposing of an overseas operation, the difference in translation of the foreign currency financial statementsrelated to the overseas operation listed in other comprehensive income items in the balance sheet shall betransferred from other comprehensive income items to the profits and losses of the current period for disposal.When the proportion of overseas business interests held is reduced due to the disposal of part of equity investmentor other reasons but the right of control over overseas business is not lost, the difference of translation of foreigncurrency statements related to the disposal part of overseas business will be attributed to minority shareholders'rights and interests and will not be transferred to current profit and loss. When disposing of part of the equity of anoverseas operation that is an associate or a joint venture, the difference on translation of the foreign currencystatement related to the overseas operation shall be transferred to the disposal of the current profit and lossaccording to the proportion of the disposal of the overseas operation.
10. Financial instruments
When the Company becomes a party to a financial instrument, it recognizes a financial asset or liability.
The effective interest method refers to the method of calculating the amortized cost of financial assets orliabilities and allocating interest income or interest expense into each accounting period.
The effective interest rate refers to the interest rate used to discount the estimated future cash flow of afinancial asset or financial liability during its expected duration to the book balance of the financial asset or theamortized cost of the financial liability. When determining the effective interest rate, the expected cash flow isestimated on the basis of considering all contract terms of financial assets or liabilities (such as prepayment,extension, call options or other similar options), but the expected credit loss is not considered.
The amortized cost of a financial asset or financial liability is the accumulated amortization amount formedby deducting the repaid principal from the initial recognition amount of the financial asset or financial liability,adding or subtracting the difference between the initial recognition amount and the maturity amount by using theeffective interest method, and then deducting the accumulated accrued loss reserve (only applicable to financialassets).
（1）Classification and measurement of financial assets
According to the business model of the financial assets under management and the contractual cash flow
characteristics of the financial assets, the Company divides the financial assets into the following threecategories:
Financial assets measured at amortized cost.Financial assets measured at fair value and whose changes are included in other comprehensive income.Financial assets measured at fair value and whose changes are included in the current profit and loss.
Financial assets are measured at fair value when initially recognized, but if the accounts or notes receivablearising from the sale of goods or the provision of services do not contain significant financing components or donot consider financing components for no more than one year, the initial measurement shall be made at thetransaction price.
For financial assets measured at fair value and whose changes are included in the current profit and loss,transaction expenses are directly recognized in the current profit and loss. For other financial assets, transactionexpenses are included in the initial recognition amount.
Subsequent measurement of financial assets depends on their classification. All related financial assetsaffected will be reclassified when and only when the Company changes its business model of managing financialassets.
1）Financial assets classified as measured at amortized costThe contract terms of a financial asset stipulate that the cash flow generated on a specific date is only thepayment of the principal and the interest on the amount of outstanding principal, and the business model formanaging the financial asset is to collect the contractual cash flow, then the Company classifies the financialasset as measured at amortized cost. Financial assets of the Company that are classified as measured atamortized cost include monetary funds, some notes receivable and accounts receivable measured at amortizedcost, other receivables, long-term receivables, etc.The Company recognizes interest income from such financial assets with the effective interest method,and carries out subsequent measurement at amortized cost. Gains or losses arising from impairment orderecognition or modification are included in the current profit and loss. The Company calculates anddetermines the interest income based on the book balance of financial assets multiplied by the effectiveinterest rate except for the following circumstances:
① For purchased or originated credit-impaired financial assets, the Company calculates and determinestheir interest income at the amortized cost of the financial asset and the credit-adjusted effective interest ratesince the initial recognition.
② For financial assets that have not been credit-impaired at the time of being purchased or originatedbut become credit-impaired in the subsequent period, the Company calculates and determines their interestincome at the amortized cost and the effective interest rate of the financial assets in the subsequent period. Ifthe financial instrument is no longer credit-impaired due to the improvement of its credit risk in thesubsequent period, the Company calculates and determines the interest income by multiplying the effectiveinterest rate by the book balance of the financial asset.
2）Financial assets classified as measured at fair value and whose changes are included in other
comprehensive income
The contract terms of a financial asset stipulate that the cash flow generated on a specific date is only thepayment of the principal and the interest on the amount of outstanding principal, and the business model formanaging the financial asset is both to collect contractual cash flows and for its sale, then the Companyclassifies the financial asset as measured at fair value and whose changes are included in other comprehensiveincome.
The Company recognizes interest income from such financial assets with the effective interest method.
Except that the interest income, impairment loss and exchange difference are recognized as the current profitand loss, other changes in fair value are included in other comprehensive income. When the financial asset isderecognized, the accumulated gains or losses previously included in other comprehensive income aretransferred out and included in the current profit and loss.Notes and accounts receivable measured at fair value with changes included in other comprehensiveincome are reported as receivables financing, and such other financial assets are reported as other creditors'investments. Among them, other creditors' investments maturing within one year from the balance sheet dateare reported as non-current assets maturing within one year, and other creditors' investments maturing withinone year are reported as other current assets.3）Financial assets designated as measured at fair value and whose changes are included in other
comprehensive incomeAt the time of initial recognition, the Company may irrevocably designate non-trading equity instrumentinvestments as financial assets measured at fair value and whose changes are included in other comprehensiveincome on the basis of individual financial assets.
Changes in the fair value of such financial assets are included in other comprehensive income withoutprovision for impairment. When the financial asset is derecognized, the accumulated gains or lossespreviously included in other comprehensive income are transferred out and included in the retained earnings.During the investment period when the Company holds the equity instrument, the dividend income isrecognized and included in the current profit and loss when the Company's right to receive dividends has beenestablished, the economic benefits related to dividends are likely to flow into the Company, and the amount ofdividends can be measured reliably. The Company reported such financial assets under other equityinstrument investment items.An investment in equity instruments is a financial asset measured at fair value and whose changes areincluded in the current profit and loss when it is obtained mainly for recent sale, or is part of the identifiableportfolio of financial assets centrally managed, and objective evidence exists for a short-term profit model inthe near future when initially recognized, or is a derivative (except derivatives defined as financial guaranteecontracts and designated as effective hedging instruments).4）Financial assets classified as measured at fair value and whose changes are included in the current
profit and loss
If failing to be classified as measured at amortized cost or at fair value and whose changes are includedin other comprehensive income, or not designated as measured at fair value and whose changes are includedin other comprehensive income, financial assets are all classified as measured at fair value and whose changesare included in the current profit and loss.
The Company carries out subsequent measurement of such financial assets at fair value, and includesgains or losses arising from changes in fair value as well as dividends and interest income associated withsuch financial assets into current profit and loss.
The Company reports such financial assets as trading financial assets and other non-current financialassets according to their liquidity.5）Financial assets designated as measured at fair value and whose changes are included in the current profit
and lossAt the time of initial recognition, the Company may irrevocably designate financial assets as measured at fairvalue and whose changes are included in the current profit and loss on the basis of individual financial assets inorder to eliminate or significantly reduce accounting mismatches.If the mixed contract contains one or more embedded derivative instruments and its main contract is not any
financial asset as above, the Company may designate the whole of the mixed contract as a financial instrumentmeasured at fair value and whose changes are included in the current profit and loss. Except under the followingcircumstances:
① Embedded derivatives do not significantly change the cash flow of mixed contracts.
② When determining for the first time whether similar mixed contracts need to be split, it is almost clear thatembedded derivatives contained in them should not be split without analysis. If the prepayment rightembedded in a loan allows the holder to prepay the loan at an amount close to the amortized cost, theprepayment right does not need to be split.The Company carries out subsequent measurement of such financial assets at fair value, and includes gainsor losses arising from changes in fair value as well as dividends and interest income associated with such financialassets into current profit and loss.
The Company reports such financial assets as trading financial assets and other non-current financial assetsaccording to their liquidity.
（2）Classification and measurement of financial liabilities
The Company classifies a financial instrument or its components into financial liabilities or equityinstruments upon initial recognition according to the contract terms of and the economic essence reflected by thefinancial instrument issued, rather than only in legal form, in combination with the definitions of financialliabilities and equity instruments. Financial liabilities are classified at initial recognition as measured at fair valueand whose changes are included in current profit and loss, or other financial liabilities, or derivatives designatedas effective hedging instruments.
Financial liabilities are measured at fair value upon initial recognition. For financial liabilities measured atfair value and whose changes are included in current profit and loss, relevant transaction expenses are directlyincluded in current profit and loss. For other categories of financial liabilities, relevant transaction expenses areincluded in the initial recognition amount.
1）Subsequent measurement of financial liabilities depends on their classification:
Financial liabilities measured at fair value and whose changes are included in the current profit and loss
Such financial liabilities include trading financial liabilities (including derivatives falling under financialliabilities) and financial liabilities designated as measured at fair value upon initial recognition and whose changesare included in current profit and loss.
The financial liability is a trading financial liability if it is mainly undertaken for recent sale or repurchase, oris part of the identifiable portfolio of financial instruments centrally managed, and there is objective evidence thatthe enterprise has recently employed a short-term profit model, or is a derivative instrument, except derivativesdesignated as effective hedging instruments and derivatives conforming to financial guarantee contracts. Tradingfinancial liabilities (including derivatives belonging to financial liabilities) shall be subsequently measuredaccording to fair value. Except in relation to hedge accounting, all changes in fair value shall be recorded intocurrent profit and loss.
The Company irrevocably designates financial liabilities as measured at fair value and whose changes areincluded in current profit and loss at the time of initial recognition in order to provide more relevant accountinginformation if:
① Such financial liabilities can eliminate or significantly reduce accounting mismatches.
② The financial liability portfolio or the portfolio of financial assets and liabilities is managed and evaluated forperformance on the basis of fair value according to the enterprise risk management or investment strategystated in the official written documents, and is reported to key management personnel within the enterprise onthis basis.
The Company subsequently measures such financial liabilities at fair value. Except changes in fair value thatare brought about by changes in the Company's own credit risk are included in other comprehensive income, otherchanges in fair value are included in current profit and loss. Unless including such changes in othercomprehensive income will cause or expand accounting mismatch in profit or loss, the Company will include allchanges in fair value (including the amount affected by changes in its own credit risk) in current profit and loss.
2）Other financial liabilities
The Company classifies financial liabilities except for the following items as measured at amortized cost.Such financial liabilities are recognized by the effective interest method and subsequently measured at amortizedcost. Gains or losses arising from derecognition or amortization are included in the current profit and loss:
① Financial liabilities measured at fair value and whose changes are included in the current profit and loss.
② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions forderecognition or continue to be involved in the transferred financial assets.
③ Financial guarantee contracts that do not fall under the first two categories of this article, and loancommitments that do not fall under category 1) of this article and lend at a below-market interest rate.
Financial guarantee contracts refer to contracts that require the issuer to pay a specific amount to the contractholder who has suffered losses when a specific debtor fails to pay the debt in accordance with the original ormodified terms of the debt instrument. Financial guarantee contracts that are not financial liabilities designated asmeasured at fair value and whose changes are included in current profit and loss are measured after initialrecognition according to the loss reserve amount and of the initial recognition amount, less the accumulatedamortization amount during the guarantee period, whichever is higher.
（3）Derecognition of financial assets and liabilities
1) Financial asset are derecognized, i.e. written off from its account and balance sheet if:
① The contractual right to receive cash flow from the financial asset is terminated; or
② The financial asset has been transferred, which meets the requirements for derecognition of financial assets.
2) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or part thereof) has been discharged, such financial liability(or part thereof) is derecognized.
The existing financial liability is derecognized with a new one recognized, and the difference between thecarrying amount and the consideration paid (including transferred non-cash assets or assumed liabilities) isincluded in the current profit and loss, if an agreement is signed between the Company and the lender to replacethe existing financial liability by assuming a new one, and the contract terms of these two financial liabilities aresubstantially different, or the contract terms of the existing financial liability (or part thereof) are substantiallymodified.
If the Company repurchases part of a financial liability, the carrying amount of the financial liability shall bedistributed according to the proportion of the fair value of the continuing recognition portion and thederecognition portion to the overall fair value on the repurchase date. The difference between the carrying amountallocated to the derecognized portion and the consideration paid (including transferred non-cash assets orliabilities assumed) shall be included in the current profit and loss.
（4）Recognition basis and measurement method of financial asset transferWhen a financial asset is transferred, the Company evaluates the risks and rewards retained of thefinancial asset ownership:
1）If almost all the risks and rewards of the financial asset ownership are transferred, such financial asset shall bederecognized, and the rights and obligations generated or retained in the transfer shall be separatelyrecognized as assets or liabilities.
2）If almost all the risks and rewards of the financial asset ownership are retained, such financial asset shallcontinue to be recognized.3）In circumstances when the Company neither transfers nor retains almost all the risks and rewards of the
financial asset ownership (i.e. circumstances other than 1) and 2) of this article), according to whether itretains control over such financial asset:
① The financial asset shall be derecognized, and the rights and obligations generated or retained in the transfershall be separately recognized as assets or liabilities if such control is not retained; or
② the relevant financial asset shall continue to be recognized to the extent that it continues to be involved in thetransferred financial asset, and the relevant liabilities shall be recognized accordingly if such control isretained. The extent that it continues to be involved in the transferred financial asset refers to the extent theCompany bears the risks or rewards on changes in the value of the transferred financial asset.When judging whether the transfer of financial assets meets the above conditions for derecognition offinancial assets, the principle of substance over form shall be adopted. The Company divides the transfer offinancial assets into overall transfer and partial transfer.1）If the overall transfer of financial assets meets the conditions for derecognition, the difference between the
following two amounts shall be included in the current profit and loss:
① The carrying amount of the transferred financial asset on the date of derecognition.
② The sum of the consideration received for the transfer of financial assets and the amount of the correspondingderecognized portion of the accumulated changes in fair value originally included in other comprehensiveincome directly (the financial assets involved in the transfer are financial assets measured at fair value andwhose changes are included in other comprehensive income).2）If the financial asset is partially transferred and the transferred part meets the conditions for derecognition, thecarrying amount of the financial asset before transfer shall be allocated between the derecognition portion andthe continuing recognition portion (in this case, the retained service asset shall be regarded as the continuingrecognition part of the financial asset) according to the respective relative fair values on the transfer date, andthe difference between the following two amounts shall be included in the current profit and loss:
① The carrying amount of the derecognized portion on the derecognition date.
② The sum of the consideration received for the derecognized portion and the amount of the correspondingderecognized portion of the accumulated changes in fair value originally included in other comprehensiveincome (the financial assets involved in the transfer are financial assets measured at fair value and whosechanges are included in other comprehensive income).If the transfer of a financial asset does not meet the conditions for derecognition, the financial asset shallcontinue to be recognized and the consideration received shall be recognized as a financial liability.
（5）Determination of fair value of financial assets and liabilities
The fair value of a financial asset or liability with an active market shall be determined by the quotedprice in the active market, unless the financial asset has a sell-off period for the asset itself. For the financialassets restricted for the assets themselves, the compensation amount demanded by market participants due tothe risk of not being able to sell the financial assets on the open market within the specified period shall bededucted from the quoted price in the active market. Quoted prices in the active market includes those forrelated assets or liabilities that can be easily and regularly obtained from exchanges, dealers, brokers, industrygroups, pricing or regulatory agencies, and can represent actual and recurring market transactions on the basisof fair trade.Financial assets initially acquired or derived or financial liabilities assumed shall be determined on thebasis of market transaction price.
The fair value of financial assets or liabilities without an active market shall be determined by valuationtechniques. At the time of valuation, the Company adopts valuation techniques that are applicable under thecurrent circumstances and are supported by sufficient available data and other information, selects inputvalues consistent with the characteristics of relevant assets or liabilities considered by market participants inthe transactions thereof, and gives priority to the use of relevant observable input values whenever possible. Ifthe relevant observable input value cannot be obtained or be feasibly obtained, the unobservable input valueshall be used.
（6）Impairment of financial instruments
Based on the expected credit loss, the Company conducts impairment accounting of financial assetsclassified as measured at amortized cost, financial assets classified as measured at fair value and whosechanges are included in other comprehensive income and financial guarantee contracts and recognizes lossreserves.
Expected credit loss refers to the weighted average of the credit losses of financial instruments weightedby the risk of default. Credit loss refers to the difference between all contractual cash flows discounted at theoriginal effective interest rate and receivable according to the contract and all cash flows expected to becollected of the Company, i.e. the present value of all cash shortfalls. Among them, credit-impaired purchasedor originated financial assets of the Company shall be discounted at the credit-adjusted effective interest rateof such financial assets.
For receivables arising from transactions regulated by the income criteria, the Company uses thesimplified measurement method to measure the loss reserve according to the amount equivalent to theexpected credit loss during the entire duration.
For credit-impaired purchased or originated financial assets, only the accumulated changes in theexpected credit losses during the entire duration since the initial recognition are recognized as loss reserves onthe balance sheet date. On each balance sheet date, the amount of change in the expected credit loss during theentire duration is included in the current gains and losses as impairment losses or gains. Even if the expectedcredit loss during the entire duration on the balance sheet date is less than that reflected in the estimated cashflow upon initial recognition, the favorable change in the expected credit loss is recognized as impairmentgains.
In addition to other financial assets adopting the above simplified measurement method and other thanthe credit-impaired purchased or originated ones, the Company evaluates whether the credit risk of relevantfinancial instruments has increased significantly since the initial recognition, measures its loss reserves andrecognizes the expected credit loss and its changes respectively according to the following circumstances oneach balance sheet date:
1）If the credit risk of the financial instrument has not increased significantly since its initial recognition and is in
the first stage, its loss reserve shall be measured according to an amount equivalent to its expected credit lossin the next 12 months, and the interest income shall be calculated at the book balance and the effectiveinterest rate.2）If the credit risk of the financial instrument has increased significantly since the initial recognition but no credit
impairment has occurred, it is in the second stage, then its loss reserve shall be measured according to anamount equivalent to its expected credit loss throughout its life, and the interest income shall be calculated atthe book balance and the effective interest rate.3）If the financial instrument is credit-impaired since its initial recognition, it is in the third stage, and theCompany shall measure its loss reserve according to an amount equivalent to its expected credit lossthroughout its life, and calculate the interest income at the amortized cost and the effective interest rate.
The increase or reversed amount of the credit loss reserve for financial instruments shall be included in thecurrent profit and loss as impairment losses or gains. Except for financial assets classified as measured at fairvalue and whose changes are included in other comprehensive income, the credit loss reserve will offset thecarrying amount of the financial assets. For financial assets classified as measured at fair value and whose changesare included in other comprehensive income, the Company recognizes its credit loss reserve in othercomprehensive income without reducing its carrying amount presented in the balance sheet.In the previous accounting period, the Company has measured the loss reserve, the amount of which isequivalent to the expected credit loss of the financial instrument throughout its life. However, on the balance sheetdate of the current period, the financial instrument no longer conforms to the situation of significant increase incredit risk since initial confirmation; on the balance sheet date of the current period, the Company has measuredthe loss reserve of the financial instrument, the amount of which is equivalent to the expected credit loss in thenext 12 months, and the reversed amount of the loss reserve thus formed is included in the current profit and lossas impairment profit.
1）Significant increase of credit risk
In order to determine whether the credit risk of financial instruments has increased significantly since theinitial recognition, the Company uses the available reasonable and based forward-looking information andcompares the risk of default of financial instruments on the balance sheet date with the risk of default on the initialconfirmation date. When the Company applies provisions on depreciation of financial instruments to financialguarantee contracts, the initial recognition date shall be regarded as the date when the Company becomes a partyto make irrevocable commitments.
For the assessment of whether the credit risk has increased significantly, the Company will consider thefollowing factors
① Whether the actual or expected operating results of the debtor have changed significantly;
② Whether the regulatory, economic or technological environment of the debtor has undergone significant
adverse changes;
③ Whether the following items have changed significantly: the value of collateral as debt mortgage, or the
guarantee provided by a third party, or the quality of credit enhancement; these changes will reduce thedebtor's economic motivation to repay the loan within the time limit stipulated in the contract or impact theprobability of default;
④ Whether the debtor's expected performance and repayment behavior have changed significantly;
⑤ Whether the Company's credit management methods for financial instruments have changed, etc.
If, on the balance sheet date, the credit risk of the financial instrument is judged to be low by the Company,the Company assumes that the credit risk of the financial instrument has not increased significantly since theinitial recognition. The financial instrument will be deemed to have lower credit risk under the followingcircumstances: the default risk of the financial instrument is lower; the borrower has a strong ability to fulfill itscontractual cash flow obligations in a short time; furthermore, even if there are adverse changes in the economicsituation and operating environment for a long period of time, it may not necessarily reduce the borrower's abilityto fulfill its contractual cash flow obligations.
2）Financial assets with depreciation of creditIf one or more events have adverse effects on the expected future cash flow of a financial asset, thefinancial asset will become a financial asset that has suffered credit impairment. The following observableinformation can be regarded as evidence of credit impairment of financial assets:
① The issuer or debtor is in serious financial difficulties;
② The debtor breaches the contract, such as default or overdue payment of interest or principal, etc.;
③ The creditor gives concessions to the debtor due to economic or contractual considerations related to the
debtor's financial difficulties; the concessions will not be made under any other circumstances;
④ There is a great possibility of bankruptcy or other financial restructuring of the debtor;
⑤ The financial difficulties of the issuer or debtor cause the disappearance of the active market for the financial
asset;
⑥ The purchase or origin of a financial asset at a substantial discount that reflects the fact that a credit loss has
occurred.
Credit impairment of financial assets may not be caused by separately identifiable events, but may becaused by the combined effect of multiple events.3）Determination of expected credit lossThe Company's assessment of the expected credit losses of financial instruments is based on single itemsand combinations. During the evaluation, the Company will take into account reasonable and reliableinformation about past events, current situation and future economic situation forecast.The Company divides financial instruments into different combinations on the basis of common creditrisk characteristics. Common credit risk characteristics adopted by the Company include: financial instrumenttype, credit risk rating, aging combination, overdue aging combination, contract settlement cycle, debtor'sindustry, etc. To understand the individual evaluation criteria and combined credit risk characteristics ofrelevant financial instruments, please refer to the accounting policies of relevant financial instruments fordetails.The Company adopts the following methods to determine the expected credit losses of relevant financialinstruments:
① In terms of financial assets, credit loss is equivalent to the present value of the difference between thecontract cash flow that the Company shall receive and the expected cash flow.
② In terms of the financial guarantee contract, credit loss is equal to the expected amount of paymentmade by the Company to the holder of the contract for credit loss incurred, less the present value of thedifference between the amount expected to be collected from the holder of the contract, the debtor or anyother party.
③ If, on the balance sheet date, a financial asset has suffered credit impairment, but one does notpurchase or originate a financial asset that has suffered credit impairment, the credit loss is equivalent to thedifference between the book balance of the financial asset and the present value of the estimated future cashflow discounted at the original actual interest rate.
Factors reflected in the Company's method of predicting credit losses by quantitative finance toolsinclude: unbiased probability weighted average amount determined by evaluating a series of possible results;time value of money; reasonable and reliable information about past events, current situation and futureeconomic situation forecast that can be obtained on the balance sheet date without unnecessary extra costs orefforts.4）Write-off of financial assetsIf the Company cannot reasonably expect the contract cash flow of the financial asset to be fully or partiallyrecovered, the book balance of the financial asset will be written off directly. This write-off constitutes thederecognition of relevant financial assets.
（7）Offset of financial assets and financial liabilities
In the balance sheet, financial assets and financial liabilities are shown separately without offsetting eachother. However, if the following conditions are met at the same time, the net amount after offset will be listed inthe balance sheet:
1) The Company has the legal right, which is currently enforceable, to offset the confirmed amount;
2) The Company plans to settle on a net basis, or realize the financial assets and settle the financial liabilitiesat the same time.
11. Notes receivable
For the determination method and accounting treatment method of the Company for the expected creditlosses on notes receivable, please refer to "10. Financial instruments" of "V. Important Accounting Policies andAccounting Estimates" in this section.
When sufficient evidence of expected credit loss cannot be evaluated at a reasonable cost at the level ofsingle instrument, the Company will refer to the experience of historical credit loss, combines the current situationand judgment on future economic situation, divides bills receivable into several combinations according to thecharacteristics of credit risk, and calculates expected credit loss on the basis of combinations. The basis fordetermining the portfolio is as follows:
| Item | Basis for determining portfolio | Method |
| Risk free bank acceptance bill portfolio | Type of bill | Refer to the experience of historical credit loss, combines the current situation and judgment on future economic situation to measure the expected credit loss |
| Commercial acceptance bill portfolio | Type of bill | Refer to the experience of historical credit loss, combines the current situation and judgment on future economic situation to measure the expected credit loss |
12. Accounts receivable
For the determination method and accounting treatment method of the Company for the expected creditlosses on accounts receivable, please refer to "10. Financial instruments" of "V. Important Accounting Policies andAccounting Estimates" in this section.
The Company separately determines credit losses for accounts receivable that have sufficient evidence toassess expected credit losses at a reasonable cost at the level of a single instrument.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of singleinstrument, the Company will divide the accounts receivable into several combinations according to the credit riskcharacteristics, and calculate the expected credit loss on the basis of the combinations (with reference to theexperience of historical credit loss, and in combination with the current situation with the judgment of futureeconomic situation). The basis for determining the portfolio is as follows:
| Item | Basis for determining portfolio | Method |
| Related party within the consolidation scope | Accounts receivable between companies included in the consolidation scope | No provision for expected credit loss shall be made with reference to historical credit loss experience |
| Aging portfolio | Accounts receivable with similar credit risk characteristics by aging, except for the portfolio scope of the consolidated related parties | Referring to historical credit loss experience, combined with the current situation and the forecast of future economic situation, according to the expected credit loss in the whole period of existence, a comparative table of age and expected credit loss rate is worked out, based on which the expected credit loss is calculated. |
13. Receivables financing
For the determination method and accounting treatment method of the Company for the expected credit losses onreceivables financing, please refer to "10. Financial instruments" of "V. Important Accounting Policies andAccounting Estimates" in this section.
14. Other receivables
Determination method and accounting treatment method of expected credit loss of other receivables
For the determination method and accounting treatment method of the Company's expected credit loss onother receivables, please refer to "10. Financial instruments" of "V. Important Accounting Policies and AccountingEstimates" in this section.
The Company separately determines credit losses for other receivables that have sufficient evidence to assessexpected credit losses at a reasonable cost at the level of a single instrument.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of singleinstrument, the Company will divide the other receivables into several combinations according to the credit riskcharacteristics, and calculate the expected credit loss on the basis of the combinations (with reference to theexperience of historical credit loss, and in combination with the current situation with the judgment of futureeconomic situation). The basis for determining the portfolio is as follows:
| Item | Basis for determining portfolio | Method |
| Related party within the consolidation scope | Other receivables between companies included in the consolidation scope | No provision for expected credit loss shall be made with reference to historical credit loss experience |
| Aging portfolio | Other receivables with similar credit risk characteristics by aging, except for the portfolio scope of the consolidated related parties | With reference to historical credit loss experience, combined with current conditions and forecasts of future economic conditions, the expected credit loss is calculated through the default risk exposure and the credit loss rate in the next 12 months or the entire duration. |
15. Inventories
Classification of inventories
Inventories refer to the finished products or commodities held for sale by the Company in the course ofits daily activities, the products being in the process of production, and the materials and supplies consumedin the process of production or provision of labor services, etc. The Company classifies inventories into rawmaterials, turnover materials, entrusted processing materials, work-in-process products, self-madesemi-finished products, finished products (inventory goods), issued goods, etc.Valuation method of inventories
When the inventories is acquired, it is initially measured at cost, including purchase cost, processing costand other costs. When the inventories are delivered, it shall be valued by the weighted average method at theend of the month.Basis for the determination of the net realizable value of inventories and method for the provision ofinventory provision reserve
Ending inventories are measured at cost or net realizable value, whichever is lower. For inventories ofgoods directly used for sale, such as finished goods, merchandise inventories and materials for sale, in thenormal production and operation process, the net realizable value is determined by the amount of theestimated selling price of the inventory less the estimated sales cost and relevant taxes and fees; for material
inventories that need to be processed, in the normal production and operation process, the net realizable valueis determined by the amount of the estimated selling price of finished products produced less the estimatedcost to be occurred at the time of completion, the estimated selling expenses and related taxes; for inventoriesheld for the execution of sales contracts or labor contracts, the net realizable value is calculated on the basis ofthe contract price, and if the quantity of inventories held is more than the quantity specified in sales contracts,the net realizable value of excess inventories is calculated based on the general sales price.
At the end of the period, inventory valuation allowance is accrued according to individual inventoryitems; but for a large number of inventories with lower unit prices, inventory valuation allowance is accruedaccording to inventory category; for inventories related to the product series produced and sold in the sameregion with the same or similar end use or purpose, and that is difficult to be measured separately from otheritems, inventory valuation allowance is accrued combined with other items.If the influencing factors of the write-down of inventory value have disappeared, the amountwritten-down is recovered and reversed to the amount of inventory valuation allowance already accrued, andthe amount reversed is included in the current profit and loss.Inventory system
A perpetual inventory system is adopted.Amortization method of low-value consumables and packagesLow-value consumables are amortized by the one-off writing-off method;Packages are amortized by the one-off writing-off method.Other turnover materials are amortized by the one-off writing-off method.
16. Contractual assets
Where the Company has transferred goods to customers and has the right to receive consideration, and the rightdepends on factors other than the passage of time, it shall be recognized as contract assets. The Company'sunconditional (that is, depending only on the passage of time) right to collect consideration from customers isseparately listed as receivables. For the determination method and accounting treatment method of the Company'sexpected credit loss on contractual assets, please refer to "10. Financial instruments" of "V. Important AccountingPolicies and Accounting Estimates" in this section.
17. Contract costs
(1)Contract performance cost
The Company's costs incurred for the performance of the contract that do not fall within the scope ofother accounting standards for business enterprises other than the income standards and meet the followingconditions at the same time are recognized as contract performance costs as an asset:
1) The cost is directly related to a current or expected contract, including direct labor, direct materials,manufacturing expenses (or similar expenses), costs clearly borne by the customer, and other costs incurredsolely due to the contract;
2) This cost increases the Company's future resources for fulfilling its performance obligations.
3) The cost is expected to be recovered.
The asset is reported in inventory or other non-current assets according to whether the amortizationperiod has exceeded one normal operating cycle at the time of its initial recognition.
(2)Contract acquisition cost
The incremental costs incurred by the Company to acquire the contract that are expected to be recoveredby the Company shall be recognized as an asset as the cost of acquiring the contract. Incremental costs arecosts that the Company would not have incurred without acquiring the contract, such as sales commissions. Ifthe amortization period does not exceed one year, it shall be recorded into the current profit and loss at thetime of occurrence.
(3)Amortization of contract costs
The assets related to the contract cost mentioned above shall be amortized at the time of performance ofthe obligation or according to the performance progress on the same basis as the income recognition of thecommodity or service related to the asset and shall be recorded into the current profit and loss.
(4)Impairment of contract costs
If the book value of the above assets related to the contract cost is higher than the difference between theremaining consideration expected to be obtained by the Company due to the transfer of the commodities related tothe asset and the estimated costs to be incurred for the transfer of the commodities, the excess part shall be setaside as an impairment provision and recognized as an impairment loss of the asset. After the provision forimpairment loss, if the impairment factors in the previous period change, making the above two differences higherthan the book value of assets, it shall be reversed to the original provision for assets impairment, and included inthe current profit and loss. However, the carrying value of the asset after the reversal shall not exceed the carryingvalue of the asset on the reversal date if no provision for impairment is assumed.
18. Held-for-sales assets
(1)Classified as held-for-sale recognition criteria
The Company recognizes non-current assets or disposal groups that meet the following conditions asheld-for-sale components:
1) According to the practice of selling such assets or disposal groups in similar transactions, they can besold immediately in the current situation;
2) The sale is highly likely to occur, that is, the Company has made a resolution on a sale plan, obtainedregulatory approval (if applicable), and obtained a certain purchase commitment, and it is expected that thesale will be completed within one year.
The confirmed purchase commitment refers to the legally binding purchase agreement signed by theCompany and other parties. The agreement includes important terms such as transaction price, time andsufficiently severe penalty for breach of contract, which makes the possibility of significant adjustment orcancellation of the agreement extremely small.
(2)Accounting method of held for sale
The Company does not accrue depreciation or amortization for non-current assets or disposal groups held forsale. If the book value is higher than the net amount of fair value minus selling expenses, the book value shall bewritten down to the net amount of fair value minus selling expenses. The amount written down shall berecognized as asset impairment loss and included in the current profit and loss, and the assets held for saleimpairment reserves shall be accrued at the same time.For the non-current assets or disposal groups classified as held for sale on the acquisition date, the initialmeasurement amount and the net amount of the fair value less the selling expenses under the condition that theyare not classified as held for sale are comparatively assumed in the initial measurement, whichever is lower.
The above principles apply to all non-current assets, but do not include investment properties that aresubsequently measured using the fair value model, biological assets that are measured using the net amount of fairvalue less selling expenses, assets formed by employee compensation, deferred tax assets, financial assetsregulated by accounting standards related to financial instruments, and rights generated by insurance contractsregulated by accounting standards related to insurance contracts.
19. Debt investments
20. Other debt investments
For the determination method and accounting treatment method of the Company's expected credit loss onother debt investments, please refer to "10. Financial instruments" of "V. Important Accounting Policies andAccounting Estimates" in this section.
21. Long-term receivables
For the determination method and accounting treatment method of the Company's expected credit loss onlong-term receivables, please refer to "10. Financial instruments" of "V. Important Accounting Policies andAccounting Estimates" in this section.
The Company separately determines credit losses for long-term receivable that have sufficient evidence toassess expected credit losses at a reasonable cost at the level of a single instrument.
If sufficient evidence of expected credit loss cannot be assessed at reasonable cost at the level of singleinstrument, the Company will divide the long-term receivables into several combinations according to the creditrisk characteristics, and calculate the expected credit loss on the basis of the combinations (with reference to theexperience of historical credit loss, and in combination with the current situation with the judgment of futureeconomic situation). The basis for determining the portfolio is as follows:
| Item | Basis for determining portfolio | Method |
| Overdue portfolio | Overdue long-term receivables | Provision in accordance with the comparison table of the number of overdue days and the expected credit loss rate of the entire duration |
| Unexpired portfolio | Long-term receivables other than those in the portfolio above | Refer to the experience of historical credit loss, combines the current situation and judgment on future economic situation to measure the expected credit loss |
22. Long-term equity investment
(1)Recognition of initial investment cost
1) For the long-term equity investment formed by the merger of enterprises, the specific accountingpolicies are detailed in "5. Accounting treatments for merger of enterprises under common control and notunder common control" of "V. Important Accounting Policies and Accounting Estimates" in this section.
2) Long-term equity investment acquired by other means
For long-term equity investment acquired by cash payment, the actual acquisition price is recognized asinitial investment cost. The initial investment cost includes expenses, taxes and other necessary expensesdirectly related to the acquisition of the long-term equity investment.
For a long-term equity investment obtained by issuing equity securities, the initial investment cost shallbe the fair value of the equity securities issued. Transaction costs incurred in the issuance or acquisition ofone's own equity instruments those can be directly attributable to the equity transaction shall be deductedfrom the equity.Provided that the non-monetary asset exchange contains commercial substance and the fair value of theassets received or assets surrendered can be reliably measured, the initial investment cost of the long-termequity investment received with non-monetary assets is determined based on the fair value of the assetssurrendered, except that there is conclusive evidence indicates that the fair value of assets received is morereliable. For non-monetary assets that do not satisfy the above condition, the book value of assets surrenderedand related taxes and fees payable are recognized as the initial investment cost of the long-term equityinvestment.The initial investment cost of a long-term equity investment acquired by debt restructuring is determinedon the basis of fair value.
(2)Subsequent measurement and recognition of related profit and loss
1) Cost method
The Company can use the cost method to calculate the long-term equity investment controlled by theinvested entity, price it according to the initial investment cost, and increase or recoup the cost of invest onadjusting a long-term equity investment.
Except for the declared but undistributed cash dividends or profits included in the actual payment orconsideration when the investment is obtained, the Company shall recognize the cash dividends or profitsdeclared to be distributed by the invested entity as current investment income.
2) Equity method
The Company adopts equity method for accounting of long-term equity investments in associates andjoint ventures. For the equity investment in associates in which part of it is held indirectly through venturecapital institutions, mutual funds, trust companies or similar entities including investment-linked insurancefunds, it shall be measured at fair value and its changes shall be recorded into profits and losses.
For the balance that the initial investment cost is bigger than the fair value shares of invested units’distinguished net assets which shall be enjoyed by the Company, the Company will not adjust the initialinvestment cost of long-term equity investments; for the balance that the initial investment cost is smaller thanthe fair value shares of invested units’ distinguished net assets which shall be enjoyed by the Company, theCompany will adjust the book value of long-term equity investments and record it in owner’s equity.
After the Company obtains long-term equity investment, it shall recognize investment income and othercomprehensive income respectively according to its share of the net profit or loss realized by the investedentity and other comprehensive income, and adjust the book value of long-term equity investment at the sametime. In addition, the part to be enjoyed shall be calculated according to the profit or cash dividend declaredby the invested entity to be distributed, and the book value of long-term equity investment shall be reducedaccordingly. For other changes in owners' equity other than net profit and loss, other comprehensive incomeand profit distribution of the invested entity, the book value of long-term equity investment shall be adjustedand recorded into owners' equity.
When confirming the shares of invested units’ net gain or loss to be enjoyed, the Company will adjustand confirm the invested units’ net profit based on the fair value of the invested units’ distinguishable netassets when investments are obtained, and according to the Company’s accounting policies and fiscal period.For the gain or loss on the non-realized internal transactions between the Company and associates enterprises/joint ventures, the part attributing to the Company will be calculated as per the proportion to be enjoyed, will
be written down, and on this basis, the investment yield will be confirmed.The Company recognizes that the loss suffered by the invested unit should be dealt with in the followingorder: first, reduce the Book value of Long-term equity investments. Secondly, if the book value of long-termequity investments is not sufficient to offset, the book value of other long-term equity books that substantiallyconstitute the net investment in the invested entity shall be used to continue to recognize the investment lossand offset the book value of long-term receivables. Finally, after the above treatment, according to theinvestment contract or agreement, the enterprise still assumes the additional obligations, and it will confirmthe Provisions according to the expected obligations and shall be included in the current investment losses.
If the investee makes profits in the future, the Company shall, after deducting the unrecognized lossshare, deal with it in the reverse order, write down the book balance of the confirmed provisions, recoverother long-term interests that substantially constitute the net investment to the investee and the book value oflong-term equity investments, and resume the recognition of investment income.
(3)Transformation of accounting method of long term equity investments
1)Transfer of fair value measurement to equity method
The equity investment originally held by the Company that does not have control, joint control orsignificant influence on the investee and is subject to accounting treatment according to the recognition andmeasurement standards of financial instruments can exert significant influence on the investee or implementjoint control but does not constitute control due to additional investment and other reasons, the sum of the fairvalue of the originally held equity investment plus the newly increased investment cost determined inaccordance with the accounting standards for Business Enterprises No. 22 - recognition and measurement offinancial instruments shall be regarded as the initial investment cost calculated according to the equitymethod.
The initial investment cost calculated by the equity method is less than the difference between the fairvalue of the identifiable net assets of the investee calculated and determined according to the newshareholding ratio after the additional investment, the book value of long term equity investments is adjustedand included in the non-operating income of the current period.
2)Transfer of fair value measurement or equity method to cost method
The equity investment originally held by the Company that does not have control, joint control orsignificant impact on the investee and is subject to accounting treatment in accordance with the recognitionand measurement standards of financial instruments, or the long term equity originally held by the Companyfor joint ventures and joint ventures: If the investee under different control can be controlled due to additionalinvestment and other reasons, when preparing individual financial statements, the sum of book value of equityinvestment originally held plus new investment cost shall be taken as the initial investment cost calculated bycost method instead.
The other comprehensive income, which is recognized as equity investment held before the purchasedate, is accounted for by the equity method. When disposing the investment, it adopts the same basis as thedirect assets or liabilities directly disposed of by the invested entity for accounting treatment.
If the equity investment held before the acquisition date is accounted for in accordance with the relevantprovisions of the accounting standards for Business Enterprises No.22 - recognition and measurement offinancial instruments, the changes in the accumulated fair value originally included in other comprehensiveincome are transferred to the current profit and loss when the cost method is used for accounting.
3)Transfer of equity method accounting to fair value measurement
If the Company loses joint control or significant impact on the invested entity due to disposal of part ofequity investment, the remaining equity after disposal shall be accounted according to accounting standards
for Business Enterprises No. 22 - recognition and measurement of financial instruments, and the differencebetween the fair value and book value on the date of loss of joint control or significant impact shall beincluded in the current profit and loss.The other comprehensive income of the original equity investment recognized due to the use of equitymethod shall be accounted on the same basis as the invested unit's direct disposal of relevant assets orliabilities when the equity method is terminated.
4)Transfer of cost method to equity method
If the Company loses the control over the investee due to the disposal of part of the equity investmentand other reasons, when preparing individual financial statements, if the residual equity after disposal canexercise joint control or exert significant influence on the investee, the equity method shall be used foraccounting instead, and the residual equity shall be deemed to be adjusted by the equity method when it isobtained.
5)Transfer of cost method to fair value measurement
If the Company loses control over the investee due to the disposal of part of equity investment and otherreasons, when preparing individual financial statements, if the residual equity after disposal cannot exercise jointcontrol or exert significant influence on the investee, the accounting treatment shall be carried out in accordancewith the relevant provisions of the Accounting Standards for Business Enterprises No. 22 - recognition andmeasurement of financial instruments, and the accounting treatment shall be carried out on the date of loss ofcontrol. The difference between the fair value and the book value is included in the current profit and loss.
(4)Disposal of Long-Term Equity Investments
For the disposal of long term equity investments, the difference between the book value and the actuallyobtained price shall be included in the current profit and loss. Long term equity investments accounted by theequity method shall be disposed on the same basis as the investee's direct disposal of relevant assets or liabilities,and the part originally included in other comprehensive income shall be accounted according to the correspondingproportion.
If the terms, conditions and economic impact of the disposal of various transactions of equity investment insubsidiaries meet one or more of the following conditions, multiple transactions shall be accounted as a packagedeal:
1)These transactions are made simultaneously or with consideration of influence on each other;
2)These transactions can only achieve a complete business outcome when treated as a whole;
3)The occurrence of a transaction depends on the occurrence of at least one of the other transactions;
4)A transaction is uneconomical when treated alone, but is economical when considered together with other.
If the control over the original subsidiary company is lost due to the disposal of part of equity investment orother reasons, and it does not belong to a package deal, the relevant accounting treatment shall be made bydistinguishing individual financial statements and consolidated financial statements:
1) In individual financial statements, for the equity disposed, the difference between the book value and theactually obtained price is included in the current profit and loss. If the residual equity after disposal can exercisejoint control or exert significant influence on the investee, it shall be accounted by equity method, and the residualequity shall be deemed as adjusted by equity method when it is acquired; If the residual equity after disposalcannot exercise joint control or exert significant influence on the investee, it shall be accounted in accordance withthe relevant provisions of the accounting standards for Business Enterprises No. 22 - recognition andmeasurement of financial instruments, and the difference between the fair value and book value on the date of lossof control shall be included in the current profit and loss.
2) In the consolidated financial statements, for the difference between the disposal price and the
corresponding share of net assets of the subsidiary calculated continuously from the purchase date or the mergerdate for each transaction before the loss of control over the subsidiary, adjust the capital reserve (share capitalpremium) If the capital reserve is insufficient to offset, the retained earnings shall be adjusted; if the control rightover the subsidiary is lost, the remaining equity shall be remeasured according to its fair value on the date oflosing the control right. The difference between the sum of the consideration obtained from the disposal of equityand the fair value of the remaining equity minus the share of the net assets of the original subsidiary calculatedcontinuously from the purchase date calculated according to the original shareholding ratio shall be included inthe investment income of the current period when the control right is lost, and goodwill shall be offset at the sametime. Other comprehensive income related to the equity investment of the original subsidiary will be convertedinto the current investment income when the control right is lost.If all transactions from disposal of equity investment in subsidiaries to loss of control belong to a packagedeal, each transaction shall be treated as a transaction for disposal of equity investment in subsidiaries and loss ofcontrol, and relevant accounting treatment shall be conducted according to individual financial statements andconsolidated financial statements:
1) In individual financial statements, the difference between each disposal price and the long term equityinvestment book value corresponding to the disposed equity before the loss of control right is recognized as othercomprehensive income, which is transferred to the loss and profit of the current period when the control right islost.
2) In the consolidated financial statements, the difference between each disposal price and the share of thesubsidiary's net assets corresponding to the disposal investment before the loss of the control right is recognized asother comprehensive income, which is transferred into the current profit and loss when the control right is lost.
(5)Judgment criteria for joint control and significant impact
If the Company controls an arrangement collectively with other participants in accordance with relevantagreements, and the activity decision-making that has a significant impact on the return of the arrangement needsto exist after the consensus of the participants sharing the control right, it is deemed that the Company and otherparticipants jointly control an arrangement, which is a joint venture arrangement.
When the joint venture arrangement is reached by a single body, the individual entity shall be judged as ajoint venture and the equity method shall be used for accounting when the Company has the right to enjoy the netassets of the individual entity according to the relevant agreement. If it is judged that the Company does not havethe right to the net assets of the individual subject according to the relevant agreement, the individual subject shallbe regarded as the joint operation, the Company shall recognize the items related to the share of interests of thejoint operation, and carry out accounting treatment in accordance with the provisions of the relevant accountingstandards for business enterprises.Significant influence means that the investor has the right to participate in the decision-making of the financialand operational policies of the investee, but cannot control or jointly control the formulation of these policies withother parties. The Company judges to have a significant impact on the investee through one or more of thefollowing circumstances and comprehensive consideration of all facts and circumstances: 1) having arepresentative on the board of directors or similar authority of the investee; 2) participate in the financial andoperational policy-making process of the investee; 3) there are significant transactions with the investee; 4)dispatch management personnel to the investee; and 5) provide key technical data to the investee.
23. Investment properties
Measuring mode of investment propertiesMeasured at costDepreciation or amortization methodThe Company's investment property means the property held for the purpose of earning rent or capitalappreciation, or both, including the land use rights that have been leased, the land use rights that are held fortransfer upon appreciation, and the leased buildings. In addition, for the vacant buildings held by the Company forthe purpose of leases, if the Board of Directors makes a written resolution that expressly indicates that thebuildings will be used for leases and the intention of holding will not change in a short-term, the building will alsobe reported as investment property.The Company's investment properties are recorded at their cost. The cost of outsourcing investmentproperties includes the purchase price, relevant taxes and other expenses that can be directly attributable to theasset. The cost of self-construction investment properties is composed of the necessary expenses incurred beforethe construction of the asset reaches the expected usable state.
The Company adopts the cost model for subsequent measurement of investment property. For the purpose ofdepreciation or amortization method, the same amortization policy adopted for buildings as fixed assets and landuse rights as intangible assets are used. The estimated service life, net residual value rate and annual depreciation(amortization) rate of investment properties are listed as follows:
| Type | The estimated service life (Year) | Salvage rate (%) | Annual depreciation (amortization) rate (%) |
| Land use rights | service life of land use right | 1/Service life*100 | |
| Property and plant | 20 | 5-10 | 4.50-4.75 |
When the purpose of investment properties is changed to self-use, from the date of change, the Company willconvert the investment properties to fixed assets or intangible assets. When the purpose of self-use properties ischanged to earn rent or capital appreciation, the Company will convert fixed assets or intangible assets toinvestment properties from the date of change. In case of conversion, the book value before conversion shall betaken as the entry value after conversion.When the investment properties are disposed, or permanently withdrawn from use, and no economic benefits areexpected to be obtained from the disposal, the confirmation of the investment properties shall be terminated. Theamount of disposal income from sale, transfer, scrap or damage of investment properties after deducting its bookvalue and relevant taxes shall be included in the current profit and loss.
24. Fixed assets
(1) Recognition criteria
Fixed assets mean tangible assets held for the purpose of producing goods, rendering of services, leases or operation management,whose service life is more than one fiscal year. Fixed assets satisfying the following conditions are recognized:
(1) The economic benefits associated with the fixed assets are likely to flow into the enterprise;
(2) The cost of the fixed asset can be measured in a reliable way.
(2) Depreciation method
| Type | Depreciation method | Depreciation life | Rate of residual value | Annual depreciation rate |
| Property and plant | Straight-line method | 20 | 5-10 | 4.50-4.75 |
| Machinery and equipment | Straight-line method | 10-13 | 5-10 | 6.92-9.50 |
| Transportation equipment | Straight-line method | 5 | 5-10 | 18.00-19.00 |
| Electronic equipment | Straight-line method | 5 | 5-10 | 18.00-19.00 |
| Office equipment | Straight-line method | 5 | 5-10 | 18.00-19.00 |
| Other equipment | Straight-line method | 5 | 5-10 | 18.00-19.00 |
1) Initial recognition of fixed assets
The Company's fixed assets shall be initially measured according to cost.a. The cost of purchased fixed assets includes the purchase price, import duties and other related taxes, as well as otherexpenses directly attributable to the fixed assets incurred before they reach the predetermined usable state.b. The cost of self-constructed fixed assets consists of the necessary expenditures incurred before the asset isconstructed to a predetermined usable state.c. The fixed assets invested by the investor shall be recorded at the value agreed upon in the investment contract oragreement, but if the value agreed upon in the contract or agreement is not fair, it shall be recorded at the fairvalue.d. If payments for the purchase of fixed assets are extended beyond the normal credit terms with financing nature, thecosts of fixed assets are determined on the basis of present values of the purchase prices. The difference betweenthe actual price paid and the present value of the purchase price, except for those that should be capitalized, shallbe included in the current profit and loss during the credit period.2> Subsequent measurement and disposal of fixed assetsa. Depreciation of fixed assetsDepreciation of fixed assets shall be accrued within the estimated service life after deducting the estimatednet residual value from its recorded value. For fixed assets with provision for impairment, the amount ofdepreciation shall be determined in the future periods based on the book value after deduction of the impairmentprovision and based on the remaining service life; and fixed assets that have been fully depreciated and are still inuse shall not be depreciated.
The fixed assets formed by special reserve expenditure shall be deducted from the special reserve accordingto the cost of forming the fixed assets, the accumulated depreciation of the same amount shall be confirmed, andthe fixed assets shall not be depreciated in the future period.The Company shall determine the service life and estimated net residual value of the fixed assets accordingto their nature and usage. At the end of the year, the service life, estimated net residual value and depreciationmethod of the fixed assets shall be reviewed, and if there is any difference from the original estimate,corresponding adjustments shall be made.b. Subsequent expenditures on fixed assets
Subsequent expenditures related to fixed assets those meet the conditions for the recognition of fixed assetsshall be included into the cost of fixed assets; and those do not meet the conditions for the recognition of fixedassets shall be recorded into the current profit and loss at the time of occurrence.c. Disposal of fixed assets
When a fixed asset is disposed of or is not expected to generate economic benefits through use or disposal,the recognition of the fixed asset shall be terminated. The amount of disposal income from sale, transfer, scrap ordamage of fixed assets after deducting its book value and relevant taxes shall be included in the current profit and
loss.
(3) Recognition basis, valuation and depreciation method of fixed assets acquired under financing leasesWhere the leasing agreement signed between Company and the lessor specifies either of the conditions as follows, the lease will berecognized as a finance lease:
(1) The ownership of the leasing asset belongs to the Company at the expiration of the lease.
(2) The Company has the option to buy the asset at a price to be far lower than the fair value of the asset at the date when the optionbecomes exercisable; and therefore it is reasonable to be certain that the Company will exercise the option at the inception of lease.
(3) The lease term covers the major part of the service life of the leased asset.
(4) The present value of the minimum lease payments on the lease beginning date does not have too large differences with the fairvalue of the asset.
(5) The nature of the leased assets is special. Only the Company can use the leased assets without major transformation.On the date of the lease starts, the Company recognizes the fair value of the leased asset or the present value of the minimum leasepayment as the book value of the leased asset, whichever is lower. The minimum lease payment shall be recorded as the value of thelong-term payables and the difference shall be recorded as an unrecognized financing expense. The initial direct expenses incurredduring the lease negotiation and signing of the lease contract, such as handling fee, lawyer's fee, travel expense and stamp duty,which can be attributed to the lease project, shall be included in the value of the leased asset. Unrecognized financing expenses areapportioned over the lease term by the effective interest method.The Company adopts the depreciation policy consistent with its own fixed assets to accrue the depreciation of fixed assets underfinancing lease. If the ownership of the leased asset can be reasonably determined at the end of the lease term, depreciation shall beaccrued within the service life of the leased asset. If the ownership of the leased asset can not be reasonably determined at the end ofthe lease term, depreciation shall be accrued within the shorter of the lease term and the service life of the leased asset.
25. Construction in progress
(1)Initial measurement of construction in progress
Construction in progress refers to the necessary expenses incurred by the Company for the purchase andconstruction of fixed assets or investment property before being ready for the expected usable status, includingengineering materials costs, labor costs, related taxes and fees, borrowing costs that should be capitalized andindirect costs that should be apportioned.
(2)Standards and time points for carrying forward construction in progress to fixed assetsFor the construction in progress project, all expenses incurred before the construction of the asset reaches theexpected serviceable state shall be taken as the entry value of fixed assets. If the construction in progress hasreached the expected serviceable condition, but the final accounts of completion have not yet been handled, fromthe date of reaching the expected serviceable condition, it shall be transferred to fixed assets according to theestimated value according to the project budget, cost or actual cost of the project, and fixed assets shall be accruedaccording to the Company's fixed assets depreciation policy For the depreciation of assets, the original estimatedvalue shall be adjusted according to the actual cost after the completion of final accounts, but the amount ofdepreciation that has been accrued shall not be adjusted.
26. Borrowing costs
(1)Recognition principles of capitalization of borrowing costs
Borrowing costs, that are directly attributable to the acquisition, construction or production of qualifying assetsfrom part of the costs of those assets, shall be capitalized. Other borrowing costs are recognized as expenses arecharged to profits or losses in the current period.Assets eligible for capitalization refer to fixed assets, investment properties, inventory and other assets that areexpected to be usable or salable after a considerable period of purchase and construction or production activities.Capitalization shall commence when:
1) Expenditures are being incurred, which comprise disbursements incurred in the form of payments ofcash, transfer of non-monetary assets or assumption of interest-bearing debts;
2) Borrowing costs are being incurred, and;
3) Purchase, construction or manufacturing activities that are necessary to prepare the assets for theirintended use or sale are in progress.
(2)Capitalization period for borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its cessation;period of suspension for capitalization is excluded.Capitalization shall cease when substantially all of the purchase, construction or manufacturing activitiesnecessary to prepare the assets for their intended use or sale are complete.Where construction for assets purchased, constructed or manufactured eligible for capitalization is completed instages, which can be used while construction of the other parts continues, capitalization of borrowing costs forassets shall cease when substantially all of the activities necessary to prepare that part for its intended use or saleare complete.Where construction for each part of assets purchased, constructed or manufactured has been completed separatelybut can be used or sold only after the entire assets have been completed, capitalization of borrowing costs forassets shall cease at the completion of the entire assets.
(3)Period of suspension for capitalization
Capitalization shall be suspended during periods in which purchase, construction or manufacturing of assetseligible for capitalization is interrupted abnormally; if the interruption is the necessary procedure to prepare theassets purchased, constructed or manufactured eligible for capitalization for their intended use or sale, theborrowing costs shall continue to be capitalized. Borrowing costs incurred during the interruption shall be chargedto current profits or losses, and shall continue to be capitalized when purchase, construction or manufacturing ofthe relevant assets resumes.
(4)Measurement of capitalized amounts of borrowing costs
Where funds are borrowed specifically for purchase, construction or manufacturing of assets eligible forcapitalization, costs eligible for capitalization are the actual costs incurred less any income earned on thetemporary investment of such borrowings.Where funds allocated for purchase, construction or manufacturing of assets eligible for capitalization are part of ageneral pool, the eligible amounts are determined by applying a capitalization rate to the weighted average excessof accumulated capital expenditures over those on specific borrowings. The capitalization rate will be theweighted average of the borrowing costs applicable to the general pool.Where there are discounts or premiums on borrowings, the amounts of interest for each accounting period shall beadjusted taking account of amortizable discount or premium amounts for the period by effective interest method.
27. Biological assets
28. Oil and gas assets
29. Right-of-use assets
30. Intangible assets
(1) Measurement method, service life, and impairment test
Intangible assets are non-monetary assets with no physical form that can be identified and owned or controlled bythe Company, including land use right, computer software, patent right, non-proprietary technology, etc.Initial recognition of intangible assets
Costs of purchased intangible assets include purchase prices, relevant taxes and surcharges, and otherexpenditures that are directly attributable to the intangible assets before they reach working conditions fortheir intended use. If payments for the purchase of intangible assets are extended beyond the normal creditterms with financing nature, the costs of intangible assets are determined on the basis of present values of thepurchase prices.
For intangible assets obtained from debtors in settlement of his liabilities in case of debt restructuring,they shall be initially stated at their fair values. Differences between the book values and the fair values of theintangible assets are charged to current profits or losses.
If the exchange of non-monetary assets has commercial substance, and the fair values of these assets canbe measured reliably, the book values of intangible assets traded in are based on the fair values of theintangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded inare more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of theintangible assets traded in shall be the book values of the assets traded out and relevant taxes and surchargespaid, and no profits or losses shall be recognized.
Intangible assets obtained through acquisition of enterprises under common control shall be initiallystated at their carrying amounts recognized in the accounting records of the acquired party. Intangible assetsobtained through acquisition of enterprises not under common control shall be initially stated at fair value.
The costs of internally developed intangible assets include: the materials consumed during thedevelopment, labor costs, registration fees, amortization of other patents and licenses applied during thedevelopment, interest expense eligible for capitalization, as well as other direct costs incurred for theintangible assets to reach working condition for their intended use.Subsequent measurement of intangible assetsThe intangible assets are amortized on a straight-line basis over the period during which they can bringeconomic benefits to the Company. For intangible assets which are not expected to bring economic benefits to theCompany, they are deemed as intangible assets with uncertain useful lives and are not amortized.a. Intangible assets with limited useful livesFor the intangible assets with limited service life, they are amortized by the straight-line method within theperiod of bringing economic benefits to the enterprise. The estimated life and basis of intangible assets withlimited service life are as follows:
| Item | Expected service life | Basis for estimates |
| Software | 10 | Expected service life |
| Land use rights | 50 | Certificate of land using right |
| Patent rights | 10 | Benefit period |
| Non-proprietary technology | 10 | Benefit period |
The service life of the intangible assets with limited service life and its amortization method shall bereviewed at the end of each period.After review, the service life and amortization method of the intangible assets at the end of the period thisyear are different from that estimated previously.b. Intangible assets with uncertain useful lives
Intangibles assets of which the time period that brings economic benefits to the Company cannot be foreseen,are regarded as intangibles assets with uncertain useful lives.
Intangibles assets with uncertain useful lives are not amortized during the holding period, but are reviewedfor remaining useful lives at each year end. If the post-review useful lives are still uncertain, the impairment testswill be conducted during each accounting period.After review, the useful lives for such intangible assets are still uncertain.
(2) Accounting policies for internal research and development expendituresCriteria for separating between research phase and development phase of internal research anddevelopment projects of the CompanyResearch phase: Research is original and planned investigation, undertaken with the prospect of gainingnew scientific or technical knowledge and understanding.Development phase: Development is the application of research findings or other knowledge to a plan ordesign for the production of new or substantially improved materials, devices, or products before the start ofcommercial production or use.The expenditure of internal research and development projects incurred during research phase isrecognized through profit or loss.Criteria for capitalization of qualifying expenditures during the development phase
Expenditures arising from development phase on internal research and development projects must becapitalized if the Company can satisfy all of the following criteria:
(1) There is technical feasibility of completing the intangible assets (so that they will be available for use orsale);
(2) There is intention to complete and use or sell the assets;
(3) The method that the intangible assets generate economic benefits, including existence of a market forproducts produced by the intangible assets or for the intangible assets themselves, shall be proved. Or, if to beused internally, the usefulness of the assets shall be proved;
(4) Enough technology, financial resources and other resources are provided for support, so as to completethe development of the intangible assets, and the ability is provided for using or selling the intangible assets;
(5) The expenditure belonging to the development phase of intangible assets can be reliably measured.If the expenditure at the development phase does not meet the above condition, it shall be charged to currentprofits or losses when occurring. The expenditure at the research phase shall be charged to current profits or losseswhen occurring. The capitalized expenditures in the development stage shall be listed as developmentexpenditures in the balance sheet and transformed into intangible assets as of the date when the project reaches itsintended use.
31. Impairment of long-term assets
On the balance sheet date, the Company judges whether there is any sign of possible impairment oflong-term assets. If there is any sign of impairment of a long-term asset, the recoverable amount shall be estimatedon the basis of a single asset; if it is difficult to estimate the recoverable amount of a single asset, the recoverableamount of the asset group to which the asset belongs shall be determined.The recoverable amount of an asset is estimated based on the higher of the net amount of its fair value lessdisposal expenses and the present value of the expected future cash flow of the asset.The measurement results of the recoverable amount show that if the recoverable amount of the long-termasset is lower than its book value, the book value of the long-term asset shall be written down to the recoverableamount, and the writedown amount shall be recognized as the impairment loss of the asset, which shall berecorded into the current profit and loss, and the corresponding asset impairment provision shall be drawn at thesame time. Once the impairment loss of assets is recognized, it shall not be reversed in the future accountingperiod.
After the asset impairment loss is recognized, the depreciation or amortization expenses of the impaired assetshall be adjusted accordingly in the future period, so as to systematically apportion the adjusted asset book value(deducting the estimated net residual value) within the remaining service life of the asset.
For goodwill and intangible assets with uncertain service life due to business combination, whether there isany sign of impairment or not, impairment test shall be carried out every year.Treatment of goodwill impairment: in the impairment test of goodwill, the book value of goodwill is apportionedto the asset group or asset group portfolio expected to benefit from the synergy of business combination. and thebook value of goodwill is apportioned to the relevant asset group or asset group combination in a reasonable way.In the case of impairment test, the asset group or asset group portfolio that does not contain goodwill is tested forimpairment first to confirm the corresponding asset impairment loss, and then the asset group or asset groupcontaining goodwill is tested for impairment to confirm the corresponding goodwill impairment loss. Thenconduct an impairment test on the asset groups or asset group portfolio that contains goodwill, and compare thebook value of these related asset groups or asset group portfolio (including the book value of the allocatedgoodwill) with the recoverable amount. If the recoverable amount of the relevant asset groups or the asset groupportfolio is lower than its carrying value, the impairment loss of goodwill shall be recognized.
32. Long-term unamortized expenses
Amortization methodThe term unamortized expenses refers to the expenses incurred by the Company but should be borne by thecurrent period and subsequent periods with a period of apportion for more than one year. Long-term prepaidexpenses are amortized equally over the period of projected earnings.Amortization period
| Type | Amortization period | Notes |
| Leasehold improvement | Expected service life or lease term, whichever is lower | |
| Workshop improvement | 3 | |
| Filling machine | Based on contract | |
| Rented substation | 10 | |
| Workshop lease cost | Based on contract | |
| Software system implementation fee | 5 |
| Repair and maintenance fee | 2-3 years |
33. Contractual liabilities
The Company recognizes as a contractual liability the portion of its obligation to transfer commodities to acustomer for which the customer consideration has been received or is receivable.
34. Employee benefits
(1) Accounting treatment for short-term employee benefits
Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare,premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds,union running costs and employee education costs, and short-term paid absences. The employee benefit liabilitiesare recognized in the accounting period in which the service is rendered by the employees, with a correspondingcharge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits aremeasured at their fair value.
(2) Accounting treatment for post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or defined benefitplans. Defined contribution plans are post-employment benefit plans under which the Company pays fixedcontributions into a separate fund and will have no obligation to pay further contributions; and defined benefitplans are post-employment benefit plans other than defined contribution plans.During the Reporting Period, the Company’s defined contribution plans mainly include basic pensions andunemployment insurance. During the accounting period when employees provide services to the Company, theamount of deposit payable calculated according to the defined deposit plan shall be recognized as liabilities andincluded in the current profit and loss or related asset costs.The Company shall have no other payment obligations after regularly paying the above-mentioned funds inaccordance with the standards and annuity plans stipulated by the state.
(3) Accounting treatment for termination benefits
If the Company terminates the labor relationship with an employee before the labor contract expires, or offerscompensation for encouraging the employee to accept the redundancies voluntarily, the liabilities arising from thetermination of labor relations with the employee is determined, and also included in the current profit and loss, atthe time when the group cannot unilaterally withdraw the termination of the labor relationship plan orredundancies proposal, or the time when the cost associated with restructuring involving payment of terminationbenefits is confirmed, whichever is earlier.The Company provides early retirement benefits to employees who accept internal retirement arrangements. Earlyretirement welfare refers to the wages paid to the employees who fail to reach the retirement age stipulated by thestate and voluntarily quit their jobs with the approval of the Company's management and the social insurancepremiums paid for them. The Company shall pay the internal retirement benefits to the early retired employeesfrom the date of the internal retirement arrangement to the date when the employees reach the normal retirement
age. For the early retirement welfare, the Company shall carry out accounting treatment according to thetermination benefits. When the relevant recognition conditions of the termination benefits are met, the wages andsocial insurance premiums to be paid to the early retired employees from the date when the employees stopproviding services to the normal retirement date shall be recognized as liabilities and included in the current profitand loss once. The difference caused by the change of actuarial assumption and the adjustment of welfare standardof early retirement welfare shall be included in the current profit and loss when it occurs.
(4) Accounting treatment for other long-term employee benefits
35. Lease liabilities
36. Estimated Liabilities
Recognition criteria of provisionsWhen an obligation related to the contingent events satisfies all the following conditions, it is recognizedby the Company as provisions:
The obligation is the current obligation of the Company;The performance of obligation is likely to result in the outflow of economic benefits from the Company;The cost of the obligation can be measured in a reliable way.Measurement of provisionsThe provisions of the Company are initially measured on the basis of the best estimate of the expenditurerequired to perform the relevant current obligations.When determining the best estimate, the Company considers factors such as risks, uncertainties and timevalue of money related to contingent events. Where the time value of money has a significant impact, the bestestimate is determined by discounting the relevant future cash outflows.The best estimates are handled as follows:
In case that there is a continuous range (or interval) of required expenditures, within which the possibility ofoccurrence of various results is the same, the best estimate is determined by the average of the middle value of therange, that is, the average of the upper and lower limits.In case that there is no continuous range (or interval) of required expenditures, or there is a continuous rangebut the possibility of various results in the range is different, if the contingency involves a single item, the bestestimate is determined based on the most probable amount; if a contingency involves multiple items, the bestestimate is determined based on various possible outcomes and associated probabilities.If all or part of the expenses required by the Company to settle the provisions are expected to be compensated by athird party, the compensation amount is separately recognized as an asset when it is basically confirmed to bereceived, and the recognized compensation amount should not exceed the book value of provisions.
37. Share-based payments
Categories of share-based payments
The share based payment of the Company is divided into equity settled share based payment and cashsettled share based payment.Determination method of fair value of equity instruments
For the granted equity instruments such as options with active market, their fair value shall be
determined according to the quoted price in the active market. For the granted equity instruments withoutactive market, the option pricing model is used to determine their fair value. The following factors areconsidered in the option pricing model: (1) the exercise price of the option; (2) the validity period of theoption; (3) the current price of the target share; (4) the expected volatility of the share price; (5) the expecteddividend of the share; (6) the Risk free interest rate.When determining the fair value of the equity instrument on the grant date, the impact of marketconditions and non exercise conditions in the vesting conditions specified in the share based paymentagreement shall be considered. If there are non vesting conditions for share based payment, as long as theemployees or other parties meet all non market conditions (such as service term, etc.) in the vestingconditions, the corresponding cost of the services received shall be recognized.Basis for determining the best estimate of exercisable equity instruments
At each balance sheet date in the vesting period, the Company would make best estimate in accordancewith the newly acquired information such as changes in the number of employees entitled to equityinstruments, and amend the number of exercisable equity instruments. On the exercisable date, the ultimateestimated number of exercisable equity instruments coincides with the actual number.Accounting treatment
The equity-settled share-based payment shall be measured at the fair value of the equity instrument grantedto the employee. If the right is feasible immediately after the grant, the relevant cost or expense shall be recordedin accordance with the fair value of the equity instrument on the grant date, and the capital reserve shall beincreased accordingly. If the right is not viable until the service within the waiting period is completed or theperformance conditions are met, on each balance sheet date within the waiting period, the services acquired in thecurrent period shall be included into relevant costs or expenses and capital reserves based on the best estimate ofthe number of the equity instruments of the viable rights and based on the fair value on the grant date of the equityinstruments. No adjustments shall be made after the vesting date for the related costs or expenses recognized andtotal owners' equity.The cash-settled share-based payment where the Company calculates and determines the cash payment orany other asset obligation on the basis of shares or other equity instruments in return for services, is measured atthe fair value of the liabilities calculated based on relevant equity instruments. Where the right is feasibleimmediately after the grant, the fair value of the liabilities borne by the Company shall be included into therelevant costs or expenses on the grant date, and the liabilities shall be increased accordingly. Where theshare-based payment is not exercisable until the service in the vesting period is completed or specifiedperformance conditions are met, then at each balance sheet date within the vesting period, the service obtained inthe current period shall be included in cost or expenses and in liabilities at the fair value of the Company'sliabilities based on the best estimates of the quantity of exercisable equity instruments made by the Company. Ateach balance sheet date and settlement date before relevant liabilities are settled, the fair value of the liabilities isremeasured and the changes are recognised in profit or loss.If the granted equity instrument is cancelled in the waiting period, the Company will treat the cancellation of thegranted equity instrument as accelerated exercise, and the amount to be recognized in the remaining waitingperiod will be included in the current profit and loss immediately, and capital reserve will be recognized at thesame time. If the employee or other parties can choose to meet the non-vesting conditions but fail to meet themwithin the waiting period, the Company will treat them as the cancellation of the granted equity instrument.
38. Preferred stock, perpetual bonds and other financial instruments
The Company classifies the financial instruments and their components at initial recognition into eitherfinancial liabilities or equity instruments, in accordance with the “Financial Instruments Standards”, on the basisof the contract terms of and the economic substances but not only the legal forms reflected by the preferred stock,perpetual bonds and other financial instruments issued, together with the definitions of financial liabilities andequity instruments:
If one of the following conditions is met, the financial instrument issued shall be classified as a financialliability:
(1) a contractual obligation to deliver cash or other financial assets to another entity;
(2) a contractual obligation to exchange with another entity a financial asset or financial liability underpotential unfavorable conditions;
(3) a non-derivative contract, which shall be or may be settled by the Company’s own equityinstruments, and that the Company would deliver a variable number of its own equity instruments;
(4) a derivative contract, which shall be or may be settled by the Company’s own equity instruments,but except for which the Company would deliver a fixed quantity of its own equity instruments in exchangefor a fixed quantity of cash or other financial assets.If all of the following conditions are met, the financial instrument issued shall be classified as an equityinstrument:
(1) The financial instrument does not include those delivering cash or other financial assets to anotherentity, or contractual obligations with potential unfavorable conditions to exchange financial assets orfinancial liabilities with another entity;
(2) For a financial instrument that shall be or may be settled by the Company’s own equity instruments,if the financial instrument is a non-derivative instrument, it must not include a contractual obligation todeliver a variable quantity of the Company’s own equity instruments; if the financial instrument is aderivative instrument, it can only be settled by the fixed quantity of its own equity instruments in exchangefor a fixed number of cash or other financial assets.Accounting treatmentFor the financial instrument classified as an equity instrument, any interest expense or dividend distributionis recognized as profit distribution of the issuer, the buy-backs and write-offs are recognized as changes in equity,and transaction costs such as handling charges, commissions are deducted from equity;For the financial instrument classified as a financial liability, any interest expense or dividend distribution is dealtwith in accordance with borrowing costs, any gain or loss on the buy-backs or redemptions are recognized throughprofit or loss, and transaction costs such as handling charges, commissions are included into the initialmeasurement of the financial instrument issued.
39. Revenue
Accounting policies for recognition and measurement of revenueGeneral principles of revenue recognition
The Company has fulfilled its obligations under the contract, that is, when the customer acquires controlof the relevant goods or services, the revenue is recognized according to the transaction price apportioned tothe performance obligations.
Performance obligation refers to the commitment of the Company in the contract to assign commoditiesor services that can be clearly distinguished to the customer.Obtaining the control right of the related commodity means to be able to dominate the use of thecommodity and obtain almost all the economic benefits from it.The Company shall evaluate the contract on the commencement date of the contract, identify theindividual performance obligations contained in the contract, and determine whether each individualperformance obligation shall be performed within a certain period of time or at a certain point in time. If oneof the following conditions is satisfied, the performance obligation shall be performed within a certain periodof time, and the Company shall recognize the income within a certain period of time according to theperformance progress of the Company: (1) the client shall obtain and consume the economic benefits broughtby the performance of the Company at the same time; (2) the customer is able to control the goods underconstruction during the performance of the Company; and (3) the products produced by the Company duringthe performance of the contract are of irreplaceable use, and the Company is entitled to collect payment forthe part of the contract which has been completed so far during the whole term of the contract. Otherwise, theCompany recognizes revenue at the time point when the customer acquires control of the relevant goods orservices.For the performance obligations performed during a certain period of time, the Company will use theoutput/input method to determine the appropriate performance schedule based on the nature of the goods andservices. The output method determines the performance schedule according to the value to the customer ofthe goods that have been transferred to the customer (the input method determines the performance scheduleaccording to the Company's input to fulfill the performance obligation). If the performance schedule cannotbe reasonably determined and the Company is expected to be compensated for the costs already incurred, therevenue shall be recognized in accordance with the amount of costs already incurred until the performanceprogress can be reasonably determined.Specific method of income recognitionThe timing of revenue recognition of the Company for major products respectively are as follows: (1) For BOPPcigarette films, cigarette labels, aseptic packaging products, when the products are delivered to the locationsdesignated by the customers, and the delivery is completed and the evidence of transfer of control of the goods isobtained from the customers. (2) For BOPP flat films and lithium battery separator films, when the delivery hasbeen completed according to the method agreed by the customers, and the evidence of transfer of control of goodsis obtained from the customers or the carriers designated by the customers. (3) For special paper products, theproducts are delivered to designated locations by the customers, the delivery is completed and the evidence ofconforming requirements from customers is obtained.
Differences in accounting policies for revenue recognition due to the adoption of different business models for similar businesses
40. Government grant
Type
Government subsidies are transfers of monetary or non-monetary assets from the government to theGroup at nil consideration. According to the subsidy targets stipulated in the relevant government documents,government subsidies are classified into government subsidies related to assets and government subsidiesrelated to income.
The government subsidies related to assets refer to the government subsidies obtained by the Company
for purchasing and constructing or forming long-term assets in other ways. Government subsidies related toincome refer to government subsidies other than those related to assets.
Recognition of government subsidiesIf there is evidence at the end of the period that the Company can meet the relevant conditions specifiedin the financial support policy and it is expected to receive the financial support funds, the governmentsubsidy shall be recognized according to the receivable amount. Otherwise, government subsidies arerecognized when they are actually received.If a government subsidy is a monetary asset, it is measured at the amount received or receivable. If agovernment subsidy is a non-monetary asset, it is measured at fair value. If the fair value cannot be obtainedin a reliable way, it is measured at the nominal amount (RMB1). Government subsidies measured at nominalamounts are recognized directly in the current profit and loss.
Accounting treatmentAccording to the essence of economic business, the Company determines whether the total amount methodor the net amount method should be used for accounting treatment of a certain type of government subsidybusiness. Generally, the Company only selects one method for the same or similar government subsidy business,and consistently uses the method for the business.The government subsidies related to the assets shall be written off against the book value of the relevantassets or recognized as deferred income. If the government subsidy related to the asset is recognized as deferredincome, it shall be recorded into the profit and loss in stages in accordance with a reasonable and systematicmethod during the service life of the asset built or purchased.If the government subsidy related to the income is used to compensate the relevant expenses or losses of theenterprise in the future period, it shall be recognized as deferred income and recorded into the current profit andloss or the relevant costs shall be written off during the period of recognition of the relevant expenses or losses; Ifit is used to compensate the related expenses or losses incurred by the enterprise, it shall be directly recorded intothe current profit and loss or the relevant costs shall be written off.The government subsidies related to the daily activities of the enterprise shall be included in other income orused to write off related costs and expenses; Government subsidies not related to the daily activities of theenterprise shall be included in the non-operating income and expenditure.For preferential loans for policy discount, if the government finance department appropriates the discountedfunds to the lending bank, the borrowing cost is accounted for according to the principal of the loan and the policypreferential interest rate, with the amount actually received as the entry value of the loan. If the governmentfinance department directly appropriates the interest subsidy funds to the Company, the subsidies offset the relatedborrowing costs.In case that a confirmed government subsidy is required to be returned, the book value of the asset is adjusted ifthe book value of relevant assets is offset at the initial recognition; if there is related deferred income, the bookbalance of deferred income is offset, and the excess is included in the current profit and loss; in case of othercircumstances, it is directly included in the current profit and loss.
41. Deferred income tax assets/Deferred income tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arisingbetween the tax bases of assets and liabilities and their carrying amounts (temporary differences). On the balancesheet date, deferred tax assets and deferred tax liabilities are measured at the applicable tax rate during the periodwhen the asset is expected to be recovered or the liability is expected to be settled.
Basis for recognition of deferred income tax assets
The Company recognizes the deferred tax assets generated by the deductible temporary differences to theextent that it is likely to obtain the taxable income that can be used to offset the deductible temporarydifferences, carry forward the deductible losses and tax credits in the following years. However, deferred taxassets arising from the initial recognition of assets or liabilities in transactions with the followingcharacteristics shall not be recognized: (1) the transaction is not a business combination; and (2) thetransaction does not affect the accounting profit or taxable income or deductible loss.For the deductible temporary differences related to the investment of associated enterprises, if thefollowing conditions are met at the same time, the corresponding deferred tax assets shall be confirmed: thetemporary differences are likely to be reversed in the foreseeable future, and the taxable income used todeduct the deductible temporary differences is likely to be obtained in the future.Basis for recognition of deferred income tax liabilitiesThe Company recognizes the taxable temporary differences that should be paid but not paid in the currentperiod and the previous period as deferred tax liabilities. But excluding:
(1) The temporary difference formed by the initial confirmation of goodwill;
(2) The transaction or event not formed by business combination, and the occurrence of the transaction orevent does not affect the accounting profit or the temporary difference formed by the taxable income (ordeductible loss);
(3) For the taxable temporary difference related to the investment of subsidiaries and associated enterprises, thetime of reversal of the temporary difference can be controlled and the temporary difference is unlikely to bereversed in the foreseeable future.
42. Leases
(1) Accounting treatment for operating leases
(1) Operating leasing assets
The rental fees paid by the Company for the lease of assets are apportioned on a straight-line basis over theentire lease term without deduction of the rent-free period and included in the current expenses. The initial directcosts associated with the lease transactions paid by the Company are included in the current expenses.
When the lessor of an asset bears the expenses related to the lease that should be borne by the Company, theCompany deducts the part of the expenses from the total rent. The deducted rental expenses are apportionedduring the lease term and included in the current expenses.
(2) Operating leased assets
The rental fees charged by the Company for renting out assets are apportioned on a straight-line basis overthe entire lease term without deduction of the rent-free period and is recognized as rental income. The initial directexpenses related to lease transactions paid by the Company are included in the current expenses; if the amount is asignificant one, it is capitalized and included in the current income in the same period as the lease income isrecognized throughout the lease period.When the Company bears the lease-related expenses that should be borne by the lessee, the Company deducts thepart of the expenses from the total rental income, and distributes the deducted rental expenses within the leaseterm.
(2) Accounting treatment for finance leases
(1) Financial leased assets: On the date when lease starts, the Company recognizes the fair value of the leasedasset or the present value of the minimum lease payment as the book value of the leased asset, whichever is lower,and recognizes the minimum lease payment amount as the book value of the long-term payable, and the differencebetween the two is recognized as unconfirmed financing expenses. For the identification basis, valuation anddepreciation methods of the finance leasing assets, please refer to "24. Fixed assets" of "V. Important AccountingPolicies and Accounting Estimates" in this section.The Company adopts the effective interest rate method to amortize the unrecognized financing expensesduring the asset lease period and includes them in financial expenses.
(2) Financial leasing assets: On the date when lease starts, the Company recognizes the receivable of the financiallease, the difference between the sum of unsecured residual value and its present value as unrealized financingincome, and recognizes the lease income in the future period of the lease. The initial direct costs incurred by theCompany in connection with lease transactions are included in the initial measurement of financial leasereceivable, and the amount of income recognized during the lease term is reduced.
43. Other critical accounting policies and accounting estimates
1> Discontinuation of operation
The Company recognizes a component disposed of or classified as a component that can be separatelydistinguished from the category held for sale and satisfied any of the following as a component of discontinuedoperations:
(1) The component represents an independent major business or a separate major business area;
(2) This component is part of a related plan to dispose of an independent major business or a separate majoroperating area;
(3) This component is a subsidiary that is acquired for resale.
Operating profit and loss, such as impairment losses for discontinued operations and the amount reversed,and disposal profit and loss are presented in the income statement as profit and loss of discontinued operations.2> Hedge accounting
The Company categorizes the hedging instruments into fair value hedges, cash flow hedges and netinvestment hedges in a foreign operation, in accordance with hedging relationships.For hedging instruments satisfy all following conditions, hedge accounting is applied for accounting
treatment:
(1) The hedging relationship is comprised of only qualifying hedging instruments and hedged items.
(2) Prior to hedging, the Company has formally designated the hedging instruments and the hedged items,and prepared the documentation regarding hedging relationships and risk management strategy and objectivesfor undertaking the hedging.
(3) The hedging relationship meets the hedge effectiveness requirements.
The hedging relationship that meets all of the following conditions, are regarded in accordance withhedge effectiveness requirements.
1) There is an economic relationship between the hedged item and the hedging instrument, which makesthe values of the hedging instruments and the hedged items generally move in the opposite direction becauseof the same hedged risk.
2) The effect of credit risk does not dominate the value changes that result from that economicrelationship between the hedged item and the hedging instruments.
3) The hedge ratio of hedging relationship is the same as that resulting from the quantity of the hedgeditem that the Company actually hedges and the quantity of the hedging instrument that the Company actuallyuses to hedge that the quantity of hedged item. However, that designation shall not reflect an imbalancebetween the weightings of the hedged item and the hedging instrument that would create the hedgeineffectiveness that could result in an economic outcome that would be inconsistent with the purpose of hedgeaccounting.Accounting treatment for fair value hedges
(1) Gains or losses arising from hedging instruments shall be included in current profit and loss. If thehedging instrument hedges the non tradable equity instrument investment (or its components) that is selectedto be measured at fair value and its change is included in other comprehensive income, the gains or lossesgenerated by the hedging instrument are included in other comprehensive income.
(2) Gains or losses of the hedged item arising from the hedged risk exposure are included in the currentprofit and loss, and the book value of the hedged item that is not measured at fair value is adjusted. If thehedged item is a financial asset (or its component) measured at fair value and its change is included in othercomprehensive income, the profit or loss generated from the hedged risk exposure is included in the currentprofit and loss, and its book value has been measured at fair value without adjustment; the hedged item ismeasured at fair value and its change is included in other comprehensive income for the Company. For thenon-tradable equity instrument investment (or its components) of income, the gains or losses arising from thehedged risk exposure are included in other comprehensive income, and its book value has been measured atfair value without adjustment.
If the hedged item is an unrecognized firm commitment (or its component), the accumulated change infair value caused by the hedged risk after the designation of the hedging relationship shall be recognized as anasset or liability, and the relevant gains or losses shall be included in the profits and losses of each relevantperiod. When the assets are determined or commitments are made, the initial recognised amount of the assetor liability is adjusted to include the fair value cumulative change of the recognized hedged item.
(3) If the hedged item is a financial instrument (or its component) measured at amortized cost, theadjustment of book value of the hedged item shall be amortized according to the actual interest raterecalculated on the amortization date and included in the current profit and loss. The amortization can startfrom the adjustment date, but not later than the time point when the hedging gains and losses are adjusted forthe termination of the hedged item. If the hedged item is a financial asset (or its component) measured at fairvalue and its change is included in other comprehensive income, the accumulated recognized hedging gains orlosses shall be amortized in the same way and included in the current profit and loss, but the book value of thefinancial asset (or its component) shall not be adjusted.Accounting for cash flow hedges
(1) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedgeshall be recognized in other comprehensive income: The amount of the cash flow hedge reserve shall bedetermined by the lower of the absolute amount of the following two items:
1) the cumulative gain or loss on the hedging instrument from inception of the hedge; and
2) the present value of the cumulative change in the hedged expected future cash flows of the hedgeditem from inception of the hedge. The amount of the cash flow hedge reserve recognized in the othercomprehensive income during each accounting period is the change in the cash flow hedge reserve for theaccounting period.
(2) Any remaining gain or loss on the hedging instrument (or any gain or loss required to balance thechange in the cash flow hedge reserve calculated) is hedge ineffectiveness that shall be recognized in profit orloss.
(3) The amount that has been accumulated in the cash flow hedge reserve shall be accounted for asfollows:
1) If a hedged forecast transaction subsequently results in the recognition of a non-financial asset ornon-financial liability, or a hedged forecast transaction for a non-financial asset or a non-financial liabilitybecomes a firm commitment for which fair value hedge accounting is applied, the Company shall remove thatamount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount ofthe asset or the liability.
2) For cash flow hedges other than those covered by a), that amount shall be reclassified from thecash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods duringwhich the hedged expected future cash flows affect profit or loss.
3) However, if that amount is a loss and the Company expects that all or a portion of that loss will notbe recovered in one or more future periods, it shall immediately reclassify the amount that is not expected tobe recovered into profit or loss as a reclassification adjustment.Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted foras part of the net investment, shall be accounted for similarly to cash flow hedges:
(1) The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall berecognized in other comprehensive income.
The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge that hasbeen accumulated in the foreign currency translation reserve shall be reclassified from equity to profit or loss as areclassification adjustment on the disposal or partial disposal of the foreign operation; and
(2) The ineffective portion shall be recognized in profit or loss.
5. Termination of hedge accounting
In case of any of the following circumstances, the application of hedge accounting shall be terminated:
(1) the hedging relationship no longer meets the risk management objective on the basis of which it qualifiedfor hedge accounting.
(2) the hedging instrument or instruments have been expired, sold or terminated or executed.
(3) there is no longer an economic relationship between the hedged item and the hedging instrument or theeffect of credit risk starts to dominate the value changes that result from that economic relationship.
(4) The hedging relationship does not satisfy other conditions of undertaking hedge accounting. Ifrebalancing of the hedging relationship applies, the Company shall consider the rebalancing the hedgingrelationship first and subsequently assess whether the hedging relationship satisfies the conditions of undertakinghedge accounting.
On rebalancing of the hedging relationship, the hedge ratio might be adjusted in such a way that some of thevolume of the hedged item is no longer part of the hedging relationship; hence, hedge accounting is terminatedonly for the volume of the hedged item that is no longer part of the hedging relationship.
6. Option to designate a credit exposure as measured at fair value
When the credit risk exposure of a financial instrument (or its components) is managed by using a creditderivative instrument measured at fair value through current profit and loss, the financial instrument (or itscomponents) can be at the time of initial recognition, subsequent measurement or unconfirmed, it shall bedesignated as a financial instrument measured at fair value with its changes included in the current profit and loss,
and written records shall be made at the same time, but the following conditions shall be met simultaneously:
(1) the name of the credit exposure (for example, the borrower, or the holder of a loan commitment) matchesthe reference entity of the credit derivative (‘name matching’); and
(2) the seniority of the financial instrument matches that of the instruments that can be delivered in accordancewith the credit derivative.
44. Changes in critical accounting policies and accounting estimates
(1) Changes in critical accounting policies
√ Applicable □ N/A
| Content and reason of accounting policy change | Procedures for approval | Notes |
| The Company will implement the Accounting Standards for Business Enterprises No. 14 - Revenue revised by the Ministry of Finance in 2017 as of January 1, 2020. | The “Proposal on Changes in Accounting Policies” was reviewed and approved on the 1st meeting of the fourth board of directors and the first meeting of the fourth board of supervisors held by the Company on April 24, 2020. |
Impact of the implementation of the new revenue standards on the Company
The Company will implement the Accounting Standards for Business Enterprises No. 14 - Revenue revisedby the Ministry of Finance in 2017 as of January 1, 2020. The accounting policies after the change are detailed inNote IV.
In accordance with the convergence regulations of the new revenue standards, the cumulative impact of thefirst implementation of the standards will be adjusted to the amount of retained earnings and other related items inthe financial statements at the beginning of the first implementation of the current period (January 1, 2020)without any adjustment to the information of the comparable period.
In the implementation of the new revenue standards, the Company only adjusts the cumulative impact of thecontracts that have not been completed on the first execution date; No retroactive adjustment is made for contractchanges that occur before the beginning of the earliest comparable period or before the beginning of 2020, butinstead, the performance obligations performed and outstanding are identified, the transaction price is determinedand the transaction price is apportioned between the performance obligations performed and outstanding inaccordance with the final arrangements for the contract changes.
The impact of the implementation of the new revenue standards on the relevant items of the balance sheet atthe beginning of this period is as follows:
| Item | December 31, 2019 | Accumulated impact amount | January 1, 2020 | ||
| Reclassify (Note 1) | Remeasure (Note 2) | Subtotal | |||
| Advances from customers | 9,241,127.99 | -9,241,127.99 | |||
| Contractual liabilities | 8,177,989.37 | 8,177,989.37 | |||
| Other current liabilities | 1,063,138.62 | 1,063,138.62 | |||
| Total liabilities | 9,241,127.99 | 9,241,127.99 |
Note: the above table only presents the affected financial statement items, and the unaffected financialstatement items are not included. Therefore, the subtotal and total disclosed cannot be recalculated according tothe figures presented in the above table.
Note 1: The Company's receipts in advance are reclassified to contract liabilities and related VAT isreclassified to other current liabilities.
The impact of the implementation of the new revenue standards on the consolidated balance sheet as at 31December 2020 is as follows:
| Item | Number of statements | Assuming the original guidelines are followed | Influence |
| Advances from customers | 8,892,912.54 | -8,892,912.54 | |
| Contractual liabilities | 7,677,129.87 | 7,677,129.87 | |
| Other current liabilities | 1,021,339.34 | 1,021,339.34 | |
| Total liabilities | 8,892,912.54 | 8,892,912.54 |
The impact of the implementation of the new revenue standards on the 2020 consolidated income statementis as follows:
| Item | Number of statements | Assuming the original guidelines are followed | Influence |
| Operating cost | 2,456,998,310.23 | 2,398,520,338.41 | 58,477,971.82 |
| Selling expenses | 56,365,549.96 | 114,843,521.78 | -58,477,971.82 |
(2) Changes in critical accounting estimates
□ Applicable √ N/A
(3) First implementation of the new revenue standards and new lease standards since 2020 to adjust thefirst implementation of relevant items of financial statements at the beginning of the year
ApplicableAdjustment of items of the balance sheet at the beginning of the year
√ Yes □ No
CONSOLIDATED BALANCE SHEET
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment |
| Current assets: | |||
| Monetary funds | 1,011,554,636.06 | 1,011,554,636.06 | |
| Settlement reserves | |||
| Loans to banks and other financial institutions | |||
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 185,281,908.27 | 185,281,908.27 | |
| Accounts receivable | 1,424,354,132.31 | 1,424,354,132.31 | |
| Receivable financing | 182,535,597.54 | 182,535,597.54 | |
| Prepayments | 105,308,597.08 | 105,308,597.08 | |
| Premiums receivable | |||
| Reinsurance premium receivable | |||
| Reinsurance contract provision receivable | |||
| Other receivables | 831,637,318.80 | 831,637,318.80 | |
| Including: Interest receivable | |||
| Dividends receivable | 1,188,900.87 | 1,188,900.87 | |
| Financial assets held under resale agreements | |||
| Inventories | 759,230,046.85 | 759,230,046.85 | |
| Contractual assets | |||
| Held-for-sales assets |
| Non-current assets due within one year | |||
| Other current assets | 523,124,562.78 | 523,124,562.78 | |
| Total current assets | 5,023,026,799.69 | 5,023,026,799.69 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | 3,343,466.01 | 3,343,466.01 | |
| Investments in other equity instruments | |||
| Other non-current financial assets | |||
| Investment properties | 10,001,993.90 | 10,001,993.90 | |
| Fixed assets | 4,936,597,979.17 | 4,936,597,979.17 | |
| Construction in progress | 1,554,274,795.85 | 1,554,274,795.85 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 298,768,420.95 | 298,768,420.95 | |
| Development expenditures | |||
| Goodwill | 44,154,633.34 | 44,154,633.34 | |
| Long-term unamortized expenses | 2,603,725.01 | 2,603,725.01 | |
| Deferred income tax assets | 94,713,958.19 | 94,713,958.19 | |
| Other non-current assets | 225,702,589.31 | 225,702,589.31 | |
| Total non-current assets | 7,170,161,561.73 | 7,170,161,561.73 | |
| Total assets | 12,193,188,361.42 | 12,193,188,361.42 | |
| Current liabilities: | |||
| Short-term borrowings | 2,670,365,032.83 | 2,670,365,032.83 | |
| Borrowings from the central bank | |||
| Placements from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 522,674,089.50 | 522,674,089.50 | |
| Accounts payable | 382,691,559.85 | 382,691,559.85 | |
| Advances from customers | 9,241,127.99 | -9,241,127.99 | |
| Contractual liabilities | 8,177,989.37 | 8,177,989.37 | |
| Financial assets sold under repurchase agreements | |||
| Customer bank deposits and due to banks and other financial institutions | |||
| Customer brokerage deposits | |||
| Securities underwriting brokerage deposits | |||
| Employee benefits payable | 20,194,051.89 | 20,194,051.89 | |
| Taxes payable | 77,254,716.63 | 77,254,716.63 | |
| Other payables | 98,657,984.36 | 98,657,984.36 | |
| Including: Interest payable | |||
| Dividends payable | 7,574,667.67 | 7,574,667.67 | |
| Fees and commissions payable | |||
| Reinsurance amounts payable | |||
| Hold-for-sale liabilities | |||
| Non-current liabilities due within one year | 448,243,627.51 | 448,243,627.51 | |
| Other current liabilities | 1,063,138.62 | 1,063,138.62 | |
| Total current liabilities | 4,229,322,190.56 | 4,229,322,190.56 | |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | 1,967,813,815.80 | 1,967,813,815.80 | |
| Bonds payable |
| Including: preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | 435,042,080.77 | 435,042,080.77 | |
| Deferred income tax liabilities | 60,696,969.12 | 60,696,969.12 | |
| Other non-current liabilities | 619,187,419.79 | 619,187,419.79 | |
| Total non-current liabilities | 3,082,740,285.48 | 3,082,740,285.48 | |
| Total liabilities | 7,312,062,476.04 | 7,312,062,476.04 | |
| Owners’ equity: | |||
| Share capital | 805,370,770.00 | 805,370,770.00 | |
| Other equity instruments | |||
| Including: preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,894,027,132.14 | 1,894,027,132.14 | |
| Less: treasury stock | 28,137,312.00 | 28,137,312.00 | |
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 135,153,637.58 | 135,153,637.58 | |
| General risk provision | |||
| Undistributed profits | 1,744,638,648.71 | 1,744,638,648.70 | |
| Total owners’ equity attributable to parent company | 4,551,052,876.43 | 4,551,052,876.43 | |
| Minority interests | 330,073,008.95 | 330,073,008.95 | |
| Total owners’ equity | 4,881,125,885.38 | 4,881,125,885.38 | |
| Total liabilities and owners’ equity | 12,193,188,361.42 | 12,193,188,361.42 |
Adjustment statementCOMPANY BALANCE SHEET
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjustment |
| Current assets: | |||
| Monetary funds | 173,535,371.19 | 173,535,371.19 | |
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 9,600,000.00 | 9,600,000.00 | |
| Accounts receivable | 41,692,384.78 | 41,692,384.78 | |
| Receivable financing | |||
| Prepayments | 1,230,107.09 | 1,230,107.09 | |
| Other receivables | 1,101,125,909.57 | 1,101,125,909.57 | |
| Including: Interest receivable | |||
| Dividends receivable | 272,540,000.00 | 272,540,000.00 | |
| Inventories | 24,548,426.09 | 24,548,426.09 | |
| Contractual assets | |||
| Held-for-sales assets | |||
| Non-current assets due within one year | |||
| Other current assets | 1,866,350.09 | 1,866,350.09 | |
| Total current assets | 1,353,598,548.81 | 1,353,598,548.81 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term receivables | |||
| Long-term equity investments | 4,167,834,622.62 | 4,167,834,622.62 | |
| Investments in other equity instruments |
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 78,899,091.13 | 78,899,091.13 | |
| Construction in progress | 2,401,314.53 | 2,401,314.53 | |
| Productive biological assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 12,163,386.82 | 12,163,386.82 | |
| Development expenditures | |||
| Goodwill | |||
| Long-term unamortized expenses | |||
| Deferred income tax assets | 9,915,678.59 | 9,915,678.59 | |
| Other non-current assets | 8,416,961.95 | 8,416,961.95 | |
| Total non-current assets | 4,279,631,055.64 | 4,279,631,055.64 | |
| Total assets | 5,633,229,604.45 | 5,633,229,604.45 | |
| Current liabilities: | |||
| Short-term borrowings | 181,264,450.04 | 181,264,450.04 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 178,321,179.75 | 178,321,179.75 | |
| Accounts payable | 41,490,200.04 | 41,490,200.04 | |
| Advances from customers | 688,175.71 | -688,175.71 | |
| Contractual liabilities | 609,005.05 | 609,005.05 | |
| Employee benefits payable | 198,382.51 | 198,382.51 | |
| Taxes payable | 5,190,155.03 | 5,190,155.03 | |
| Other payables | 502,673,483.50 | 502,673,483.50 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Hold-for-sale liabilities | |||
| Non-current liabilities due within one year | |||
| Other current liabilities | 79,170.66 | 79,170.66 | |
| Total current liabilities | 909,826,026.58 | 909,826,026.58 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payable | |||
| Estimated liabilities | |||
| Deferred income | |||
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | |||
| Total liabilities | 909,826,026.58 | 909,826,026.58 | |
| Owners’ equity: | |||
| Share capital | 805,370,770.00 | 805,370,770.00 | |
| Other equity instruments | |||
| Including: preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 3,651,035,741.69 | 3,651,035,741.69 | |
| Less: treasury stock | 28,137,312.00 | 28,137,312.00 | |
| Other comprehensive income | |||
| Special reserve |
| Surplus reserve | 107,401,126.59 | 107,401,126.59 | |
| Undistributed profits | 187,733,251.59 | 187,733,251.59 | |
| Total owners’ equity | 4,723,403,577.87 | 4,723,403,577.87 | |
| Total liabilities and owners’ equity | 5,633,229,604.45 | 5,633,229,604.45 |
Adjustment statement
(4) Description of comparative data in the previous period retroactively adjusted by the firstimplementation of the new revenue standards and new lease standards since 2020
√ Applicable □ N/A
The Company has implemented the new revenue guidelines for the first time this year. The Company recognizes the obligation totransfer goods to customers due to customer consideration received or receivable at the end of 2019 as a contractual liability; otherthan that, the Company has no other adjustments.The implementation of the above guidelines has no significant impact on the financial statements during the reporting period.
45. Others
VI. Taxation
1. Main Tax Types and Tax Rates
| Tax type | Taxation basis | Tax rate |
| Value added tax (“VAT”) | Taxable value-added amount (Tax payable is calculated using the taxable sales amount/taxable service income multiplied by the applicable tax rate less deductible VAT input of the current period or taxable turnover amount multiplied by the VAT rate) | 13%, 9%, 6% |
| City maintenance and construction tax | Amount of VAT paid | 7%, 5%, 1% |
| Corporate income tax | Taxable income | 25%, 15%, 16.5%, 9% |
Explanation of disclosure for taxpayers with different corporate income tax rates
| Taxpayer | Income tax rate |
| The Company | 15% |
| Yunnan Dexin Paper Co., Ltd. | 15% |
| Shenzhen Qingsong Jinze Technology Development Co., Ltd. | 25% |
| Hunan Qingsong Jingze Technology Development Co., Ltd. | 25% |
| Yunnan Hongchuang Packaging Co., Ltd. | 15% |
| Wuxi Energy Trading Co., Ltd. | 25% |
| Yunnan Hongta Plastic Co., Ltd. | 15% |
| Hongta Plastic (Chengdu) Co., Ltd. | 15% |
| Yuxi Feiermu Trading Co., Ltd. | 25% |
| Shanghai Energy New Material Technology Co., Ltd. | 15% |
| Zhuhai Energy New Material Technology Co., Ltd. | 15% |
| Guangdong Energy New Material Institute Co., Ltd. | 25% |
| Wuxi Energy New Material Technology Co., Ltd. | 15% |
| Jiangxi Tonry New Energy Technology Development Co., Ltd. | 15% |
| Jiangxi Ruijie New Material Technology Co., Ltd. | 25% |
| Suzhou Green Power New Energy Materials Co., Ltd. | 15% |
| Foshan Donghang Photoelectric Technology Co., Ltd. | 15% |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | 15% |
| Hainan Energy Investment Co., Ltd. | 25% |
| SEMCORP Global Holdings Korlátolt Felelsség Társaság | 9% |
| SEMCORP Hungary Korlátolt Felelsség Társaság | 9% |
| Innovative New Materials (Hong Kong) Co., Ltd | 16.5% |
2. Preferential tax treatment
According to the announcement on enterprise income tax issues related to the implementation of the WesternDevelopment Strategy (Announcement No. 12, 2012 of the State Administration of Taxation), the Company andits subsidiaries Yunnan Hongta Plastic Co., Ltd., Yunnan Dexin Paper Co., Ltd. and Chongqing YuntianhuaNewmi Technological Co., Ltd. and its sub-subsidiary Hongta Plastic (Chengdu) Co., Ltd. continue to enjoy thepreferential tax policies for the Western Development in the current period, with the tax rate 15%.According to the enterprise income tax law of the People’s Republic of China (2018 Amendment) and Notice ofthe Ministry of Science and Technology, the Ministry of Finance, the State Administration of Taxation on therevision and printing of the Administrative Measures for the Recognition of High and New TechnologyEnterprises (GKFH [2016] No. 32), its subsidiary Shanghai Energy New Material Technology Co., Ltd.,sub-subsidiaries Zhuhai Energy New Material Technology Co., Ltd., Jiangxi Tonry New Energy TechnologyDevelopment Co., Ltd. and Wuxi Energy New Material Technology Co., Ltd., Suzhou Green Power New EnergyMaterial Co., Ltd. and sub-subsidiary Foshan Donghang Photoelectric Technology Co., Ltd. are recognized ashigh-tech enterprises upon application, and the preferential tax rate for high-tech enterprises shall be 15%.
3. Others
SEMCORP Global Holdings Korlátolt Felelsség Társaság and SEMCORP Hungary Korlátolt Felelsség Társaságare subject to the Hungarian government corporate income tax, and the statutory tax rate is 9%.Innovative new materials (Hong Kong) Co., Ltd. is subject to Hong Kong Special Administrative Regionprofits tax, with the statutory tax rate of 16.5%.
VII. Notes to Items in Consolidated Financial Statements
1. Monetary funds
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash | 144,778.56 | 14,120.97 |
| Cash at bank | 2,054,771,005.99 | 715,641,793.81 |
| Other currency fund | 319,828,078.15 | 295,898,721.28 |
| Total | 2,374,743,862.70 | 1,011,554,636.06 |
| Including: total amount of funds deposited abroad | 1,838,836.77 | 16,678.12 |
Other explanations
The details of restricted monetary funds are as follows:
| Item | Closing balance | Opening balance |
| Bank acceptance guarantee deposit | 291,920,509.32 | 214,406,111.22 |
| L / C deposit | 24,511,902.16 | 76,230,110.06 |
| Guarantee bond | 5,262,500.00 | |
| L/G deposit | 2,600,000.00 |
| Total | 319,032,411.48 | 295,898,721.28 |
2. Trading financial assets
| Item | Closing balance | Opening balance |
| Financial assets that are measured at fair value and whose changes are included in the current profit and loss | 1,340,551,914.18 | |
| Including: | ||
| Structured deposits | 1,340,551,914.18 | |
| Total | 1,340,551,914.18 |
Other explanations:
3. Derivative financial assets: None
4. Notes receivable
(1) Notes receivable by type
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance | 115,702,598.65 | 55,600,772.01 |
| Commercial acceptance | 271,293,369.17 | 129,681,136.26 |
| Provision for bad debts | -7,256,643.88 | |
| Total | 379,739,323.94 | 185,281,908.27 |
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Including: | ||||||||||
| Notes receivable with bad debt reserve withdrawn as per the portfolio of credit risk characteristics | 386,995,967.82 | 100.00% | 7,256,643.88 | 1.88% | 379,739,323.94 | 185,281,908.27 | 100.00% | 185,281,908.27 | ||
| Including: | ||||||||||
| Bank acceptance note portfolio | 115,702,598.65 | 29.90% | 115,702,598.65 | 55,600,772.01 | 30.01% | 55,600,772.01 | ||||
| Commercial acceptance bill portfolio | 271,293,369.17 | 70.10% | 7,256,643.88 | 2.67% | 264,036,725.29 | 129,681,136.26 | 69.99% | 129,681,136.26 | ||
| Total | 386,995,967.82 | 100.00% | 7,256,643.88 | 1.88% | 379,739,323.94 | 185,281,908.27 | 100.00% | 185,281,908.27 | ||
Provision for bad debts by portfolio:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Bank acceptance note portfolio | 115,702,598.65 | ||
| Commercial acceptance bill portfolio | 271,293,369.17 | 7,256,643.88 | 2.67% |
| Total | 386,995,967.82 | 7,256,643.88 | -- |
Description of the basis for determining the portfolio:
If provision was made for bad debts of notes receivable in accordance with the general expected credit loss model, please discloserelevant information of provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
(2) Provision for bad debts accrued, recovered or reversed during the Reporting Period
Provision for bad debts during the Reporting Period:
Unit: RMB
| Type | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reverse | Write-offs | Other | |||
| Notes receivable subject to individual impairment assessment | ||||||
| Notes receivable subject to impairment assessment by portfolio | 7,256,643.88 | 7,256,643.88 | ||||
| Total | 7,256,643.88 | 7,256,643.88 | ||||
Among them, the important amount of recovery or reverse of bad debt provision for the period:
□ Applicable √ N/A
(3) Notes receivable pledged by the Company at the end of the Reporting Period
Unit: RMB
| Item | Amount pledged at the end of the Reporting Period |
| Bank acceptance | 22,174,829.70 |
| Total | 22,174,829.70 |
(4) Notes receivable endorsed or discounted by the Company, which were not yet due on the balance sheetdate as at the end of the Reporting Period
Unit: RMB
| Item | Derecognized amount at the end of the Reporting Period | Recognized amount at the end of the Reporting Period |
| Bank acceptance | 682,587,200.32 | |
| Commercial acceptance | 19,179,415.84 | |
| Total | 701,766,616.16 |
(5) Notes receivable that were converted to accounts receivable due to the drawer’s failure to perform thecontract: None
(6) Actual write-off of notes receivable for the period: None
5. Accounts receivable
(1) Disclosure of accounts receivable by type
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Accounts receivable with significant single amount and having bad debt reserve independently | 81,012,693.96 | 3.32% | 81,012,693.96 | 100.00% | 16,879,255.32 | 1.15% | 16,879,255.32 | 100.00% | ||
| Including: | ||||||||||
| Accounts receivable with bad debt reserve withdrawn as per the portfolio of credit risk characteristics | 2,359,776,648.05 | 96.68% | 31,560,941.78 | 1.34% | 2,328,215,706.27 | 1,454,745,838.46 | 98.85% | 30,391,706.15 | 2.09% | 1,424,354,132.31 |
| Including: | ||||||||||
| Aging portfolio | 2,359,776,648.05 | 96.68% | 31,560,941.78 | 1.34% | 2,328,215,706.27 | 1,454,745,838.46 | 98.85% | 30,391,706.15 | 2.09% | 1,424,354,132.31 |
| Total | 2,440,789,342.01 | 100.00% | 112,573,635.74 | 4.61% | 2,328,215,706.27 | 1,471,625,093.78 | 100.00% | 47,270,961.47 | 3.21% | 1,424,354,132.31 |
Provision for bad debts by individual:
Unit: RMB
| Name | Closing balance | |||
| Book balance | Provision for bad debts | Provision proportion | Provision reason | |
| OptimumNano Energy Co., Ltd. | 32,249,003.26 | 32,249,003.26 | 100.00% | Estimated to be ncollectible |
| Shaanxi OptimumNano New Energy Co., Ltd. | 14,847,098.36 | 14,847,098.36 | 100.00% | Estimated to be ncollectible |
| Shenzhen Heda New Material Technology Co., Ltd. | 7,129,136.06 | 7,129,136.06 | 100.00% | Estimated to be ncollectible |
| Yunnan Zhongyun Li’ao Package Printing Co., Ltd. | 6,062,972.00 | 6,062,972.00 | 100.00% | Estimated to be ncollectible |
| Heilongjiang Longdan Dairy Technology Co., Ltd. | 5,075,381.00 | 5,075,381.00 | 100.00% | Estimated to be ncollectible |
| Wuhu ETC Battery Limited | 4,778,521.69 | 4,778,521.69 | 100.00% | Estimated to be ncollectible |
| Zhongshan Yuankangyuan Food Co., Ltd. | 3,555,052.60 | 3,555,052.60 | 100.00% | Estimated to be ncollectible |
| Chengdu Henglide Food Co., Ltd. | 2,780,677.50 | 2,780,677.50 | 100.00% | Estimated to be ncollectible |
| Jingzhou Wotema Battery Co., Ltd. | 1,175,130.00 | 1,175,130.00 | 100.00% | Estimated to be ncollectible |
| Shenzhen Lukewan Technology | 1,000,000.00 | 1,000,000.00 | 100.00% | Estimated to be ncollectible |
| Co., Ltd. | ||||
| Hubei Hummer Technology Co., Ltd. | 773,544.78 | 773,544.78 | 100.00% | Estimated to be ncollectible |
| Langfang Beifang Jiake Printing Co., Ltd. | 500,000.00 | 500,000.00 | 100.00% | Estimated to be ncollectible |
| Zhongci (Qingdao) New Energy Automobile Manufacturing Co., Ltd. | 335,596.70 | 335,596.70 | 100.00% | Estimated to be ncollectible |
| Shandong Wina Green Power Technology Co., Ltd. | 285,251.12 | 285,251.12 | 100.00% | Estimated to be ncollectible |
| Shandong Hengyu New Energy Co., Ltd. | 161,302.38 | 161,302.38 | 100.00% | Estimated to be ncollectible |
| Henan Haibo Printing Co., Ltd. | 137,267.60 | 137,267.60 | 100.00% | Estimated to be ncollectible |
| Guangdong Ruitong New Energy Co., Ltd. | 60,481.98 | 60,481.98 | 100.00% | Estimated to be ncollectible |
| Shantou Jiaxin Beverage Co., Ltd. | 49,158.53 | 49,158.53 | 100.00% | Estimated to be ncollectible |
| Henan Haocai New Material Technology Co., Ltd. | 29,475.60 | 29,475.60 | 100.00% | Estimated to be ncollectible |
| Tongren Yu’nuo Ecological Animal Husbandry Technology Co., Ltd. | 27,642.80 | 27,642.80 | 100.00% | Estimated to be ncollectible |
| Total | 81,012,693.96 | 81,012,693.96 | -- | -- |
Provision for bad debts by portfolio:
Unit: RMB
| Name | Closing balance | ||
| Book balance | Provision for bad debts | Provision proportion | |
| Less than 1 year | 2,204,111,170.28 | 12,231,876.61 | 0.55% |
| 1-2 years | 94,170,893.41 | 5,792,320.60 | 6.15% |
| 2-3 years | 38,123,251.26 | 4,140,417.78 | 10.86% |
| 3-4 years | 22,007,215.89 | 8,314,737.86 | 37.78% |
| 4-5 years | 409,061.54 | 126,533.26 | 30.93% |
| Over 5 years | 955,055.67 | 955,055.67 | 100.00% |
| Total | 2,359,776,648.05 | 31,560,941.78 | -- |
If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model, please discloserelevant information of provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Less than 1 year (inclusive) | 2,165,102,226.74 |
| 1-2 years | 135,091,642.10 |
| 2-3 years | 44,131,463.62 |
| Over 3 years | 96,464,009.55 |
| 3-4 years | 84,914,092.94 |
| 4-5 years | 9,391,352.80 |
| Over 5 years | 2,158,563.81 |
| Total | 2,440,789,342.01 |
(2) Provision for bad debts accrued, recovered or reversed during the Reporting PeriodProvision for bad debts during the Reporting Period:
Unit: RMB
| Type | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reverse | Write-offs | Other | |||
| Accounts receivable subject to individual impairment assessment | 16,879,255.32 | 19,111,774.90 | 19,702,028.48 | 64,723,692.22 | 81,012,693.96 | |
| Accounts receivable subject to impairment assessment by portfolio | 30,391,706.15 | 9,414,645.28 | -8,245,409.65 | 31,560,941.78 | ||
| Total | 47,270,961.47 | 28,526,420.18 | 19,702,028.48 | 56,478,282.57 | 112,573,635.74 | |
(3) Actual write-off of accounts receivable for the period
Unit: RMB
| Item | Amount of write-off |
| Actual write-off of accounts receivable | 19,702,028.48 |
Write-off of important accounts receivable:
Unit: RMB
| Company name | Nature of accounts receivable | Amount of write-off | Reason for write-off | Write-off procedures performed | Whether the payment is generated by related party transactions |
| Zhangjiakou Ruiye Commercial & Trading Co., Ltd. | Payment for goods | 11,727,064.10 | Not to be recovered | Board resolution | None |
| Jiangsu Weilou Biotechnology Co., Ltd. | Payment for goods | 2,845,087.00 | Not to be recovered | Board resolution | None |
| Nanchong Pandeng Food Co., Ltd. | Payment for goods | 1,790,545.00 | Not to be recovered | Board resolution | None |
| Baoshan Guorun Industrial Co., Ltd. | Payment for goods | 724,520.50 | Not to be recovered | Board resolution | None |
| Xiamen Huibing Trading Co., Ltd. | Payment for goods | 524,335.00 | Not to be recovered | Board resolution | None |
| AL BADYA INDUSTRY FOR PRODUCING JUICE | Payment for goods | 424,066.58 | Not to be recovered | Board resolution | None |
| Yunnan Baiwang Food Co., Ltd. | Payment for goods | 411,422.00 | Not to be recovered | Board resolution | None |
| Changde Feixiang Bean Industry Co., Ltd. | Payment for goods | 375,094.50 | Not to be recovered | Board resolution | None |
| Youdian'ai (Chuzhou) Health Technology Co., Ltd. | Payment for goods | 239,603.08 | Not to be recovered | Board resolution | None |
| Chongqing Wanzhou Dajin Food and Beverage Factory | Payment for goods | 218,478.00 | Not to be recovered | Board resolution | None |
| Puer City Dai Wang Oils & Foodstuffs Co., Ltd. | Payment for goods | 118,910.76 | Not to be recovered | Board resolution | None |
| Dongguan Kenuo Anti-counterfeiting Technology Co., Ltd | Payment for goods | 39,106.26 | Not to be recovered | Board resolution | None |
| Total | -- | 19,438,232.78 | -- | -- | -- |
(4) Top five customers with closing balance of accounts receivable collected by arrear party
Unit: RMB
| Company name | Closing balance of accounts receivable | Percentage of total of closing balance of accounts receivable | Closing balance of bad debt provision |
| Company 1 | 376,843,150.25 | 15.44% | 1,469,688.29 |
| Company 2 | 273,470,047.72 | 11.20% | 1,900,860.23 |
| Company 3 | 249,855,185.50 | 10.24% | 587,022.77 |
| Company 4 | 129,716,289.82 | 5.31% | 3,428,165.69 |
| Company 5 | 108,130,493.83 | 4.43% | 421,708.93 |
| Total | 1,138,015,167.12 | 46.62% |
(5) Accounts receivable derecognized due to the transfer of financial assets: None
(6) Amount of assets and liabilities generated by transferring accounts receivable and continuing to beinvolved: None
6. Accounts receivable financing
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance | 22,174,829.70 | 9,886,495.00 |
| Commercial acceptance | 172,649,102.54 | |
| Accounts receivable | 380,000,000.00 | |
| Provision for bad debts | -2,622,000.00 | |
| Total | 399,552,829.70 | 182,535,597.54 |
Changes in accounts receivable financing and changes in fair value
√ Applicable □ N/A
The Company believes that for the financing of receivables measured at fair value and whose changes are included in othercomprehensive income, as the remaining maturity is not long and the difference between the actual interest rate and the marketinterest rate is very small, the fair value and the book value are similar.If provision was made for accounts receivable financing in accordance with the general expected credit loss model, please discloserelevant information of provision for impairment referring to the disclosure of other receivables:
□ Applicable √ N/A
Other explanations:
The accepting bank of the bank acceptance held by the Company has a relatively high credit rating but has nosignificant credit risk; therefore, no provision for impairment has been made. The issuer has a certain credit risk,RMB2,622,000.00 of provision for impairment has been made for the account receivable held by the Company.
7. Prepayments
(1) Prepayments by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Less than 1 year | 176,145,847.86 | 97.57% | 104,123,431.87 | 98.87% |
| 1-2 years | 3,362,801.79 | 1.86% | 927,210.61 | 0.88% |
| 2-3 years | 826,963.83 | 0.46% | 92,215.61 | 0.09% |
| Over 3 years | 196,442.10 | 0.11% | 165,738.99 | 0.16% |
| Total | 180,532,055.58 | -- | 105,308,597.08 | -- |
Explanation on why prepayments with aging of more than 1 year and an important amount not settled in time:
| Company name | Closing balance | Aging | Reason |
| Shanghai Xinglong Enterprise Management Consulting Co., Ltd. | 1,520,000.00 | Less than 1 year, and 1-2 years | Services not completed |
(2) Top five suppliers with closing balance of prepayment collected by prepaid entity
| Company name | Closing balance | Proportion (%) | Time | Reason |
| Company 1 | 22,431,853.07 | 12.43 | Less than 1 year | Not yet delivered |
| Company 2 | 14,010,849.22 | 7.76 | Less than 1 year | Not yet delivered |
| Company 3 | 12,565,317.56 | 6.96 | Less than 1 year | Not yet delivered |
| Company 4 | 11,149,749.12 | 6.18 | Less than 1 year | Not yet delivered |
| Company 5 | 11,108,115.48 | 6.15 | Less than 1 year | Not yet delivered |
| Total | 71,265,884.45 | 39.48 | — | — |
Other explanations:
The main reason for the larger increase in the ending balance of the Company’s prepayments over the opening
balance is: the production line of lithium battery separator film has been put into production, and the prepaymentfor materials has increased accordingly.
8. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends receivable | 1,188,900.87 | |
| Other receivables | 10,861,029.53 | 830,448,417.93 |
| Total | 10,861,029.53 | 831,637,318.80 |
(1) Interest receivable
1) Interest receivable by type: None
2) Major overdue interest: None
3) Provision for bad debts
□ Applicable √ N/A
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | 1,188,900.87 | |
| Total | 1,188,900.87 |
2) Major dividend receivable aged over one year: None
3) Provision for bad debts
□ Applicable √ N/A
(3) Other receivables
1) Other receivables by nature
Unit: RMB
| Nature of amount | Book balance at the end of the Reporting Period | Book balance at the beginning of the Reporting Period |
| Equity acquisition | 820,000,000.00 | |
| Issuing expenses of convertible bonds | 1,084,905.66 | |
| Guarantees and deposits | 6,396,495.59 | 4,438,003.35 |
| Employee borrowings and advances | 1,487,785.97 | 2,696,682.56 |
| Substitute advance | 1,683,603.50 | 1,203,121.38 |
| Other | 2,763,105.25 | 1,769,896.21 |
| Total | 12,330,990.31 | 831,192,609.16 |
2) Provision for bad debts
Unit: RMB
| Provision for bad debts | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance of January 1, 2020 | 316,278.99 | 170,377.70 | 257,534.54 | 744,191.23 |
| Balance of January 1, 2020 for the period | —— | —— | —— | —— |
| --Transferred to the second stage | -27,882.59 | 27,882.59 | ||
| --Transferred to the third stage | -90,940.90 | -157,016.50 | 247,957.40 | |
| Provision for the period | 94,616.97 | 191,860.97 | 53,000.00 | 339,477.94 |
| Other changes | 113,291.61 | 273,000.00 | 386,291.61 | |
| Balance of December 31, 2020 | 405,364.08 | 506,104.76 | 558,491.94 | 1,469,960.78 |
Changes in book balance with significant changes in loss reserves in the current period
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Less than 1 year (inclusive) | 8,846,205.35 |
| 1-2 years | 1,238,318.80 |
| 2-3 years | 1,026,694.22 |
| Over 3 years | 1,219,771.94 |
| 3-4 years | 205,680.00 |
| 4-5 years | 558,600.00 |
| Over 5 years | 455,491.94 |
| Total | 12,330,990.31 |
(3) Provision for bad debts accrued, recovered or reversed during the Reporting Period: None
4) Actual write-off of other receivables for the period: None
5) Top five customers with closing balance of other receivables collected by arrear party
Unit: RMB
| Company name | Nature of amount | Closing balance | Aging | Percentage of total of closing balance of other receivables | Closing balance of bad debt provision |
| China Tobacco Henan Industrial Co., Ltd. | Guarantees and deposits | 813,000.00 | Less than 1 year | 6.59% | 35,365.50 |
| Wujiang Building Installation and Management Office | Guarantees and deposits | 544,000.00 | 4-5 years | 4.41% | 272,000.00 |
| Shanxi Zhongyan Industry Co., Ltd. | Guarantees and deposits | 500,000.00 | Less than 1 year | 4.05% | 21,750.00 |
| Chenyue Construction Project Management Group Co., Ltd. | Guarantees and deposits | 380,800.00 | Less than 1 year | 3.09% | 16,564.80 |
| Kunming Ruifeng Printing Co., Ltd. | Guarantees and deposits | 335,829.67 | Less than 1 year | 2.72% | 14,608.59 |
| Total | -- | 2,573,629.67 | -- | 20.87% | 360,288.89 |
6) Accounts receivable related to government grants: None
7) Other receivables derecognized due to the transfer of financial assets: None
8) Amount of assets and liabilities generated by transferring other receivables and continuing to beinvolved: None
9. Inventories
Did the Company need to comply with the disclosure requirements of the real estate industryNone
(1) Classification of Inventories
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Inventory provision reserve or contract | Book value | Book balance | Inventory provision reserve or contract | Book value | |
| performance cost depreciation reserve | performance cost depreciation reserve | |||||
| Raw material | 181,857,690.10 | 944,622.50 | 180,913,067.60 | 112,792,578.57 | 23,191.84 | 112,769,386.73 |
| Goods in process | 24,480,339.87 | 436,222.88 | 24,044,116.99 | 31,577,592.12 | 436,222.88 | 31,141,369.24 |
| Finished goods | 1,024,022,804.36 | 150,081,339.35 | 873,941,465.01 | 560,323,330.51 | 5,570,216.82 | 554,753,113.69 |
| Turnover material | 33,714,499.63 | 33,714,499.63 | 16,721,617.70 | 16,721,617.70 | ||
| Goods in transit | 34,110,894.27 | 183,334.00 | 33,927,560.27 | 30,118,007.46 | 30,118,007.46 | |
| Consigned processing material | 164,506.20 | 164,506.20 | 91,289.59 | 91,289.59 | ||
| Semi-finish goods | 10,325,445.01 | 10,325,445.01 | 13,635,262.44 | 13,635,262.44 | ||
| Total | 1,308,676,179.44 | 151,645,518.73 | 1,157,030,660.71 | 765,259,678.39 | 6,029,631.54 | 759,230,046.85 |
(2) Inventory provision reserve and contract performance cost depreciation reserve
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Others | Recovery or reversal | Others | |||
| Raw material | 23,191.84 | 921,430.66 | 944,622.50 | |||
| Goods in process | 436,222.88 | 436,222.88 | ||||
| Finished goods | 5,570,216.82 | 7,955,319.87 | 227,223,330.17 | 90,667,527.51 | 150,081,339.35 | |
| Goods in transit | 183,334.00 | 183,334.00 | ||||
| Total | 6,029,631.54 | 8,138,653.87 | 228,144,760.83 | 90,667,527.51 | 151,645,518.73 | |
1. Description of inventory provision reserve:
(1) Other items in the increase for the period are the inventory provision reserve transferred from the merger ofSuzhou Green Power and Newmi Tech by enterprises not under common control.
(2) Resales for the period are due to the sale of the inventory of the inventory provision reserve alreadyaccrued.
2. Other explanations of inventory
The main reason for the larger increase in the ending balance of the Company’s inventories over the openingbalance is: (1) the rapid growth of the Company's business, and the corresponding business volume growth; (2)the merger of Suzhou Green Power and Newmi Tech by enterprises not under common control.
(3) Capitalization of interest in the closing inventories balance
(4) Description of the current amortization amount of contract performance cost
10. Contractual assets: None
11. Held-for-sales assets: None
12. Non-current assets due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term receivables due within one year | 2,956,802.29 | |
| Total | 2,956,802.29 |
13. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| VAT credit | 533,769,875.20 | 523,124,562.78 |
| Total | 533,769,875.20 | 523,124,562.78 |
14. Debt investments: None
15. Other debt investments: None
16. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance | Discount rate range | ||||
| Book balance | Provision for bad | Book value | Book balance | Provision for bad debts | Book value | ||
| debts | |||||||
| Financial lease proceeds | 2,956,802.29 | 2,956,802.29 | |||||
| Including: unrealized financing income | 43,197.71 | 43,197.71 | |||||
| Long-term receivables due within one year | -2,956,802.29 | -2,956,802.29 |
Impairment of provision for bad debts
Unit: RMB
| Provision for bad debts | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance of January 1, 2020 for the period | —— | —— | —— | —— |
Changes in book balance with significant changes in loss reserves in the current period
□ Applicable √ N/A
(2) Long-term receivables derecognized due to the transfer of financial assets
(3) Amount of assets and liabilities generated by transferring long-term receivable and continuing to beinvolvedOther explanations
The closing balance of long-term receivables is transferred from the merger of Newmi Tech by enterprises notunder common control for the period.
17. Long-term equity investment
Unit: RMB
| Name of investees | Opening balance (book value) | Increase/Decrease for the period | Closing balance (book value) | Closing balance of provision for impairment | |||||||
| Increase in investment | Decrease in investment | Investment profit or loss recognized under equity method | Adjustments to other comprehensive income | Other changes in equity | Cash dividends or profit declared | Provision for impairment | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Yuxi Kunshasi Plastic Color Masterbatch | 3,343,466.01 | 1,516,305.77 | 1,484,562.91 | 3,375,208.87 | |||||||
| Co., Ltd. | |||||||||||
| Subtotal | 3,343,466.01 | 1,516,305.77 | 1,484,562.91 | 3,375,208.87 | |||||||
| Total | 3,343,466.01 | 1,516,305.77 | 1,484,562.91 | 3,375,208.87 |
Other explanations
18. Other equity instrument investment: None
19. Other non-current financial assets: None
20. Investment properties
(1) Adoption of the cost measurement mode for investment properties
√ Applicable □ N/A
Unit: RMB
| Item | Property and plant | Land use rights | Construction in progress | Total |
| I. Original book value | ||||
| 1. Opening balance | 11,871,802.82 | 11,871,802.82 | ||
| 2. Increase for the period | ||||
| (1) External purchase | ||||
| (2) Inventory\Fixed assets\Transfer in of construction in progress | ||||
| (3) Increase in business combination | ||||
| 3. Decrease for the period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | 11,871,802.82 | 11,871,802.82 | ||
| II. Accumulative depreciation and amortization | ||||
| 1. Opening balance | 1,869,808.92 | 1,869,808.92 | ||
| 2. Increase for the period | 534,231.12 | 534,231.12 | ||
| (1) Provision or amortization | 534,231.12 | 534,231.12 | ||
| 3. Decrease for the period |
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | 2,404,040.04 | 2,404,040.04 | ||
| III. Provision for impairment | ||||
| 1. Opening balance | ||||
| 2. Increase for the period | ||||
| (1) Provision | ||||
| 3. Decrease for the period | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4. Closing balance | ||||
| IV. Book value | ||||
| 1. Closing book value | 9,467,762.78 | 9,467,762.78 | ||
| 2. Opening book value | 10,001,993.90 | 10,001,993.90 |
(2) Adoption of the fair value measurement mode for investment properties
□ Applicable √ N/A
(3) Investment properties not having obtained the title certificate
Unit: RMB
| Item | Book value | Reason for not having obtained the title certificate |
| Property and plant | 9,467,762.78 | Being processed |
Other explanations
21. Fixed assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 8,420,764,216.20 | 4,936,597,979.17 |
| Total | 8,420,764,216.20 | 4,936,597,979.17 |
(1) Fixed assets
Unit: RMB
| Item | Property and plant | Machinery and equipment | Transportation equipment | Electronic equipment and Other | Total |
| I. Original book value: | |||||
| 1. Opening balance | 898,346,307.39 | 5,140,402,993.45 | 22,096,333.89 | 56,054,782.54 | 6,116,900,417.27 |
| 2. Increase for the period | 891,472,338.35 | 4,195,196,933.08 | 7,063,271.30 | 46,854,165.52 | 5,140,586,708.25 |
| (1) Purchase | 1,120,021.36 | 42,591,962.89 | 1,740,836.84 | 7,159,930.65 | 52,612,751.74 |
| (2) Transfer of construction in progress | 679,064,403.28 | 1,917,650,105.15 | 1,273,141.59 | 8,601,630.87 | 2,606,589,280.89 |
| (3) Increase in business combination | 211,287,913.71 | 2,234,954,865.04 | 4,049,292.87 | 31,092,604.00 | 2,481,384,675.62 |
| 3. Decrease for the period | 2,364,267.89 | 508,945.73 | 59,255.98 | 2,932,469.60 | |
| (1) Disposal or scrapping | 2,364,267.89 | 508,945.73 | 59,255.98 | 2,932,469.60 | |
| 4. Closing balance | 1,789,818,645.74 | 9,333,235,658.64 | 28,650,659.46 | 102,849,692.08 | 11,254,554,655.92 |
| II. Accumulative depreciation | |||||
| 1. Opening balance | 182,580,030.41 | 964,679,204.95 | 12,326,100.82 | 20,717,101.92 | 1,180,302,438.10 |
| 2. Increase for the period | 95,627,492.36 | 1,233,812,558.66 | 5,799,882.26 | 27,568,701.04 | 1,362,808,634.32 |
| (1) Provision | 51,290,767.13 | 483,744,178.03 | 2,628,052.85 | 8,088,233.62 | 545,751,231.63 |
| (2) Merger of enterprises not under common control | 44,336,725.23 | 750,068,380.63 | 3,171,829.41 | 19,480,467.42 | 817,057,402.69 |
| 3. Decrease for the period | 731,999.28 | 426,980.00 | 19,511.60 | 1,178,490.88 | |
| (1) Disposal or scrapping | 731,999.28 | 426,980.00 | 19,511.60 | 1,178,490.88 | |
| 4. Closing balance | 278,207,522.77 | 2,197,759,764.33 | 17,699,003.08 | 48,266,291.36 | 2,541,932,581.54 |
| III. Provision for impairment | |||||
| 1. Opening balance | |||||
| 2. Increase for the period | 291,833,076.92 | 15,759.89 | 9,021.37 | 291,857,858.18 | |
| (1) Provision | |||||
| (2) Merger of enterprises not under common control | 291,833,076.92 | 15,759.89 | 9,021.37 | 291,857,858.18 | |
| 3. Decrease for the period | |||||
| (1) Disposal or scrapping | |||||
| 4. Closing balance | 291,833,076.92 | 15,759.89 | 9,021.37 | 291,857,858.18 |
| IV. Book value | |||||
| 1. Closing book value | 1,511,611,122.97 | 6,843,642,817.39 | 10,935,896.49 | 54,574,379.35 | 8,420,764,216.20 |
| 2. Opening book value | 715,766,276.98 | 4,175,723,788.50 | 9,770,233.07 | 35,337,680.62 | 4,936,597,979.17 |
(2) Fixed assets in temporary idle
Unit: RMB
| Item | Original book value | Accumulative depreciation | Provision for impairment | Book value | Notes |
| Property and plant | 2,105,695.50 | 779,418.94 | 1,326,276.56 | As of December 31, 2020, the recoverable amount was estimated based on the selling prices of similar houses and buildings in the same lot. The recoverable amount was higher than the book value, so no provision for impairment of fixed assets was made. | |
| Machinery and equipment | 9,135,247.28 | 5,059,520.64 | 4,075,726.64 | As of December 31, 2020, the recoverable amount was estimated based on the selling price of similar machinery and equipment. The recoverable amount was higher than the book value, so no provision for impairment of fixed assets was made. |
(3) Fixed assets rented through finance lease: None
(4) Fixed assets leased through operating lease: None
(5) Fixed assets not obtaining the title certificate
Unit: RMB
| Item | Book value | Reason |
| Property and plant | 1,052,491,443.41 | Being processed |
Other explanations
(1) The main reason for the larger increase in the ending balance of the Company’s fixed assets over the openingbalance is: ①the subsidiary Shanghai Energy New Material Technology Co., Ltd. and its subsidiaries are in thegrowth stage, the Company intensifies the construction of production lines, and the number of assembly linescompleted in this period increases accordingly; ②enterprises not under common control of the subsidiaryShanghai Energy New Material Technology Co., Ltd. merge Suzhou Green Power New Energy Material Co., Ltd.and Chongqing Yuntianhua Newmi Technological Co., Ltd., resulting in the increase in fixed assets for the period.
(2) Please refer to "81. Assets with restricted ownership or use right" in "VII. Notes to items in consolidatedfinancial statements" of this section for details of the limited ownership of fixed assets of the Company.
(6) Liquidation of fixed assets: None
22. Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Construction in progress | 1,628,157,358.74 | 1,546,045,179.46 |
| Engineering materials | 11,646,609.18 | 8,229,616.39 |
| Total | 1,639,803,967.92 | 1,554,274,795.85 |
(1) Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Cold pressing machine for printing special equipment | 1,724,137.93 | 1,724,137.93 | ||||
| Middle stage test workshop | 64,902,750.98 | 64,902,750.98 | ||||
| Zhuhai Energy battery separator film production base phase II Project | 23,235,129.81 | 23,235,129.81 | 62,430,402.45 | 62,430,402.45 | ||
| Wuxi Energy battery separator film production base phase I Project | 70,022,103.63 | 70,022,103.63 | 886,052,455.29 | 886,052,455.29 | ||
| Phase II project of Wuxi Energy battery separator film production base | 716,878,985.42 | 716,878,985.42 | ||||
| Phase I project of Jiangxi Tonry battery separator film production base | 258,431,515.43 | 258,431,515.43 | 524,639,042.67 | 524,639,042.67 | ||
| Lithium battery separator film project of Jiangxi Tonry (expansion of phase I) | 139,404,996.71 | 139,404,996.71 | ||||
| Building of Jiangxi Ruijie plant | 1,279,253.82 | 1,279,253.82 | ||||
| No. 1 aluminum plastic film project | 37,331,842.72 | 37,331,842.72 | ||||
| Utilities | 9,419,783.70 | 9,419,783.70 | ||||
| IT upgrading project | 3,207,547.08 | 3,207,547.08 | ||||
| 5-7 line base film project | 353,206,733.42 | 9,319,496.94 | 343,887,236.48 | |||
| Reconstruction and expansion project of | 2,733,126.44 | 2,733,126.44 | 91,958.23 | 91,958.23 | ||
| BOPP film with an annual output of 70,000 tons | ||||||
| Project of 1 billion packaging boxes of liquid beverage | 15,195,257.16 | 15,195,257.16 | ||||
| Other projects | 7,130,580.34 | 7,130,580.34 | 6,204,431.91 | 6,204,431.91 | ||
| Total | 1,637,476,855.68 | 9,319,496.94 | 1,628,157,358.74 | 1,546,045,179.46 | 1,546,045,179.46 |
(2) Changes in important projects in progress for the period
Unit: RMB
| Item | Budget | Opening balance | Increase for the period | Transfer to fixed assets for the period | Decrease in other amounts for the period | Closing balance | Proportion of total project investment in budget | Progress of the project | Capitalized accumulated amount of interest | Including: Capitalized amount of interest for the period | Capitalization rate of interest for the period | Source of capital |
| Cold pressing machine for printing special equipment | 200.00 | 1,724,137.93 | 1,724,137.93 | 100.00% | 100.00% | Other | ||||||
| Middle stage test workshop | 7,500.00 | 64,902,750.98 | 4,557,678.10 | 69,460,429.08 | 100.00% | 100.00% | Other | |||||
| Zhuhai Energy battery separator film production base phase II Project | 140,000.00 | 62,430,402.45 | 1,060,380,755.62 | 1,099,576,028.26 | 23,235,129.81 | 80.27% | 95.00% | 29,920,996.84 | 29,920,996.84 | 4.69% | Others | |
| Wuxi Energy battery separator film production base phase I Project | 220,000.00 | 886,052,455.29 | 98,883,457.53 | 914,913,809.19 | 70,022,103.63 | 72.98% | 90.00% | 68,435,716.63 | 49,982,205.22 | 4.36% | Raised Funds | |
| Phase II project of Wuxi Energy battery separator film production base | 280,000.00 | 716,878,985.42 | 716,878,985.42 | 26.08% | 30.00% | Raised Funds | ||||||
| Phase I project of Jiangxi Tonry battery separator film production base | 175,000.00 | 524,639,042.67 | 104,058,668.98 | 370,266,196.22 | 258,431,515.43 | 94.97% | 89.71% | 10,275,378.94 | 1,262,708.35 | 4.89% | Raised Funds | |
| Lithium battery separator film | 175,000.00 | 139,404,996. | 139,404,996. | 8.87% | 20.59% | Raised Funds |
| project of Jiangxi Tonry (expansion of phase I) | 71 | 71 | ||||||||||
| Building of Jiangxi Ruijie plant | 10,000.00 | 75,836,394.48 | 74,557,140.66 | 1,279,253.82 | 78.34% | 87.64% | Other | |||||
| No. 1 aluminum plastic film project | 14,250.00 | 101,392,770.96 | 64,060,928.24 | 37,331,842.72 | 73.33% | 80.63% | Other | |||||
| Utilities | 3,000.00 | 14,522,503.29 | 5,102,719.59 | 9,419,783.70 | 49.89% | 53.42% | Other | |||||
| IT upgrading project | 566.04 | 3,207,547.08 | 3,207,547.08 | 56.67% | 60.00% | Other | ||||||
| 5-7 line base film project | 68,770.00 | 353,206,733.42 | 353,206,733.42 | 51.36% | 50.00% | 15,938,122.29 | 10,814,723.11 | 4.74% | Others | |||
| Reconstruction and expansion project of BOPP film with an annual output of 70,000 tons | 36,000.00 | 91,958.23 | 2,641,168.21 | 2,733,126.44 | 0.76% | 1.00% | 1,688.89 | 1,688.89 | 3.80% | Others | ||
| Project of 1 billion packaging boxes of liquid beverage | 5,101.00 | 15,195,257.16 | 15,195,257.16 | 29.79% | 35.00% | Other | ||||||
| Other projects | 1,070.75 | 6,204,431.91 | 7,854,040.15 | 6,927,891.72 | 7,130,580.34 | - | Others | |||||
| Total | 1,136,457.79 | 1,546,045,179.46 | 2,698,020,957.11 | 2,606,589,280.89 | 1,637,476,855.68 | -- | -- | 124,571,903.59 | 91,982,322.41 | -- |
(3) Provision for impairment of construction in progress: None
Other explanationsThe main reason for the larger increase in the ending balance of the Company’s projects under constructionover the opening balance is: the subsidiary Shanghai Energy New Material Technology Co., Ltd and itssubsidiaries are in the growth stage, and the Company has increased the construction of production lines, resultingin the increase of new production lines in the current period.Please refer to "81. Assets with restricted ownership or use right" in "VII. Notes to items in consolidated financialstatements" of this section for details of the limited ownership of construction in progress of the Company.
(4) Project materials
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Engineering materials | 4,352,742.79 | 4,352,742.79 | 5,579,312.22 | 5,579,312.22 | ||
| Equipment not installed | 7,293,866.39 | 7,293,866.39 | 2,534,766.90 | 2,534,766.90 | ||
| Tools and instruments for production | 115,537.27 | 115,537.27 | ||||
| Total | 11,646,609.18 | 11,646,609.18 | 8,229,616.39 | 8,229,616.39 | ||
23. Productive biological assets
(1) Adoption of the cost measurement mode for productive biological assets
□ Applicable √ N/A
(2) Adoption of the fair value measurement mode for productive biological assets
□ Applicable √ N/A
24. Oil and gas assets
□ Applicable √ N/A
25. Right-of-use assets: None
26. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Land use rights | Patent rights | Non-patent technology | Software | Total |
| I. Original book value | |||||
| 1. Opening balance | 320,805,666.11 | 10,443,016.49 | 331,248,682.60 | ||
| 2. Increase for the period | 152,929,234.72 | 26,000,000.00 | 23,338,200.00 | 3,837,502.19 | 206,104,936.91 |
| (1) Purchase | 73,152,706.00 | 2,186,947.43 | 75,339,653.43 | ||
| (2) Internal R&D | |||||
| (3) Increase in business combination | 79,776,528.72 | 26,000,000.00 | 23,338,200.00 | 1,650,554.76 | 130,765,283.48 |
| 3. Decrease for the period |
| (1) Disposal | |||||
| 4. Closing balance | 473,734,900.83 | 26,000,000.00 | 23,338,200.00 | 14,280,518.68 | 537,353,619.51 |
| II. Accumulative amortization | |||||
| 1. Opening balance | 31,211,400.20 | 1,268,861.45 | 32,480,261.65 | ||
| 2. Increase for the period | 19,747,908.80 | 2,166,666.67 | 17,171,971.78 | 2,684,718.00 | 41,771,265.25 |
| (1) Provision | 8,138,277.04 | 2,166,666.67 | 1,796,194.41 | 12,101,138.12 | |
| (2) Merger of enterprises not under common control | 11,609,631.76 | 17,171,971.78 | 888,523.59 | 29,670,127.13 | |
| 3. Decrease for the period | |||||
| (1) Disposal | |||||
| 4. Closing balance | 50,959,309.00 | 2,166,666.67 | 17,171,971.78 | 3,953,579.45 | 74,251,526.90 |
| III. Provision for impairment | |||||
| 1. Opening balance | |||||
| 2. Increase for the period | 1,203,498.45 | 1,203,498.45 | |||
| (1) Provision | |||||
| (2) Merger of enterprises not under common control | 1,203,498.45 | 1,203,498.45 | |||
| 3. Decrease for the period | |||||
| (1) Disposal | |||||
| 4. Closing balance | 1,203,498.45 | 1,203,498.45 | |||
| IV. Book value | |||||
| 1. Closing book value | 422,775,591.83 | 23,833,333.33 | 4,962,729.77 | 10,326,939.23 | 461,898,594.16 |
| 2. Opening book value | 289,594,265.91 | 9,174,155.04 | 298,768,420.95 |
Proportion of intangible assets generated through internal R&D of the Company in the balance of intangible assets at the end of theReporting Period.
(2) Land usage rights not obtaining the title certificate: None
Other explanations:
The main reason for the larger increase in the ending balance of the Company’s intangible assets over theopening balance is: the merger of Suzhou Green Power and Newmi Tech by enterprises not under common controlof the subsidiary Shanghai Energy.Please refer to "81. Assets with restricted ownership or use right" in "VII. Notes to items in consolidated financialstatements" of this section for details of the limited ownership of intangible assets of the Company.
27. Development expenditures: None
28. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Events that may generate goodwill through investee names | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Generated by business combination | Others | Disposal | Others | |||
| Business combination not under the common control | 44,154,633.34 | 485,747,491.01 | 529,902,124.35 | |||
| Total | 44,154,633.34 | 485,747,491.01 | 529,902,124.35 | |||
(2) Provision for impairment of goodwill
Unit: RMB
| Events that may generate goodwill through investee names | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Provision | Others | Disposal | Others | |||
| Business combination not under the common control | 9,671,444.70 | 9,671,444.70 | ||||
| Total | 9,671,444.70 | 9,671,444.70 | ||||
Related information on asset groups or combination of asset groups containing goodwillExplanation on goodwill impairment test process, key parameters (such as the forecast period growth rate when the present value offuture cash flows are expected, the stable period growth rate, profit rate, discount rate, forecast period, etc.) and the confirmationmethod of goodwill impairment loss:
Impact of goodwill impairment testOther explanations
(1) Goodwill related to Jiangxi Tonry New Energy Technology Development Co., Ltd.
Goodwill calculation process of Jiangxi Tonry New Energy Technology Development Co., Ltd. (hereinafter referred to as“Jiangxi Tonry”) merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Jiangxi Tonry on the acquisition date multipliedby the proportion of acquired equity equals to goodwill, that is, 200,000,000.00 minus 165,516,811.36 multiplied by 100% equals toRMB34,483,188.64.
At the end of the period, the Company identified Jiangxi Tonry New Energy Technology Development Co., Ltd. as an assetgroup and conducted goodwill impairment test. The recoverable amount of goodwill is calculated according to the present value ofestimated future cash flow. The estimated future cash flow is determined according to the financial budget of the relevant asset groupfrom 2021 to 2025. After 2025, it will be a perpetual period. It is estimated that the annual growth rate of cash flow will be 5%, andthe recoverable value of the asset group will be calculated according to the discount rate of 7.35%. The recoverable value exceeds thebook value of the asset group including all shareholders goodwill, and there is no goodwill impairment.
(2) Goodwill related to Shenzhen Qingsong Jinze Technology Development Co., Ltd.
Goodwill calculation process of Shenzhen Qingsong Jinze Technology Development Co., Ltd. (hereinafter referred to as
“Shenzhen Qingsong”) merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Shenzhen Qingsong on the acquisition datemultiplied by the proportion of acquired equity equals to goodwill, that is, 20,000,000.00 minus 10,328,555.30 multiplied by 100%equals to RMB9,671,444.70.At the end of the period, the Company recognized Shenzhen Qingsong Jinze Technology Development Co., Ltd. as an assetgroup for goodwill impairment test. As the production of Shenzhen Qingsong Jinze Technology Development Co., Ltd. is currentlysuspended, the recoverable amount of goodwill is calculated based on the fair value of the assets minus the net amount of disposalexpenses. Upon confirmation by the Zhi Zheng Ping Bao Zi [2021] No. 0202 appraisal report issued by Yunnan Zhizheng AssetAppraisal Co., Ltd., the recoverable value is lower than the book value of the asset group including the goodwill of all shareholders,and full provision for impairment is made for the goodwill.
(3) Goodwill related to Suzhou Green Power New Energy Material Co., Ltd.
Goodwill calculation process of Suzhou Green Power New Energy Material Co., Ltd. (hereinafter referred to as “Suzhou GreenPower”) merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Suzhou Green Power on the acquisition datemultiplied by the proportion of acquired equity equals to goodwill, that is, 739,219,511.67 minus 269,061,777.98 multiplied by 100%equals to RMB470,157,733.69.
At the end of the period, the Company identified Suzhou Green Power New Energy Material Co., Ltd. as an asset group andconducted goodwill impairment test. The recoverable amount of goodwill is calculated according to the present value of estimatedfuture cash flow. The estimated future cash flow is determined according to the financial budget of the relevant asset group from2021 to 2025. After 2025, it will be a perpetual period. It is estimated that the annual growth rate of cash flow will be 5%, and therecoverable value of the asset group will be calculated according to the discount rate of 7.35%. The recoverable value exceeds thebook value of the asset group including all shareholders goodwill, and there is no goodwill impairment.
(4) Goodwill related to Chongqing Yuntianhua Newmi Technological Co., Ltd.
Goodwill calculation process of Newmi Tech merged by enterprises not under common control:
The acquisition cost minus the fair value of the book identifiable net assets of Newmi Technological on the acquisition datemultiplied by the proportion of acquired equity equals to goodwill, that is, 68,259,500.00 minus 68,977,915.28 multiplied by
76.3574% equals to RMB15,589,757.32.
At the end of the period, the Company identified Newmi Tech as an asset group and conducted goodwill impairment test. Therecoverable amount of goodwill is calculated according to the present value of estimated future cash flow. The estimated future cashflow is determined according to the financial budget of the relevant asset group from 2021 to 2025. After 2025, it will be a perpetualperiod. It is estimated that the annual growth rate of cash flow will be 5%, and the recoverable value of the asset group will becalculated according to the discount rate of 7.35%. The recoverable value exceeds the book value of the asset group including allshareholders goodwill, and there is no goodwill impairment.
29. Long-term unamortized expenses
Unit: RMB
| Item | Opening balance | Increase for the period | Amortized amount for the period | Decrease in other amounts | Closing balance |
| Leasehold improvement | 428,078.20 | 150,775.54 | 277,302.66 | ||
| Workshop improvement | 144,459.93 | 512,868.29 | 232,425.07 | 13,262.36 | 411,640.79 |
| Filling machine | 1,788,295.24 | 2,434,800.00 | 1,990,290.91 | 2,232,804.33 |
| Rented substation | 70,969.84 | 11,259.84 | 59,710.00 | ||
| Workshop lease cost | 600,000.00 | 300,000.00 | 300,000.00 | ||
| Software implementation fee | 1,542,276.64 | 1,542,276.64 | |||
| Repair and maintenance fee | 2,877,837.06 | 1,056,144.20 | 1,821,692.86 | ||
| Total | 2,603,725.01 | 7,795,860.19 | 3,740,895.56 | 13,262.36 | 6,645,427.28 |
30. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets before offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Asset impairment provision | 274,894,329.74 | 41,234,513.77 | 54,044,784.24 | 8,111,807.68 |
| Unrealized profit of internal transaction | 73,315,371.84 | 10,997,305.77 | 44,222,936.81 | 5,719,907.64 |
| Deductible losses | 276,479,581.49 | 42,424,284.31 | 205,103,468.50 | 36,764,981.15 |
| Government subsidy | 721,652,616.93 | 108,247,892.52 | 257,913,960.37 | 40,453,014.06 |
| Equity incentive | 24,428,317.76 | 3,664,247.66 | ||
| Total | 1,346,341,900.00 | 202,903,996.37 | 585,713,467.68 | 94,713,958.19 |
(2) Deferred income tax liabilities before offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Appraisal and appreciation of assets in mergers of companies not under common control | 113,080,406.56 | 16,962,060.99 | ||
| Pre-tax deduction of equipment and instruments at one time | 555,199,732.99 | 83,443,996.97 | 367,904,948.73 | 60,696,969.12 |
| Total | 668,280,139.55 | 100,406,057.96 | 367,904,948.73 | 60,696,969.12 |
(3) Net amount of offset deferred income tax assets or liabilities
Unit: RMB
| Item | Offsetting amount of | Closing balance of | Offsetting amount of | Opening balance of |
| deferred income tax assets and deferred income tax liabilities at the end of the Reporting Period | deferred income tax assets or liabilities after offset | deferred income tax assets and deferred income tax liabilities at the beginning of the Reporting Period | deferred income tax assets or liabilities after offset | |
| Deferred income tax assets | 202,903,996.37 | 94,713,958.19 | ||
| Deferred income tax liabilities | 100,406,057.96 | 60,696,969.12 |
(4) Details of unrecognized deferred income tax assets: None
(5) Deductible losses for which deferred income tax assets were unrecognized will expire in the followingyears: NoneOther explanations:
Description of deferred income tax liabilities before offset:
According to the Notice of the Ministry of Finance and the State Administration of Taxation on the Policy ofDeducting the Enterprise Income Tax of Equipment and Appliances (Cai Shui [2018] No. 54), the Company andits subsidiaries deduct the enterprise income tax of equipment and appliances with the unit value of below RMB5million purchased from January 1, 2018 to December 31, 2020 when calculating the taxable income. As a result,temporary differences in taxable income are formed and further turned into deferred income tax liabilities.
31. Other non-current assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Advance payment for equipment | 515,786,722.70 | 515,786,722.70 | 194,394,615.91 | 194,394,615.91 | ||
| Advance payment for project | 59,073,039.82 | 59,073,039.82 | 9,556,037.22 | 9,556,037.22 | ||
| Quality guarantee Note 1 | 1,350,000.00 | 1,350,000.00 | 1,350,000.00 | 1,350,000.00 | ||
| Installment for sale of equipment Note 2 | 8,083,352.09 | 8,083,352.09 | 7,401,936.18 | 7,401,936.18 | ||
| Deductible input tax | 14,897,818.46 | 14,897,818.46 | ||||
| Other | 13,000,000.00 | 13,000,000.00 | ||||
| Total | 599,190,933.07 | 599,190,933.07 | 225,702,589.31 | 225,702,589.31 | ||
Other explanations:
Description of other non-current assetsThe main reason for the larger increase in the ending balance of the Company’s other non-current assets
over the opening balance is: the sub-subsidiaries Wuxi Energy New Material Technology Co., Ltd. And JiangxiTonry New Energy Technology Development Co., Ltd. is in the growth stage, the Company intensifies theconstruction of production lines, and the advance payment for equipment increases accordingly.Note 1: Guizhou Hao1duo Dairy Co., Ltd. signed an agreement with the Company, and the two parties enteredinto a long-term strategic partnership. The company provided Guizhou Hao1duo Dairy Co., Ltd. with the abovemoney as its quality guarantee. Guizhou Hao1duo Dairy Co., Ltd. promised to purchase no less than 13 millionboxes of products from the Company every year, and return the above money after the termination of thepartnership Money. As long as the cooperation relationship is not terminated, the agreement will automaticallycontinue after expiration. During the reporting period, Guizhou Hao1duo Dairy Co., Ltd. has a good cooperationrelationship with the Company, and the annual order quantity to the Company exceeds the agreed quantity in theabove agreement. The company expects that the above agreement will continue.Note 2: the Company purchases filling machines and auxiliary equipment and sells them to customers byinstallment sales. The price of the equipment is RMB8,083,352.09 (tax-exclusive). The price of the equipmentshall be paid together with the payment for the Company's products purchased by customers. Until the appointedtime, all the payments for equipment shall be recovered, invoices shall be issued and the property rights of theequipment shall be transferred to customers.
32. Short-term loans
(1) Classification of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Pledged loan | 528,484,649.10 | 182,410,437.58 |
| Mortgaged loan | 34,900,000.00 | |
| Guaranteed loan | 1,012,102,530.77 | 2,282,265,288.87 |
| Credit loan | 254,000,000.00 | 169,486,222.89 |
| Undue interest payables | 1,092,349.04 | 1,303,083.49 |
| Total | 1,795,679,528.91 | 2,670,365,032.83 |
(2) Overdue and outstanding short-term borrowings: None
Other explanations:
The main reason for the larger decrease in the ending balance of the Company’s short-term loans over theopening balance is: repayment of loans with the Company's relatively abundant funds.Note 1: Shanghai Energy New Material Technology Co., Ltd., a subsidy of the Company, pledged its ownaccount receivable creditor's rights of RMB380,000,000.00, to obtain a loan of RMB380,000,000.00; ShanghaiEnergy New Material Technology Co., Ltd., a subsidy of the Company, pledged its 100% equity in Suzhou GreenPower New Energy Materials Co., Ltd., to obtain a loan of RMB50,000,000.00; Foshan Donghang PhotoelectricTechnology Co., Ltd., a sub-subsidiary of the Company, pledged its own notes receivable of RMB70,000.00, toobtain a loan of RMB70,000.00; and Zhuhai Energy New Material Technology Co., Ltd., a sub-subsidiary of theCompany, pledged its own structured deposits of RMB129,600,000.00, to obtain a loan of USD15,082,936.00.For details of the pledge, please refer to "81. Assets with restricted ownership or use right" in "VII. Notes to items
in consolidated financial statements" of this section”.Note 2: For details of loans obtained through the guarantee provided by actual controllers of the Company, theCompany and its subsidiaries, please refer to “(4) Related party guarantees” under “5. Related party transactions”in “XII. Related Parties and Related Party Transactions”.
33. Trading financial liabilities: None
34. Derivative financial liabilities: None
35. Notes payable
Unit: RMB
| Type | Closing balance | Opening balance |
| Commercial acceptance | 14,547,851.27 | 10,615,319.33 |
| Bank acceptance | 680,878,688.42 | 512,058,770.17 |
| Total | 695,426,539.69 | 522,674,089.50 |
The total amount of notes payable that have been overdue and outstanding at the end of the Reporting Period is RMB[ ].
36. Accounts payable
(1) Accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Materials payable | 277,833,591.11 | 197,480,189.34 |
| Engineering equipment payable | 125,081,160.84 | 148,392,577.43 |
| Accessories and spare parts payable | 11,543,629.05 | 6,172,762.14 |
| Transportation fee payable | 23,477,922.68 | 14,633,758.80 |
| Other payable | 33,140,214.54 | 16,012,272.14 |
| Total | 471,076,518.22 | 382,691,559.85 |
(2) Major accounts payable aged over one year
Unit: RMB
| Item | Closing balance | Reasons for outstanding or carry-over |
| Shenzhen Hecang Technology Co., Ltd. | 6,752,547.61 | Not mature |
| JEPWLCoLtd | 5,649,417.45 | Not mature |
| Wuxi Lead Intelligent Equipment Co., Ltd. | 2,700,000.00 | Not mature |
| Mingsheng Machinery Co., Ltd | 1,500,000.00 | Not mature |
| Shanghai Kaijin New Material Technology Co., Ltd. | 1,492,489.00 | Not mature |
| Total | 18,094,454.06 | -- |
Other explanations:
The main reason for the larger increase in the ending balance of the Company's accounts payable over the openingbalance is: the merger of Suzhou Green Power and Newmi Tech by enterprises not under common control of thesubsidiary Shanghai Energy for the period.
37. Receipts in advance: None
38. Contractual liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Advance receivable for goods | 7,677,129.87 | 8,177,989.37 |
| Total | 7,677,129.87 | 8,177,989.37 |
39. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| I. Short-term remuneration | 19,341,191.37 | 461,327,781.59 | 452,524,154.97 | 28,144,817.99 |
| II. Retirement pension program-defined contribution plan | 852,860.52 | 3,551,656.38 | 4,404,516.90 | |
| Total | 20,194,051.89 | 464,879,437.97 | 456,928,671.87 | 28,144,817.99 |
(2) Short-term benefits
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| 1. Wage, bonus, allowance and subsidies | 17,327,214.98 | 402,510,530.19 | 393,792,663.45 | 26,045,081.72 |
| 2. Employee welfare | 21,421,047.38 | 21,421,047.38 | ||
| 3. Social insurance | 912,151.35 | 17,086,143.57 | 17,307,957.68 | 690,337.24 |
| Including: medical insurance | 838,777.67 | 15,715,899.40 | 15,933,372.38 | 621,304.69 |
| Labor injury insurance | 11,844.04 | 340,651.52 | 352,495.56 | |
| Breeding insurance | 61,529.64 | 1,029,592.65 | 1,022,089.74 | 69,032.55 |
| 4. Housing fund | 299,376.00 | 16,785,910.84 | 16,750,506.84 | 334,780.00 |
| 5. Labor union budget and staff education fund | 802,449.04 | 3,524,149.61 | 3,251,979.62 | 1,074,619.03 |
| Total | 19,341,191.37 | 461,327,781.59 | 452,524,154.97 | 28,144,817.99 |
(3) Defined contribution plans
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| 1. Basic pension | 817,598.11 | 3,449,707.61 | 4,267,305.72 | |
| 2. Unemployment insurance | 35,262.41 | 101,948.77 | 137,211.18 | |
| Total | 852,860.52 | 3,551,656.38 | 4,404,516.90 |
Other explanations:
40. Taxes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| VAT | 58,372,023.20 | 28,116,303.25 |
| Corporate income tax | 112,955,783.69 | 46,448,805.71 |
| Personal income tax | 756,962.07 | 482,324.73 |
| City maintenance and construction tax | 1,517,261.49 | 747,573.66 |
| Property tax | 1,204,000.74 | 52,432.61 |
| Land using tax | 577,940.85 | 412,047.52 |
| Education surtax | 3,245,319.76 | 881,666.86 |
| Other | 354,783.64 | 113,562.29 |
| Total | 178,984,075.44 | 77,254,716.63 |
Other explanations:
41. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends payable | 7,871,573.20 | 7,574,667.67 |
| Other payables | 577,510,854.43 | 91,083,316.69 |
| Total | 585,382,427.63 | 98,657,984.36 |
(1) Interest payables: None
(2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Common share dividends | 7,871,573.20 | 4,960,000.00 |
| Employee incentive dividend | 2,614,667.67 | |
| Total | 7,871,573.20 | 7,574,667.67 |
(3) Other payables
1) Other payables listed by nature of payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Equity acquisition | 44,736,010.00 | 44,736,010.00 |
| Restricted stock repurchase obligation | 28,137,312.00 | |
| Loans from non-financial institutions | 470,118,553.75 | 7,039,200.00 |
| Withholding and remitting employee incentive and dividend Personal income tax | 46,031,316.80 | |
| Deposits and guarantees | 10,498,912.12 | 7,570,083.14 |
| Withholding employees' social insurance | 2,392,968.63 | 1,213,196.63 |
| Reimbursement | 2,550,636.39 | 2,124,442.89 |
| Other | 1,182,456.74 | 263,072.03 |
| Total | 577,510,854.43 | 91,083,316.69 |
2) Major other payables aged over one year
Unit: RMB
| Item | Closing balance | Reasons for outstanding or carry-over |
| Gao'an Kewei investment partnership (limited partnership) | 22,380,000.00 | Payment terms not been met |
| DENCO LIMITED | 20,356,010.00 | Payment terms not been met |
| Nantong 10th Construction Group Co., Ltd. | 5,000,000.00 | Payment terms not been met |
| Total | 47,736,010.00 | -- |
Other explanations
The main reason for the larger increase in the ending balance of the Company’s other payables over the openingbalance is: the merger of Newmi Tech by enterprises not under common control of the subsidiary ShanghaiEnergy for the period.
42. Hold-for-sales liabilities: None
43. Non-current liabilities due within one year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term loans due within 1 year | 514,980,422.77 | 444,148,747.12 |
| Long-term payables due within 1 year | 4,988,932.48 | |
| Undue interest payables | 6,311,708.63 | 4,094,880.39 |
| Total | 526,281,063.88 | 448,243,627.51 |
Other explanations:
44. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Output value-added tax payable | 1,021,339.34 | 1,063,138.62 |
| Total | 1,021,339.34 | 1,063,138.62 |
45. Long-term borrowings
(1) Long-term borrowings by type
Unit: RMB
| Item | Closing balance | Opening balance |
| Pledged loan | 864,400,000.00 | |
| Mortgaged loan | 708,177,982.72 | 1,223,607,871.03 |
| Guaranteed loan | 1,319,313,572.42 | 1,188,354,691.89 |
| Credit loan | 290,000,000.00 | |
| Long-term loans due within 1 year | -514,980,422.77 | -444,148,747.12 |
| Total | 2,666,911,132.37 | 1,967,813,815.80 |
Description for long-term borrowings by type:
Other explanations, including the range of interest rate:
The main reason for the larger increase in the ending balance of the Company’s long-term borrowings over the opening balanceis: the Company's new M&A loan in the current period is used for the merger of Suzhou Green Power by enterprises not undercommon control by enterprises not under common control.Note 1: The subsidiary Shanghai Energy New Material Technology Co., Ltd. will pledge its 100% equity in Suzhou GreenPower New Energy Material Co., Ltd. and 100% equity in Jiangxi Tonry New Energy Technology Development Co., Ltd., to obtain aloan of RMB864,400,000.00.Note 2: The sub-subsidiaries Zhuhai Energy, Wuxi Energyand Jiangxi Tonry respectively pledge their own fixed assets ofRMB2,545,618,483.89, projects under construction of RMB174,466,109.97 and intangible assets of RMB186,322,989.29, to obtain aloan of RMB708,177,982.72. For details of the pledge, please refer to "81. Assets with restricted ownership or use right" in "VII.Notes to items in consolidated financial statements" of this section.
Note 3: For details of loans obtained through the guarantee provided by actual controllers of the Company, the Company and itssubsidiaries, please refer to “(4) Related party guarantees” under “5. Related party transactions” in “XII. Related Parties and RelatedParty Transactions”.
46. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Convertible corporate bonds | 755,725,620.04 | |
| Total | 755,725,620.04 |
(2) Changes in bonds payable: (excluding preferred shares classified as financial liabilities, perpetual bondsand other financial instruments)
Unit: RMB
| Name of bond | Par value | Issue date | Term | Issue size | Opening balance | Issued in current period | Interest provisioned by par value | Amortization of discounts and premiums | Paid in the current period | Shares converted in the current period | Closing balance |
| Convertible corporate bonds of Yunnan Energy New Material Co., Ltd. | 1,600,000,000.00 | 2020年2月11日 | 6 | 1,600,000,000.00 | 1,600,000,000.00 | 5,508,386.32 | -83,360,866.28 | -766,421,900.00 | 755,725,620.04 | ||
| Total | -- | -- | -- | 1,600,000,000.00 | 1,600,000,000.00 | 5,508,386.32 | -83,360,866.28 | -766,421,900.00 | 755,725,620.04 |
(3) Explanation on conversion conditions and conversion time of convertible corporate bondsAccording to the Listing Rules of Shares on the Shenzhen Stock Exchange Stock and the Prospectus ofYunnan Energy New Material Co., Ltd. on the Public Issuance of Convertible Corporate Bonds, the debt and shareconversion period of Yunnan Energy commences from the first trading day in the six months after the end of theissuance to the maturity date of the convertible corporate bonds, that is, from August 17, 2020 to February 11,2026, and the initial conversion price is RMB64.61 per share.On May 21, 2020, according to the Announcement on the Adjustment of the Conversion Price of ConvertibleCorporate Bonds, as the Company implements the 2019 annual equity distribution plan, the conversion price ofdebts and shares of Yunnan Energy is adjusted from RMB64.61 per share to RMB64.49 per share.On September 3, 2020, according to the Announcement on the Adjustment of the Conversion Price of Convertible
Corporate Bonds, as the Company adopts the non-public issuance of new shares, the conversion price of debts andshares of Yunnan Energy is adjusted to RMB65.09 per share.
(4) Explanation on other financial instruments classified as financial liabilities: None
47. Lease liabilities: None
48. Long-term payables
(1) Long-term payables listed by nature of payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial lease proceeds payable | 4,988,932.48 | |
| Less: Long-term payables due within one year | 4,988,932.48 |
Other explanations:
The reason for the increase in the ending balance of the Company’s long-term payables is: the merger of NewmiTech by enterprises not under common control of the subsidiary Shanghai Energy.
(2) Special payables: None
49. Long-term payroll payable: None
50. Estimated liabilities: None
51. Deferred income
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | Reason |
| Government subsidies related to assets | 417,382,880.77 | 342,278,525.25 | 51,405,791.36 | 708,255,614.66 | |
| Government subsidies related to income | 17,659,200.00 | 17,659,200.00 | |||
| Total | 435,042,080.77 | 342,278,525.25 | 69,064,991.36 | 708,255,614.66 | -- |
Items involving government grants:
Unit: RMB
| Item related to liabilities | Opening balance | Grants increased for the period | Non-operating income recorded in the period | Other income recorded in the period | Amount that offsets costs and expenses in the current period | Other changes | Closing balance | Related to assets/income |
| Equipment subsidies of the Gao'an Municipal People’s Government | 156,428,842.52 | 163,669,725.24 | 24,600,595.80 | 295,497,971.96 | Related to assets |
| Note 1 | ||||||||
| Item subsidy for the development of advanced equipment manufacturing industry Note 2 | 191,103,925.95 | 14,308,295.53 | 176,795,630.42 | Related to assets | ||||
| Support and incentive payment of the Xishan Economic and Technological Development Zone Note 3 | 120,000,000.00 | 5,552,890.20 | 114,447,109.80 | Related to assets | ||||
| Special funds for the development of provincial strategic emerging industries Note 4 | 30,000,000.00 | 30,000,000.00 | Related to assets | |||||
| Subsidies for infrastructure construction Note 5 | 26,812,000.00 | 1,340,599.92 | 25,471,400.08 | Related to assets | ||||
| High-performance lithium ion battery separator film project with an annual output of 90 million square meters Note 6 | 18,928,314.72 | 2,696,405.70 | 16,231,909.02 | Related to assets | ||||
| Municipal technological transformation project for high-quality development Note 7 | 11,250,000.00 | 93,750.00 | 11,156,250.00 | Related to assets | ||||
| Technological transformation project of the production line of lithium-ion battery separator film Note 8 | 11,269,531.76 | 1,105,949.08 | 10,163,582.68 | Related to assets | ||||
| Technological transformation project of the second batch of industrial transformation in 2020 Note 9 | 9,000,000.00 | 750,000.00 | 8,250,000.00 | Related to assets | ||||
| Special funds for 70,000-ton BOPP projects Note 10 | 5,300,000.00 | 5,300,000.00 | Related to assets | |||||
| Special funds for basic projects Note 11 | 4,000,000.00 | 301,282.05 | 3,698,717.95 | Related to assets | ||||
| Special funds for basic projects Note 12 | 1,000,000.00 | 76,923.08 | 923,076.92 | Related to assets | ||||
| Cable trench subsidy Note 13 | 3,201,667.05 | 339,999.96 | 2,861,667.09 | Related to assets | ||||
| Enterprise support funds allocated by Gao’an New World Industrial City Finance Office | 2,698,600.00 | 2,698,600.00 | Related to assets |
| Note 14 | ||||||||
| Boiler upgrading and reconstruction projects Note 15 | 2,558,800.00 | 2,558,800.00 | Related to assets | |||||
| Subsidies of the Yuxi Municipal Bureau of Finance for the first major technical equipment Note 16 | 754,717.04 | 113,207.52 | 641,509.52 | Related to assets | ||||
| Specials fund for the construction of the Yuxi municipal industrial park in 2017 Note 17 | 574,215.20 | 34,977.60 | 539,237.60 | Related to assets | ||||
| Reward for Suzhou to build an intelligent demonstration workshop of advanced manufacturing base in 2020 Note 18 | 500,000.00 | 38,461.54 | 461,538.46 | Related to assets | ||||
| Funds for the preparation of touring inspection activities in Yichun and centralized commencement and completion activities of major projects in Yichun, allocated by Gao’an New World Industrial City Finance Office Note 19 | 294,400.00 | 2,453.33 | 291,946.67 | Related to assets | ||||
| Subsidies for the renovation of power supporting projects outside the plants in the Jiulong district of the Yuxi High-Tech Development Zone Management Committee Note 20 | 316,666.53 | 50,000.04 | 266,666.49 | Related to assets | ||||
| Industrial support fund Note 21 | 17,659,200.00 | 17,659,200.00 | Related to income | |||||
| Total | 435,042,080.77 | 342,278,525.24 | 69,064,991.36 | 708,255,614.66 |
Other explanations:
Note 1: As described in "52. Other non-current liabilities" in "VII. Notes to items in consolidated financialstatements" of this section, Jiangxi Tonry New Energy Technology Development Co., Ltd., the 3 level subsidiaryof the Company, has built an item production base of lithium ion separator film in Gao'an City, Yichun City,Jiangxi Province, with policy support from the local government. According to the relevant provisions of theinvestment agreement, the Gao'an Municipal Government advances the payment for equipment in the form ofgovernment loan. When each production line of lithium-ion separator film is put into use, the advance paymentshall be recognized as equipment subsidy in batches based on the proportion specific to the value of the importedequipment of the production line that has been put into operation. This government subsidy is related to the
production line put into use by Jiangxi Tonry New Energy Technology Development Co., Ltd. This governmentsubsidy related to assets is recognized as deferred income, and apportioned and recognized as the current profitand loss according to the depreciation life of related assets. As of December 31, 2020, 8 production lines oflithium-ion separator film have been put into use and submitted for review. The government subsidy related to thisasset has been accumulatively included in the current profit and loss of RMB31,129,345.49, including:
RMB6,528,749.69 apportioned in 2019 and RMB24,600,595.80 apportioned in 2020.Note 2: Zhuhai Energy, a level 3 subsidiary of the Company, received a subsidy of RMB194.6810 million forthe development projects of advanced equipment manufacturing issued by the Economic & InformationCommission of Guangdong Province in September 2019. This government subsidy is related to the constructionof lithium battery separator film projects of Zhuhai Energy. This government subsidy is also related to assets andrecognized as deferred income, and apportioned and recognized as the current profit and loss based on thedepreciation life of related assets. As of December 31, 2020, the construction of the subsidy-related assets hasbeen completed and carried forward to the fixed assets, and the asset-related government subsidy has beenaccumulatively included in the current profit and loss of RMB17,885,369.58, including: RMB3,577,074.05apportioned in 2019 and RMB14,308,295.53 apportioned in 2020.Note 3: According to the Supplementary Agreement of the Investment Agreement signed between theAdministrative Committee of Xishan Economic and Technological Development Zone and Shanghai Energy NewMaterial Technology Co., Ltd., a subsidiary of the Company, the Administrative Committee of Xishan Economicand Technological Development Zone grants a subsidy of RMB120 million for the payment for equipment toWuxi Energy New Material Technology Co., Ltd. (a level 3 subsidiary of the Company) regarding the projectsmentioned in the Investment Agreement. This government subsidy is related to the construction of lithium batteryseparator film projects of Wuxi Energy. This government subsidy is also related to assets and recognized asdeferred income, and apportioned and recognized as the current profit and loss based on the depreciation life ofrelated assets. As of December 31, 2020, the construction of the project-related assets has been completed andcarried forward to the fixed assets, with the apportion in 2020 of RMB5,552,900.Note 4: According to the Notice on Forwarding the Special Funds for the Development of ProvincialStrategic Emerging Industries and Project Investment Plans for 2020 Issued by the Provincial Development andReform Commission and the Provincial Department of Finance, the Wuxi Development and Reform Commissionappropriates special funds of RMB30 million to Wuxi Energy New Material Technology Co., Ltd. (a level 3subsidiary of the Company) for the construction of the phase II expansion project of Wuxi Enjie’s new materialindustrial base. This government subsidy is related to the production line put into use by Wuxi Energy NewMaterial Technology Co., Ltd. This government subsidy related to assets is recognized as deferred income, andapportioned and recognized as the current profit and loss based on the depreciation life of related assets. As ofDecember 31, 2020, the construction of the subsidy-related assets has not been completed, and the subsidy has notbeen apportioned.Note 5: For supporting the polymer nanomaterial project of Jiangxi Tonry New Energy TechnologyDevelopment Co., Ltd., a level 3 subsidiary of the Company, the Gao’an Municipal Government signs anInvestment Cooperation Agreement and a Supplementary Agreement. According to the relevant provisions of theInvestment Cooperation Agreement, the Gao’an Municipal Government grants a subsidy of RMB26,812,000 forinfrastructure development to Jiangxi Tonry New Energy Technology Development Co., Ltd., while the latter willuse the subsidy for subsequent plant development. This government subsidy is related to the construction of theJiangxi Tonry plant. It is also related to assets and recognized as deferred income. It is apportioned and recognizedas the current profit and loss based on the depreciation life of related assets. As of December 31, 2020, theconstruction of the subsidy-related assets has been completed and carried forward to the fixed assets, with the
apportion in 2020 of RMB1,340,600.
Note 6: In July 2011, the National Development and Reform Commission and the Ministry of Industry andInformation Technology issued the Notice on Issuing the First Batch of Investment Plans within the CentralBudget for the Revitalization and Technological Transformation Projects of the Electronic Information Industry in2011 [Fa Gai Tou Zi (2011) No. 1387], Shanghai Energy, a subsidiary of the Company, received a subsidy ofRMB12 million for the high-performance lithium ion battery separator film project with an annual output of 90million square meters.
In June 2011, the Shanghai Municipal Commission of Economy and Informatization issued the OfficialReply Concerning the Report on the Application for Special Funds for Key Industrial Revitalization andTechnological Transformation of the New 90 Million Square Meter High-Performance Lithium Ion BatterySeparator Film Projects of Shanghai Energy New Material Technology Co., Ltd. in 2011 [Hu Jing Xin Tou (2011)No. 298], Shanghai Energy, a subsidiary of the Company, received a subsidy of RMB12 million for thehigh-performance lithium ion battery separator film project with an annual output of 90 million square meters.
In March 2013, pursuant to the relevant provisions of the Measures for the Use and Management of SpecialDevelopment Funds of the Shanghai Zhangjiang National Innovation Demonstration Zone [Hu Cai Yu (2012) No.141] and the Notice of the Use of Special Development Funds of the Shanghai Zhangjiang National InnovationDemonstration Zone for Subsidizing Jinqiaoyuan’s First Batch of Projects in 2012 [Hu Gao Xin Guan Wei (2013)No. 5], the Shanghai Pudong Science and Technology Commission and Shanghai Energy (a subsidiary of theCompany) signed a Contract on the Management of Special Development Funds of the Shanghai ZhangjiangNational Innovation Demonstration Zone. Pursuant to the provisions of the Contract, Shanghai Energy (asubsidiary of the Company) received a subsidy of RMB7 million for the high-performance lithium ion batteryseparator film projects with an annual output of 90 million square meters during the year. In the current period, theCompany received a subsidy of RMB3 million for the high-performance lithium ion battery separator filmprojects with an annual output of 90 million square meters.
The above subsidies, related to the high-performance lithium ion battery separator film project with anannual output of 90 million square meters, total RMB34 million. The high-performance lithium ion batteryseparator film project with an annual output of 90 million square meters has three production lines. The deferredincome is apportioned and recognized as the current profit and loss based on the time point when the threeproduction lines are carried forward to the fixed assets successively and depreciation life of the fixed assets of 13years. As of December 31, 2020, the construction of the high-performance lithium ion battery separator filmproject with an annual output of 90 million square meters has been completed and carried forward to the fixedassets, and the asset-related government subsidy has been accumulatively included in the current profit and loss ofRMB17,768,090.98, including: RMB1,454,615.38 apportioned in 2013, RMB1,454,615.38 apportioned in 2014,RMB1,804,358.98 apportioned in 2015, RMB2,350,833.31 apportioned in 2016, RMB2,618,458.17 apportionedin 2017, RMB2,692,398.30 apportioned in 2018, RMB2,696,405.76 apportioned in 2019, and RMB2,696,405.70apportioned in 2020.
Note 7: According to the Several Policies and Measures of the Pudong New Area for Promoting theHigh-quality Development of Key Advantageous Industries (Implementation), the Operating Standards of theSeveral Policies and Measures of the Pudong New Area for Promoting the High-quality Development of KeyAdvantageous Industries (Trial), and relevant project support and management requirements, the ShanghaiPudong Science and Technology Commission grants a subsidy of RMB11.25 million to Shanghai Energy (a level2 subsidiary of the Company) for related technological upgrading projects without compensation. The subsidy isrelated to assets and recognized as deferred income. It is apportioned and recognized as the current profit and lossbased on the remaining depreciation life of related assets. As of December 31, 2020, the construction of the
subsidy-related assets has been completed and carried forward to the fixed assets, with the apportion in 2020 ofRMB93,750.00.Note 8: In 2017, the Company and its subsidiary Shanghai Energy signed the 2017 (the second batch of keytechnological transformation) job specification on special funds for industrial transformation, upgrading anddevelopment, requiring to grant a subsidy of RMB22.5 million for the technological transformation project ofShanghai Energy’s production line of lithium ion battery separator film without compensation. The subsidy isrelated to assets and recognized as deferred income. It is apportioned and recognized as the current profit and lossbased on the remaining depreciation life of related assets. In December 2017, the Company received a subsidy ofRMB13.5 million for the technological transformation project of Shanghai Energy’s production line of lithium ionbattery separator film. As of December 31, 2020, the construction of the technological transformation project ofthe production line of lithium ion battery separator film has been completed and carried forward to the fixed assets,and the asset-related government subsidy has been accumulatively included in the current profit and loss ofRMB3,336,417.32, including: RMB90,065.13 apportioned in 2017, RMB1,059,621.55 apportioned in 2018,RMB1,080,781.56 apportioned in 2019, and RMB1,105,949.08 apportioned in 2020.Note 9: In 2017, the Company and its subsidiary Shanghai Energy signed the 2017 (the second batch of keytechnological transformation) job specification on special funds for industrial transformation, upgrading anddevelopment, requiring to grant a subsidy of RMB22.5 million for the technological transformation project ofShanghai Energy’s production line of lithium ion battery separator film without compensation. The subsidy isrelated to assets and recognized as deferred income. It is apportioned and recognized as the current profit and lossbased on the remaining depreciation life of related assets. In December 2017, the Company received the subsidyof RMB13.50 million for the technological transformation project of the production line of lithium-ion batteryseparator film of Shanghai Energy, and the balance of RMB9 million was received on March 26, 2020. As ofDecember 31, 2020, the project has been transferred to the fixed assets and the RMB9 million was apportionedwith RMB750,000.00 for 2020.
Note 10: Yunnan Hongta Plastic Co., Ltd., a level 2 subsidiary of the Company, received the governmentgrant for the construction of 70,000-tonne BOPP film project according to the file named “2020 Yunnan Plan onSpecial Fund (1st batch) for Provincial-level Industrial and informatization Development. This governmentsubsidy was related to the project construction. It belonged to the assets-related government subsidy so it shall berecognized as deferred income. The current profit and loss shall be confirmed according to the depreciation life ofrelated assets. As of December 31, 2020, the construction of the subsidy-related assets has not been completed,and the subsidy has not been apportioned.Note 11: Jiangxi Tonry, a level 3 subsidiary of the Company, got RMB4 million special support fund fromGao’an Municipal government according to the file named 'The Circular to Declare Provincial industrialTransformation and Upgrading Special Funds in 2019'. This government subsidy is related to lithium-ionseparator film item construction. It belongs to the assets-related government subsidy so it shall be recognized asdeferred income. The current profit and loss shall be confirmed according to the depreciation life of related assets.As of December 31, 2020, the construction of the subsidy-related assets has been completed and transferred to thefixed assets, with the apportion in 2020 of RMB301,282.05.Note 12. Jiangxi Tonry, a level 3 subsidiary of the Company, got RMB1 million special support fund fromGao’an Municipal government according to the Yichun city government file named 'The Circular of ProvincialBudget Infrastructure Investment Enhances the Core Competitiveness of the Manufacturing of Special Funds Planin 2018' [Yi Shi Fa Gai Chan Ye Zi (2018) No. 16]. The government subsidies are related to the lithium ionseparator film related item construction, and belong to the assets-related government subsidy and shall berecognized as deferred income. The current profit and loss shall be confirmed according to the depreciation life of
related assets. As of December 31, 2020, the construction of the subsidy-related assets has been completed andtransferred to the fixed assets, with the apportion in 2020 of RMB76,923.08.Note 13. From 2009 to 2012, Chengdu Hongsu, a third-level subsidiary of the Company, obtained RMB6.8million of subsidies for the construction of a 35kv cable trench from Chengdu Cross-strait Science andTechnology Industry Development Zone in Wenjiang district. This government subsidy is related to the 35kvcable trench assets, and the amount of profits and losses is confirmed by stages according to the depreciationperiod of 35kv cable trench. The asset reached its intended usable status on May 31, 2009, with a depreciation lifeof 20 years.
Note 14: Jiangxi Tonry, a level 3 subsidiary of the Company, got the support for its polymer nanomaterialsitem from Gao’an Municipal government with an investment cooperation agreement and a supplementaryagreement. According to the relevant provisions of the investment agreement, Jiangxi Tonry got RMB2.6986million infrastructure subsidies from Gao’an Municipal government. Jiangxi Tonry will use it for subsequentconstruction of infrastructure according to the agreement. This government subsidy is related to the constructionand equipment of the plant of Jiangxi Tonry and the government subsidy belongs to Related to assets so it isrecognized as Deferred income. The current profit and loss shall be confirmed according to the depreciation life ofrelated assets. As of December 31, 2020, the construction of the subsidy-related assets has not been completed,and the subsidy has not been apportioned.Note 15: Under the Circular on the Application for Special Funds Projects (energy-saving technologicaltransformation) of Shanghai Municipality Industrial Energy Saving and Contract Energy Management in 2019,Shanghai Energy, a level 2 subsidiary of the Company, received the special funds for furnace transformationproject of RMB2.5588 million from the Shanghai Municipal Commission for Economy and Informatization. Thisgovernment subsidy was related to the project construction. It belonged to the assets-related government subsidyso it shall be recognized as deferred income. The current profit and loss shall be confirmed according to thedepreciation life of related assets. As of December 31, 2020, the construction of the subsidy-related assets has notbeen completed, and the subsidy has not been apportioned.Note 16: In November 2017, the Company got RMB1 million subsidies for the first set of major technicalequipment from the Ministry of Finance and Industry and Information Technology Commission of Yuxi city in2016. These government subsidies are Item special subsidies. The profit and loss amount is confirmed by theMachinery and equipment depreciation period stage. The depreciation life is 10 years but the remaining useful lifeis 5 years plus 10 months.Note 17: In November 2017: the Company obtained the renovation subsidy of RMB500,000 for the auxiliarypower project outside the factory in Kowloon region issued by the Administrative Committee of Yuxi High-techIndustrial Development Zone. The government subsidy is related to the assets of the auxiliary power project. Theprofit and loss amount is confirmed by the Machinery and equipment depreciation period stage and thedepreciation period is 10 years.Note 18: Under the Circular of District Industry and Information Bureau and District Bureau of Finance onthe Special Funds for Building 2020 Suzhou Municipal-level Advanced Manufacturing Base, Suzhou GreenPower New Energy Materials Co., Ltd., a level 3 subsidiary of the Company received the government subsidy ofRMB500 thousand. Under the Circular, the subsidiary was related to the construction of Suzhou Green’sworkshops. It belonged to the assets-related government subsidy so it shall be recognized as deferred income. Thecurrent profit and loss shall be confirmed according to the depreciation life of related assets. As of December 31,2020, the construction of the subsidy-related assets has been completed and transferred to the fixed assets, withthe apportion in 2020 of RMB38,461.54.Note 19: Jiangxi Tonry, a level 3 subsidiary of the Company, got the support for its polymer nanomaterials
item from Gao’an Municipal government with an investment cooperation agreement and a supplementaryagreement. According to the relevant provisions of the investment agreement, Jiangxi Tonry got RMB294,400infrastructure subsidies from Gao’an Municipal government. This government subsidy is related to the campusgreening of Jiangxi Tonry and the government subsidy belongs to Related to assets so it is recognized as deferredincome. The current profit and loss shall be confirmed according to the depreciation life of related assets. As ofDecember 31, 2020, the construction of the subsidy-related assets has been completed and transferred to the fixedassets, with the apportion in 2020 of RMB2,453.33.Note 20: In May 2016: the Company obtained the renovation subsidy of RMB500,000 for the auxiliarypower project outside the factory in Kowloon region issued by the Administrative Committee of Yuxi High-techIndustrial Development Zone. The government subsidy is related to the assets of the auxiliary power project. Theprofit and loss amount is confirmed by the Machinery and equipment depreciation period stage and thedepreciation period is 10 years.Note 21: In March 2018, Shanghai Energy, a level 2 subsidiary of the Company, got the subsidies forexpanding business in Wuxi city from Wuxi Xishan Economic and Technological Development ZoneManagement Committee with an investment cooperation agreement and a supplementary agreement. XishanEconomic and Technological Development Zone Administrative Committee want to encourage companies toaccelerate the process of their item, so it promised to set up a special industrial support fund with RMB69.4992million which should come under the income-related government subsidy. Of which, RMB51.84 million of thesubsidies has in 2019 met the conditions stipulated in the supplementary agreement of the investment agreementand was recognized as other income; The remaining RMB17.6592 million met the agreed conditions according tothe supplementary agreement of the investment agreement, so it was recognized as loss and profit of currentperiod
52. Other non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Government support for lithium battery separation film project | 455,517,694.55 | 619,187,419.79 |
| Total | 455,517,694.55 | 619,187,419.79 |
Other explanations:
Jiangxi Tonry New Energy Technology Development Co., Ltd., the third level subsidiary of the Company,has built an item production base of lithium ion separator film in Gao'an City, Yichun City, Jiangxi Province, withpolicy support from the local government. According to the relevant provisions of the investment agreement, thegovernment borrows money in advance to pay for the purchase of equipment. When each lithium-ion filmproduction line is put into use, the equipment subsidy shall be recognized in batches according to thecorresponding proportion of the value of the imported equipment of the production line that has been put intooperation.
53. Share capital
Unit: RMB
| Opening balance | Increase or decrease (＋,－) | Closing balance | |||||
| New issues | Bonus issuance | Conversion of reserve into share | Others | Subtotal | |||
| Total amount of shares | 805,370,770.00 | 69,444,444.00 | 11,750,937.00 | 81,195,381.00 | 886,566,151.00 | ||
Other explanations:
Note 1: Issuance of new sharesSee "III.Basic information of the Company" in this section. The Company’s non-public issuance of newshares led to an increase of share capital of RMB69,444,444.00.Note 2: Public offering of convertible corporate bondsSee "III.Basic information of the Company" in this section. The convertible bonds public issued by theCompany entered the share transfer period on August 17, 2020. As of December 31, 2020, the Company’s sharecapital increased by RMB11,774,057.00 due to the share transfer.Note 3: Repurchase and cancellation of employee incentive sharesSee "III.Basic information of the Company" in this section. The Company repurchased the total shares ofRMB194,809.12 subscribed by employees in the form of currency capital., including: reducing share capital byRMB23,120.00 and capital reserve share capital premium by RMB171,689.12. Based on this matter, theCompany's share capital has been reduced by RMB23,120.00.
54. Other equity instruments
(1) Outstanding preferred shares, perpetual bonds and other financial instruments as at the end of theReporting Period
Under the Approval of the Issuance of Convertible Corporate Bonds by Yunnan Energy New Material Co.,Ltd. (Zheng Jian Xu Ke [2019] No. 2701 issued by the China Securities Regulatory Commission, the Companypublicly issued 16 million convertible corporate bonds on February 11, 2020, which was calculated as the value ofthe debt instruments of the convertible corporate bonds was RMB1,408,703,126.08, and the value of the equityinstruments was RMB177,419,515.43 by referring to the interest rates of the credit bonds of similar enterpriseswith AA credit rating and similar maturities in the market and deducting the bond issuance expenses.
(2) Table of changes in outstanding preferred shares, perpetual bonds and other financial instruments as atthe end of the Reporting Period
Unit: RMB
| Outstanding financial instruments | At the beginning of the period | Increase for the period | Decrease for the period | At the end of the period | ||||
| Number of shares | Book value | Number of shares | Book value | Number of shares | Book value | Number of shares | Book value | |
| Equity instrument of convertible corporate bonds | 177,419,515.43 | 84,986,376.32 | 92,433,139.11 | |||||
| Total | 177,419,515.43 | 84,986,376.32 | 92,433,139.11 |
Explanations on changes in other financial instruments and reasons thereof as at the end of the Reporting Period, and basis for relatedaccounting treatment:
In 2020, the Company’s “Energy Convertible Bond” increased by RMB766,421,900.00 (7,664,219.00 bonds) dueto the transfer of 11,774,057.00 shares and reduced the other equity instrument by RMB84,986,376.32.Other explanations:
55. Capital reserve
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Capital premium (capital stock premium) | 1,790,454,605.21 | 5,763,141,194.08 | 378,906,493.34 | 7,174,689,305.95 |
| Other capital reserve | 103,572,526.93 | 21,332,629.04 | 70,458,636.09 | 54,446,519.88 |
| Total | 1,894,027,132.14 | 5,784,473,823.12 | 449,365,129.43 | 7,229,135,825.83 |
Other explanations, including changes and reasons thereof as at the end of the Reporting Period:
Note 1: issuance of new sharesSee "III.Basic information of the Company" in this section. The Company’s non-public issuance of newshares led to an increase of capital reserve of RMB4,913,060,110.49.Note 2: Public offering of convertible corporate bondsSee "III.Basic information of the Company" in this section. The convertible bonds public issued by theCompany entered the share transfer period on August 17, 2020. As of December 31, 2020, the Company’s capitalreserve increased by RMB779,622,447.50 due to the share transfer.
Note 3: Capital increase of minority shareholdersYunnan Hongchuang Packaging Co., Ltd., a level 2 subsidiary of the Company, received the capital increaseof Future Industry Investment Fund (Limited Partnership), which led to the change in the Company’s proportionof shareholding and the increase of capital reserve by RMB58,446,097.71.Note 4: Share-based paymentsSee Note XIII. Share-based payment, capital reserve of the Company increased by RMB21,332,629.04 dueto the Company and its subsidiary Shanghai Energy share-based payment.Note 5: Trading with minority shareholdersThe Company in the current period purchased in monetary capital 5.1418% of the shares in the level 2subsidiary Shanghai Energy held by Tan Kim Chwee and Yin Hongqiang at a premium. Because of the matter, theCompany’s capital reserve is reduced by RMB320,288,706.52.Note 6: Repurchase and cancellation of employee incentive sharesSee "35. Share capital" in "VII. Notes to items in consolidated financial statements" of this section, becauseof the repurchase and cancellation, the Company's capital reserve decreased by RMB171,689.12.Note 7: Employee incentive share release
See Note XIII. Share-based payment As all the employee incentive share are released, the capital reserveresulting from the payment-other capital reserve are transferred to the capital reserve (capital stock premium),amounting to RMB70,458,636.09.
56. Treasury stock
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Restricted share-based payment | 28,137,312.00 | 28,137,312.00 | ||
| Total | 28,137,312.00 | 28,137,312.00 |
Other explanations, including changes and reasons thereof as at the end of the Reporting Period:
1. The company recognizes liabilities for repurchase obligations of restricted shares issued to employees,purchases treasury stock, and determines the amount of inventory shares based on the number of restricted sharesissued and the corresponding repurchase price
2. See "XIII. Share based payment" in this section. July 23, 2020 is the date of lifting the ban on the thirdbatch of employee restricted shares. 3,404,080.00 employee restricted shares are lifted in the current period, andthe inventory shares are reduced by RMB27,942,502.88.
3. See "44. Other current liabilities" in "VII. Notes to items in consolidated financial statements" of thissection, the Company canceled 23,120.00 employee restricted shares, and the inventory shares are reduced byRMB194,809.12.
57. Other comprehensive income: None
58. Special reserve: None
59. Surplus reserve
Unit: RMB
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Statutory surplus reserve | 112,583,275.21 | 12,797,027.00 | 125,380,302.21 | |
| Reserve fund | 21,153,681.64 | 21,153,681.64 | ||
| Enterprise development fund | 1,416,680.73 | 1,416,680.73 | ||
| Total | 135,153,637.58 | 12,797,027.00 | 147,950,664.58 |
Explanations on surplus reserve, including explanation about the reason of the change:
The increase of surplus reserve in the current period is due to the withdrawal of 10% of the net profit of theCompany's headquarters.
60. Undistributed profit
Unit: RMB
| Item | Current period | Previous period |
| Retained earnings before adjustments at the end of prior year | 1,744,638,648.71 | 1,093,630,310.62 |
| Retained earnings adjusted at beginning of the year | 1,744,638,648.70 | 1,093,630,310.62 |
| Less: Withdrawal of statutory surplus reserve | 1,115,604,020.47 | 849,837,425.81 |
| Withdrawal of random surplus reserve | 12,797,027.00 | 19,400,130.11 |
| Common share dividends payable | 100,650,774.03 | 179,428,957.61 |
| Undistributed profits at the end of the period | 2,746,794,868.15 | 1,744,638,648.71 |
Details on adjustment of undistributed profits at the beginning of the period:
1) Due to retrospective adjustments in accordance with Accounting Standards for Business Enterprises and relevant new provisions,undistributed profits at the beginning of the period read RMB[ ].
2) Due to changes in accounting policies, undistributed profits at the beginning of the period read RMB[ ].
3) Due to correction of material accounting errors, undistributed profits at the beginning of the period read RMB[ ].
4) Due to change of consolidation range caused by merger of entities under common control, undistributed profits at the beginning ofthe period read RMB[ ].
5) Due to other adjustments, undistributed profits at the beginning of the period read RMB[ ].
61. Operating income and operating cost
Unit: RMB
| Item | Amount for current period | Amount for previous period | ||
| Income | Cost | Income | Cost | |
| Main businesses | 4,205,724,684.56 | 2,431,374,588.76 | 3,126,340,216.38 | 1,701,271,664.79 |
| Other businesses | 77,282,904.55 | 25,623,721.47 | 33,221,338.53 | 29,029,499.32 |
| Total | 4,283,007,589.11 | 2,456,998,310.23 | 3,159,561,554.91 | 1,730,301,164.11 |
Whether the lower of the audited net profit before and after deduction of non-recurring gains or losses is negative
□ Yes √ No
Information related to performance obligations:
Refer to "39. Revenue" of "V. Important Accounting Policies and Accounting Estimates" in this section.Information related to the transaction price allocated to the remaining performance obligations:
The amount of income corresponding to the performance obligations that have been contracted but not yet performed or not yetcompleted at the end of the Reporting Period is RMB0.00, of which, RMB[ ] is expected to be recognized as income, RMB[ ] isexpected to be recognized as income, and RMB[ ] is expected to be recognized as income.Other explanations
62. Taxes and surcharges
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| City maintenance and construction tax | 5,629,419.35 | 3,006,771.05 |
| Education surcharge | 8,499,476.81 | 3,206,664.97 |
| Property tax | 6,958,921.14 | 5,709,257.96 |
| Land using tax | 3,653,135.48 | 1,805,288.18 |
| Vehicle and vessel usage tax | 24,092.50 | 28,717.50 |
| Stamp duty | 2,974,343.13 | 1,133,217.48 |
| Land value-added tax | 4,459,864.19 | |
| Other | 291,767.68 | 30,526.22 |
| Total | 32,491,020.28 | 14,920,443.36 |
Other explanations:
63. Selling expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Transportation and handling charges | 41,986,808.20 | |
| Sales commission | 21,570,707.19 | |
| Labor costs | 16,094,980.44 | 12,329,938.44 |
| Sales agency expense | 4,335,824.29 | 1,519,244.73 |
| Depreciation and amortization | 3,743,322.45 | 429,178.90 |
| Entertainment expense | 3,790,466.62 | 4,063,055.23 |
| Travel expense | 2,476,652.84 | 3,009,489.50 |
| Other | 4,353,596.13 | 3,912,492.94 |
| Total | 56,365,549.96 | 67,250,207.94 |
Other explanations:
The reason that the Company has no transportation and handling fees is that: the Company in 2020implemented a new income rule, under which, the fees above would be recorded in the main business costs as thecontract performance costs.
64. Administrative expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Labor costs | 63,919,851.38 | 50,242,454.74 |
| Share-based expense | 22,215,924.74 | 30,995,694.08 |
| Depreciation and amortization | 26,684,666.04 | 15,022,235.90 |
| Agencies | 12,011,876.97 | 8,193,514.18 |
| Maintenance costs | 5,229,480.24 | 1,942,171.16 |
| Office expense | 3,417,237.08 | 4,039,640.70 |
| Travel expense | 3,424,879.55 | 2,881,295.77 |
| Entertainment expense | 2,886,409.51 | 2,170,444.23 |
| Lease costs | 2,781,713.31 | 21,804.79 |
| Other | 13,228,352.83 | 7,358,576.54 |
| Total | 155,800,391.65 | 122,867,832.09 |
Other explanations:
65. R&D expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Material costs | 79,004,042.46 | 66,358,175.43 |
| Labor costs | 65,572,611.56 | 55,139,449.81 |
| Depreciation and amortization | 13,672,934.31 | 11,569,371.05 |
| Utility costs | 8,386,265.87 | 8,544,370.45 |
| Other | 11,607,479.08 | 13,301,841.01 |
| Total | 178,243,333.28 | 154,913,207.75 |
Other explanations:
66. Financial expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Interest expense | 203,597,658.74 | 98,286,877.98 |
| Less: Interest income | 34,077,648.03 | 2,491,822.81 |
| Exchange gain/loss | 13,994,768.25 | -2,068,326.97 |
| Bank charges and other | 5,361,462.57 | 5,239,139.58 |
| Total | 188,876,241.53 | 98,965,867.78 |
Other explanations:
67. Other income
Unit: RMB
| Source | Amount for current period | Amount for previous period |
| Government subsidy | 139,305,009.71 | 121,993,732.08 |
| Return of individual income tax service charge | 357,802.66 | 216,435.97 |
| Total | 139,662,812.37 | 122,210,168.05 |
68. Investment income
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Gain on long-term equity investments subject to accounting with equity method | 1,516,305.77 | 1,484,572.03 |
| Proceeds from wealth management products | 7,111,089.67 | 191,780.82 |
| Total | 8,627,395.44 | 1,676,352.85 |
Other explanations:
The reason for the significant increase of the Company’s investment income in the current period over that of lastperiod is: The Company purchased more wealth management products that the last period.
69. Net exposure hedge income: None
70. Gains on fair value change
Unit: RMB
| Source | Amount for current period | Amount for previous period |
| Trading financial assets | 10,951,914.18 | |
| Total | 10,951,914.18 |
71. Credit impairment losses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Bad debt losses | -28,865,898.12 | -26,343,860.48 |
| Impairment loss on notes receivable | -7,256,643.88 | |
| Impairment losses on accounts receivable financing | -2,622,000.00 | |
| Total | -38,744,542.00 | -26,343,860.48 |
Other explanations:
72. Asset impairment losses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| II. Inventory falling price losses and contract performance cost depreciation losses | -8,138,653.87 | -5,191,727.71 |
| XI. Goodwill impairment loss | -9,671,444.70 | |
| Total | -17,810,098.57 | -5,191,727.71 |
Other explanations:
73. Gains on disposal of assets
Unit: RMB
| Source | Amount for current period | Amount for previous period |
| Disposal of fixed assets | -144,872.28 | 2,066.58 |
74. Non-operating income
Unit: RMB
| Item | Amount for current period | Amount for previous period | Amount of non-recurring gain or loss included in the current period |
| Accepting donations | 112,000.00 | 112,000.00 | |
| Compensation received | 48,990.09 | 48,990.09 | |
| Amount of combination cost less than the fair value share of identifiable net assets obtained | 673,727.72 | 673,727.72 | |
| Other | 861,437.24 | 209,752.60 | 861,437.24 |
| Total | 1,696,155.05 | 209,752.60 | 1,696,155.05 |
Government grants included in profit or loss for the current period: None
75. Non-operating expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period | Amount of non-recurring gain or loss included in the current period |
| Donation | 3,095,889.50 | 612,015.00 | 3,095,889.50 |
| Abandonment losses of non-current assets | 9,015.27 | 9,015.27 | |
| Other | 2,119,519.32 | 363,844.91 | 2,119,519.32 |
| Total | 5,224,424.09 | 975,859.91 | 5,224,424.09 |
76. Income tax expenses
(1) Table of income tax expenses
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Current income tax | 175,442,968.27 | 145,997,905.67 |
| Deferred income tax | -37,845,346.91 | -19,636,957.65 |
| Total | 137,597,621.36 | 126,360,948.02 |
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
| Item | Amount for current period |
| Total profit | 1,313,247,082.28 |
| Income tax expenses calculated based on the statutory (or applicable) tax rates | 196,987,062.34 |
| Impact of different tax rates applied to subsidiaries | 4,139,155.39 |
| Impact of adjusting income tax in previous periods | -5,004,654.94 |
| Impact of non-taxable income | -227,445.87 |
| Impact of non-deductible costs, expenses, and losses | 920,056.71 |
| Impact of R&D expenses plus deduction | -17,678,126.24 |
| Impact of the market value of employee incentive shares is higher than that of exercise cost and share cost. | -30,943,102.93 |
| Impact of income tax credit for investment in special equipment | -10,629,449.75 |
| Other | 34,126.65 |
| Income tax expenses | 137,597,621.36 |
77. Other comprehensive income
78. Cash flow statement
(1) Cash received relating to other operating activities
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Interest income | 33,281,981.36 | 2,491,822.81 |
| Subsidy income | 248,848,818.36 | 337,274,971.87 |
| Recovered deposit | 13,224,154.33 | 100,956,315.04 |
| Collecting employee incentive and dividend Personal income tax | 46,031,316.80 | |
| Other | 2,119,241.75 | 245,175.62 |
| Total | 343,505,512.60 | 440,968,285.34 |
(2) Cash payments relating to other operating activities
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Deposit payment | 1,767,280.81 | 235,887,901.91 |
| Other payable paid | 888,605.40 | 37,396,905.66 |
| Administrative expenses and R&D expenses | 63,899,169.60 | 37,970,592.47 |
| Operating expenses | 33,557,836.05 | 44,182,050.59 |
| Service charge | 5,361,462.57 | 5,190,997.60 |
| Donation expenditure | 3,095,889.50 | |
| Reserve fund paid | 1,230,949.29 | 1,882,211.75 |
| Other | 2,119,519.32 | 1,455,187.33 |
| Total | 111,920,712.54 | 363,965,847.31 |
(3) Cash received relating to other investing activities
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Net cash payments received from acquisitions of subsidiaries | 1,098,067.46 | |
| Total | 1,098,067.46 |
Explanations on cash received relating to other investing activities:
(4) Cash payments relating to other investing activities
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Payment for debt as an agent for acquisitions of subsidiaries | 521,580,488.33 | |
| Total | 521,580,488.33 |
Explanations on cash payments relating to other investing activities:
(5) Cash received relating to other financing activities: None
(6) Cash payments relating to other financing activities
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Payment for equity of minority shareholder | 490,557,252.00 | |
| Repayment of loans from non-financial institutions | 6,034,200.00 | |
| Buyback of employee incentive shares | 194,809.12 | 1,753,246.27 |
| Forfaiting Business Deposit | 91,480,000.00 | |
| Issuing expenses of convertible bonds | 1,084,905.66 | |
| Total | 496,786,261.12 | 94,318,151.93 |
Explanations on cash payments relating to other financing activities:
79. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
| Supplementary information | Amount of current period | Amount of previous period |
| 1. Reconciliation of net profit to cash flows from operating activities | -- | -- |
| Net profit | 1,175,649,460.92 | 935,568,775.84 |
| Add: Credit impairment losses | 38,744,542.00 | 26,343,860.48 |
| Add: Provisions for asset impairment | 17,810,098.57 | 5,191,727.71 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets | 546,285,462.75 | 296,455,453.94 |
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 12,101,138.12 | 6,705,807.04 |
| Amortization of long-term unamortized expenses | 3,740,895.56 | 1,183,881.89 |
| Losses from disposal of fixed assets, intangible assets, and other long-term assets (gain is indicated with “-”) | 144,872.28 | -2,066.58 |
| Losses from scrapping of fixed assets (gain is indicated with “-”) | 9,015.27 | |
| Losses from change of fair value (gain is indicated with “-”) | -10,951,914.18 | |
| Financial expenses (gain is indicated with “-”) | 203,597,658.74 | 98,286,877.98 |
| Investment losses (gain is indicated with “-”) | -8,627,395.44 | -1,676,352.85 |
| Decrease in deferred income tax assets (increase is indicated with“-”) | -60,253,611.03 | -67,080,923.61 |
| Increase in deferred income tax liabilities (decrease is indicated with“-”) | 22,408,264.12 | 47,443,965.95 |
| Decrease in inventory (increase is indicated with“-”) | -221,512,160.66 | -292,292,146.94 |
| Decrease in operating receivables (increase is indicated with“-”) | -1,333,445,763.86 | -683,706,759.27 |
| Increase in operating payables (decrease is indicated with“-”) | 647,263,525.29 | 359,879,212.11 |
| Other | 22,215,924.74 | 30,995,694.08 |
| Net cash flows from operating activities | 1,055,180,013.19 | 763,297,007.77 |
| 2. Significant investment and financing activities not involving cash receipts and payments: | -- | -- |
| Conversion of debt into capital | ||
| Convertible bonds due within one year | ||
| Fixed assets acquired under finance leases | ||
| 3. Net changes in cash and cash equivalents | -- | -- |
| Closing balance of cash | 2,054,915,784.55 | 715,655,914.78 |
| Less: Opening balance of cash | 715,655,914.78 | 245,612,205.26 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 1,339,259,869.77 | 470,043,709.52 |
(2) Net cash paid for acquisitions of subsidiaries for the period
Unit: RMB
| Amount | |
| Cash and cash equivalents paid in the current year for acquisition of subsidiaries incurred in the current year | 807,479,011.67 |
| Including: | -- |
| Among them: Suzhou Green Power | 739,219,511.67 |
| Newmi Tech | 68,259,500.00 |
| Less: Cash and cash equivalents held by subsidiaries at the acquisition date | 38,568,053.11 |
| Including: | -- |
| Among them: Suzhou Green Power New Energy Materials Co., Ltd. | 36,165,210.63 |
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | 2,402,842.48 |
| Including: | -- |
| Net cash payments for acquisitions of subsidiaries | 768,910,958.56 |
Other explanations:
(3) Net cash received from disposal of subsidiaries for the period: None
(4) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 2,054,915,784.55 | 715,655,914.78 |
| Including: Cash on hand | 144,778.56 | 14,120.97 |
| Cash at bank that can be readily drawn on demand | 2,054,771,005.99 | 715,641,793.81 |
| III. Cash and cash equivalents at the end of the Reporting Period | 2,054,915,784.55 | 715,655,914.78 |
80. Notes to statement of changes in equity: None
81. Assets with restricted ownership or use right
Unit: RMB
| Item | Closing book value | Reason of restriction |
| Monetary capital | 319,032,411.48 | Bank draft deposit, L/C deposit and L/G deposit |
| Fixed assets | 2,606,449,712.93 | Mortgaged loan |
| Intangible assets | 229,456,843.79 | Mortgaged loan |
| Trading financial assets | 129,600,000.00 | Pledged loan |
| Construction in progress | 174,466,109.97 | Mortgaged loan |
| Receivable financing | 22,174,829.70 | Pledged loan |
| Total | 3,481,179,907.87 | -- |
82. Monetary items denominated in foreign currencies
(1) Monetary items denominated in foreign currencies
Unit: RMB
| Item | Ending balance of foreign currency | Exchange rate | Ending balance converted into RMB |
| Monetary capital | -- | -- | 81,268,108.72 |
| Including: USD | 8,300,309.32 | 6.5249 | 54,158,688.31 |
| EUR | 22,947.92 | 8.025 | 184,157.06 |
| HKD | 1,307.42 | 0.8416 | 1,100.32 |
| JPY | 426,015,237.82 | 0.0632 | 26,924,163.03 |
| Accounts receivable | -- | -- | 341,707,328.13 |
| Including: USD | 45,745,982.16 | 6.5249 | 298,487,959.02 |
| EUR | |||
| HKD |
| JPY | 683,850,777.06 | 0.0632 | 43,219,369.11 |
| Long-term borrowings | -- | -- | 262,796,022.85 |
| Including: USD | |||
| EUR | |||
| HKD | |||
| JPY | 4,158,164,918.51 | 0.0632 | 262,796,022.85 |
| Other receivables | - | 1,441,574.46 | |
| Including: EUR | 179,635.45 | 8.0250 | 1,441,574.46 |
| Short-term borrowings | - | 98,414,649.11 | |
| Including: USD | 15,082,936.00 | 6.5249 | 98,414,649.11 |
| Accounts payable | - | 12,355,286.64 | |
| Including: USD | 1,557,860.77 | 6.5249 | 10,164,885.74 |
| JPY | 34,658,242.09 | 0.0632 | 2,190,400.90 |
(2) Description of overseas business entities; for material overseas business entities, disclose their majorbusiness places overseas, functional currency and the selection criterion thereof; should there be anychange in the functional currency, disclose the reason for such change
□ Applicable √ N/A
83. Hedging: None
84. Government grant
(1) Details of government grants
Unit: RMB
| Type | Amount | Presented items | Amount included in current profit and loss |
| Government subsidies recorded in deferred income | 342,278,525.24 | 69,064,991.36 | |
| Government subsidies recorded in other income | 70,240,018.35 | 70,240,018.35 | |
| Total | 412,518,543.59 | 139,305,009.71 |
(2) Return of government grants
□ Applicable √ N/A
Other explanations:
85. Others
VIII. Changes in the Consolidation Scope
1. Merger of enterprises not under common control
(1) Merger of enterprises not under common control in the current period
Unit: RMB
| Name of acquiree | Timing of acquisition | Equity acquisition cost | Ratio of equity acquired | Means of equity acquisition | Acquisition date | Basis for determining the acquisition date | Income of acquirees from the acquisition date to the period-end | Net profit of acquirees from the acquisition date to the period-end |
| Suzhou Green Power | February 29, 2020 | 739,219,511.67 | 100.00% | Acquisition | February 29, 2020 | Actual acquisition of control | 809,593,383.70 | 229,900,083.43 |
| Newmi Tech | December 23, 2020 | 68,259,500.00 | 76.3574% | Acquisition | December 23, 2020 | Actual acquisition of control | 10,827,100.00 | -1,026,465.00 |
| Donghang Photoelectric | February 29, 2020 | 1.00 | 70.00% | Acquisition | February 29, 2020 | Actual acquisition of control | 41,771,880.98 | -13,980,966.89 |
(2) Merger cost and goodwill
Unit: RMB
| Merger cost | Suzhou Green Power | Newmi Tech | Donghang Photoelectric |
| --Cash | 739,219,511.67 | 68,259,500.00 | 1.00 |
| Total combination cost | 739,219,511.67 | 68,259,500.00 | 1.00 |
| Less: Fair value of the share of identifiable net assets acquired | 269,061,777.98 | 52,669,742.68 | 673,727.72 |
| Goodwill/amount of combination cost less than the fair value share of identifiable net assets obtained | 470,157,733.69 | 15,589,757.32 | -673,727.72 |
(3) Identifiable assets and liabilities of acquirees as at the acquisition date
Unit: RMB
| Suzhou Green Power | Newmi Tech | Donghang Photoelectric | ||||
| Fair value at the acquisition date | Book value at the acquisition date | Fair value at the acquisition date | Book value at the acquisition date | Fair value at the acquisition date | Book value at the acquisition date | |
| Monetary capital | 69,290,161.01 | 69,290,161.01 | 2,402,649.78 | 2,402,649.78 | 1,098,067.46 | 1,098,067.46 |
| Receivables | 122,760,124.99 | 122,760,124.99 | 55,083,854.19 | 55,083,854.19 | 15,527,726.14 | 15,527,726.14 |
| Inventories | 149,537,731.85 | 129,462,984.51 | 27,107,331.21 | 24,571,105.30 | 7,782,044.01 | 7,782,044.01 |
| Fixed assets | 970,221,678.53 | 928,699,578.53 | 380,602,674.51 | 376,670,884.70 | 21,645,061.71 | 21,645,061.71 |
| Intangible assets | 73,012,713.25 | 37,120,023.09 | 26,850,844.50 | 15,657,866.27 | 28,100.31 | 28,100.31 |
| Notes receivable | 63,567,205.82 | 63,567,205.82 | 19,003,128.08 | 19,003,128.08 | 1,004,097.19 | 1,004,097.19 |
| Receivable financing | 168,564,678.23 | 168,564,678.23 | ||||
| Advances to customers | 3,832,268.99 | 3,832,268.99 | 1,871,354.12 | 1,871,354.12 | 18,559.68 | 18,559.68 |
| Other receivables | 915,120.72 | 915,120.72 | 451,898.28 | 451,898.28 | 1,668,008.55 | 1,668,008.55 |
| Non-current assets due within one year | 2,956,802.29 | 2,956,802.29 | ||||
| Other current assets | 15,932,617.28 | 15,932,617.28 | 48,030,814.57 | 48,030,814.57 | 1,199,983.91 | 1,199,983.91 |
| Construction in progress | 5,336,493.52 | 5,336,493.52 | 343,887,236.48 | 343,887,236.48 | ||
| Long-term deferred expenses | 3,348,868.61 | 3,160,568.61 | 1,542,276.64 | 1,542,276.64 | 469,914.95 | 469,914.95 |
| Deferred income tax assets | 47,936,427.15 | 47,936,427.15 | ||||
| Other non-current assets | 726,070.51 | 726,070.51 | ||||
| Borrowings | -230,795,977.98 | -230,795,977.98 | -20,123,771.89 | -20,123,771.89 | ||
| Payables | -64,614,830.20 | -64,614,830.20 | -18,241,725.06 | -18,241,725.06 | -46,697,528.87 | -46,697,528.87 |
| Deferred income tax liabilities | -14,651,675.63 | -2,649,149.09 | ||||
| Notes payable | -59,150,531.75 | -59,150,531.75 | ||||
| Contractual liabilities | -217,113.88 | -217,113.88 | -966,642.65 | -966,642.65 | -724,212.09 | -724,212.09 |
| Employee benefits payable | -3,600,790.02 | -3,600,790.02 | -1,153,440.81 | -1,153,440.81 | -198,351.83 | -198,351.83 |
| Taxes payable | -336,454.43 | -336,454.43 | -227,726.93 | -227,726.93 | ||
| Other payables | -1,042,654,051.39 | -1,042,654,051.39 | -772,206,201.68 | -772,206,201.68 | -1,859,002.95 | -1,859,002.95 |
| Estimated liabilities | -9,898,957.20 | -9,898,957.20 | ||||
| Non-current liabilities due within one year | -25,118,627.71 | -25,118,627.71 | ||||
| Other current liabilities | -125,663.55 | -125,663.55 | ||||
| Net equity | 269,061,777.98 | 186,035,616.11 | 68,977,915.28 | 53,966,070.42 | 962,468.17 | 962,468.17 |
| Less: Minority interests | 16,308,172.60 | 12,758,982.17 | 288,740.45 | 288,740.45 | ||
| Net assets obtained | 269,061,777.98 | 186,035,616.11 | 52,669,742.68 | 41,207,088.25 | 673,727.72 | 673,727.72 |
Determination method for the fair value of identifiable assets and liabilities:
1. The fair values of the net assets of Suzhou Green Power New Energy Materials Co., Ltd. have been appraised and confirmed byChina United Assets Appraisal Group in the CUAA Report [2019] No. 1775.
2. The fair values of the net assets of Chongqing Yuntianhua Newmi Technological Co., Ltd. have been appraised and confirmed byChina United Assets Appraisal Group in the CUAA Report [2019] No. 1775. Beijing Yachao Asset Appraisal Co., Ltd. In the BeijingYachao Appraisal Report [2020] No. A223.
Contingent liabilities of acquirees assumed in the merger:
Other explanations:
(4) Profit or loss generated from the re-measurement of equity held before the acquisition date at the fairvalueWhether there is a transaction that realizes mergers step by step via multiple transactions and obtains control during the ReportingPeriod
□ Yes √ No
(5) Relevant information about the merger consideration that cannot be reasonably determined at theacquisition date or the end of the current period of merger or on the fair value of acquirees’ identifiableassets and liabilities
(6) Other explanations
2. Merger of enterprises under common control: None
3. Reverse purchase: None
4. Disposal of subsidiaries
Whether there is a loss of control in a single disposal of investments in subsidiaries
□ Yes √ No
Whether there is a loss of control in the current period under a progressive disposal of investments in subsidiaries through multipletransactions
□ Yes √ No
5. Changes in the consolidation scope due to other reasons
Describe the changes in the consolidation scope due to other reasons (e.g. incorporating a new subsidiary and liquidating a subsidiary)and its details:
During the Reporting Period, the Company invested in establishment of 5 new subsidiaries: Guangdong Energy New MaterialInstitute Co., Ltd., Yuxi Feiermu Trading Co., Ltd., Hainan Energy Investment Co., Ltd., SEMCORP Global Holdings Kft. andSEMCORP Hungary Kft.; cancelled 2 subsidiaries: Shanghai Energy Information Technology Co., Ltd., Shanghai Fengzhou TradingCo., Ltd.
6. Others
IX. Interests in Other Entities
1. Interests in subsidiaries
(1) Constitution of the enterprise group
| Name of subsidiaries | Principal place of business | Place of registration | Nature of business | Shareholding proportion | Method of acquisition | |
| Direct | Indirect | |||||
| Yunnan Dexin Paper Co., Ltd. | Yuxi, Yunnan | Yuxi, Yunnan | Paper production and sales | 100.00% | Newly established | |
| Yunnan Hongchuang Packaging Co., Ltd. | Yuxi, Yunnan | Yuxi, Yunnan | Production and sales of aseptic packing box | 59.46% | Newly established | |
| Wuxi Energy Trading Co., Ltd. | Wuxi, Jiangsu | Wuxi, Jiangsu | Trading | 100.00% | Newly established | |
| Yunnan Hongta Plastic Co., Ltd. | Yuxi, Yunnan | Yuxi, Yunnan | Bopp film production and sales | 100.00% | Newly established | |
| Hongta Plastic (Chengdu) Co., Ltd. | Chengdu, Sichuan | Chengdu, Sichuan | Bopp film production and sales | 100.00% | Newly established | |
| Shanghai Energy New Material Technology Co., Ltd. | Shanghai | Shanghai | Production and sales of lithium battery separator film | 95.22% | Merger of enterprises under common control | |
| Zhuhai Energy New Material Technology Co., Ltd. | Zhuhai, Guangdong | Zhuhai, Guangdong | Production and sales of lithium battery separator film | 100.00% | Newly established | |
| Wuxi Energy New Material Technology Co., Ltd. | Wuxi, Jiangsu | Wuxi, Jiangsu | Production and sales of lithium battery separator film | 100.00% | Newly established | |
| Jiangxi Tonry New Energy Technology Development Co., Ltd. | Yichun, Jiangxi | Yichun, Jiangxi | Production and sales of lithium battery separator film | 100.00% | Business combination not under the common control | |
| Innovative New Materials (Hong Kong) Co., Ltd. | Hong Kong | Hong Kong | Trading | 100.00% | Newly established | |
| Shenzhen Qingsong Jinze Technology Development Co., Ltd. | Shenzhen, Guangdong | Shenzhen, Guangdong | Production and sales of packaging materials | 100.00% | Business combination not under the common control | |
| Hunan Qingsong Jingze Technology Development Co., Ltd. | Changde, Hunan | Changde, Hunan | Production and sales of packaging materials | 100.00% | Business combination not under the common control | |
| Jiangxi Ruijie New Material Technology Co., Ltd. | Yichun, Jiangxi | Yichun, Jiangxi | Production and sales of packaging materials | 82.00% | Business combination not under the common control | |
| Yuxi Feiermu Trading Co., Ltd. | Yuxi, Yunnan | Yuxi, Yunnan | Trading | 100.00% | Newly established | |
| Guangdong Energy New Material Institute Co., Ltd. | Zhuhai, Guangdong | Zhuhai, Guangdong | Technical services | 100.00% | Newly established | |
| Suzhou Green Power New Energy Materials Co., Ltd. | Suzhou, Jiangsu Province | Suzhou, Jiangsu Province | Production and sales of lithium battery separator film | 100.00% | Business combination not under the common control | |
| Foshan Donghang Photoelectric Technology Co., Ltd. | Foshan, Guangdong | Foshan, Guangdong | Production and sales of lithium battery separator film | 70.00% | Business combination not under the common |
| control | ||||||
| Chongqing Yuntianhua Newmi Technological Co., Ltd. | Chongqing | Chongqing | Production and sales of lithium battery separator film | 76.36% | Business combination not under the common control | |
| Hainan Energy Investment Co., Ltd. | Chengmai County, Hainan Province | Chengmai County, Hainan Province | Investment and technology services | 100.00% | Newly established | |
| SEMCORP Global Holdings Kft. | Hungary | Hungary | Investment and technology services | 100.00% | Newly established | |
| SEMCORP Hungary Kft. | Hungary | Hungary | Production and sales of lithium battery separator film | 100.00% | Newly established |
Explanation on the inconsistency of the percentage of shares in subsidiaries with the proportion of voting rights:
Basis for holding half or less of the voting rights but still controlling investees, and holding more than half of the voting rights but notcontrolling investees:
Basis for controlling major structured entities consolidated into the financial statements:
Basis for determining whether the Company is an agent or an entrustor:
Other explanations:
(2) Key non-wholly owned subsidiaries
Unit: RMB
| Name of subsidiaries | Percentage of shares held by minority interests | Profit or loss attributable to minority shareholders in the current period | Dividends declared to minority shareholders in the current period | Ending balance of minority interests |
| Shanghai Energy New Material Technology Co., Ltd. | 4.78% | 46,200,824.33 | 2,911,573.20 | 202,515,668.88 |
Explanation on the inconsistency of the percentage of shares held by minority shareholders in subsidiaries with the proportion ofvoting rights:
Other explanations:
(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
| Name of subsidiaries | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Shanghai Energy New Material Technology Co., Ltd. | 5,020,256,247.60 | 11,164,066,308.05 | 16,184,322,555.65 | 8,303,525,643.52 | 3,630,981,418.84 | 11,934,507,062.36 | 3,259,769,518.17 | 6,575,640,134.66 | 9,835,409,652.83 | 3,443,437,675.48 | 3,077,893,019.66 | 6,521,330,695.14 |
Unit: RMB
| Name of subsidiaries | Amount for current period | Amount for previous period |
| Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | Operating income | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Shanghai Energy New Material Technology Co., Ltd. | 2,647,651,880.53 | 961,572,206.27 | 961,572,206.27 | 220,246,091.98 | 1,952,042,718.82 | 864,227,318.93 | 864,227,318.93 | 398,882,625.10 |
Other explanations:
(4) Major restrictions on the use of assets and settlement of debts of the corporate group
(5) Financial support or other support provided for structured entity included in the scope of theconsolidated financial statements
2. Transaction in which the share of owner's equity in the subsidiary changes while control over thesubsidiary remains unchanged
(1) Explanations on changes in the share of owner's equity in the subsidiaryThe Company in the current period purchased in cash 5.1418% of the shares in the level 2 subsidiary ShanghaiEnergy held by Tan Kim Chwee and Yin Hongqiang. After the transaction, the Company held 95.22% of theshares in Shanghai Energy.
(2) Impact of the transaction on the minority shareholders' equity and the owner's equity attributable tothe parent company
Unit: RMB
| --Cash | 490,557,252.00 |
| Total of purchase costs/disposal consideration | 490,557,252.00 |
| Less: subsidiary’s net assets proportion calculated as per obtained/disposed equity ratio | 170,268,545.48 |
| Difference | 320,288,706.52 |
| Including: adjust capital reserve | 320,288,706.52 |
3. Interests in joint arrangement or associates
(1) Important joint ventures or associates
| Name of joint ventures or associates | Principal place of business | Place of registration | Nature of business | Shareholding proportion | Accounting treatment for investments in joint ventures or associates | |
| Direct | Indirect | |||||
| Yuxi Kunshasi Plastic Color Masterbatch | Yuxi, Yunnan | Yuxi, Yunnan | Additive production | 40.00% | Equity | |
Explanation on the inconsistency of the percentage of shares in joint ventures or associates with the proportion of voting rights:
Basis for holding 20% or less voting rights but having important influence, or holding 20% or more voting rights but not havingimportant influence:
(2) Main financial information of important joint ventures: None
(3) Main financial information of important associates
Unit: RMB
Co., Ltd.
| Closing balance/Amount for the current period | Opening balance/Amount for the previous period | |
| Current assets | 9,558,003.37 | 12,274,453.10 |
| Non-current assets | 195,918.55 | 236,281.64 |
| Total assets | 9,753,921.92 | 12,510,734.74 |
| Current liabilities | 1,315,899.74 | 4,152,069.71 |
| Total liabilities | 1,315,889.74 | 4,152,069.71 |
| Shareholders' equity attributable to the parent company | 8,438,022.18 | 8,358,665.03 |
| Pro rata shares of the net assets calculated | 3,375,208.87 | 3,343,466.01 |
| Book value of equity investments in associates | 3,375,208.87 | 3,343,466.01 |
| Operating income | 32,405,011.05 | 31,505,422.58 |
| Net profit | 3,790,787.22 | 3,711,430.07 |
| Total comprehensive income | 3,790,787.22 | 3,711,430.07 |
| Dividends received from associates during the year | 1,484,562.91 | 1,188,900.87 |
Other explanations
(4) Combined financial information of insignificant joint ventures and associates: None
(5) Explanation on significant restrictions on the ability of joint ventures or associates to transfer funds tothe Company: None
(6) Excess loss generated from joint ventures or associates: None
(7) Unrecognised commitment related to investments in joint ventures: None
(8) Contingent liabilities related to investments in joint ventures or associates: None
4. Significant joint operation: None
5. Interests in structured entities not included in the scope of consolidated financial statements: None
6. Others: None
X. Risks Related to Financial InstrumentsThe Company's primary financial instruments include cash and cash equivalents, loans, receivables, payables and convertiblebonds, etc. In daily business activities, the Company is faced with various risks of financial instruments, including credit risk,liquidity risk and market risk. The risks associated with these financial instruments and the risk management policies adopted by theCompany to mitigate these risks are described as follows:
The boards of directors are responsible for planning and establishing company’s risk management framework, formulating riskmanagement policies and relevant guidelines, and supervising the implementation of risk management measures. The Company hasformulated risk management policies to identify and analyze the risks. These risk management policies clearly stipulated the specificrisks, covering market risk, credit risk, liquidity risk management and many other aspects. The Company regularly evaluates themarket environment and changes in its business activities to determine whether to update its risk management policies and systems.The Company’s risk management is carried out by the risk management committee in accordance with the policies approved by theboard of directors. The risk management committee identifies, evaluates and avoids relevant risks through close cooperation withother departments. The internal audit department perform regular audit on risk management controls and procedures, and reports theaudit results to the audit committee. The Company disperses the risk of financial instruments through appropriate diversifiedinvestment and business portfolio, and reduces the risks of being concentrated on a single industry, specific region or specificcounterparty by formulating corresponding risk management policies.(I) Credit riskCredit risk refers to the risk of financial loss of the Company caused by the counterparties failure to perform its contractualobligations. The management has formulated appropriate credit policies and constantly monitors the exposure of credit risk.The Company has adopted a policy of trading only with credit worthy counterparties. In addition, the Company assesses thecredit qualification of customers and sets corresponding credit period based on their financial status, the possibility of obtainingguarantee from a third party, credit records and other factors such as current market conditions. The Company continuously monitorsthe balance and recovery of notes and accounts receivable. For customers with poor credit records, the Company will use writtendunning, shortening credit period or canceling credit period to ensure that the Company will not face significant credit loss. Inaddition, the Company reviews the recovery of financial assets on each balance sheet date to ensure that the relevant financial assetsare fully prepared for the expected credit loss.Other financial assets of the Company include cash and cash equivalents, other receivables, etc. The credit risk of these
financial assets comes from the default of the counterparty, and the maximum credit risk exposure is the book amount of eachfinancial asset in the statement of financial position. The company does not provide any other guarantee that may expose company tocredit risk.The cash and cash equivalents held by the Company are mainly deposited in the state-owned holding banks and other large andmedium-sized commercial banks and other financial institutions. The management believes that these commercial banks have highreputation and asset status, there is no significant credit risk, and there will be no significant loss caused by the default of the otherparty. The company’s policy is to control the amount of deposit deposited according to the market reputation, business scale andfinancial background of each well-known financial institution, so as to limit the amount of credit risk to any single financialinstitution.As part of the Company’s credit risk asset management, the Company uses account aging to assess the impairment loss ofaccounts receivable and other receivables. The accounts receivable and other receivables involve a large number of customers. Theaging information can reflect the solvency and bad debt risk of these customers for accounts receivable and other receivables. Basedon historical data, the Company calculates the historical actual bad debt rate of different account age periods, and takes into accountthe forecast of current and future economic conditions, such as national GDP growth, total infrastructure investment, nationalmonetary policy and other forward-looking information to adjust the expected loss rate. For long term receivables, the Companycomprehensively considers the settlement period, payment period agreed in the contract, the financial situation of the debtor and theeconomic situation of the debtor’s industry, and reasonably evaluates the expected credit loss after adjusting the aforesaidforward-looking information.As of December 31, 2020, the book balance and expected credit impairment loss of related assets are as follows:
| Aging | Book balance | Provision for impairment |
| Notes receivable | 386,995,967.82 | 7,256,643.88 |
| Accounts receivable | 2,440,789,342.01 | 112,573,635.74 |
| Receivable financing | 402,174,829.70 | 2,622,000.00 |
| Other receivables | 12,330,990.31 | 1,469,960.78 |
| Long-term receivables (receivables due within one year inclusive) | 2,956,802.29 | |
| Total | 3,245,247,932.13 | 123,922,240.40 |
As at December 31, 2020 the Company did not provide financial guarantee.The major clients of the Company have reliable and good reputation. Therefore, the Company does not believe that suchcustomers have significant credit risks. As the Company has a wide range of customers, there is no significant credit concentrationrisk.(II) Liquidity riskLiquidity risk refers to the risk of fund shortage when the Company satisfies the obligation of settlement by delivering cash orother financial assets. Each member of company is responsible for their own cash flow forecast. Based on the cash flow forecastresults of each member enterprise, the subordinate financial department of the Company continuously monitors the short-term andlong-term capital demand of the Company at the Company level to ensure that sufficient cash reserves are maintained; at the sametime, it continuously monitors whether it conforms to the provisions of the loan agreement and obtains the commitment of providingsufficient reserve funds from the main financial institutions to meet the short-term and long-term capital demand. In addition, theCompany entered into a financing line credit agreement with major business banks to provide support for the Company to fulfill itsobligations related to commercial bills. As of December 31, 2020, the Company has the bank credit line provided by many domesticbanks, with the amount of RMB18,139.85 million, including: the amount of used credit line is RMB5,091.72 million.
As of December 31, 2020, the Company’s financial liabilities and off balance sheet guarantee projects are listed as follows withundiscounted contract cash flow according to the remaining term of the contract:
| Item | Closing balance | |||
| Less than 1 year | 1-5 years | Over 5 years | Total | |
| Short-term borrowings | 1,795,679,528.91 | 1,795,679,528.91 | ||
| Notes payable | 695,426,539.69 | 695,426,539.69 | ||
| Accounts payable | 471,076,518.22 | 471,076,518.22 |
| Other payables | 585,382,427.63 | 585,382,427.63 | ||
| Long-term borrowings | 518,849,432.68 | 2,666,911,132.37 | 3,185,760,565.05 | |
| Bonds payable | 2,442,698.72 | 755,725,620.04 | 758,168,318.76 | |
| Long-term payables | 4,988,932.48 | 4,988,932.48 | ||
| Total | 4,073,846,078.33 | 2,666,911,132.37 | 755,725,620.04 | 7,496,482,830.74 |
(III) Market risk
1. Exchange rate risk
The Company’s main business is located in China, and its main business is settled in RMB. However, the recognized foreigncurrency assets and liabilities and future foreign currency transactions (the pricing currency of foreign currency assets and liabilitiesand foreign currency transactions are mainly in USD and JPY) still have exchange rate risk. The financial department of theCompany is responsible for monitoring the scale of foreign currency transactions and foreign currency assets and liabilities of theCompany to minimize the exchange rate risk faced; therefore, the Company may sign forward foreign exchange contracts or currencyswap contracts to avoid exchange rate risk.
(1) In the year, the Company did not sign any forward foreign exchange contracts or currency swap contracts.
(2) As of December 31, 2020, the amount of foreign currency financial assets and foreign currency financial liabilities held by theCompany converted into RMB is listed as follows:
| Item | Closing balance | ||||
| USD | EUR | JPY | HKD | Total | |
| Foreign currency financial assets: | |||||
| Monetary capital | 54,158,688.31 | 184,157.06 | 26,924,163.03 | 1,100.32 | 81,268,108.72 |
| Accounts receivable | 298,487,959.02 | 43,219,369.11 | 341,707,328.13 | ||
| Other receivables | 1,441,574.46 | 1,441,574.46 | |||
| Subtotal | 352,646,647.33 | 1,625,731.52 | 70,143,532.14 | 1,100.32 | 424,417,011.31 |
| Foreign currency financial liabilities: | |||||
| Short-term borrowings | 98,414,649.11 | 98,414,649.11 | |||
| Accounts payable | 10,164,885.74 | 2,190,400.90 | 12,355,286.64 | ||
| Long-term borrowings | 262,796,022.85 | 262,796,022.85 | |||
| Subtotal | 108,579,534.85 | 264,986,423.75 | 373,565,958.60 |
(3) Sensitivity analysis:
As of December 31, 2020, for all kinds of USD, EUR, JPY and HKD financial assets and USD, EUR, JPY and HKD financialliabilities of the Company, if RMB appreciates or depreciates 10% against USD, EUR, JPY and HKD, and other factors remainunchanged, the Company will reduce or increase its net profit by about RMB4.3223 million (about -RMB9.8780 million in 2019).
2. Interest rate risk
The interest rate risk of the Company mainly comes from bank loans, etc. Financial liabilities with floating interest rate exposethe Company to the interest rate risk of cash flow, and financial liabilities with fixed interest rate expose the Company to the interestrate risk of fair value. The company determines the relative proportion of fixed rate and floating rate contracts according to themarket environment at that time.
The financial department of the Company continuously monitors the interest rate level of company. The rising interest rate willincrease the cost of new interest bearing debt and the interest expense of the outstanding interest bearing debt with floating interestrate, and have a significant adverse impact on the financial performance of company. The management will make timely adjustmentsaccording to the latest market conditions, which may be interest rate swap arrangements to reduce interest rate risk.
(1) The company has no significant interest rate swap arrangement in this year.
(2) As of December 31, 2020, the Company’s long-term interest-bearing liabilities were the floating interest rate contract pricedin RMB, with the amount of RMB3.1818916 billion, see "45. Long-term loans" in "VII. Notes to consolidated financial statementitems" of this section for more.
(3) Sensitivity analysis:
As of December 31, 2020, if the loan interest rate based on the floating interest rate rises or falls by 50 basis points, while otherfactors remain unchanged, the Company’s net profit will decrease or increase by about RMB2,122.19 (about RMB559.76 in 2019).The above sensitivity analysis assumes that the interest rate has changed on the balance sheet date and has been applied to allborrowings obtained by the Company at a floating interest rate.
3. Price risk
Price risk refers to the risk of fluctuation due to the change of market price other than exchange rate risk and interest rate risk,which mainly comes from the change of commodity price, stock market index, equity instrument price and other risk variables.
XI. Disclosure of Fair Value
1. Final fair value of assets and liabilities measured at fair value
2. Determination basis of the market price of the item measured using the first-level continuous andnoncontinuous fair value measurement
3. Valuation techniques and qualitative and quantitative information on important parameters adopted forthe second-level continuous and noncontinuous fair value measurement
4. Valuation techniques and qualitative and quantitative information on important parameters adopted forthe third-level continuous and noncontinuous fair value measurement
5. Continuous third-level fair value measurement items, adjustment information between the opening andclosing book value and sensitivity analysis of unobservable parameters
6. For the continuous fair value measurement items, if there is a conversion between all levels in the currentperiod, describe the reason for the conversion and the policy for determining the time point of theconversion
7. Changes in valuation techniques and the cause of changes in the current period
8. Fair value of financial assets and financial liabilities that are not measured at fair value
Financial assets and liabilities not measured at fair value mainly include receivables, short term loans,payables, non-current liabilities maturing within one year and long term loans.
The difference between book value and fair value of the above financial assets and liabilities not measured at fairvalue is very small
9. Others
As of December 31, 2020, the Company had no financial instruments measured at fair value except receivablefinancing. The book value of the receivable financing is similar to the fair value, and its fair value is conducted asthe book value
XII. Related Parties and Related Party Transactions
1. Information about Parent Company of the Company
Description of the parent company of the CompanyAs of December 31, 2020, the actual controller of the Company was the Paul Xiaoming Lee family. The PaulXiaoming Lee family held 46.94% of the Company's shares directly and indirectly, and actually controlled theCompany. The shareholding of Paul Xiaoming Lee's family is as follows: his family member Paul Xiaoming Leeholds 14.41% of the shares directly, his family member Li Xiaohua holds 7.88% of the shares directly, his familymember Sherry Lee holds 8.29% of the shares directly, and his family member Jerry Yang Li holds 2.00% of theshares directly. Paul Xiaoming Lee's family members indirectly hold 14.37% equity of the Company through YuxiHeyi Investment Co., Ltd, Yuxi Heli Investment Co., Ltd and Zhuhai Hengjie Enterprise Management Office(limited partnership).The ultimate control of the enterprise is the Paul Xiaoming Lee family.Other explanations:
2. Information about subsidiaries of the Company
Please refer to Note “1.Interest in Subsidiaries” of“IX. Interests in Other Entities”.
3. Information about joint ventures and associates of the Company
Please refer to Note “3.Equity in Joint Ventures or Associates Enterprises” of“IX. Interests in Other Entities”.Details of joint ventures or associates with related party transactions for the period and balances resulted from related partytransactions in the previous period are as follows:
| Name of joint venture or associate | Relationship with the Company |
| Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | An associate of the Company |
Other explanations
4. Information about Other Related Parties
| Name of other related party | Relationship with the Company |
| Yuxi Heli Investment Co., Ltd. | Shareholder |
| Yuxi Heyi Investment Co., Ltd. | Shareholder |
| PAUL XIAOMING LEE | Main members of the ultimate controller family |
| Li Xiaohua | Main members of the ultimate controller family |
| YAN MA | Main members of the ultimate controller family |
| Yanyang Hui | Main members of the ultimate controller family |
| Industrial and Commercial Bank of China Limited | The spouse of the independent director of the Company serves as its non-executive director |
Other explanations
5. Related party transactions
(1) Related party transactions on purchase and sales of goods and rendering and receiving of services
Statement of purchase of goods/acceptance of services
Unit: RMB
| Related party | Particulars of related party transaction | Amount for current period | Approved transaction limit | Whether exceeding the transaction limited | Amount for previous period |
| Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | Purchase additives | 32,405,011.05 | 40,000,000.00 | None | 31,505,422.58 |
Statement of sales of goods/rendering of services
Unit: RMB
| Related party | Particulars of related party transaction | Amount for current period | Amount for previous period |
| Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | Sale raw materials | 12,510,578.39 | 17,108,807.77 |
Description of related party transactions on purchase and sales of goods and rendering and receiving of services
(2) Trusteeship/contracting and entrusted management/outsourcing: None
(3) Leasing between related parties
The Company as the lessor:
Unit: RMB
| Lessee’s name | Type of leased assets | Rental income recognized for the period | Rental income recognized in the previous period |
| Yuxi Heli Investment Co., Ltd. | Office | 2,285.72 | 2,285.72 |
| Yuxi Heyi Investment Co., Ltd. | Office | 2,357.13 | 3,142.84 |
| Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | Workshop | 22,857.15 | 22,857.15 |
| Total | - | 27,500.00 | 28,285.71 |
The Company as the lessee:None
(4) Related party guarantees
The Company as the guarantor
Unit: RMB
| Secured party | Guarantee amount | Commencement date of guarantee | Expiry date of guarantee | Guarantee fully fulfilled |
| Hongta Plastic | 44,000,000.00 | November 04, 2020 | November 04, 2021 | No |
| Hongta Plastic | 78,000,000.00 | October 19, 2018 | October 19, 2021 | No |
| Hongta Plastic | 30,000,000.00 | March 13, 2020 | December 18, 2020 | No |
| Hongta Plastic | 40,000,000.00 | August 23, 2019 | August 23, 2020 | No |
| Hongta Plastic | 40,000,000.00 | November 02, 2020 | November 02, 2022 | No |
| Hongta Plastic | 210,000,000.00 | November 10, 2020 | December 31, 2025 | No |
| Hongta Plastic | 40,000,000.00 | November 09, 2020 | October 23, 2025 | No |
| Hongta Plastic | 40,000,000.00 | October 23, 2020 | October 13, 2021 | No |
| Chengdu Hongta Plastic | 20,000,000.00 | December 28, 2020 | March 30, 2021 | No |
| Hongchuang Packaging | 20,000,000.00 | March 10, 2020 | February 28, 2022 | No |
| Hongchuang Packaging | 30,000,000.00 | June 23, 2020 | June 22, 2021 | No |
| Hongchuang Packaging | 66,000,000.00 | November 04, 2020 | November 04, 2021 | No |
| Hongchuang Packaging | 30,000,000.00 | October 23, 2020 | September 28, 2021 | No |
| Dexin Paper | 22,300,000.00 | November 13, 2019 | November 13, 2022 | No |
| Dexin Paper | 5,000,000.00 | June 16, 2020 | June 11, 2021 | No |
| Dexin Paper | 10,000,000.00 | October 23, 2020 | October 13, 2021 | No |
| Shanghai Energy | 300,000,000.00 | October 23, 2020 | October 23, 2023 | No |
| Shanghai Energy | 100,000,000.00 | July 25, 2019 | July 24, 2025 | No |
| Shanghai Energy | 300,000,000.00 | July 20, 2020 | July 19, 2023 | No |
| Shanghai Energy | 150,000,000.00 | July 02, 2020 | July 02, 2021 | No |
| Shanghai Energy | 510,000,000.00 | April 27, 2020 | April 26, 2025 | No |
| Shanghai Energy | 100,000,000.00 | August 06, 2020 | July 08, 2021 | No |
| Shanghai Energy | 110,000,000.00 | September 22, 2020 | September 22, 2021 | No |
| Shanghai Energy | 210,000,000.00 | June 23, 2020 | June 15, 2021 | No |
| Shanghai Energy | 90,000,000.00 | December 06, 2019 | November 12, 2022 | No |
| Shanghai Energy | 100,000,000.00 | November 19, 2019 | November 18, 2024 | No |
| Shanghai Energy | 220,000,000.00 | December 13, 2019 | November 18, 2020 | No |
| Shanghai Energy | 110,000,000.00 | November 14, 2020 | November 14, 2021 | No |
| Shanghai Energy | 550,000,000.00 | December 17, 2019 | December 17, 2022 | No |
| Shanghai Energy | 100,000,000.00 | October 30, 2019 | December 31, 2021 | No |
| Shanghai Energy | 150,000,000.00 | January 15, 2020 | January 14, 2021 | No |
| Shanghai Energy | 856,000,000.00 | September 30, 2020 | September 27, 2027 | No |
| Shanghai Energy | 80,000,000.00 | September 27, 2020 | March 26, 2022 | No |
| Shanghai Energy | 100,000,000.00 | October 29, 2020 | October 28, 2021 | No |
| Wuxi Energy | 1,300,000,000.00 | May 17, 2019 | June 21, 2026 | No |
| Wuxi Energy | 100,000,000.00 | February 18, 2020 | February 17, 2024 | No |
| Wuxi Energy | 50,000,000.00 | April 13, 2020 | February 17, 2021 | No |
| Wuxi Energy | 120,000,000.00 | July 21, 2020 | July 21, 2023 | No |
| Wuxi Energy | 1,160,000,000.00 | December 01, 2020 | December 01, 2029 | No |
| Jiangxi Tonry | 1,500,000,000.00 | September 17, 2019 | December 31, 2024 | No |
| Jiangxi Tonry | 100,000,000.00 | December 11, 2020 | December 10, 2021 | No |
| Jiangxi Tonry | 277,500,000.00 | July 29, 2020 | July 28, 2021 | No |
| Jiangxi Tonry | 50,000,000.00 | October 28, 2020 | October 27, 2022 | No |
| Zhuhai Energy | 1,000,000,000.00 | August 14, 2017 | August 13, 2026 | No |
| Zhuhai Energy | 750,000,000.00 | August 01, 2019 | August 01, 2025 | No |
| Zhuhai Energy | 80,000,000.00 | July 14, 2020 | July 14, 2021 | No |
| Zhuhai Energy | 220,000,000.00 | September 18, 2020 | September 17, 2021 | No |
| Zhuhai Energy | 70,000,000.00 | March 16, 2020 | March 15, 2021 | No |
| Zhuhai Energy | 35,000,000.00 | November 01, 2019 | November 01, 2020 | No |
| Zhuhai Energy | 50,000,000.00 | December 11, 2019 | December 11, 2024 | No |
| Zhuhai Energy | 100,000,000.00 | April 13, 2020 | April 12, 2021 | No |
| Zhuhai Energy | 200,000,000.00 | May 08, 2020 | August 23, 2023 | No |
| Zhuhai Energy | 100,000,000.00 | May 17, 2020 | May 17, 2021 | No |
| Zhuhai Energy | 80,000,000.00 | May 08, 2020 | May 08, 2025 | No |
| Zhuhai Energy | 100,000,000.00 | March 30, 2020 | March 30, 2021 | No |
| Zhuhai Energy | 150,000,000.00 | December 22, 2020 | December 22, 2021 | No |
| Suzhou Green Power | 150,000,000.00 | July 01, 2020 | July 01, 2023 | No |
| Suzhou Green Power | 100,000,000.00 | April 08, 2020 | April 08, 2021 | No |
The Company as the secured party
Unit: RMB
| Guarantor | Guarantee amount | Commencement date of guarantee | Expiry date of guarantee | Guarantee fully fulfilled |
| Yunnan Hongta Plastic Co., Ltd. | 10,000.00 | March 27, 2020 | March 26, 2021 | No |
| Yunnan Dexin Paper Co., Ltd. | 3,000.00 | April 15, 2020 | March 17, 2021 | No |
| Yunnan Dexin Paper Co., Ltd. | 1,600.00 | April 14, 2020 | April 14, 2023 | No |
| Shanghai Energy New Material Technology Co., Ltd. | 2,000.00 | June 23, 2020 | June 22, 2021 | No |
Description of related guarantees
As of December 31, 2020, the related guarantees of the company are as follows:
(1) Provide related party guarantee
The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Yunnan Hongta Plastic Co.,Ltdl, including line of credit, loan and acceptance draft, in a total amount of RMB522,000,000.00;
The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Yunnan Dexin Paper Co., Ltd.,including line of credit, loan and acceptance draft, in a total amount of RMB37,300,000.00;
The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Yunnan HongchuangPackaging Co., Ltd., including line of credit, loan and acceptance draft, in a total amount of RMB126,000,000.00;
The Company has provided the guarantee for the debts incurred by the subsidiary Yunnan Hongchuang Packaging Co., Ltd. In
a total amount of RMB20,000,000.00;The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Hongta Plastic (Chengdu) Co.,Ltd., including acceptance draft, in a total amount of RMB20,000,000.00;The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Shanghai Energy NewMaterial Technology Co., Ltd., including line of credit, loan, acceptance draft, payment agency and bill advance, in a total amount ofRMB4,136,000,000.00;The Company has provided the guarantees for the comprehensive line of credit for its tier-2 subsidiary Zhuhai Energy NewMaterial Technology Co., Ltd., including loan,letter of credit, acceptance draft, payment agency and bill advance, in a total amount ofRMB565,000,000.00;
The Company and its subsidiary Shanghai Energy New Material Technology Co., Ltd. Have jointly provided the guarantees forthe comprehensive line of credit for Zhuhai Energy New Material Technology Co., Ltd., loan, acceptance draft, trade financing andletter of guarantee, in a total amount of RMB2,370,000,000.00;The Company has provided the guarantees for the comprehensive line of credit for its tier-2 subsidiary Wuxi Energy NewMaterial Technology Co., Ltd., including acceptance draft and loan, in a total amount of RMB100,000,000.00;The Company aand its subsidiary Shanghai Energy New Material Technology Co., Ltd. Have jointly provided a guarantee forthe comprehensive line of credit for Wuxi Energy New Material Technology Co., Ltd., including acceptancce draft, loan, letter ofcredit, import and export bill financing and non-financing guarantee, in a total amount of RMB1,330,000,000.00;The Company has provided the guarantees for the comprehensive line of credit for its tier-2 subsidiary Jiangxi Tonry NewEnergy Technology Development Co., Ltd., including acceptance draft and loan, in a total amount of RMB427,500,000.00;
The Company and its subsidiary Shanghai Energy New Material Technology Co., Ltd. Have jointly provided the guarantees forthe comprehensive line of credit for Jiangxi Tonry New Energy Technology Development Co., Ltd., including line of credit,in a totalamount of RMB1,500,000,000.00;
The Company has provided the guarantees for the comprehensive line of credit for its subsidiary Suzhou Green Power NewEnergy Materials Co., Ltd., including acceptance draft, in a total amount of RMB250,000,000.00;
The subsidiary Yunnan Hongta Plastic Co., Ltd. has provided the guarantee for the comprehensive line of credit of theCompany, including line of credit, loan and acceptance draft, in a total amount of RMB100,000,000.00;
The subsidiary Yunnan Dexin Paper Co., Ltd. has provided the guarantee for the comprehensive line of credit of the Company,including line of credit, loan and acceptance draft, in a total amount of RMB46,000,000.00;
The subsidiary Shanghai Energy New Material Technology Co., Ltd. has provided the guarantee for the comprehensive line ofcredit of the Company, including line of credit, loan and acceptance draft, in a total amount of RMB20,000,000.00;
(2) Acceptance of related party guarantees
The details of the guarantee provided by the shareholders of the Company for the subsidiary Shanghai Energy are as follows:
| Guarantor | Amount guaranteed | Commencement date of guarantee | Expiry date of guarantee | Guarantee fully fulfilled |
| PAUL XIAOMING LEE | 1,000,000,000.00 | August 14, 2017 | August 13, 2025 | No |
| Li Xiaohua | 1,000,000,000.00 | August 14, 2017 | August 13, 2025 | No |
| PAUL XIAOMING LEE | 50,000,000.00 | September 20, 2017 | September 20, 2022 | No |
| Li Xiaohua | ||||
| PAUL XIAOMING LEE, YAN MA | 200,000,000.00 | October 1, 2017 | June 30, 2021 | No |
| Li Xiaohua, HUI YANYANG | 200,000,000.00 | October 1, 2017 | June 30, 2021 | No |
| PAUL XIAOMING LEE、YAN MA | 50,000,000.00 | August 18, 2017 | August 18, 2024 | No |
| Li Xiaohua, YANYANG HUI | 50,000,000.00 | August 18, 2017 | August 18, 2024 | No |
| PAUL XIAOMING LEE | 120,000,000.00 | July 13, 2018 | July 13, 2021 | No |
| Total | 2,670,000,000.00 | — | — |
The Company, Paul Xiaoming Lee, Li Xiaohua and its subsidiary Shanghai Energy jointly provide guarantee for the loan of the tier-2subsidiary Wuxi Energy with a total guarantee amount of RMB1,300,000,000.00;
(5) Borrowings with related parties: None
(6) Asset transfer and debt restructuring of related parties: None
(7) Remuneration to key management
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Remuneration to Key Management Personnel | 4,579,104.65 | 4,499,133.69 |
(8) Other related party transactions
| Type of transaction | Name of related party | Amount for current period | Amount for previous period | Pricing policy and procedure for decision-making |
| Loan with related bank (including application for comprehensive facility, acceptance draft, letter of credit, bank guarantee, etc.) | Industrial and Commercial Bank of China Limited | 1,440,000,000.00 | Market price / as approved by the General Meeting of Shareholders |
| Loan with related bank (including demand deposits, time deposits, call deposits, etc.) | Industrial and Commercial Bank of China Limited | 56,116,390.66 | Market price / as approved by the General Meeting of Shareholders | |
| Mutual guarantees between companies within the scope of the company's consolidated financial statements through the related bank | Industrial and Commercial Bank of China Limited | 3,560,000,000.00 | Market price / as approved by the General Meeting of Shareholders |
6. Amounts due to and due from related parties
(1) Receivable: None
(2) Payables
Unit: RMB
| Item | Related party | Book balance at the end of the Reporting Period | Book balance at the beginning of the Reporting |
| Period | |||
| Accounts payable | Yuxi Kunshasi Plastic Color Masterbatch Co., Ltd. | 2,204,149.24 | 8,511,205.44 |
7. Commitments in relation to related parties
8. Others
XIII. Share-based Payment
1. General information about share-based payment
√Applicable □N/A
Unit: RMB
| Total amount of equity instruments granted by the Company in the current period | 0.00 |
| Total amount of equity instruments exercised by the Company in the current period | 3,404,080.00 |
| Total amount of equity instruments expired in the current period | 23,120.00 |
Other explanations
On April 20, 2017, the Company convened the resolution of the 2016 annual general meeting of shareholdersand approved the Company's 2017 restricted stock incentive plan (Draft). On June 1, 2017, the fourth meeting ofthe third board of directors was held to deliberate and approve the proposal on granting restricted shares toincentive objects of 2017 restricted stock incentive plan of the Company. According to the above provisions, theCompany granted 2.57 million shares of restricted shares to 84 directors, senior managers, middle-level managers,core technical and business backbones. The restricted stock award date is June 1, 2017, and the price isRMB28.65/share. After the change, the registered capital was RMB136,450,000.00, of which the new registeredcapital was RMB2,570,000.00, adding Capital reserveRMB71,060,500.00. The Company converted capitalreserve to share capital twice, and the employee incentive shares were changed from 2,570,000.00 shares to8,738,000.00 shares, and the corresponding restricted stock exercise price was changed to RMB8.426/share. OnJuly 23, 2020, all restricted stocks for this equity incentive were unlocked.Restricted period arrangement of restricted shares:
The restricted stock granted by the scheme is 12 months, 24 months and 36 months from the date of award.The restricted stock granted by the incentive object under this plan shall not be transferred before the release ofthe restricted stock, used for guaranty or repayment of debts. After the expiration of the sale period, the Companyshall handle the lifting of the sale restriction in order to satisfy the incentive object of the lifting of the restrictedconditions, and the restricted stock held by the incentive object that does not meet the deregistration restrictionsshall be rewritten and canceled by the Company.
The release period of restricted shares granted and the time schedule for each period are as follows:
| Post lock-up period | Timing | Proportion of shares exercisable |
| 1st post lock-up period | From the first trading day after 12 months since the registration of granting to the last trading day within 24 months after the registration of granting | 30% |
| 2nd post lock-up period | From the first trading day after 24 months since the registration of granting to the last trading day within 36 months after the registration of granting | 30% |
| 3rd post lock-up period | From the first trading day after 36 months since the registration of granting to the last trading day within 48 months after the registration of granting | 40% |
The cash dividends obtained from the restricted shares granted to the incentive objects shall be managed bythe Company on behalf of the incentive objects and paid to the incentive objects when the restricted shares arelifted; if the restricted shares cannot be lifted under the plan, they shall be recovered by the Company. Therestricted shares granted to the incentive objects due to the conversion of capital reserve fund to share capital,stock dividend and stock split shall be restricted for sale at the same time, and shall not be sold in the secondarymarket or transferred in other ways. The period of lifting the restriction on sale of such shares is the same as thatof lifting the restriction on sale of restricted shares.During the agreed period, the restricted stock that was not applied for lifting the restricted sale or restrictedstock that could not be applied for releasing the restricted sale because of the condition that the sale limit had notbeen met, the Company will buy back and cancel the restricted stock that the incentive object has not yet lifted.The release of restricted shares granted shall meet both the Company's performance assessment requirementsand individual assessment requirements, as follows:
①Company performance assessment requirements
Index of financial performance assessment: net profit growth rate.
For the restricted stocks granted in the plan, in each fiscal year of the period of lifting the sales restriction, theperformance appraisal shall be carried out by year and the sales restriction shall be lifted, and the conditions forlifting the sales restriction as the incentive object have been met.
During the validity period of this incentive plan, the financial performance assessment objectives of eachyear are as follows:
| Unlock period | Performance assessment indicators |
| 1st unlock period | Based on the net profit attributable to the parent company in 2016, the growth rate of the net profit attributable to the parent company in 2017 is not less than 5%; |
| 2nd unlock period | Based on the net profit attributable to the parent company in 2016, the growth rate of the net profit attributable to the parent company in 2018 is not less than 7%; |
| 3rd unlock period | Based on the net profit attributable to the parent company in 2016, the growth rate of the net profit attributable to the parent company in 2019 is not less than 9%. |
The above "net profit" index refers to the net profit before the incentive cost is deducted.
②Personal performance assessment requirements
The incentive object can be unlocked only if it meets the requirements of the Company's performanceassessment requirements and personal performance assessment requirements in the previous year, and the specificunlocking percentage is determined according to the individual performance assessment result of the incentiveobject. The results of individual performance assessment of incentive objects are classified according to fourassessment levels: excellent, good, qualified and unqualified. The corresponding scores and the unlocking ratiosof each assessment level are as follows:
| Score | Score≥90 | 90＞Score≥80 | 80＞Score≥70 | Score＜70 |
| Level | Excellent | Good | Pass | Unqualified |
| Unlocking ratios | 100% | 80% | 50% | 0 |
2. Information on equity-settled share-based payment
√Applicable □N/A
Unit: RMB
| Determination method of fair value of equity instruments on the date of grant | For the senior managers, the international Black-Scholes model is adopted, except the other incentive objects of senior managers, the fair value is granted by the closing price of the grant day. |
| Basis for determining the number of vesting equity instruments | The number of shares transferred in the contract |
| Reasons for significant difference between current and previous estimate | None |
| Equity settled equity payments are included in the cumulative amount of Capital reserve | 70,458,636.09 |
| Total cost of equity-settled confirmed by equity settlement | 3,736,935.26 |
Other explanations
3. Information on cash-settled share-based payment
□ Applicable √ N/A
4. Modification and termination of share payment
5. Others
The share based payment of Shanghai Energy, a subsidiary of the Company, is as follows:
(I). General information about share-based payment
| Item | 2020 | 2019 | 2018 | 2017 |
| The total amount of equity instruments granted by the Company during this period (10,000 shares) | 1,002.00 |
(II). Information on equity-settled share-based payment
| Item | 2020 | 2019 | 2018 | 2017 |
| Determination method of fair value of equity instruments on the date of grant | Confirm according to the evaluation value | Confirm according to the evaluation value | Confirm according to the evaluation value | Confirm according to the evaluation value |
| Equity settled equity payments are included in the cumulative amount of Capital reserve | 69,296,210.55 | 50,817,221.07 | 32,338,231.59 | 13,859,242.11 |
| Total cost of equity-settled confirmed by equity settlement | 18,478,989.48 | 18,478,989.48 | 18,478,989.48 | 13,859,242.11 |
On April 14, 2017, the 2016 annual general meeting of shareholders of Shanghai Energy, a subsidiary of the Company, deliberatedand passed the proposal on confirming the equity incentive plan and the list of equity incentive objects, and agreed that a total of 40employees from Zhuhai Hengjie Enterprise Management Office (limited partnership) (as "Zhuhai Hengjie") could indirectly hold theCompany at the price of RMB5.50/ share, 10.02 million shares in exchange for services provided by employees. According to therelevant provisions of "accounting standards for Enterprises No. eleventh - share payment", the equity incentive is a share settlementbased on equity settlement. According to the appraisal report (2017) No. 3233 issued by Beijing Zhongqihua Appraisal Co., Ltd., thetransaction price of the Company's purchase of the corresponding equity of Shanghai Energy is RMB5.180 billion, RMB14.26/shareas the fair value of the share based payment. Therefore, according to the difference between the number of shares subscribed byemployees multiplied by the fair value of RMB14.26/share and the subscription value of RMB5.50/share, the Company recognized itas general and administrative expenses and capital reserve, RMB87,775,200.00 in total. Meanwhile, the terms and conditions of thecontract and the exit mechanism should be signed with the object being encouraged: 5 years from the effective date of the labor
contract (to December 31, 2021). It is not allowed to resign unilaterally or leave the Company in other ways or use the existingtechnology and newly created technology for any third party. Otherwise, it will not have the right to enjoy the partner rights andinterests obtained in Zhuhai Hengjie. All partner rights and interests will be owned by Zhuhai Hengjie, which is deemed as the agreedservice period. Therefore, the above equity incentive will be confirmed by stages from April 2017 to December 2021. To sum up,during January-December 2017, the Company confirmed the share based payment fee of RMB13,859,242.11, the Companyconfirmed the share based payment fee of RMB18,478,989.48 in 2018, and the Company confirmed the share based payment fee ofRMB18,478,989.48 in 2019 and the Company confirmed the share based payment fee of RMB18,478,989.48 in 2020. The impact ofthis event on the amount of capital reserve in the current consolidated balance sheet is RMB17,595,693.78.
XIV. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
(1) Mortgage asset
As of December 31, 2020, the Company has obtained the bank's comprehensive credit line with the mortgageof property and plant in fixed assets, machinery and equipment, land using right and construction in progress inintangible assets of RMB1.7849815 billion. See “81. Assets with restricted ownership or use right" in "VII. Notesto items of consolidated financial statements" of this section for more.
(2) Pledged assets
As of December 31, 2020, the Company obtained bank loans of RMB1,392,884,600 by pledging structureddeposits, accounts receivable, notes receivable, 100% equity interest in its tier-2 subsidiary Suzhou Green PowerNew Energy Materials Co., Ltd. and 100% equity interest in its tier-2 subsidiary Jiangxi Tonry New EnergyTechnology Development Co., Ltd. For details, see "32. Short-term borrowings", "45. Long-term borrowings" and"81. Assets with restricted ownership or use right" in "VII. Notes to items of consolidated financial statements" ofthis section.
As at December 31, 2020, except for the disclosures above, there were no other important commitments thatare required to be disclosed.
2. Contingencies
(1) Significant contingencies on the balance sheet date
1) Contingencies arising from external debt guarantee and their financial implicationsSee "(4) Related party guarantees” under “5. Related party transactions” in “XII. Related Parties and Related PartyTransactions”for the guarantee provided by the related party
2) Letter of guarantee and letter of credit
As of December 31, 2020, the balance of letters of credit issued by financial institutions for the Company wasUSD874,291.50, JPY1,195,500,000.00 and Euro5,578,071.55 and the amount of the L/G was RMB12,600,000.00.As at 31 December 2020, except for the disclosures above, there were no other major contingencies that arerequired to be disclosed.
(2) Where the Company has no significant contingencies to disclose, description is also required:
The Company has no significant contingencies to disclose.
(3) Other information required by the guidelines for information disclosure of automobile manufacturingrelated industries
Amount of sales adopting mortgage sales, finance lease and other models accounts for more than 10% of operating income
□ Applicable ? N/A
Guarantees provided by the Company to distributors
□ Applicable ? N/A
3. Others
XV. Events Subsequent to the Balance Sheet Date
1. Important non-adjusting events
Unit: RMB
| Item | Content | Effects on financial conditions and operating results | Reasons for inestimable effects |
| Important external investments | (1) Under the 21st meeting of the 4th Board of Directors of the Company and the 2021 2nd Extraordinary General Meeting of the Company, the Company was approved to make and enter into the Agreement on the Investment in Projects of Changshou Economic and Technological Development Zone with the administrative committee of Changshou Economic and Technological Development Zone. Under the Agreement, the Company’s level 2 subsidiary Shanghai Energy planned to invest in the 16 high-performance lithium ion battery micropore separator film production lines and 39 spray wiring lines in Changshou Economic and Technological Development Zone, Chongqing. The investments for the projects were RMB5.8 billion, which would be its own funds and self-raised funds. As of the issue date of the report, the Company had not yet made actual investments. (2) Under the Proposal on the Cooperation of Subsidiaries with Polypore approved in the 23rd meeting of the 4th Fourth Board of Directors of the Company, the Company’s level 2 subsidiary Shanghai Energy was approved to make and enter into the Agreement on Subscription For Capital Increase and Joint Venture Agreement with Polypore Hong Kong Limited (Polypore Hong Kong), a subsidiary of Polypore International, LP (“Polypore”). Under the Proposal, when meeting the premises stipulated in the agreements, Shanghai Energy and Polypore Hong Kong shall, within the required time limited, make a capital |
2. Profit distribution
3. Sales return
4. Other events subsequent to the balance sheet date
XVI. Other Significant Events
1. Correction of previous accounting errors: None
2. Debt restructuring: None
3. Assets exchange: None
4. Annuity plan: None
5. Discontinuation of operation: None
6. Segment information
(1) Determination basis and accounting policy of reporting segments
The Company determines the business segment based on its internal organizational structure, managementrequirements and internal reporting system. The operating segments of the Company refer to the componentsmeeting the following conditions at the same time:
The component can generate income and expenses in daily activities;The management can regularly evaluate the operation results of the component to decide to allocate resources to itand evaluate its performance;The relevant accounting information can be obtained from the financial status, operating results and cash flow ofthe component.
The Company determines the reporting segment based on the operating segment, and the operating segmentmeeting one of the following conditions is determined as the reporting segment:
The segment revenue of the business segment accounts for 10% or more of the total revenue of all segments.The absolute profit (loss) of the division accounts for 10% or more of the absolute sum of the total profits of all
profit segments or the total amount of all deficit segment losses.
According to the accounting policy, the proportion of the total revenue from the external revenue of thebusiness segment of the reporting division determined by the above accounting policy does not reach 75% of thetotal revenue, increasing the number of reporting segments, and bringing the other non reporting divisions into thereporting segment according to the following provisions, reaching the proportion of 75%:
The management considers the disclosure of the business segment information to be a useful reporting segmentfor the accounting information users.The business segment is merged with one or more other business segments which have similar economiccharacteristics and meet the merger conditions of the business segment as a reporting division.
The transfer price between segments is determined by referring to the market price, and the assets and relatedexpenses used together with each segment are distributed among different segments according to the income
proportion.
The report segments of the Company are all business units providing different products and services. Asvarious businesses require different technologies and market strategies, the Company independently manages theproduction and operation activities of each reporting segment, and separately evaluates its operating results todetermine its allocation of resources and evaluate its performance.The Company has 2 reporting segments: the lithium battery separator film business segment and the BOPP filmbusiness segment. The lithium battery separator film business segment is responsible for the production of lithiumbattery separator film, which is mainly used for the production of power car batteries and 3C product batteries; theBOPP film business segment is responsible for the production of BOPP film, which is mainly used for the outerpackaging of cigarette boxes, food and other products.
(2) Financial information of reporting segments
Unit: RMB
| Item | Lithium battery separation film business segment | BOPP film business segment | Others | Inter-segment elimination | Total |
| I. Operating income | 299,555.47 | 59,679.13 | 89,524.07 | -20,457.91 | 428,300.76 |
| Including: Income from outside trade | 299,555.47 | 59,679.13 | 69,066.16 | 428,300.76 | |
| Income from inter-segment trade | 20,457.91 | -20,457.91 | |||
| II. Operating cost | 194,653.14 | 53,342.28 | 81,168.54 | -16,631.01 | 312,532.95 |
| Among them: Depreciation and amortization costs | 43,654.40 | 1,972.29 | 10,792.54 | -206.48 | 56,212.75 |
| Income from investment in joint ventures and associates | 151.63 | 151.63 | |||
| Asset impairment losses | 419.14 | 163.18 | 1,198.69 | 1,781.01 | |
| Credit impairment losses | 1,174.03 | 53.45 | 2,646.97 | 3,874.45 | |
| III. Total profit | 118,842.62 | 6,630.06 | 15,301.03 | -9,449.00 | 131,324.71 |
| IV. Income tax expense | 14,881.42 | 1,123.10 | -1,754.92 | -489.83 | 13,759.76 |
| V. Net profit | 103,961.20 | 5,506.97 | 17,055.95 | -8,959.17 | 117,564.95 |
| VI. Total assets | 1,618,432.26 | 147,425.15 | 1,306,046.60 | -1,014,680.53 | 2,057,223.48 |
| VII. Total liabilities | 1,193,450.71 | 100,173.68 | 154,431.29 | -550,406.72 | 897,648.96 |
(3) If the Company has no reporting segment or the total assets and total liabilities of the reportingsegments cannot be disclosed, please explain the reason
(4) Other explanations
7. Significant transactions and matters that have an impact on investors’ decision-making
8. Others
XVII. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure of accounts receivable by type
Unit: RMB
| Type | Closing balance | Opening balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Including: | ||||||||||
| Accounts receivable with bad debt reserve withdrawn as per the portfolio of credit risk characteristics | 14,082,469.16 | 100.00% | 581,605.98 | 4.13% | 13,500,863.18 | 41,764,973.38 | 100.00% | 72,588.60 | 0.17% | 41,692,384.78 |
| Including: | ||||||||||
| Aging portfolio | 14,082,469.16 | 100.00% | 581,605.98 | 4.13% | 13,500,863.18 | 30,282,737.52 | 72.51% | 72,588.60 | 0.24% | 30,210,148.92 |
| Related party within the consolidation scope | 11,482,235.86 | 27.49% | 11,482,235.86 | |||||||
| Total | 14,082,469.16 | 100.00% | 581,605.98 | 4.13% | 13,500,863.18 | 41,764,973.38 | 100.00% | 72,588.60 | 0.17% | 41,692,384.78 |
If provision was made for bad debts of accounts receivable in accordance with the general expected credit loss model, please discloserelevant information of provision for bad debts referring to the disclosure of other receivables:
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Less than 1 year (inclusive) | 14,082,469.16 |
| Total | 14,082,469.16 |
(2) Provision for bad debts accrued, recovered or reversed during the Reporting PeriodProvision for bad debts during the Reporting Period:
Unit: RMB
| Type | Opening balance | Changes in amount for the period | Closing balance | |||
| Provision | Recovery or reverse | Write-offs | Other | |||
| Accounts receivable subject to individual impairment assessment | ||||||
| Accounts receivable subject to impairment assessment by portfolio | 72,588.60 | 509,017.38 | 581,605.98 | |||
| Total | 72,588.60 | 509,017.38 | 581,605.98 | |||
(3) Actual write-off of accounts receivable for the period
(4) Top five customers with closing balance of accounts receivable collected by arrear party
Unit: RMB
| Company name | Closing balance of accounts receivable | Percentage of total of closing balance of accounts receivable | Closing balance of bad debt provision |
| Company 1 | 6,668,378.18 | 47.35% | 275,404.02 |
| Company 2 | 4,451,107.14 | 31.61% | 183,830.72 |
| Company 3 | 1,934,778.03 | 13.74% | 79,906.33 |
| Company 4 | 726,000.00 | 5.16% | 29,983.80 |
| Company 5 | 152,510.00 | 1.08% | 6,298.66 |
| Total | 13,932,773.35 | 98.94% |
(5) Accounts receivable derecognized due to the transfer of financial assets
(6) Amount of assets and liabilities generated by transferring accounts receivable and continuing to beinvolved
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends receivable | 241,040,000.00 | 272,540,000.00 |
| Other receivables | 3,904,486,029.74 | 828,585,909.57 |
| Total | 4,145,526,029.74 | 1,101,125,909.57 |
(1) Interest receivable: None
(2) Dividends receivable
1) Dividends receivable by type
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Yunnan Dexin Paper Co., Ltd. | 137,500,000.00 | 157,500,000.00 |
| Shanghai Energy New Material Technology Co., Ltd. | 103,040,000.00 | 45,040,000.00 |
| Yunnan Hongta Plastic Co., Ltd. | 500,000.00 | 70,000,000.00 |
| Total | 241,040,000.00 | 272,540,000.00 |
2) Major dividend receivable aged over one year: None
3) Provision for bad debts
□ Applicable √ N/A
Other explanations:
(3) Other receivables
1) Other receivables by nature
Unit: RMB
| Nature of amount | Book balance at the end of the Reporting Period | Book balance at the beginning of the Reporting Period |
| Equity acquisition | 820,000,000.00 | |
| Capital lending | 3,903,081,382.31 | 6,166,450.43 |
| Issuing expenses of convertible bonds | 1,084,905.66 | |
| Deposits and guarantees | 1,406,560.77 | 943,466.50 |
| Employee borrowings and advances | 229,241.50 | 561,775.36 |
| Other | 28,428.80 | 25,058.80 |
| Total | 3,904,745,613.38 | 828,781,656.75 |
2) Provision for bad debts
Unit: RMB
| Provision for bad debts | Stage I | Stage II | Stage III | Total |
| 12-month ECL | Lifetime ECL (not credit-impaired) | Lifetime ECL (credit-impaired) | ||
| Balance of January 1, 2020 | 8,730.68 | 137,016.50 | 50,000.00 | 195,747.18 |
| Balance of January 1, 2020 for the period | —— | —— | —— | —— |
| --Transferred to the second stage | -342.84 | 342.84 | ||
| --Transferred to the third stage | -137,016.50 | 137,016.50 | ||
| Provision for the period | 55,079.30 | 8,757.16 | 63,836.46 | |
| Balance of December 31, 2020 | 63,467.14 | 9,100.00 | 187,016.50 | 259,583.64 |
Changes in book balance with significant changes in loss reserves in the current period
□ Applicable √ N/A
Disclosure by aging
Unit: RMB
| Aging | Book balance |
| Less than 1 year (inclusive) | 3,904,470,396.88 |
| 3,904,470,396.88 | |
| 1-2 years | 68,200.00 |
| 2-3 years | 20,000.00 |
| Over 3 years | 187,016.50 |
| Over 5 years | 187,016.50 |
| Total | 3,904,745,613.38 |
(3) Provision for bad debts accrued, recovered or reversed during the Reporting Period: None
4) Actual write-off of other receivables for the period: None
5) Top five customers with closing balance of other receivables collected by arrear party
Unit: RMB
| Company name | Nature of amount | Closing balance | Aging | Percentage of total of closing balance of other receivables | Closing balance of bad debt provision |
| Wuxi Energy New Material Technology Co., Ltd. | Capital lending | 2,213,156,656.63 | Less than 1 year | 56.68% | |
| Jiangxi Tonry New Energy Technology Development Co., Ltd. | Capital lending | 766,028,615.66 | Less than 1 year | 19.62% | |
| Hongta Plastic (Chengdu) Co., Ltd. | Capital lending | 580,000,000.00 | Less than 1 year | 14.85% | |
| Yunnan Hongta Plastic Co., Ltd. | Capital lending | 343,896,110.02 | Less than 1 year | 8.81% | |
| Kunming Ruifeng Printing Co., Ltd. | Guarantees and deposits | 335,829.67 | Less than 1 year | 0.01% | 14,608.59 |
| Total | -- | 3,903,417,211.98 | -- | 99.97% | 14,608.59 |
6) Accounts receivable related to government grants：None
7) Other receivables derecognized due to the transfer of financial assets：None
8) Amount of assets and liabilities generated by transferring other receivables and continuing to beinvolved：None
3. Long-term equity investment
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidies | 4,662,093,871.62 | 4,662,093,871.62 | 4,167,834,622.62 | 4,167,834,622.62 | ||
| Total | 4,662,093,871.62 | 4,662,093,871.62 | 4,167,834,622.62 | 4,167,834,622.62 | ||
(1) Investments in subsidiaries
Unit: RMB
| Name of investees | Opening balance (book value) | Increase/Decrease for the period | Closing balance (book value) | Closing balance of provision for impairment | |||
| Increase in investment | Decrease in investment | Provision for impairment | Other | ||||
| Yunnan Dexin Paper Co., Ltd. | 162,135,598.40 | 162,135,598.40 | |||||
| Yunnan Hongta Plastic Co., Ltd. | 418,898,313.03 | 418,898,313.03 | |||||
| Shanghai Energy New Material Technology Co., Ltd. | 3,144,981,789.76 | 490,557,252.00 | 3,635,539,041.76 | ||||
| Yunnan Hongchuang Packaging Co., Ltd. | 441,809,808.43 | 441,809,808.43 | |||||
| Innovative New Materials (Hong Kong) Co., Ltd. | 9,113.00 | 3,701,997.00 | 3,711,110.00 | ||||
| Suzhou Green Power New Energy Materials Co., Ltd. | 739,219,511.67 | 739,219,511.67 | |||||
| Total | 4,167,834,622.62 | 1,233,478,760.67 | 739,219,511.67 | 4,662,093,871.62 | |||
(2) Investments in associates and joint ventures: None
(3) Other explanations
4. Operating income and operating cost
Unit: RMB
| Item | Amount for current period | Amount for previous period | ||
| Income | Cost | Income | Cost | |
| Main businesses | 215,805,133.19 | 151,401,585.18 | 363,757,839.43 | 259,160,659.85 |
| Other businesses | 18,818,801.97 | 16,821,297.47 | 71,738,130.71 | 67,682,220.14 |
| Total | 234,623,935.16 | 168,222,882.65 | 435,495,970.14 | 326,842,879.99 |
Information related to performance obligations:
The Company has transferred the main risks and rewards of ownership of the goods to the buyer; the Company does not retain theright of continuous management related to the ownership, nor effectively control the sold goods; the amount of revenue can bereliably measured; the relevant economic benefits are likely to flow into the enterprise; when the relevant costs incurred or to beincurred can be reliably measured, the revenue from commodity sales is recognized.The timing of revenue recognition of the Company for major products is as follows. When the products are delivered to the locationsdesignated by the customers, and the delivery is completed and the evidence of transfer of ownership and risks is obtained from thecustomers.Information related to the transaction price allocated to the remaining performance obligations:
The amount of income corresponding to the performance obligations that have been contracted but not yet performed or not yetcompleted at the end of the Reporting Period is RMB0.00.Other explanations:
5. Investment income
Unit: RMB
| Item | Amount for current period | Amount for previous period |
| Gain on long-term equity investments subject to accounting with cost method | 58,000,000.00 | 160,000,000.00 |
| Total | 58,000,000.00 | 160,000,000.00 |
6. Others
XVIII. Supplementary Information
1. Breakdown of non-recurring gain or loss for the current period
√ Applicable □ N/A
Unit: RMB
| Item | Amount | Notes |
| Gains and loss from the disposal of non-current assets | -144,872.28 |
| Government subsidies recognized in current gains or losses (except for those closely related to the Company's business and are either in fixed amounts or determined under quantitative methods in accordance with the national standard) | 139,305,009.71 | Due to increase in investment in the production line of lithium-ion battery separator film, the local government gave policy support. |
| Profit generated for the costs of the Company in the acquisition of subsidiaries, associates or joint ventures are lower than the fair value of the Company’s share in the identifiable net assets of the investees | 673,727.72 | |
| Gains or losses on entrusted investments or assets management | 7,111,089.67 | |
| Gains or losses from changes in fair value arising from the holding of trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other debt investments, excluding the effective hedging business related to the Company’s normal business operations | 10,951,914.18 | |
| Other non-operating income/expenses other than items above-mentioned | -4,201,996.76 | |
| Other items within the definition of non-recurring gains or losses | 357,802.66 | |
| Less: amount affected by the income tax | 23,107,901.22 | |
| Influences on minority equity | 5,847,930.29 | |
| Total | 125,096,843.39 | -- |
The reason for the Company defining items as non-recurring profit or loss items according to the Information Disclosure andPresentation Rules for Companies Making Public Offering of Securities No.1 – Non-recurring Profit or Loss, and the reason fordefining the non-recurring profit or loss items illustrated in the Information Disclosure and Presentation Rules for CompaniesMaking Public Offering of Securities No. 1 – Non-recurring Profit or Loss as recurring profit or loss items should be specified.
□ Applicable √ N/A
2. Return on equity and earnings per share
| Profit during the Reporting Period | Weighted average return on equity | Earnings per share | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profits attributable to common stockholders of the parent company | 17.15% | 1.34 | 1.34 |
| Net profits attributable to common stockholders of the Company after deducting non-recurring gains and loss | 15.22% | 1.19 | 1.19 |
3. Accounting data differences under domestic and international accounting standards
(1) Differences between the net profit and the net assets in the financial statements disclosed in accordancewith international accounting standards and in accordance with Chinese accounting standards at the sametime
□ Applicable √ N/A
(2) Differences between the net profit and the net assets in the financial statements disclosed in accordancewith overseas accounting standards and in accordance with Chinese accounting standards at the same time
□ Applicable √ N/A
(3) Descriptions of reasons for accounting data differences occurring under domestic and foreignaccounting standards; if adjustment is made for data audited by an overseas audit institution, the name ofthe institution shall be provided
4. Others
Section 13 Documents Available for InspectionI. Financial statements signed and sealed by the legal representative, the person in charge of finance and the person in charge of theaccounting department of the Company.II. The original copy of audit report containing the seal of the accounting firm and the signature and seal of the certified publicaccountant.III. The original copies of all documents and announcements of the Company which have been publicly disclosed in newspapersdesignated by the China Securities Regulatory Commission during the Reporting Period.IV. The original text of the 2020 annual report signed by the chairman of the Board of Directors.V. The place where the above documents are maintained: the Company’s Securities Department.