ZHEJIANG WANFENG AUTO WHEEL CO., LTD
2020 Annual Report
April 2021
Section I: Important Notes, Contents and Definitions
The Board of Directors, Board of Supervisors, Directors, Supervisors andSenior Management of Zhejiang Wanfeng Auto Wheel Co., Ltd. (hereinafterreferred to as the “Company”) hereby guarantee that the information presentedin this report shall be authentic, accurate, complete, and free from materialmisstatement whether due to false record, misleading statement or significantomission, and they will bear both individual and joint legal liabilities.Chen Bin, the Company's legal representative, Dong Ruiping, the person incharge of accounting work, and Chen Shanfu, the person in charge of theaccounting department (accounting officer), hereby declare that the financialstatements in the annual report are true, accurate and complete.All directors attended the board meeting to review this report.The information pertaining to future plans and performance forecasts in thisreport is uncertain and does not constitute a substantial commitment toinvestors. The Company are exposed to risks of macroeconomic and industryconditions, fluctuations in the RMB exchange rate, raw material prices, risinglabor costs, trade barriers, and the impact of COVID 19. Investors are advisedto pay attention to investment risks.Pre-arranged profit distribution plan approved by the Board of Directors:
distribute 1.0 Yuan cash dividends per 10 common stocks (tax inclusive) and 0stock dividend to all shareholders, on the basis of 2,072,107,520 shares (totalissued shares of 2,186,879,678 minus repurchased shares of 114,772,158).If there is no specific explanation or otherwise stated in tables, the currency inthis report is RMB or yuan used interchangeably.This report and its abstract have been prepared in both Chinese and English.Should there be any discrepancies or misunderstandings between the twoversions, the Chinese version shall prevail.
CONTENTS
Section I: Important Notes, Contents and Definitions ...... 2
Section II: Corporate Profile and Key Financial Indicators ...... 6
Section III: Corporate Business Overview ...... 12
Section IV: Management’s Discussion and Analysis ...... 21
Section V: Significant Events ...... 47
Section VI: Changes in Shares and Information about Shareholders ...... 88
Section VII: Information of Preferred Shares ...... 99
Section VIII: Information about Convertible Bonds ...... 100
Section IX: Information about Directors, Supervisors, Senior Management ...... 101
Section X: Corporate Governance ...... 113
Section XI: Corporate Bonds ...... 123
Section XII: Financial Statements ...... 124
Section XIII: Documents Available for Reference ...... 348
Definitions
| Items | Refers to | Definition |
| Company, the Company, Wanfeng Auto Wheel, We | Refers to | Zhejiang Wanfeng Auto Wheel Co., Ltd |
| Group, the Group | Refers to | The Company and its subsidiaries |
| Wanfeng Group | Refers to | Wanfeng Auto Holding Group Co., Ltd. |
| Wanfeng Motorcycle Wheel | Refers to | Zhejiang Wanfeng Motorcycle Wheel Co., Ltd. |
| Ningbo Aoweier | Refers to | Ningbo Aoweier Wheel Co., Ltd. |
| Guangdong Motorcycle Wheel | Refers to | Guangdong Motor Wheel Co., Ltd. |
| Weihai Magnesium | Refers to | Weihai Wanfeng Magnesium Technology Development Co., Ltd. |
| Weihai Wanfeng | Refers to | Weihai Wanfeng Auto Wheel Co., Ltd. |
| Jilin Wanfeng | Refers to | Jilin Wanfeng Auto Wheel Co., Ltd. |
| India Wanfeng | Refers to | Wanfeng Aluminum Wheel (India) Pty. Co., Ltd |
| Chongqing Wanfeng | Refers to | Chongqing Wanfeng Auto Wheel Co., Ltd |
| Shanghai Dacromet | Refers to | Shanghai Dacromet Coating Industry Co., Ltd |
| Ningbo Dacromet | Refers to | Ningbo Economic and Technological Development Zone Dacromet Coating Industry Co., Ltd |
| Shangda Tu Fu | Refers to | Zhejiang Wanfeng Shangda Coating Technology Co., Ltd. |
| Wanfeng Meridian | Refers to | Wanfeng MLTH Holdings Co., Ltd |
| Meridian New Material | Refers to | Wanfeng Meridian New Material Technology Co., Ltd. |
| Weiwan Lianchuang | Refers to | Shandong Weiwan Ke Chuanglian Engineering Technology Co., Ltd. |
| Shanghai Fengtu | Refers to | Shanghai Fengtu Automobile Technology Co., Ltd. |
| Wuxi Xiongwei | Refers to | Wuxi Xiongwei Precision Technology Co., Ltd. |
| Wuxi Geoff | Refers to | Wuxi Geoff Machinery Technology Co., Ltd. |
| Yancheng Xiongwei | Refers to | Yancheng Xiongwei Auto Parts Co., Ltd. |
| Yizheng Xiongwei | Refers to | Yizheng Xiongwei Machinery Technology Co., Ltd. |
| Changchun Xiongwei | Refers to | Changchun Xiongwei Auto Parts Co., Ltd. |
| Shanghai Meridian | Refers to | Shanghai Meridian Magnesium Products Company Limited |
| Suzhou Yucuiyuan | Refers to | Suzhou Yucuiyuan Trading Enterprise (General Partnership) |
| Aviation Industry or Wanfeng Aviation | Refers to | Wanfeng Aviation Industry Co., Ltd. |
| Aircraft Industry or Wanfeng Aircraft | Refers to | Wanfeng Aircraft Industry Co., Ltd. |
| Wanfeng Jinyuan | Refers to | Wanfeng Jinyuan Holdings Group Co., Ltd. |
| Articles of Association | Refers to | Articles of Association of Zhejiang Wanfeng Auto Wheel Co., Ltd. |
| General Meeting | Refers to | the General Meeting of shareholders of Zhejiang Wanfeng Auto Wheel Co., Ltd. |
| The Board of Directors | Refers to | The Board of Directors of Zhejiang Wanfeng Auto Wheel Co., Ltd. |
| The Board of Supervisors | Refers to | the Board of Supervisors of Zhejiang Wanfeng Auto Wheel Co., Ltd. |
| The CSRC | Refers to | the China Securities Regulatory Commission |
| SZSE | Refers to | the Shenzhen Stock Exchange |
| Yuan | Refers to | RMB |
| Company Law | Refers to | Company Law of the People's Republic of China |
| Securities Law | Refers to | Securities Law of the People's Republic of China |
Section II: Corporate Profile and Key Financial Indicators
I. Corporate Information
| Stock Abbreviation | Wanfeng Auto Wheel | Ticker | 002085 |
| Listed Security Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江万丰奥威汽轮股份有限公司 | ||
| Abbr. Company Name in Chinese | 万丰奥威 | ||
| Company Name in English | Zhejiang Wanfeng Auto Wheel Co., Ltd | ||
| Legal Representative | Chen Bin | ||
| Registered Address | Xinchang County Industrial Park, Zhejiang, China | ||
| Registered Address Post code | 312500 | ||
| Office Address | Xinchang County Industrial Park, Zhejiang, China | ||
| Office Address Post code | 312500 | ||
| Official website | http://www.wfaw.com.cn | ||
| wfirm@wfjt.com | |||
| Board Secretary | Securities Affairs Representative | |
| Name | Zhang Yinfeng | Li Ya |
| Address | Xinchang County Industrial Park, Zhejiang, China | Xinchang County Industrial Park, Zhejiang, China |
| Tel. | 0575-86298339 | 0575-86298339 |
| Fax | 0575-86298339 | 0575-86298339 |
| yinfeng.zhang@wfjt.com | ya.li@wfjt.com |
| Information Disclosure Media | Securities Times |
| Annual Report Publishment Website Designated by China Securities Regulatory Commission | http://www.cninfo.com.cn |
| Company's Annual Report Prepared Place | Office of the Board of Directors, Zhejiang Wanfeng Auto Wheel Co., Ltd., Xinchang County Industrial Park, Zhejiang, China |
| Institution Code | 913300007324065674 |
| Changes in the Company’s principal business since its listing | 1. In June 2011, with the approval of the CSRC (CSRC issued the "Approval of the Zhejiang Wanfeng Auto Wheel Co., Ltd. to issue shares and purchase assets from Wanfeng Auto Holding Group Co., Ltd." (CSRC Permit [2011] No. 1005), the Company acquired 75% of Wanfeng Motorcycle Wheels, and thereby added motorcycle wheel to its principal business. 2. In November 2013, the Company’s General Meeting of Shareholders approved the acquisition of Shanghai Dacromet Coating Industry Co., Ltd. The Company thereby added environmental coating to its principal business. 3. In December 2015, with the approval of the CSRC, the Company acquired 100% shares of Wanfeng Meridian for RMB 1.35 billion in cash raised from a private placement. The Company thereby added lightweight magnesium alloy auto parts to its principal business. 4. In June 2018, with the approval of the Company’s Extraordinary General Meeting of Shareholders, the company acquired 95% shares of Wuxi Xiongwei Precision Technology Co., Ltd. for 1.254 billion yuan in cash, and added the die stamping auto parts to its principal business. 5. In April 2020, with the approval of the Company’s Extraordinary General Meeting of Shareholders, the Company acquired 55% shares of Wanfeng Aircraft Industry Co., Ltd, and added general aviation aircraft manufacturing to its principal business. |
| Previous changes in controlling shareholders | No Change |
| Accounting Firm Name | Ernst & Young Hua Ming Certified Public Accountants (Special General Partnership) |
| Accounting Firm Address | 50th Floor, Shanghai World Financial Center, 100 Century Avenue, Pudong New Area, Shanghai |
| Signing Accountant | Yin Guowei; Zhou Hao |
Whether the Company performed a retrospective adjustment or restatement ofprevious accounting data
√Yes □No
Retrospective adjustment or restatement reason:
Business combination under the same control
Unit: RMB unless otherwise
| 2020 | 2019 | YoY % | 2018 | |||
| Before | After | After | Before | After | ||
| Operating Revenue | 10,699,224,904.57 | 10,787,734,491.15 | 12,635,131,976.26 | -15.32% | 11,005,069,692.59 | 12,558,190,252.99 |
| Net Income Attributable to Shareholders of the Listed Company | 565,820,630.75 | 769,318,977.36 | 895,769,920.83 | -36.83% | 958,699,967.31 | 1,086,024,287.66 |
| Net Income Attributable to Shareholders of the Listed Company after Deducting Non-recurring Gains and Losses | 415,879,097.84 | 578,267,116.50 | 578,267,116.45 | -28.08% | 733,675,219.16 | 733,675,219.16 |
| Net Cash Flow Generated by Operating Activities | 1,735,780,906.42 | 1,362,402,127.06 | 1,420,368,879.77 | 22.21% | 1,316,448,423.97 | 1,548,633,356.11 |
| Basic EPS (RMB/ share) | 0.27 | 0.36 | 0.41 | -34.15% | 0.44 | 0.50 |
| Diluted EPS (RMB/ share) | 0.27 | 0.36 | 0.41 | -34.15% | 0.44 | 0.50 |
| Weighted Average ROE | 10.27% | 12.58% | 9.19% | 1.08% | 13.93% | 14.11% |
| 2020 Year End | 2019 Year End | YoY% | 2018 Year End | |||
| Before | After | After | Before | Before | ||
| Total Assets | 15,973,225,900.87 | 13,988,933,546.56 | 18,487,249,917.89 | -13.60% | 13,392,895,948.68 | 17,560,462,236.85 |
| Net assets attributable to shareholders of the Listed Company | 5,353,609,030.21 | 6,150,821,541.43 | 7,992,455,452.51 | -33.02% | 6,330,544,402.36 | 7,963,848,565.52 |
The Company's net profit before and after deducting non-recurring profit and loss inthe last three fiscal years, whichever is lower, is negative and the audit report of thelast year shows that the Company's ability to continue as a going concern is uncertain
□ Yes √ No
The lower of the net profit before and after deducting the non-recurring profit and lossis negative
□ Yes √ No
VII. Differences in Accounting Data between Domestic and Overseas
Accounting Standards
1. Difference in the financial report of net profits and net assetsaccording to the disclosure of International Financial ReportingStandards and China Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assetsaccording to the disclosure of International Financial Reporting Standards(IFRS) and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets
according to the disclosure of Overseas Accounting Standards andChina Accounting Standards
□ Applicable √ Not applicable
There is no difference in the financial report of net profits and net assetsaccording to the disclosure of Overseas Accounting Standards and ChinaAccounting Standards in the reporting period.
VIII. Key Quarterly Financial Indicators
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating Revenue | 2,383,781,671.83 | 2,038,517,384.94 | 2,935,425,929.77 | 3,341,499,918.03 |
| Net Income Attributable to Shareholders of the Listed Company | 122,641,051.81 | 129,902,429.25 | 157,903,363.82 | 155,373,785.87 |
| Net Income Attributable to Shareholders of the Listed Company after Deducting Non-recurring Gains and Losses | 77,712,897.01 | 57,744,665.34 | 136,961,688.75 | 143,459,846.74 |
| Net Cash Flow Generated by Operating Activities | 346,389,316.54 | 243,417,393.50 | 207,968,461.35 | 938,005,735.03 |
| Items | 2020FY | 2019FY | 2018FY |
| Gains or Losses from Disposal of Non-current Assets (Including the Write-off for the Accrued Impairment of Assets) | 501,156.94 | -3,277,757.06 | -33,114,832.31 |
| The Government Subsidies Included in the Current Gains and Losses (Excluding the Government Subsidies Closely Related to Regular Businesses of the Company and Issued in the Quota or Quantity Based on the National Standards) | 104,562,193.16 | 91,209,395.45 | 97,537,996.40 |
| Net Profit and Loss for the Current Period from the Beginning of the Period to the Date of the Merger Arising from a Business Combination under the Same Control | 74,836,418.19 | 229,910,806.40 | 231,498,764.28 |
| Gains or Losses Attributed to the Changes in Fair Value of Held-for-trading financial assets, Derivative Financial Assets, Trading Financial Liabilities, Derivative Financial Liabilities and Investment Income from Disposal of Held-for-trading financial assets, Derivative Financial Assets, Trading Financial Liabilities, Derivative Financial Liabilities and Other Debt Investment, Excluding Hedging Businesses Related to the Regular Business Operation of the Company | 2,859,105.21 | -1,714,863.22 | 78,609,340.40 |
| Reversal of provision for impairment of Account Receivables and Contract Assets | 4,653,372.07 | 1,917,307.35 | |
| Non-operating Income and Expenditures Other Than the Above | 33,063,841.71 | 161,174,464.09 | 141,604,258.09 |
| Less: Impact of Income Tax | 27,235,065.43 | 50,675,826.88 | 56,040,011.85 |
| Impact of Minority Equity (after tax) | 43,299,488.94 | 109,123,414.40 | 109,663,753.86 |
| Total | 149,941,532.91 | 317,502,804.38 | 352,349,068.50 |
Section III: Corporate Business Overview
I. The Principal Business of the Company during the Reporting
Period
The Company is required to comply with the disclosure requirements of theShenzhen Stock Exchange Industry Information Disclosure Guidelines No. 16-Listed Companies Engaged in Automobile Manufacturing Related Business.The Company is an international conglomerate dedicated to advancedmanufacturing, with R&D centers and plants in ten countries (regions). Growingover the past two decades, the Company has established a growth strategypropelled by “dual-engine”: lightweight auto parts, and general aviation aircraftfeatured by the "Diamond" brand. The company has become a leader in theautomotive parts sector specialized in lightweight applications of metalmaterials "magnesium alloys, aluminum alloys, and high-strength steels". It’ssubsidiary Meridian, a global leading supplier of magnesium alloy parts, hascutting-edge technology of magnesium alloy design, development, andmanufacturing. The Company also operates the world-leading aluminum alloywheels manufacturing business. Besides, Wuxi Xiongwei, another subsidiary,is a leading manufacturer of high-strength steel sheet stamping auto parts inChina. In addition, the Company has a domestically leading environmentalDacromet coating business.The Company’s general aviation aircraft business has three manufacturingbases (Austria, Canada, China), three R&D centers (Austria, Canada, CzechRepublic), and one provincial engineering center (China). Its subsidiaryDiamond Aircraft owns the complete intellectual property (IP) of 4 series, 8basic types and 16 models of aircraft, as well as multiple engines and flightsimulators. Main aircraft models include DA20, DA40, DA42, DA50 and DARTseries. Diamond ranks the first for the market share of twin-engine pistonaircraft, and the third for the market share of piston-engine aircraft. It is the firstin the world to adopt the composite material design of general aviation aircraft.Its aircraft is the only in the industry equipped with in-house designed andmanufactured engines. The economy of operation and flight range have greateradvantages in similar aircraft, and it has the safest flight record among peers.
(1) Lightweight metal auto parts business
The Company's lightweight metal parts business mainly serves the automobilemarket. Lightweight has become an inevitable trend during the advancement ofthe automobile industry and an important means of automobile energy savingand emission reduction. In October 2020, the Ministry of Industry andInformation Technology of China released the Energy-saving and New EnergyVehicle Technology Roadmap 2.0, further confirming the "low-carbon,
informatization, and intelligent" direction of global automotive technology. It alsoproposed the development goal for China’s automotive industry to reduce totalcarbon emissions by more than 20% from the peak by 2035, with new energyvehicles gradually becoming mainstream products. Automotive light-weightingis the primary vehicle to meet national emission standards and reduce energyconsumption and pollutant emissions. Aluminum and magnesium alloys arecurrently the most ideal materials for automotive light-weighting. The Companyhas fully entered the supply chain of core customers and established anaddressable market that is based on traditional ICE automobiles, with newenergy automobiles as a fulcrum, focusing on both foreign and domestic andcoordinating OEMs and aftermarket. The Company gives full play to theadvantages of lightweight applications of metal materials "magnesium alloy-aluminum alloy-high strength steel” and is committed to becoming a globalpromoter and leader of lightweight automotive metal parts.? Magnesium Alloy
Magnesium alloy products are mainly supplied to renowned automakersglobally as well as customers operating in aerospace, transportation, and 5Gtelecommunication sectors. As a global leader in the advanced treatment oflightweight magnesium alloy materials, the Company has strong integrationcapabilities of value chain and has marketed its products to transportation, 5Gand other fields. The Company has 7 production bases in the United States,Canada, the United Kingdom, Mexico, and China (Shandong, Shanghai, andZhejiang) and 4 R&D centers. Our main products include powertrain parts,front-end carriers, cross car beams, brackets, rear lift door inner panels etc. Ourcustomers are mainly top-notch global brands such as Ford, GM, Porsche,Tesla, Audi, Mercedes Benz, and BMW.
? Aluminum Alloy Wheels
Since its establishment, the Company has committed itself to R&D,manufacturing, service of high-end aluminum alloy wheels, serving the world-known OEMs through superior product design, a sound manufacturingmanagement system and after-sales service network. With an annual outputcapacity of more than 40 million sets of aluminum alloy wheels (includingAluminum Alloy Motorcycle Wheels), it has become a global leader in therespective industry segments. In the "Industry 4.0" era, the Company has builta smart factory, the first among its peers, and has explored an innovative modelfeatured by digital intelligence and care to environment. The Company’s has 5production bases for aluminum alloy wheels in Xinchang and Ningbo ofZhejiang Province, Weihai of Shandong Province, Jilin of Jilin Province, andChongqing. The Company continues to implement the "26313+N" marketingstrategy (US pedigree: GM, Ford; European pedigree: Volkswagen, BMW,Mercedes-Benz, Stellantis (Fiat Chrysler & Peugeot), Land Rover; Japanesepedigree: Toyota, Honda, Nissan; Korean pedigree: Hyundai-Kia; Chinesepedigree Chery, BYD, JAC; + N, new energy vehicle customers), advocateintelligent manufacturing in the wheel industry, and enhance the Company'sinternational influence in product quality, R&D, and design.
In the motorcycle wheel segment, the Company has always been centering on"India, Indonesia, Pakistan, Brazil and China" markets, with "Honda andYamaha" as the long-term strategic partners, Dachangjiang, Suzuki and HEROas major customers complemented by BMW, Harley-Davidson and Ducati inthe premium market.
In recent years, the automotive industry has undergone some challenges. TheCompany has increased investment in nimble production capacity againstthose challenges. Under the new cycle of recovery in the automotive industry,the Company's ready-to-use production capacity is expected to drive aluminumalloy wheel business to bottom out. As the chair unit of the National MotorcycleWheel Committee, we are entering a new era of informatization, scientific andintelligentization for advanced manufacturing. The Company is well positionedto benefit from the high-end trend of the motorcycle industry and the upgradingof product structure, through its global production network and technologicaladvantage.
? High-strength Steel Die Stamping Parts
Wuxi Xiongwei’s main products are automotive stamping parts and molds,focusing on automotive body systems, which includes seat parts and bodyaccessories, such as seat frames and adjustment structures, seat belt buckles,airbags stamping parts, door hinges, etc. It has 4 production bases in WuxiYizheng and Yancheng of Jiangsu Province and Changchun of Jilin Province,with an annual capacity of 350 million parts. With leading R&D, design, andmanufacturing capabilities in mold, it has become a core supplier of globallyrenowned manufacturers such as Faurecia, Brose, Autoliv, Adient, andJohnson Controls. By continuously optimizing the design of products,introducing advanced mold design system, and adopting the world's advancedautomated continuous stamping for all products, it has improved product qualityand reduced costs. It has been awarded the "Best Supplier" and "ExcellentSupplier" from customers such as Yanfeng Adient and Faurecia. It also hassynergistic coordination with the Company’s magnesium and aluminum alloybusiness segments, through mold R&D, stamping process linkage, productionbase collaboration, and customer interaction.
? Environmentally Friendly Dacromet Coating
The Company’s environmentally friendly Dacromet coating business includesmetal bolt manufacturing and processing, mechanical parts coating treatment,coating equipment manufacturing, etc. With production and technicalapplication capabilities of Chromium-free Dacromet coating processing,solution manufacturing and coating equipment production throughout theindustrial chain, the Company has 3 production bases in Shanghai, Ningbo andJiaxing of Zhejiang Province and an annual capacity over 70,000 tons, taking aleading position in China and synergizing well with other business segments.The Company has taken the lead in the application of digitalization andChromium-free coating technology and has the world’s advanced chromium-
free coating production line to ensure that the product quality meets the "EUROHS Directive" standards. The multifunctional composite coating developedby the Company has been awarded the honor of "National Key New Product","Shanghai Key New Product" and " Quality Trusted Key Brand of China'sEnvironmentally Friendly Product" several times. The Company hasestablished strategic partnerships with globally recognized brands such asDelta, Geomet, and Zintech. Customers widely spread in industries such asautomobile, rail transit, wind power, mechanical engineering, and construction.The Company has completed the order delivery of the core components of theShenzhou spacecraft for many times.
(2) General aviation aircraft manufacturing business
In April 2020, the Company acquired 55% equity of Wanfeng Aircraft Industrywhich thereby became a Company’s controlling subsidiary. Wanfeng AircraftIndustry is a specialized general aviation aircraft manufacturer integratingindependent R&D, top-level design, advanced manufacturing, and salesservices. Its main revenue sources from aircraft sales, after-sales services,aircraft manufacturing licensing and other revenues. Its subsidiary DiamondAircraft has the cutting-edge IPs, new material technology and advancedmanufacturing, with three design and R&D centers (Austria, Canada, CzechRepublic), one provincial engineering center (China) and three manufacturingbases (Austria, Canada, China). Customers include flight academies, airlines,aviation clubs and private pilots, and they are supported by 192 service centersin 90+ countries.In February 2021, Wanfeng Aircraft Industry introduced Qingdao WanshengChengfeng Equity Investment Partnership (Limited Partnership), controlled byQingdao City Construction Investment Group Co., Ltd, as a strategic investor.Post transaction, the Company retains 55% of the shares of the Aircraft Industry,with Qingdao Wansheng Chengfeng Equity Investment Partnership (limitedpartnership) holding 35% and Wanfeng Aviation Industry holding 10% of theshares in Aircraft Industry, respectively. The Company will work closely with itspartners to accelerate the growth of and tap the trillion-dollar domestic generalaviation market and strive to build Wanfeng Aircraft Industry into a global leaderof innovative manufacturing. With the promulgation of supportive nationalpolicies, such as the Overall Plan for Building The Low-altitude Flight ServiceGuarantee System and the China Civil Aviation Four Features AirportConstruction Action Plan (2020-2035), China’s general aviation industry hasbegun to accelerate. The aircraft manufacturing business will become a newgrowth engine for the Company in near future.
II. Significant Changes in Main Assets
1. Significant changes in main assets
| Main assets | Explanation on Major Changes |
| Equity | At the end of 2020, equity decreased by RMB 12,253,800 compared with the beginning of the year, a decrease of 69.8%, mainly due to the withdrawal of the Aircraft Industry from the original 20% equity of China Electronics Technology Group Wuhu General Aviation Industry Research Institute Co., Ltd. |
| Fixed assets | At the end of 2020, fixed assets decreased by RMB 241,196,200 compared with the beginning of the year, down 4.72%, mainly due to the depreciation of fixed assets. |
| Intangible assets | At the end of 2020, intangible assets decreased by RMB 112,746,600 or 6.34% from the beginning of the year, mainly due to the amortization of intangible assets. |
| Construction in progress | Construction in progress at the end of 2020 decreased by RMB 167,378,700 compared with the beginning of the year, a decrease of 39.26%, which was mainly due to the fact that the assets of the Meridian US plant reached a usable state and transferred to fixed assets. |
| Cash & cash equivalents | At the end of 2020, cash & cash equivalents decreased by RMB 777,775,100 or 31.71% from the beginning of the year, mainly due to the payment of acquiring 55% of equity in the Aircraft Industry. |
| Other receivables | At the end of 2020, other receivables decreased by RMB 848,007,500 from the beginning of the year, or 92.54%, mainly due to the recovery of financial assistance from controlling shareholders and related parties. |
| Development expenditure | The development expenditure in 2020 is RMB 70,537,900 at the end of the year, mainly due to the capitalization of the Aircraft Industry's research and development expenses. |
| Deferred tax assets | The deferred income tax assets at the end of 2020 increased by RMB 74,732,200 over the beginning of the year, an increase of 39.60%, which was mainly due to the steady growth of the aircraft manufacturing business, without compensating the recognition of deferred income tax assets for losses.in the current period |
| Other non-current assets | At the end of 2020, other non-current assets decreased by RMB 43,194,500 compared with the beginning of the year, a decrease of 85.27%, which was mainly due to the decrease in prepayments for equipment during the period. |
By the acquisition of Aircraft Industry, the Company has established the “dual-engine” growth strategy in lightweight auto parts and general aviation aircraftmanufacturing. Whether in the auto parts industry or the general aviationaircraft industry, the Company has competitive advantages in terms of leadingindustry position, brand customers, global bases, R&D technology, globalenterprise management and unique corporate culture. During the reportingperiod, the Company did not experience any serious impact on its corecompetitiveness due to equipment or technology upgrades, and the departureof core management teams or key technical personnel.
1. Global leader advantage
Growing over the past two decades, the Company has become a leader in theautomotive parts sector specialized in lightweight applications of metalmaterials "magnesium alloys, aluminum alloys, and high-strength steels". It’s
subsidiary Meridian, a global leading supplier of magnesium alloy parts, hascutting-edge technology of magnesium alloy design, development, andmanufacturing. The Company also operates the world-leading aluminum alloywheels manufacturing business. Besides, Wuxi Xiongwei, another subsidiary,is a leading manufacturer of high-strength steel sheet stamping auto parts inChina.As the world’s top 3 general aviation aircraft manufacturer, Aircraft Industry hasa high reputation leading in this field. According to GAMA (General AviationManufacturers Association) data, the aircraft delivered by Diamond Aircraft in2019 accounted for 15.4% of the global piston general aviation aircraft deliveredthat year. It has three major aircraft manufacturing bases in Austria, Canada,and China (Zhejiang Xinchang). Its subsidiary Diamond Aircraft company hasthe competitive advantages in engine manufacturing, new material technologyand advanced manufacturing. Our customers are in Europe, North America,Asia-Pacific, Middle East and other regions.
2. Intelligent manufacturing advantage
The intelligent manufacturing system focuses on Industry 4.0 andtransformation & upgrading, reflecting efficiency improvements. Byprocurement of cutting-edge intelligent manufacturing equipment, automationof existing production lines and construction of new smart factories, theCompany has transformed and upgraded production, improved labor efficiency.At present, the company has 8 proprietary core technologies including fullyautomatic casting system, large-scale thin-wall magnesium alloy die-castingtechnology, dynamic balance control technology, casting lightweight castingtechnology, etc., which have been all commercialized.
3. Top-notch customer advantage
Following “26313+N" customer strategy, the auto parts business has beenintegrated into the supply chain of core customers, forming a market pattern of"traditional ICE cars + new energy vehicles" and "OEMs + aftermarket". TheCompany has long-term cooperation with top-notch brands— Porsche, BMW,Mercedes-Benz., Land Rover, Tesla, Volkswagen, Audi, Toyota, GM, Ford,Volvo, Nissan, Hyundai, and other top international automakers, while providingservice to emerging new energy vehicles brands. In terms of motorcyclealuminum alloy wheels business, the Company has established a globalcustomer base with "Honda and Yamaha" as strategic partners, Dachangjiang,Suzuki and HERO as major customers complemented by BMW, Harley-Davidson and Ducati in the premium market.Diamond Aircraft holds a total of 39 trademarks and has obtained the DesignOrganization Approval (DOA) and the DUA Aeronautical R&D OrganizationCertification issued by the European Aviation Safety Agency (EASA). It’s oneof the few companies in the industry to obtain these certificates.
4. Global scale production advantage
The Company's auto parts and aircraft manufacturing businesses haveestablished manufacturing bases and R&D centers in 10 countries around theworld, including 18 plants in 7 provinces of China. Meridian has formed a globalnetwork with full production processes in 7 physical factories across 5 countriesin America, Europe, and Asia. The Company’s motorcycle wheel subsidiary hasbuilt production facilities in India. Aircraft Industry has established mainproduction bases in Austria, Canada, and China, with 192 sales & servicecenters in more than 90 countries around the world. The Company's globalnetwork has complementary advantages by resource sharing and interactivedevelopment.
5. R&D technological advantage
Aiming to "grow stronger by science and technology", the Company alwaystakes technological innovation as an important measure to improve corecompetitiveness. Making full use of the resources offered by its controllingshareholder Wanfeng Group, such as academician workstation and doctoralworkstation, and relying on the national technology center of China, theCompany has long-term industry-university-research cooperation with ChinaAutomotive Technology Research Center, Beijing Machinery Research Instituteand Zhejiang University. The Company has a global R&D center for lightweightmagnesium alloy in Canada, as well as aircraft R&D centers in Austria,Canada and Czech. This promotes the advancement of new projects andincreases the added value of products in high-end markets. The Company hasaccumulated over 1,400 patents. Relying on accumulated productionexperience and enriched R&D capabilities, the Company has participated in thedrafting and revision of national (industry) standards for the wheel industry forseveral times. The Company presided over or participated in the formulation of3 international standards, 27 national and industry standards, of which 9 weredrafted. The continuous R&D investment has enabled the Company to seizethe opportunity in China's aluminum wheel field and gradually become theforefront in international wheel industry. Meridian won the 2020 AutomotiveMagnesium Casting Product Design Award issued by the InternationalMagnesium Association (IMA), and the new diamond DA50 model won theGerman aviation magazine Aerokurier 2020 Most Innovative Award in 2020.The Company reserves a large number of general aviation R&D and designtalents, and has general aircraft R&D and design technologies featuring aeroengines, composite materials, and new piston fixed-wing aircraft design. Tocomply with the requirements of the European Aviation Safety Agency on theroadmap of green energy aviation technology development, the Companypioneered the design and development of hybrid aircraft and has successfullytest flighted the first gasoline-electric hybrid aircraft, achieving a breakthroughin the general aviation industry.
6. International management advantage
From serving international customers in early stage to the subsequent cross-border M&A and integration, the Company successfully explored its own path,forming Wanfeng's unique management solution and team. By integratingWanfeng's philosophy with local culture, the Company has achievedremarkable success among its Chinese peers.Through the existing integrated management, cost control management andquality and safety management system advantages of listed companies, theCompany has strengthened building international and professional teams,provided core personnel with competitive salaries and related benefits. TheCompany fully promoted exchanges between excellent domestic and cross-
board management and R&D technical personnel. Through the promotion of aneffective performance management system, the establishment andimprovement of a talent training system, the Company creates a goodatmosphere for rapid growth and development of talents, enhances teamcohesion, and ensures the stability of core personnel.
7. Corporate culture advantage
As an international conglomerate in the advanced manufacturing field for nearly20 years, the Company has always adhered to the values of "eternal valueenhancement and continuous dedication to society", advocating the businessphilosophy of "people-oriented, governing the enterprise according to law, anddriving success with innovation", and creating a "work happily and live joyfully"atmosphere for employees. The Company has always focused on the realeconomy, promoting the spirit of craftsmanship. By introducing internationaltalents, the Company has laid a solid foundation for achieving the vision of "being recognized globally and becoming a long-standing enterprise" and thegoal of “being strong, reputable and sustainable”.
Section IV: Management’s Discussion and Analysis
I. Business review for the reporting periodIn 2020, the Company booked total revenue of 10.699 billion yuan, a decreaseof 0.82% and 15.32% from before and after retrospective adjustment,respectively. The Company realized total net profit of 566 million yuanattributable to shareholders of listed company, a decrease of 26.45% and 36.83%from before and after retrospective adjustment, respectively.In April 2020, the Company acquired 55% of the shares in Wanfeng AircraftIndustry and established a growth strategy driven by the "dual-engine". Theautomotive metal lightweight parts business has been negatively affected bythe Covid-19 pandemic and China-US trade frictions. The Company activelyand orderly resumed work and, strengthened staff training and protection, andimplemented cost reduction and efficiency enhancement initiatives, whileactively responding to trade tariff issues. The Company reviewed its businessstrategies, improved customer communication, adjusted business structure,effectively reduced the decline in operating performance and generated follow-up growth momentum. The general aviation aircraft business has also beenaffected to a certain extent by the Covid-19 pandemic, which is mainly reflectedin the delays in the acceptance and delivery of foreign aircraft orders andrevenue recognition. The Company strengthened collaborations withgovernment agencies of countries where it has operations, resumed factoryproduction in an orderly manner, and launching of new aircraft models.Meanwhile, the Company actively carried out licensing and technology transferbusiness for aircraft and components, achieving mass production and salesfrom Chinese aircraft market. There efforts have reduced the impact of foreigndelivery delays on operating performance and contributed to a substantialincrease in operating performance. The Company exceeded the first-yearperformance guarantee and is well-positioned for sustainable development.
(1) Enhance internal control system
The Company optimized the organizational structure and management processcomprehensively, enhanced the supervision of internal audit department toimprove the depth and breadth of internal audit work, improved the internalcontrol procedures, strengthened internal financial management andmonitoring to prevent financial risks and internal control risks.
(2) Focus on resumption of operations and advance market development
steadily
From January 2020, the Covid-19 started to spread in China and othercountries. Governments across the globe have introduced a series of restrictivequarantine measures to prevent the spread of COVID 19 pandemic. TheCompany took swift action in response to these restrictions by ensuring thehealth and safety of our employees and our domestic factories resumedproduction in mid-February 2020. Due to the evolving pandemic andgovernment policies, the resumption of overseas factories was delayed to May2020. Based on the current global economic and industry situation, theCompany actively made efforts to acquire new energy vehicles (NEVs)customers in the domestic market and accelerate the development of newproducts. The Company’s magnesium alloy and stamping business units havebeen awarded designated projects by Faurecia China (Tesla Tier one supplier)and Yanfeng Adient, Evergrande New Energy Vehicle. The aluminum alloywheel business obtained new projects from Toyota in Japan and FAW Toyota,FAW Hongqi, and BMW Brilliance. The motorcycle aluminum alloy wheelbusiness has developed steadily as a whole. As the demand for large-displacement personalized motorcycles increases, the Company optimizedproduct structure and production network, upgraded technologies, andsuccessfully increased supplies to Qianjiang, Suzuki, Indian Honda, Yamaha,and Baijiajie. In terms of the coating business, the Company increased theincremental orders from existing customers, advanced the localization of thesupplier systems of Mercedes-Benz, BMW and Geely, and expanded into windpower and 5G markets.
(3) A clear pathway to develop automotive lightweight parts businessAs a lightweight magnesium alloy large-scale casting structure design, processand mold designer, the Company focuses on lightweight application of metalmaterials "magnesium alloy-aluminum alloy-high strength steel", providingcustomers with low-cost, optimization, and turn-key solution. At present, theCompany's mature magnesium alloy products, such as cross-car beam, tailgateinner panel, front-end frame, etc., total about 100Kg. It has become the firstchoice for OEMs to cooperate in automotive magnesium alloy lightweight fields.In 2020, the Company established a T3+1 strategic cooperation mechanismwith T3 (China FAW Group Co., Ltd., Dongfeng Automobile Co., Ltd., andChongqing Changan Automobile Co., Ltd., "T3"). The Company is responsiblefor design, manufacturing and service for large-scale magnesium alloy castings.The first batch of R&D products under the T3+1 mechanism focused on crosscar beam brackets, wheels, front-end modules and gearbox housings, etc.,involving nearly ten vehicle models, of which products under development orquotation include cross car beam brackets, front-end modules, display case,screen lifter bracket, and other magnesium products. With the continuousadvancement of T3+1 alliance technology R&D, it will greatly promote theapplication and development of magnesium alloy parts in China's automobileindustry and form a market-driven demonstration effect.
In 2020, new energy vehicles have shown strong resilience and endogenouspower. The annual production and sales of 1.367 million and 1.336 millionvehicles in Chinese market were completed, representing an increase of 10.9%and 7.5% year-on-year, respectively, maintaining a good growth trend. With itsmature applications in new energy vehicles OEMs such as Tesla, NIO,Xiaopeng, and its advantages in product and technology innovation, globalresource synergy, and cost leadership, Meridian provides lightweight solutionsfor new energy vehicles and opens up a new era for magnesium alloysapplication in China.
(4) Acquired 55% shares from Aircraft Industry and established “dual-engine” growth strategyWith advanced manufacturing as its core, the Company has become a globalleader in aluminum alloy wheels and lightweight magnesium alloy parts, and adomestic leader in environmentally friendly Dacromet coating and high-strengthsteel die stamping parts. To diversify and expand in the “broad transportation”sector, the Company acquired a controlling stake in general aviation aircraftmanufacturing business, leaping from auto parts to aircraft and aero partsmanufacturing field. This strategic move will widen our market access, profitavenues and improve the asset quality and risk tolerance ability of the Company,ensuring the long-term sustainable growth. The establishment of “dual-engine”growth strategy, i.e., automotive lightweight parts, and general aviation aircraft,sets a clear direction for the Company to grow in the long run.With the vision of “becoming a advocate in automotive light-weighting trend”,the Company’s auto parts business has shifted from multiple sub-leading silosmodel to comprehensive synergistic development. The Company will capitalizeon its leading market positions in "magnesium alloy, aluminum alloy, high-strength steel metal parts", and strengthen collaboration in brand customers,R&D, global network, and management. Besides, the Company has treatedNEVs as an important market development, focusing on key customers, andcontinuously increasing the value per customers, per brand and per vehicle toachieve the "1+1>2" synergy goal.Capitalizing on the leading technological advantage of Diamond brand, theCompany will expand the domestic flight training market, develop short-distance transportation, Air Taxi, government public services, business travelflights, aviation sports and competition markets, while strengthening the aircraftafter-sales market to achieve rapid growth in domestic market. Meanwhile, itwill consolidate and enhance aircraft sales in overseas market, actively expandlicensing business, to ensure the sustained and steady growth of overseasmarket and build the aircraft manufacturing business into a leader in this field.
The Company is required to comply with the disclosure requirements of theShenzhen Stock Exchange Industry Information Disclosure Guidelines No. 16-Listed Companies Engaged in Automobile Manufacturing Related Business.Production and operation of vehicle manufacturing during the reporting period
□ Applicable √ Not applicable
Production and operation of auto parts during the reporting period
√ Applicable □Not applicable
| Production Volume | Sales Volume | |||||
| Current period | Same period of previous year | YoY % | Current period | Same period of previous year | YoY % | |
| Classified by types of parts | ||||||
| Automotive aluminum alloy wheels (set) | 14,174,994.00 | 16,932,994.00 | -16.29% | 14,087,508.00 | 17,180,720.00 | -18.00% |
| Stamping parts (set) | 230,722,938.00 | 261,183,567.00 | -11.66% | 228,255,135.00 | 271,869,402.00 | -16.04% |
| Magnesium alloy die casting parts (set) | 14,869,805.00 | 18,511,085.00 | -19.67% | 13,138,601.00 | 16,303,410.00 | -19.41% |
| Classified by aftermarket | ||||||
| Automotive aluminum alloy wheels AM（set） | 2,104,207.00 | 1,734,183.00 | 21.34% | 1,774,347.00 | 1,491,868.00 | 18.93% |
| Classified by region | ||||||
| Other classification | ||||||
Unit: RMB unless otherwise stated
| Product Category | Production Capacity | Production Volume (set) | Sales Volume (set) | Sales Revenue |
| Automotive aluminum alloy wheels | -- | 648,094 | 677,321 | 167,711,492.15 |
| Stamping parts | -- | 3,138,575 | 2,867,775 | 14,089,208.52 |
| Magnesium alloy die casting parts | -- | 84,193 | 58,834 | 19,972,503.69 |
| 2020 | 2019 | YoY % | |||
| Amount | % of Operating Revenue | Amount | % of Operating Revenue | ||
| Total operating revenue | 10,699,224,904.57 | 100% | 12,635,131,976.26 | 100% | -15.32% |
| By industries | |||||
| Automotive metal lightweight parts manufacturing | 9,068,833,929.89 | 84.76% | 10,787,734,491.15 | 85.38% | -15.93% |
| Aircraft manufacturing | 1,630,390,974.68 | 15.24% | 1,847,397,485.11 | 14.62% | -11.75% |
| By products | |||||
| Automotive metal lightweight parts | 9,068,833,929.89 | 84.76% | 10,787,734,491.15 | 85.38% | -15.93% |
| General aviation aircraft | 1,630,390,974.68 | 15.24% | 1,847,397,485.11 | 14.62% | -11.75% |
| By region | |||||
| Mainland China | 4,686,803,547.58 | 43.81% | 5,250,462,160.15 | 41.55% | -10.74% |
| Overseas | 6,012,421,356.99 | 56.19% | 7,384,669,816.11 | 58.45% | -18.58% |
| Operating revenue | Operating Cost | Gross Profit Margin | YoY % of Operating Revenue | YoY % of Operating Cost | YoY % of Gross Profit Margin | |
| Classified by Industry | ||||||
| Automotive metal lightweight parts manufacturing | 9,068,833,929.89 | 7,392,811,290.04 | 18.48% | -15.93% | -14.09% | -1.75% |
| Aircraft manufacturing | 1,630,390,974.68 | 1,146,598,775.38 | 29.67% | -11.75% | -11.31% | -0.35% |
| Total | 10,699,224,904.57 | 8,539,410,065.42 | 20.19% | -15.32% | -13.73% | -1.47% |
| Classified by Products | ||||||
| Automotive metal lightweight parts | 9,068,833,929.89 | 7,392,811,290.04 | 18.48% | -15.93% | -14.09% | -1.75% |
| General aviation aircraft | 1,630,390,974.68 | 1,146,598,775.38 | 29.67% | -11.75% | -11.31% | -0.35% |
| Total | 10,699,224,904.57 | 8,539,410,065.42 | 20.19% | -15.32% | -13.73% | -1.47% |
| Classified by Region | ||||||
| Mainland China | 4,686,803,547.58 | 3,838,683,119.22 | 18.10% | -10.74% | -1.61% | -7.59% |
| Overseas | 6,012,421,356.99 | 4,700,726,946.20 | 21.82% | -18.58% | -21.61% | 3.02% |
| Total | 10,699,224,904.57 | 8,539,410,065.42 | 20.19% | -15.32% | -13.73% | -1.47% |
(3) If revenue from physical products sales greater than revenue from
providing services
√ Yes □ No
| Industry classification | Items | Unit | 2020 FY | 2019 FY | YoY % |
| Manufacturing industry | sales volume | RMB | 10,295,928,707.36 | 12,240,494,250.98 | -15.89% |
| production volume | 8,140,569,295.3 | 9,297,765,650.22 | -12.45% | ||
| inventory volume | 745,299,986.77 | 779,307,046.36 | -4.36% |
| Industries | Cost items | 2020 FY | 2019 FY | YoY % | ||
| Amount | % of operating cost | Amount | % of operating cost | |||
| Auto parts manufacturing | Direct material | 4,576,690,709.14 | 64.34% | 5,192,093,268.87 | 62.39% | -11.85% |
| Labor | 868,846,427.62 | 12.21% | 1,082,744,369.16 | 13.01% | -19.76% | |
| Depreciation & consumables | 1,117,423,142.42 | 15.71% | 1,334,103,265.83 | 16.03% | -16.24% | |
| Fuel power | 420,297,291.69 | 5.91% | 542,357,997.58 | 6.52% | -22.51% | |
| Outsourcing processing cost | 130,458,718.16 | 1.83% | 170,920,400.82 | 2.05% | -23.67% | |
| Sub total | 7,113,716,289.03 | 100% | 8,322,219,302.26 | 100% | -14.52% | |
| Aircraft manufacturing | Direct material | 805,804,284.12 | 70.50% | 838,066,207.84 | 64.86% | -3.85% |
| Labor | 209,858,641.99 | 18.36% | 316,241,746.51 | 24.47% | -33.64% | |
| Depreciation & consumables | 112,309,518.91 | 9.83% | 121,485,027.07 | 9.40% | -7.55% | |
| Fuel power | 9,075,584.32 | 0.79% | 10,441,846.95 | 0.81% | -13.08% | |
| Outsourcing processing | 5,858,073.54 | 0.51% | 5,911,463.12 | 0.46% | -0.90% | |
| Sub total | 1,142,906,102.88 | 100% | 1,292,146,291.49 | 100% | -11.55% |
| Total sales amount of the top five customers (RMB) | 2,921,615,150.81 |
| Total sales amount of the top five customers as a % of total annual sales | 28.38% |
| Sales from related parties among the top five customers as a % total annual sales | 0.00% |
| No. | Customer Name | Sales (RMB) | % of total sales |
| 1 | First | 1,156,533,240.24 | 11.23% |
| 2 | Second | 805,714,890.04 | 7.83% |
| 3 | Third | 422,130,318.19 | 4.10% |
| 4 | Fourth | 323,931,853.67 | 3.15% |
| 5 | Fifth | 213,304,848.67 | 2.07% |
| Total | - | 2,921,615,150.81 | 28.38% |
| Total sales amount of the top five suppliers (RMB) | 1,830,796,702.40 |
| Total sales amount of the top five suppliers as a % of total annual sales | 23.65% |
| Sales from related parties among the top five suppliers as a % total annual sales | 0.00% |
| No. | Supplier Name | Purchase (RMB) | % of total purchase |
| 1 | First | 632,766,433.08 | 8.17% |
| 2 | Second | 403,054,824.11 | 5.21% |
| 3 | Third | 344,790,054.40 | 4.45% |
| 4 | Fourth | 238,938,716.18 | 3.09% |
| 5 | Fifth | 211,246,674.62 | 2.73% |
| Total | 1,830,796,702.40 | 23.65% |
| 2020 FY | 2019 FY | YoY % | Notes to significant changes | |
| Sales expense | 202,937,418.90 | 326,373,313.10 | -37.82% | Mainly due to the adjustment of the transportation expenses that were originally collected as sales expenses to the fulfillment costs according to the new revenue standards |
| Administration expense | 590,837,746.38 | 669,461,795.85 | -11.74% | |
| Financial expense | 269,122,000.97 | 219,013,198.53 | 22.88% | |
| R&D expense | 337,448,870.68 | 446,102,958.85 | -24.36% |
| 2020 FY | 2019 FY | Percentage change | |
| Number of R&D personnel (person) | 1,576 | 1,603 | -1.68% |
| Proportion of R & D personnel | 13.35% | 14.49% | -1.14% |
| R&D investment (RMB) | 407,986,763.68 | 446,102,958.85 | -8.54% |
| R&D investment as a percentage of operating revenue | 3.81% | 3.53% | 0.28% |
| Capitalized amount of R&D investment (RMB) | 70,537,893.00 | 0.00 | |
| Capitalized R&D expense as a percentage of R&D investment | 17.29% | 0.00% | 17.29% |
The capitalization rate of R&D investment in 2020 is 17.29%, which is mainlydue to the capitalization of R&D expenses of the controlling subsidiary AircraftIndustry.
5. Cash flow
Unit: RMB
| Items | 2020 FY | 2019 FY | YoY % |
| Cash inflow from operating activities | 11,092,029,864.02 | 12,823,629,497.66 | -13.50% |
| Cash outflow from operating activities | 9,356,248,957.60 | 11,403,260,617.89 | -17.95% |
| Net cash flow from operating activities | 1,735,780,906.42 | 1,420,368,879.77 | 22.21% |
| Cash inflow from investment activities | 1,673,233,118.74 | 2,492,182,608.25 | -32.86% |
| Cash outflow from investment activities | 598,702,345.98 | 3,109,509,375.99 | -80.75% |
| Net cash flow from investment activities | 1,074,530,772.76 | -617,326,767.74 | 274.06% |
| Cash inflow from financing activities | 4,747,409,710.84 | 5,210,444,193.61 | -8.89% |
| Cash outflow from financing activities | 7,578,184,122.46 | 5,786,693,748.16 | 30.96% |
| Net cash flow from financing activities | -2,830,774,411.62 | -576,249,554.55 | -391.24% |
| Net increase in cash and cash equivalents | -14,281,113.87 | 258,679,854.07 | -105.52% |
5. Cash outflow from financing activities increased by 30.96% year-on-year,which was mainly due to the payment for the acquisition of 55% of the equityin the aircraft industry during the reporting period.
6. The net cash flow from financing activities decreased by 391.24% over the
same period of the year, mainly due to the impact of cash outflows fromfinancing activities.
7. The net increase in cash and cash equivalents decreased by RMB 273million compared with the same period last year, which was mainly due tothe decrease in net cash flow from investment activities compared with thesame period last year.Explanation of the reason for the significant difference between the Company’snet cash flow generated from operating activities during the reporting periodand the current year’s net profit.
□Applicable √Not applicable
III. Non-Core Business Analysis
√Applicable □Not applicable
Unit: RMB
| Amount | Proportion to Net Income | Notes to Changes | Sustainability | |
| Investment Income | 612,550.85 | 0.07% | no | |
| Gains or Losses from Change in Fair Value | 2,246,554.36 | 0.27% | no | |
| Asset Impairment | -10,179,361.63 | -1.23% | Mainly for the provision of asset impairment losses after the inventory valuation | no |
| Non-operating Revenue | 43,050,711.82 | 5.19% | Mainly for this reporting period, Meridian’s US factory received insurance claims | no |
| Non-operating Cost | 9,986,870.11 | 1.20% | Mainly for public welfare donation expenditure and asset destruction and scrapping | no |
| Other Gains | 104,562,193.16 | 12.61% | Mainly government subsidies | no |
| Credit Impairment Loss | -7,223,519.05 | -0.87% | Mainly accrued for bad debt losses of accounts receivable | no |
1. Material Changes of Assets
The Company will implement the new revenue standards or new leasestandards for the first time since 2020 and adjust the implementation of relevantitems in the financial statements at the beginning of the year.
√Applicable □Not applicable
Unit: 10,000 RMB
| 2020 Year End | 2020 Year Beginning | YoY % | Notes to Significant Changes | |||
| Amount | % of Total Assets | Amount | % of Total Assets | |||
| Cash and Cash Equivalents | 167,498 | 10.49% | 245,275 | 13.27% | -2.78% | Mainly due to payment for acquiring 55% equity of Aircraft Industry during the reporting period |
| Account Receivables | 231,498 | 14.49% | 255,570 | 13.82% | 0.67% | |
| Inventory | 230,991 | 14.46% | 239,395 | 12.95% | 1.51% | |
| Investment Property | 0.00 | |||||
| Long-term Equity Investment | 57 | 0.00% | 1,261 | 0.07% | -0.07% | Mainly due to the withdrawal of the Aircraft Industry from the original 20% equity of China Electronics Technology Group Wuhu General Aviation Industry Research Institute Co., Ltd. |
| Fixed Asset | 487,246 | 30.50% | 511,366 | 27.66% | 2.84% | |
| Construction in Progress | 25,897 | 1.62% | 426,35 | 2.31% | -0.69% | Mainly because the assets reach the usable state and turn into fixed assets |
| Short-term Borrowings | 354,430 | 22.19% | 307,012 | 16.61% | 5.58% | Mainly due to the needs of operation and acquisition projects during the reporting period, which increased bank loans |
| Long-term Borrowings | 117,920 | 7.38% | 116,522 | 6.30% | 1.08% | Mainly due to the needs of operation and acquisition projects during the reporting period, which increased bank loans |
| Non-current Liabilities due within one year | 69,443 | 4.35% | 57,197 | 3.09% | 1.26% | Mainly due to the needs of operation and acquisition projects during the reporting period, which increased bank loans |
| Prepaid Payments | 15,814 | 0.99% | 17,360 | 0.94% | 0.05% | |
| Other Account Receivables | 6,832 | 0.43% | 91,633 | 4.96% | -4.53% | Mainly due to the recovery of financial assistance from controlling shareholders and related parties during the reporting period |
| Other Current Asset | 9,560 | 0.60% | 11,701 | 0.63% | -0.03% | |
| Intangible Asset | 166,543 | 10.43% | 177,818 | 9.62% | 0.81% | |
| Goodwill | 166,299 | 10.41% | 170,116 | 9.20% | 1.21% | |
| Deferred tax asset | 26,344 | 1.65% | 18,871 | 1.02% | 0.63% | |
| Other current Asset | 9,560 | 0.60% | 11,701 | 0.63% | -0.03% | |
| Notes Payables | 19,287 | 1.21% | 21,860 | 1.18% | 0.03% | |
| Contract Liabilities | 51,284 | 3.21% | 64,857 | 3.51% | -0.30% | |
| Other Account Payables | 38,422 | 2.41% | 72,729 | 3.93% | -1.52% | Mainly due to the decrease in the amount of engineering equipment payable during the reporting period and the payment of Suzhou Yucuiyuan's investment |
| Differed Tax Liabilities | 26,863 | 1.68% | 26,823 | 1.45% | 0.23% | Mainly due to the steady growth in the performance of the aircraft manufacturing business, the deferred income tax assets are recognized in the current period without making up for losses |
| Items | Opening Balance | Change in Profit and Loss through Fair Value in the Current Period | Cumulative Change in Equity through Fair Value | Accrual Impairments in the Current Period | Current Purchase Amount | Current Sale Amount | Other Changes | Closing Balance |
| Financial Assets | ||||||||
| 1. Held-for-trading financial assets (Excluding Derivative Financial Assets) | 6,303 | 196 | 5,997 | 503 | ||||
| 2.Derivative Financial Assets | 29 | 29 | ||||||
| Subtotal of financial assets | 6,303 | 225 | 5,997 | 531 | ||||
| Total | 6,303 | 225 | 5,997 | 531 | ||||
| Financial Liabilities | 0.00 | 0.00 |
| Investment during the Reporting Period (RMB) | Investment over the Corresponding Period of Last Year (RMB) | YOY % |
| 2,769,704,594.31 | 1,031,209,167.78 | 168.59% |
√Applicable □ Not applicable
Unit: Million RMB
| Invested company name | Main business | Investment method | Invested amount | Shareholding | Funds source | Progress | Expected income | Current period investment profit or loss | If involved in lawsuit | Disclosure date | Disclosure reference |
| Aircraft Industry | Aircraft manufacturing and sales | Acquisition | 2,418 | 55.00% | Self-funded | Completed 55% equity transfer | 290 | 340 | Yes | Feb 25, 2020 | "Announcement on the Acquisition of 55% Equity and Related Transactions of Wanfeng Aircraft Industry Co., Ltd." disclosed in "Securities Times" and www.cninfo.com.cn |
| Total | -- | -- | 2,418 | -- | -- | -- | 290 | 340 | -- | -- | -- |
(2) Derivatives Investments
□ Applicable √ Not applicable
No derivatives investments during the reporting period
5. Usage of raised funds
□ Applicable √ Not applicable
No usage of raised funds during the reporting period
VI. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable √ Not applicable
During the reporting period, there was no disposal of significant assets.
2. Sales of significant equity
□ Applicable √ Not applicable
VII. Major Subsidiaries and Investees Analysis
√ Applicable □ Not applicable
Information about major subsidiaries, and investees that contribute above 10% of the Company’s net Profit.Unit: RMB
| Company name | Company Type | Principal business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Wanfeng MLTH Holdings Co., Ltd | Subsidiary | Mainly engaged in the design, research and development, manufacturing and sales of lightweight magnesium materials and components for automobiles and motorcycles | USD 76,001,900 | 3,435,371,228.62 | 2,076,513,724.18 | 2,557,650,411.18 | 228,875,241.33 | 176,910,509.14 |
| Wuxi Xiongwei Precision Technology Co., Ltd. | Subsidiary | Mainly engaged in the design, manufacture and sales of automotive stamping parts and their automated stamping dies and precision molds | RMB 79,000,000 | 1,192,080,356.54 | 914,479,480.16 | 753,572,627.73 | 135,228,963.33 | 117,389,834.06 |
| Wanfeng Aircraft Industry Co., Ltd. | Subsidiary | Mainly engaged in the design, experiment, production, sales and maintenance of general aircraft, helicopters, aviation engines, avionics and mechanical systems; technology development and consulting services. | RMB 60,000,000 | 4,690,103,855.76 | 3,645,828,950.31 | 1,630,390,974.68 | 293,762,210.43 | 340,429,883.23 |
| Company name | Method of acquisition and disposal of subsidiaries | Impact on performance |
| Wanfeng Aircraft Industry Co., Ltd. | The company acquired 55% of the shares of Wanfeng Aircraft Industry Co., Ltd. and completed the industrial and commercial change registration of the equity transfer on April 16, 2020 | The net profit of the Aircraft Industry in 2020 is 340,429,900 yuan, and the contribution goes to the parent net profit of 187,236,400 yuan. |
1. Wholly owned subsidiary: Wanfeng MLTH Holdings Co., LtdWanfeng MLTH Holdings Co., Ltd was established in the United Kingdom onNovember 6, 2013, with its management headquarter in Ontario, Canada.Wanfeng Meridian is a global leader in the magnesium alloy die-castingbusiness. It has cutting-edge core technology in the industry. Its productionbases are located in the United States, Canada, the United Kingdom, Mexico,China, and other places. It’s in the business of design, R&D, manufacturing,and sales of lightweight magnesium materials and automobiles andmotorcycles components. The registered capital is 76,001,900 US dollars, andthe Company holds 100% of the shares.As of December 31, 2020, total assets were 3,345,371,200 yuan, net assetswere 2,076,513,700 yuan; operating revenue in 2020 was 2,576,504,000 yuan;net profit was 176,910,500 yuan, a decrease of 25.89% from the same periodlast year, mainly due to the impact of the epidemic and orders decrease.
2. Controlling subsidiary: Wuxi Xiongwei Precision Technology Co., Ltd.Wuxi Xiongwei Precision Technology Co., Ltd. was established in June 2003.The main business is design, manufacture and sales of automotive stampingparts, automated stamping dies and precision molds. The registered capital isRMB 79 million, and the Company holds 95% of the shares.As of December 31, 2020, total assets of 1,190,080,400 yuan, net assets of914,479,500 yuan; operating revenue of 753,572,600 yuan in 2020; net profitof 117,389,800 yuan, a decrease of 19.85% from the previous year, mainly dueto the decrease in gross profit affected by the epidemic.
3. Controlling subsidiary: Wanfeng Aircraft Industry Co., Ltd.Wanfeng Aircraft Industry Co., Ltd. was established in March 2018. AircraftIndustry is a professional general aircraft manufacturer integrating independentR&D, top-level design, advanced manufacturing, and sales services. It is oneof the world’s top three fixed-wing general aircraft manufacturers. With 600million yuan registered capital, the Company holds 55% of the shares.As of December 31, 2020, the total assets were 4,690,103,9 00 yuan and thenet assets were 3,645,829,900 yuan; the operating revenue in 2020 was1,630,391,000 yuan; the net profit was 340,429,900 yuan, an increase of 48.07%over the same period of the previous year, mainly due to the optimization ofproduct structure and gross margin improvement and the release of domesticproduction capacity.
VIII. Structural Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook for the Future Development of the CompanyIn 2021, the Company will adhere to the general keynote of "seeking progresswhile maintaining stability", focusing on the real economy, promoting the spiritof craftsmanship, positioning in the big transportation, taking the two-wheeldrive of industry and capital as the starting point, and relying on the ability toobtain and apply information and the system for a global enterprise. Itendeavors to become a differentiated and innovative enterprise fromcompetition, build a corporate where each member can participate, become aglobal all-around leader in its segments, realize the high-quality developmentof the enterprise and maximize the value of the enterprise, and become thecreator of the world’s advanced productivity.
1. Optimize the business structure of automotive metal lightweight partsand components, vigorously promote the expansion of themagnesium alloy business in the Asia-Pacific market, realize thedefensive recovery growth of the aluminum alloy business, andconduct long-term strategic reassessment and arrangements for thehigh-strength steel businessThe Company's automotive metal parts industry focuses on the lightweightapplication of "magnesium alloy-aluminum alloy-high strength steel" metalmaterials, with the vision of "becoming a global automotive metal parts light-weighting promoter". The Company grasps global market trends, aligns variousbusiness units, continuously optimizes the business structure, and promote theCompany's growth through technology.
(1) The automotive wheel business in the aluminum alloy business may facestrong threats from China-US trade policies and domestic competitors for along time in the future. In the short term, it will be affected by the increasein upstream raw material prices and the shortage of downstream automotivechips, and the overall business will be on defensive-offense state. TheCompany will adopt a differentiated strategy, give full play to the Company'sforging process advantages, increase the proportion of business in theaftermarket and special-purpose fields, and increase profitability; continueto promote the "26313+N" customer target, consolidate traditionalautomobiles, and actively expand new energy automobile business ;Accelerate the establishment of international factories, build a globalproduction and sales network, and effectively avoid the ongoing andpossible future trade conflicts. The overall development of the Company'smotorcycle business is smooth, and it will maintain its strategy of seizingincrements, integrating stocks, and developing mid-to-high end marketrapidly. The northern plant in India has made a good start, and isaccelerating its deployment in the southern plant to seize the world’s largestincremental market; integrating domestic production capacity, transformingsmart factory production lines, increasing the Company’s automatedproduction capacity, and increasing its domestic market share; the
Company’s high-end motorcycle products continue to sell in the market. Inthe future, we will continue to increase cooperation with high-endmotorcycle manufacturers to build a technology-led moat. The high-strengthsteel stamping parts business has reached long-term strategic cooperationwith the world’s top first- and second-tier suppliers Yanfeng, Faurecia,Brose, Autoliv, etc. In the future, it will focus on cultivating new projects suchas Japanese, European and American customers, and develop new energyvehicle market. In 2021, the Company will pay more attention to theadvantages and disadvantages of high-strength steel in the field of autoparts molding and re-evaluate and arrange its positioning in the "automotivelightweight parts" industry.
(2) The magnesium alloy business continues to maintain a double-digit R&D
expense ratio and maintains an absolute lead in magnesium alloyapplication technology. The total amount of applied products will reach180Kg from the current 100Kg to 2025, and single vehicle usage willincrease from the current 1.5Kg Increase to 15Kg in 2025. The Companywill maintain a 65% market share in the North American market, promotethe rapid development of the Asian market, and gradually return to theEuropean market. In the North American market, through in-depth on-sitecooperation with automobile OEMs, the original business share ismaintained, and the existing needs of customers are met. At the same time,the application of magnesium alloy components in the entire vehicle isimproved from the design side. In the Asian market, especially in theChinese market, the application of magnesium alloy components ispromoted. On the one hand, the “T3+1” platform promotes the applicationof state-owned platforms and traditional automotive magnesium alloycomponents, On the other hand, in new energy vehicle market, use “NIOBusiness” template, strengthen the research and development sourcecooperation with the top 5 new energy vehicle manufacturers, grasp theopportunities of lightweight application in new energy vehicles. In theEuropean market, strengthen cooperation with European OEMs andincrease the current capacity utilization rate of Asian plants.
2. Build a global leader in the innovative manufacturing of general
aviation aircraftThe Company will focus on the vision of "becoming a global leader in theinnovative manufacturing of general aviation aircraft", aim to achieve the topgeneral aircraft manufacturing technology and sales volume in the world. TheCompany will adopt the circular progressive model of "Leading R&D—Licensing/technology transfer—Aircraft Manufacturing and Sales". High R&Dinvestment is to maintain the world's “leading” position, “Licensing/technologytransfer” is to support R&D and profits, “Manufacturing and sales" is to capture
the market share of mature markets. By matching the applicable scenarios ofvarious general aviation in developing countries, the Company aims togradually realize the promotion and application of general aviation aircraft indifferent countries and regions, and becomes the "unicorn" in general aviationsector.
(1) Research and development business. The Company acquired the
"Diamond" aircraft and successfully secured the "Crown" position of thegeneral aviation aircraft. From its entry in the general aviation field, it hasachieved a world-class leading advantage. In the future, it will continue toinvest in R&D and maintain its world leading position.? With the top R&D platform of Diamond brand aircraft, we will continueto develop the future general aviation aircraft EVTOL through self-research and cooperation with top customers.? Continuously introduce competitive and leading new models inaccordance with the pace of aircraft development and certification.? From a global perspective, focus on the "Laboratory Test Flight" project,and when the time is ripe, assist it in transforming technology intoproducts and markets.
(2) Licensing/technology transfer business. Through planned "licensing"business, we will strengthen monetization of the Company's current andfuture aircraft technology. For developing countries including China, we willcarry out whole-aircraft licensing /technology transfer business to quicklyrecoup funds to meet the Company's technology R&D funding needs, andat the same time increase the Company's basic profitability.? Through the licensing model, build a domestic "production base" andpromote the industrialization of domestic general aviation aircraft.? Through the technology transfer model, gradually realize the productionof parts in the country where the production base is located, and forma general aviation industry ecosystem.
(3) Aircraft manufacturing and sales business.
? Strongly launch new models, head on to seize the market in maturecountries for general aviation, and increase the market share ofDiamond aircraft.? Exploration and promotion of application scenarios of general aviationaircraft in developing countries. In 2020, the Company capitalized onthe domestic trainer application scenarios and successfully achievedmass production sales. In the future, new application scenarios will becontinuously explored and piloted based on actual conditions topromote the advancement of the domestic general aviation market. Atthe same time, it will seek application scenarios and promotion modelsfor the general aviation industry in other developing countries.
3. Give full play to the functions of the capital market and optimize theCompany's financial structureAccording to the Company's strategic thinking of "industry and capital flyingtogether", in 2021, we will give more consideration and make use of capitalmarket tools to optimize the Company's financial structure and enhance theCompany's profitability.
Risk analysis and countermeasures
(1) Macroeconomic and industry risks and countermeasures
In 2020, the global economy was affected by the epidemics in stages, and theautomobile industry took a hit. From January to December 2020, China'sautomobile production and sales completed 25.225 million vehicles and 25.311million vehicles, a year-on-year decrease of 2.0% and 1.9% respectively. Thetotal sales of light vehicles in the United States were 14.6 million units, down14% year-on-year and the lowest level since 14.49 million units in 2012.Affected by Covid-19 and the overall decline in the automotive industry, theindustry will still face greater pressure. If the economy continues to slow down,it will lead to a continued decline in demand in the automotive industry, whichwill in turn have a certain impact on the Company's market structure andprofitability.In response to this risk, on the one hand, the Company closely monitors thetrend of the industry, strengthens the integration and coordination of sub-leading auto parts industry, continuously strengthens collaboration of brandcustomer, global bases, R&D design, and management, enhances the overallcompetitiveness of auto parts, and increases new energy vehicles business,the value of single brand, single customer and single vehicle. on the other hand,it has increased the transformation and upgrading of enterprises, tookadvantage of the global competitiveness of general aviation aircraftmanufacturing, further optimized the industrial layout, and improved theCompany’s asset quality and anti-risk capabilities.
(2) International trade barrier risks and countermeasures
In recent years, a series of overseas trade protectionist measures have had acertain impact on China’s exports, and the Company is facing certain risks ofexport trade barriers. Especially since 2018, China-US trade frictions havecontinued. As a result, the tariffs on imports from China’s automobiles and partshave risen. If the trade frictions continue to escalate, it will be possible to affectthe Company's revenue and profitability.In response to this risk, on the one hand, the Company launched the overseasplant project for automotive aluminum alloy wheels and leveraged the synergy
of the global bases of various segments to realize global production, refinedmanagement, convenient supply, and reduce risk of trade barriers. On the otherhand, it will increase the development of the Asia-Pacific market, especiallyincrease the market share of high-end customers, promote the development,production and delivery of Audi and Mercedes-Benz projects; take advantageof the development opportunities in the new energy vehicle market, fully cut intothe supply chain of core customers, and increase market share.
(3) Rising energy and labor costs risks and countermeasures
The main costs of the products are raw materials, energy, and labor costs.Since the fluctuation of raw material prices has a greater impact on theCompany’s operating performance, the Company has signed a price linkagemechanism with most customers to adjust product prices with fluctuations inraw material market prices. However, due to the lagging nature of theCompany's product sales settlement, fluctuations in energy prices and risinglabor costs have a certain impact on the Company's performance.In response to this risk, the Company will strengthen global managementcoordination, reduce management costs, improve management efficiency,enhance raw material inventory management, optimize supplier managementsystem and increase bargaining power for raw materials. And the Company willalso increase its global scientific and technological research and developmentcollaboration, reduce costs through process improvement, technologicalinnovation, and increased automation, enhancing the Company’scompetitiveness.
(4) Currency exchange rate risks and countermeasures
In recent years, the Company's products have been exported to the UnitedStates, India, Europe and other countries and regions. The overseas businessincome accounted for about 50% of the Company's main business income inthe same period. The fluctuation of the RMB exchange rate will have a materialimpact on the Company's operating performance.In response to this risk, the Company will reduce the exchange rate risk throughglobal business layout. The Company will increase the development of thedomestic market and increase the proportion of product sales in addition tochoose cross-border RMB settlement. The financial department will strictlyimplement the Internal Control Management System for Forward ForeignExchange Settlement Business and use tools such as forward FX settlementand sale to carry out FX hedging business in a planned way to control exchangerate risks to the greatest extent.
(5) Domestic aviation openness policy risks and countermeasures
The domestic low-altitude airspace opening policy is the most important factorin the advancement of domestic general aviation industry. The degree ofopenness has a decisive effect on the development of the domestic generalaviation industry to a certain extent, and it also has a significant impact on thegrowth of the Company's general aviation business.In response to this risk, the Company will continuously and effectivelycommunicate with the National Air Traffic Management Bureau and relevantmanagement departments. Currently, Wanfeng Aviation has been selected toconduct pilot projects. The low-altitude opening has also been substantiallyexpanded. As Wanfeng Aviation actively strives to obtain the support fromrelevant management departments, Wanfeng’s aviation business has not beenrestrained in this slow opening process but has accumulated more developmentopportunities and advantages.
(6) Impact of pandemic risks and countermeasures
At the beginning of January 2020, the COVID 19 pandemic has spread in Chinaand other countries. Governments of various countries have introduced a seriesof restrictive quarantine measures. The resumption of overseas factories hasbeen delayed than originally planned, and short-term order delivery has beenaffected.In response to this risk, the Company puts the health and safety of itsemployees at the highest priority, actively enforced the local governments’requirements, strictly performs normal epidemic prevention and control work,and assume social responsibilities. The Company will strengthen raw materialprice cost control and customer demand tracking, rely on the Company's globalinformation technology to improve efficiency and efficiency, ensure stableproduction and operation, meet customer requirements, and minimize theadverse impact of the epidemic on production and operation.
X. Reception of activities including research, communication and
interviews during the report period
Registration form for reception of research, communication, interviews,and other activities during the reporting period
√Applicable □ Not applicable
| Reception date | Venue | Reception method | Visitor type | Visitor name | Discussion | Index of the basic situation of the survey |
| 2020.09.02 | Company’s conference room | Site visit | Institution investor | Shanghai Shenjiu Asset Management | The Company’s main business, lightweight magnesium alloy business and the synergy of various business lines. | "Record of Investor Relations Activities on September 2, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on September 3, 2020. |
| 2020.09.03 | Shanghai Meridian Magnesium Products Co., Ltd conference room | Site visit | Institutional investor | China International Capital Corporation, Foresight Fund Management | The Company's main business, the competitive advantages, and future prospects of Meridian products. | "Record of Investor Relations Activities on September 3, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on September 4, 2020. |
| 2020.09.21 | Company’s conference room | Site visit | Institutional investor | Shanghai Jingjing Investment Management, Jingsheng Investment (Beijing) | The Company's main business, magnesium alloy and general aviation aircraft manufacturing business | "Record of Investor Relations Activities on September 21, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on September 22, 2020. |
| 2020.11.09 | Company’s conference room | Conference call | Institutional investor | China International Capital Corporation and other 30 institutions | The Company's lightweight business, automotive lightweight strategy and magnesium alloy "T3+1" progress | "Record of Investor Relations Activities on November 9, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on November 11, 2020. |
| 2020.11.10 | Company’s conference room | Site visit | Institutional investor | China Knowledge (Singapore) | The Company's main business, lightweight strategy, general aviation market and aircraft manufacturing business | "Record of Investor Relations Activities on November 10, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on November 11, 2020. |
| 2020.12.17 | Shanghai Meridian Magnesium Products Co., Ltd conference room | Site visit | Institutional investor | Shenwan Hongyuan and other 9 institutions | The Company's main business, the competitive advantages and future development prospects of magnesium products, and magnesium alloy "T3+1" | "Record of Investor Relations Activities on December 17, 2020" published by the Company on the website http://irm.p5w.net/ssgs/S002085/?code=002085 on December 18, 2020. |
Section V: Significant Events
I. Common Share Profit Distribution and Conversion of Capital
Reserve to Share CapitalDuring the reporting period, the common stock profit distribution policy,especially the formulation, implementation, or adjustment of the cash dividendpolicy
√ Applicable □ Not applicable
The 2018 Second Extraordinary General Meeting of Shareholders was held onJune 1, 2018. In accordance with the China Securities RegulatoryCommission’s Listed Companies Supervision Guidelines No. 3-ListedCompanies Cash Dividends (China Securities Regulatory CommissionAnnouncement [2013] No. 43), Regarding Further Implementation The Noticeon Matters Concerning the Cash Dividend Distribution of Listed Companies(Zheng Jian Fa [2012] No. 37) and the relevant provisions of the Articles ofAssociation, the Company’s shareholder return plan for the next three years(2018-2020) was formulated. The form of profit distribution, the conditions thatshould be met at the same time when implementing cash dividends, theproportion of cash dividends, and the decision-making procedures andmechanisms for profit distribution have been clarified.According to the "Company’s Shareholder Return Plan for the Next ThreeYears (2018-2020)", the Company’s board of directors consulted the opinionsof independent directors and Company shareholders, and considered theCompany’s profitability and actual operations. According to the 2020 Semi-Annual Profit Distribution Proposal approved on the Company’s fourthextraordinary shareholder meeting in 2020, on September 10, 2020, theCompany implemented the 2020 semi-annual equity distribution plan. Takingthe Company's total share capital of 2,186,879,678 shares after excluding78,431,058 shares that have been repurchased, using 2,108,448,620 sharesas the base number, RMB 2.00 in cash (tax included) was distributed to allshareholders for every 10 shares, no bonus shares, and no capital reserveconverted into share capital.
| Special Notes on Cash Dividend Policies | |
| Whether they comply with the requirements of the Company's Articles of Incorporation or the resolutions of the General Meeting of Shareholders | Yes |
| Whether the dividend standards and proportions are distinct and clear | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete | Yes |
| Whether the independent directors performed their duties and played their due role | Yes |
| Whether the minority shareholders have the opportunity to fully express their opinions and appeals, and whether their legitimate rights and interests have been fully protected: | Yes |
| Whether relevant conditions and procedures are compliant and transparent when the cash dividend policies are being adjusted or changes | Yes |
| Year | Cash dividend amount (tax included) | Net profit attributable to common stock shareholders in the consolidated financial statement of the year for dividend distribution | The ratio of cash dividends to the net profit attributable to ordinary shareholders in the consolidated statements | The amount of cash dividends in other ways (such as share repurchase) | The proportion of cash dividends in other ways to the net profit attributable to ordinary shareholders in the consolidated statements | Total amount of cash dividends (including other ways) | The ratio of total amount of cash dividends (including other ways) to the net profit attributable to ordinary shareholders in the consolidated statements |
| 2020 | 42,169 | 56,582 | 74.53% | 42,169 | 74.53% | ||
| 2019 | 65,606 | 89,577 | 73.24% | 65,606 | 73.24% | ||
| 2018 | 65,606 | 108,602 | 60.41% | 65,606 | 60.41% |
| Bonus share issued per 10 shares (share) | 0 |
| Cash dividend per 10 shares (RMB) (tax inclusive) | 1 |
| Total capital share basis for the distribution proposal (share) | 2,072,107,520 |
| Total cash dividend (RMB) (tax inclusive) | 207,210,752.00 |
| Cash dividend amount in other ways (such as share repurchase) (RMB) | 0 |
| Total cash dividends (including other ways) (RMB) | 207,210,752.00 |
| Distributable profits (RMB) | 482,774,473.27 |
| Percentage of cash dividends of the total distributed profit (%) | 100% |
| Cash dividends | |
| If the Company's development stage is in a mature period and there is no major capital expenditure arrangement, when the profit distribution is carried out, the proportion of cash dividends in this profit distribution should be at least 80% | |
| Detailed description of profit distribution or capital reserves conversion plan | |
| The eighth meeting of the Company's seventh board of directors deliberated and passed the "Proposal for Profit Distribution in 2020." The Company intends to use 2,072,107,520 shares (total share capital of 2,186,879,678 shares minus 114,772,158 shares repurchased) as the base, and distribute cash dividends of RMB 1.0 (tax included) to all shareholders for every 10 shares. No bonus shares will be given, or capital reserve will be converted into share capital. The above plan still needs to be approved by the shareholders meeting. | |
III. Performance of Commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related parties, acquirers,and other related parties for the commitments by the end of the reporting period.
√Applicable □ Not applicable
| Commitments | Giver of commitments | Nature | Details of commitments | Date of commitments | Term of commitments | Performance |
| Commitment from reformation of shareholding | N/A | N/A | N/A | N/A | N/A | N/A |
| Commitment from M&A announcement or equity change announcement | N/A | N/A | N/A | N/A | N/A |
| Commitment from asset restructuring | Chen Ailian and Wu Liangding family, the actual controllers of the controlling shareholder Wanfeng Auto Holding Group Co., Ltd. | Commitment to avoid horizontal competition | 1. The controlling shareholder Wanfeng Group’s commitment to avoid horizontal competition: After the completion of this reorganization, Wanfeng Group’s motorcycle aluminum alloy wheel business has been incorporated into the listed company. In order to avoid horizontal competition with listed companies, Wanfeng Group has issued the "A Letter of Commitment to Avoid Horizontal Competition and Regulate Related Party Transactions", making the following commitment: "The company and its wholly-owned subsidiaries, holding subsidiaries, and other companies that the company has actual control or significant influence (referred to "The company and controlled company") will not engage in any business that occurs or may compete with Wanfeng Auto Wheel’s business after the completion of this reorganization in the future. If the company and the controlled company compete with Wanfeng Auto Wheel or have conflict interest with Wanfeng Auto Wheel in business activities, the company and the controlled company will exercise the right of veto, or urge the controlled company abandons the business that may cause horizontal competition to ensure that it does not directly or indirectly compete with the Wanfeng Auto Wheel in the same industry or be injected into Wanfeng Auto Wheel at a fair market price. If there is a business opportunity within the business scope of Wanfeng Auto, the company will give priority to Wanfeng Auto Wheel. For projects that Wanfeng Auto Wheel has constructed or planned to invest in, our company will avoid the same or similar business as Wanfeng Auto Wheels in terms of investment direction and project selection and will not compete with Wanfeng Auto Wheel in the same industry in order to protect Wanfeng Auto Wheel's interests. " 2. In order to avoid horizontal competition, Wanfeng Auto's actual controllers Chen Ailian and Wu Liangding's family issued the "Letter of Commitment on Avoiding Horizontal Competition and Regulating Related Party Transactions". Making the following commitments: "The companies and units we control will not engage in any | 21-Jul-11 | long-term | Strict performance |
| Commitment from IPO or refinancing | Chen Ailian and Wu Liangding family, the actual controllers of the controlling shareholder Wanfeng Auto Holding Group Co., Ltd. | Commitment to avoid horizontal competition | During the period of being the Company's largest shareholder and actual controller, no subsidiary companies will engage in the same or similar business as Zhejiang Wanfeng Auto Wheel Co., Ltd. | 28-Nov-06 | long-term | Strict performance |
| Commitment from stock incentive | N/A | N/A | N/A | N/A | N/A | N/A |
| Other commitment to Company's small and medium shareholders | Chen Ailian and Wu Liangding family, the actual controllers of the controlling shareholder Wanfeng Auto Holding Group Co., Ltd. | Commitment to avoid horizontal competition | 1. Do not directly or indirectly engage in the same or similar business as the listed company to avoid possible direct or indirect business competition with the production and operation of the listed company. Guarantee to take the legal and effective measures to urge other companies (excluding companies controlled by the listed company) not to engage in or participate in any activities or businesses that compete with the production and operation of the listed company. 2.If the business activities of the promise party and its close relatives (if the promise party is a natural person) having control rights may compete with the listed company’s business in the same industry in the future, the promise party will urge the promise party and the enterprises that the promise party's close relatives have control rights to abandon the business that may cause competition in the same industry and are willing to take all the responsibilities. 3. If the promise party or other enterprises that the promise party has control have any business opportunity to engage in or participate in any activity that may compete with the production and operation of the listed company, the listed company shall be notified in a written form about the business opportunity immediately. If the listed company gives a written affirmative reply that it is willing to take advantage of the business opportunity within the reasonable time limit specified in the notice, we will try our best to provide the listed company with the business opportunity in priority. 4. If the listed company has suffered losses due to the breach of the above-mentioned commitments by the promise party, the operating profit obtained shall belong to the listed company and shall be compensated for all losses. | 22-Feb-20 | long-term | Strict performance |
| Are the commitments fulfilled on time | Yes | |||||
| Details in unfulfilled commitments and work plan | N/A |
2. Where any profit forecast was made for any of the Company’s assetsor projects and the current reporting period is still within the forecastperiod, the Company shall explain whether the performance of the assetor project reaches the profit forecast and why:
√ Applicable □ Not applicable
| Profit forecast asset or project name | Forecast start time | Forecast end time | Forecast performance for the current period (10,000 RMB) | Actual performance for the current period (10,000 RMB) | Reason for not reaching the forecast (if applicable) | Original forecast disclosure date | Original forecast disclosure index |
| Aircraft Industry | Jan 1, 2020 | Dec 31, 2022 | 28,980 | 33,034 | N/A | Feb 25, 2020 | "Announcement on the Acquisition of 55% Equity of Wanfeng Aircraft Industry Co., Ltd. and related party transaction" disclosed on www.cninfo.com and "Securities Times" |
The transferor promises that the net profit attributable to the parent company inthe consolidated statement realized by the Aircraft Industry in 2020 (net profitafter deducting non-recurring gains and losses) shall not be less than 289.8million yuan, and the figure actually realized by Aircraft Industry in 2020 was
330.34 million yuan. The management has conducted impairment tests on thegoodwill of Aircraft Industry. The approved five-year financial budget hasconsidered the impact of actual performance lower than the promisedperformance on future expected cash flows. Aircraft Industry has no impairmentas of December 31, 2020.
IV. The Company’s funds used by the controlling shareholder or its
related parties for non-operating purposes.
√ Applicable □ Not applicable
Unit: 10,000 RMB
| Name of shareholder or related party | Period of time for funds used | Reason | Beginning balance | New amount during reporting period | Repaid amount during reporting period | Ending balance as of disclosure date of annual report | Expected repayment method | Expected repayment amount | Expected repayment date |
| Wanfeng Group (note 1) | 2019-12-5 to 2020-3-24 | Lending | 12,000 | 0 | 12,000 | 0 | - | ||
| Wanfeng Group (note 1) | 2019-12-5 to 2020-3-25 | Lending | 26,070 | 0 | 26,070 | 0 | - | ||
| Shaoxing Jiajing Trading Co., Ltd (note 2) | 2019-10-10 to 2020-3-27 | Lending | 4,200 | 0 | 4,200 | 0 | - | ||
| Shaoxing Jiajing Trading Co., Ltd (note 2) | 2019-10-15 to 2020-3-27 | Lending | 800 | 0 | 800 | 0 | - | ||
| Shaoxing Jiajing Trading Co., Ltd (note 2) | 2019-10-17 to 2020-3-27 | Lending | 2,000 | 0 | 2,000 | 0 | - | ||
| Shaoxing Jiajing Trading Co., Ltd (note 2) | 2019-10-21 to 2020-3-27 | Lending | 3,000 | 0 | 3,000 | 0 | - | ||
| Shaoxing Jiajing | 2019-10-11 to 2020-3-27 | Lending | 5,000 | 0 | 5,000 | 0 | - |
| Trading Co., Ltd (note 2) | |||||||||
| Wanfeng Group (note 1) | 2020.4.16 to 2020.8.17 | Lending | 7,200 | 7,200 | 0 | ||||
| Aircraft Industry (note 4) | 2020.4.16 to 2020.8.17 | Lending | 31,262 | 31,262 | 0 | ||||
| Total | 84,332 | 7,200 | 91,532 | 0 | -- | 0 | -- | ||
| The total amount at the end of the period as % of the most recent audited net assets | 0.00% | ||||||||
| Related decision-making procedures | Note 1, Note 2: The relevant decision-making procedures have not been fulfilled, and the principal and interest of the funds used have been repaid before June 2020. | ||||||||
| The reasons for the use of non-operating funds of the new major shareholders and their affiliated companies in the current period, the accountability of the responsible persons, and the explanation of the measures taken by the board of directors | The "Balance of Used Funds at the Beginning of 2020" and "The Balance of Funds at the Beginning of 2020" were restated. Note 3: Prior to January 1, 2020, Diamond Aircrafts Industries GMBH, a subsidiary of Aircraft Industry, had borrowed funds from Wanfeng Group's subsidiary Aviation Industry of RMB 312.62 million, and the Aviation Industry had repaid the principal in August 2020. And interest of RMB 316.18 million. On December 31, 2020, the principal and interest have been fully repaid. Note 4: On April 16, 2020, Wanfeng Aircraft has lent RMB 72 million to Wanfeng Group. Wanfeng Group has repaid all outstanding balance and interest of RMB 73.51 million from April to August 2020. | ||||||||
| The reasons for the failure to repay the non-operating funds use as planned, the accountability situation and the explanation of the measures taken by the board of directors | N/A | ||||||||
| Disclosure index of CPA's special review opinions on funds used | April 30, 2021 | ||||||||
New policy on revenueIn 2017, the Ministry of Finance promulgated the revised "AccountingStandards for Business Enterprises No. 14-Revenue" (Cai Kuai [2017] No. 22).The Company began accounting treatment in accordance with the newlyrevised standards from January 1, 2020. According to the convergence rules,the comparable period information will not be adjusted. The difference betweenthe implementation of the new standards and the current standards on the firstday will be retrospectively adjusted for retained earnings at the beginning of thereporting period.The new revenue standard establishes a new revenue recognition model forstandardizing revenue generated from contracts with customers. According tothe new revenue standards, the method of revenue recognition should reflectthe entity's transfer of goods or services to customers, and the amount ofrevenue should reflect the amount of consideration that the entity expects to beentitled to because of the transfer of these goods or services to customers. Atthe same time, the new revenue standard also regulates the judgments andestimates required for each step of revenue recognition. The Company onlyadjusts the cumulative impact of contracts that have not yet been completed onJanuary 1, 2020. For contract changes that occurred before January 1, 2020,the Company adopts a simplified method to deal with the final results of allcontracts based on contract changes, identify fulfilled and unfulfilledperformance obligations, determine transaction prices, and apportiontransaction prices between fulfilled and unfulfilled performance obligations.
VII. Explanation for retrospective restatement of major accounting
errors during the reporting period
□Applicable √Not applicable
During the reporting period, the Company had no major accounting errorcorrections requiring retrospective restatement.
VIII. Explanation for changes in scope of the consolidated financial
statements as compared to the financial report for the prior year
√Applicable □Not applicable
During the reporting period, the Company acquired 55% equity of WanfengAircraft Industry Co., Ltd. for RMB 2,418.0750 million in cash. The equitytransfer was completed on April 16, 2020. Wanfeng Aircraft Industry Co., Ltd.was added to the consolidated scope of the company's statements.
IX. Engagement and disengagement of the CPA firm
CPA firm engaged at present
| Name of the domestic CPA firm | Ernst & Young Hua Ming LLP |
| Remuneration of domestic accounting firms (in 10,000 RMB) | 443.8 |
| Consecutive years of the audit service provided by the domestic CPA firm | 18 years |
| Name of the certified public accountants from the domestic CPA firm | Yin Guowei, Zhou Hao |
| Consecutive years of the audit service provided by the certified public accountants from the domestic CPA firm | Yin Guowei (1 year), Zhou Hao (5 years) |
| Name of overseas accounting firm (if any) | Ernst & Young LLP Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. |
| Remuneration of overseas accounting firm (10,000 RMB) (if any) | 620.28 |
| Consecutive years of audit services of overseas accounting firms (if any) | Ernst & Young LLP (8 years) Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. (1 year) |
| Name of the certified public accountant of the overseas accounting firm (if any) | Elizabeth Maccabe Severin Eisl |
XIV. The Integrity of the Company and Its Controlling Shareholders and
Actual Controllers
□Applicable √Not applicable
XV. The Implementation of an Equity Incentive Plan, Employee Stock
Incentive Plan, or Other Incentive Plans
√Applicable □ Not applicable
The Company held the first extraordinary 2018 general meeting of shareholderson January 29, 2018. The Company approved the "Company's Phase OneEmployee Stock Ownership Plan (Draft) and its summary" and relatedproposals, agreeing to implement the first phase employee’s stock ownershipplan. The duration of the first phase employee stock ownership plan is 24months, starting from the date of approval of the Company's first extraordinaryshareholders general meeting in 2018, i.e., from January 29, 2018 to January28, 2020. The lock-up period is 12 months. The first phase employee stockownership plan purchased 45,429,282 shares of Wanfeng Auto Wheel (002085)through centralized bidding in the secondary market trading system of theShenzhen Stock Exchange, accounting for 2.08% of the Company’s total sharecapital. The purchase has been completed within 6 months from the date ofapproval.The Company approved the "Proposal on the Extension of the Company'sPhase One Employee Stock Ownership Plan" on the first phase of employeestock ownership plan holders' meeting on November 20, 2019. On November25, 2019, the Company held the sixth session of the board of directors meeting,during which the "Proposal on the Extension of the Company's Phase OneEmployee Stock Ownership Plan" was approved, agreeing to extend theduration of the Company's employee stock ownership plan for 12 months, thatis, until January 28, 2021. During the extension period, the lock-up period willno longer be set. The employee stock ownership plan management committeecan choose the opportunity to sell stocks according to the Company's stockprice. If all the Company stocks held by the employee stock ownership plan aresold, the employee stock ownership plan can be terminated early.As of the end of the reporting period, the first phase of the employee stockownership plan has reduced its holdings by 44,200,782 shares. As of January28, 2021, all the company stocks held by the first phase of the employee stock
ownership plan have been sold and the liquidation and distribution work has been completed.XVI. Significant Related-party Transaction
1. Significant related-party transactions arising from routine operation
√Applicable □ Not applicable
| Related Party | Relationship | Related Transaction Type | Related Transaction Content | Pricing Principles for Related Party Transactions | Related Transaction Price | Amount of Related Transaction (10,000 RMB) | Percentage in the Amount of Similar Transactions | Approved Transaction Quota (10,000 RMB) | Whether it Exceeds the Approved Quota | Settlement Method of Related Transaction | Available Market Prices for Similar Transactions | Disclosure Date | Disclosure Index |
| Xinchang Fangqi Investment Fund Association | Companies controlled by the same actual controller | Lease | House lease | Market price | N/A | 42.5 | 1.88% | 70 | No | Transfer | N/A | 26-Jun-20 | The "Announcement on the Estimates of Daily Related Party Transactions in 2020" disclosed on cninfo.com.cn and Securities Times. |
| Shengzhou Hechuang Trading Co., Ltd. | Companies controlled by the same actual controller | Sale | Sale of molds | Market price | N/A | 199.57 | 0.02% | 8,480 | No | Transfer | N/A | ||
| Wanfeng Jinyuan Holding Group Co., Ltd | Companies controlled by the same actual controller | Lease | House lease | Market price | N/A | 119.27 | 5.28% | No | Transfer | N/A | |||
| Shengzhou Hechuang Trading Co., Ltd. | Companies controlled by the same actual controller | Purchase | purchase of molds and accessories | Market price | N/A | 413.29 | 0.08% | No | Transfer | N/A | |||
| Zhejiang Wanfeng Technology Development Co., Ltd. | Companies controlled by the same actual controller | Purchase | Purchase raw materials, equipment accessories | Market price | N/A | 126.85 | 0.03% | No | Transfer | N/A |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Companies controlled by the same actual controller | Accept Service | Equipment maintenance service | Market price | N/A | 96.45 | 73.36% | No | Transfer | N/A | |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Companies controlled by the same actual controller | Purchase | machinery equipment | Market price | N/A | 896.23 | 1.03% | No | Transfer | N/A | |
| Zhejiang Rifa Precision Machinery Co., Ltd. | Companies controlled by the same actual controller | Purchase | machinery equipment | Market price | N/A | 33.25 | 0.01% | No | Transfer | N/A | |
| Zhejiang Rifa Precision Machinery Co., Ltd. | Companies controlled by controlling shareholders | purchase | raw materials and equipment accessories | Market price | N/A | 0.68 | 0.00% | 3,500 | No | Transfer | N/A |
| Zhejiang Wanfeng Precision Machinery Co., Ltd | Companies controlled by controlling shareholders | Provide Service | measurement repair service | Market price | N/A | 5.19 | 0.85% | No | Transfer | N/A | |
| Zhejiang Rifa Precision Machinery Co., Ltd. | Companies controlled by controlling shareholders | Accept Service | equipment maintenance | Market price | N/A | 39.14 | 29.77% | No | Transfer | N/A | |
| Zhejiang Wanfeng Precision Machinery Co., Ltd | Companies controlled by controlling shareholders | purchase | Equipment | Market price | N/A | 312.48 | 0.36% | No | Transfer | N/A | |
| Zhejiang Wanfeng Precision Machinery Co., Ltd | Companies controlled by controlling shareholders | purchase | Equipment | Market price | N/A | 86.73 | 0.10% | No | Transfer | N/A |
| Wanfeng Group | parent company | accept service | internet and equipment maintenance service | Market price | N/A | 367.84 | 18.81% | No | Transfer | N/A | |
| Wanfeng Aviation Industry Co., Ltd | Companies controlled by the same actual controller | purchase | aircraft and aviation equipment | Market price | N/A | 451.32 | 0.09% | No | Transfer | N/A | |
| Wanfeng General Aviation Co., Ltd | Companies controlled by the same actual controller | Accept service | Flight chartering service | Market price | N/A | 1,390.84 | 11.01% | No | Transfer | N/A | |
| Zhejiang Wanfeng Property Management Co., Ltd | Companies controlled by controlling shareholders | Accept service | Property management | Market price | N/A | 371.77 | 27.10% | 8,030 | No | Transfer | N/A |
| Wanfeng Aviation Industry Co., Ltd | Companies controlled by controlling shareholders | accept service | internet and equipment maintenance service | Market price | N/A | 48.83 | 2.50% | No | Transfer | N/A | |
| Zhejiang Wanfeng General Aviation Co., Ltd | Companies controlled by the same actual controller | Accept service | Airport service | Market price | N/A | 25.75 | 0.02% | No | Transfer | N/A | |
| Wanfeng General Aviation Co., Ltd | Companies controlled by the same actual controller | Accept service | Aircraft taking off and landing service | Market price | N/A | 6.07 | 0.00% | No | Transfer | N/A | |
| Xinchang County Chitong Intelligent Equipment Co., Ltd | Companies controlled by controlling shareholders | Lease | House lease | Market price | N/A | 460.84 | 20.40% | No | Transfer | N/A |
| Zhejiang Wanfeng Industry Co., Ltd | Companies controlled by controlling shareholders | Lease | House, land lease | Market price | N/A | 588.57 | 26.05% | No | Transfer | N/A | |
| Wanfeng Aviation Industry Co., Ltd | Companies controlled by controlling shareholders | Lease | House lease | Market price | N/A | 192.95 | 8.54% | No | Transfer | N/A | |
| Zhejiang Wanfeng General Aviation Co., Ltd | Companies controlled by the same actual controller | Sale | Aircraft and aviation equipment | Market price | N/A | 373.47 | 0.04% | No | Transfer | N/A | |
| Shanghai Wanfeng Aviation Club Co., Ltd | Companies controlled by the same actual controller | Lease | House lease | Market price | N/A | 252.29 | 49.06% | No | Transfer | N/A |
| Wanfeng General Aviation Co., Ltd | Companies controlled by controlling shareholders | Lease | Aircraft | Market price | N/A | 8.85 | 100.00% | No | Transfer | N/A | |||
| Total | -- | -- | 6,911.02 | -- | 20,080 | -- | -- | -- | -- | -- | |||
| Details of returns of large sales | None | ||||||||||||
| The actual performance during the reporting period (if any) is estimated by category for the total amount of daily related transactions that will occur in the current period | The related parties performed the purchase and sale business in accordance with the signed contract, and the execution of the contract met expectations. | ||||||||||||
| Reasons for the large difference between the transaction price and the market reference price (if applicable) | N/A | ||||||||||||
| Related Party | Relationship | Related Transaction Type | Description | Pricing Principles for Related Party Transactions | Book Value of Transferred Assets (10,000RMB) | Appraised Value of Transferred Assets (10,000 RMB) | Transfer Price (10,000 RMB) | Settlement Method of Related Transaction | Transaction Gains and Losses (10,000 RMB) | Disclosure Date | Disclosure Index |
| Wanfeng Aviation | Companies controlled by controlling shareholders | Equity acquisition | Acquire 55% equity of Aircraft Industry | Appraisal income method | 330,098.72 | 488,500 | 241,807.50 | Transfer | 0 | 25-Feb-20 | "Announcement on the Acquisition of 55% Equity and Related Transactions of Wanfeng Aircraft Industry Co., Ltd." disclosed in "Securities Times" and www.cninfo.com.cn |
| Reasons for the large difference between the transfer price and the book value or appraised value (if any) | According to the income method assessment, the value of all shareholders' equity of the Aircraft Industry on the assessment base date (September 30, 2019) is RMB 4,885 million, with an appreciation amount of RMB 1,584,112,800, and an appreciation rate of 47.99%. The evaluation is based on the Aircraft Industry’s expected net income, which not only includes the income that can be generated by tangible assets, but also includes the intangible assets owned by the company (such as customer resources, technical assets, etc.). Therefore, the income method results in appreciation. | ||||||||||
| Impact on the Company’s operating results and financial status | The general aviation aircraft industry has broad prospects for downstream demand, with a relatively high market competitive position and good sustained profitability. At the same time, Wanfeng Aviation promises that the net profit attributable to the parent company after deducting non-recurring gains and losses from the consolidated statements realized by the Aircraft Industry in 2020, 2021, and 2022 shall not be less than 289.8 million yuan, 303.5 million yuan, and 366.6 million yuan, respectively. After the completion of this transaction, it will further enhance the business scale of the listed company and build new profit growth points, which will help increase the value of the listed company and bring better returns to the shareholders of the listed company. | ||||||||||
| If the relevant transaction involves performance agreement, the performance achieved during the reporting period | In 2020, the Aircraft Industry realized net profit of 330.34 million yuan attributable to the parent company after deducting non-recurring gains and losses. | ||||||||||
□Applicable √Not applicable
No such case in the reporting period.
4. Related credit and debt transactions
√Applicable □ Not applicable
Whether there are non-operating related credit and debt transactions
√Yes □No
Account receivable from related parties:
| Related Party | Relationship | Reasons | Whether there is Non-operating Capital Occupation | Beginning Balance (10,000 RMB) | New Amount of the Current Period (10,000 RMB) | Amount Recovered in this Period (10,000 RMB) | Interest Rate | Interest of the Current Period (10,000 RMB) | Balance at the end of the Period (10,000 RMB) | |
| Wanfeng Group (note 1) | Controlling shareholder | Lending | Yes | 38,070 | 0 | 38,070 | N/A | N/A | 0 | |
| Shaoxing Jiajing Trading Co., Ltd. (note 2) | A legal person controlled by an associated natural person | Lending | Yes | 15,000 | 0 | 15,000 | N/A | N/A | 0 | |
| Wanfeng Group (note 3) | Controlling shareholder | Lending | Yes | 31,262 | 0 | 31,262 | N/A | N/A | 0 | |
| Aviation Industry (note 4) | Controlling shareholder's subsidiary | Lending | Yes | 0 | 7,200 | 7,200 | N/A | N/A | 0 | |
| The impact of related creditor's rights on the Company's operating results and financial status | Note 1, Note 2: As of March 31, 2020, all non-operating funds occupied have been returned. With reference to the benchmark loan interest rate of 4.35%, the accumulative interest has been repaid RMB 12,973,600 based on the actual occupied time. | |||||||||
Account payable to related parties:
| Related Party | Relationship | Reasons | Whether there is Non-operating Capital Occupation | Beginning Balance (10,000 RMB) | New Amount of the Current Period (10,000 RMB) | Amount Recovered in this Period (10,000 RMB) | Interest Rate | Interest of the Current Period (10,000RMB) | Balance at the end of the Period (10,000RMB) |
| External Guarantees from the Company and its Subsidiaries (Excluding Guarantees to the Subsidiaries) | ||||||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Amount | Guarantee Amount | Actual Occurrence Date | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not |
| Wanfeng Group | 2020-06-24 | 150,000 | 2020-11-19 | 52,199.2 | Joint liability and several guarantee | 2020-11-18 to 2024-12-31 | No | Yes |
| Total amount of external guarantee approved during the reporting period (A1) | 150,000 | Total actual amount of external guarantees during the reporting period (A2) | 52,199.2 | |||||
| The total amount of external guarantees approved at the end of the reporting period (A3) | 150,000 | Total balance of actual external guarantees at the end of the reporting period (A4) | 52,199.2 | |||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Amount | Guarantee Amount | Actual Occurrence Date | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not |
| Ningbo Orwell | 24-June-20 | 4,000 | 2020.05.20 | 2,300 | Joint liability and several guarantee | 2020.4.8 - 2025.4.7 | No | Yes |
| Ningbo Orwell | 24-June-20 | 6,000 | 2020.05.29 | 5,500 | 2020.5.29 - 2021.5.28 | No | Yes | |
| Weihai Wanfeng | 24-June-20 | 4,400 | 2020.02.28 | 4,000 | Joint liability and several guarantee | 2020.2.28 - 2021.2.27 | No | Yes |
| Weihai Wanfeng | 24-June-20 | 5,600 | 2019.05.10 | 3,000 | 2019.5.10 - 2022.5.10 | No | Yes | |
| Weihai Wanfeng | 24-June-20 | 10,000 | 2018.11.01 | 5,000 | 2018.11.1 - 2021.10.31 | No | Yes | |
| Weihai Magnesium | 24-June-20 | 5,000 | 2019.05.16 | 2,000 | Joint liability and several guarantee | 2019.5.16 - 2020.5.16 | No | Yes |
| Weihai Magnesium | 24-June-20 | 4,500 | 2020.06.04 | 3,500 | 2020.6.4 - 2021.6.4 | No | Yes | |
| Weihai Magnesium | 24-June-20 | 20,000 | 2020.10.16 | 2,000 | 2020.10.16 - 2023.10.16 | No | Yes | |
| Jilin Wanfeng | 24-June-20 | 25,500 | 2018.01.31 | 18,200 | Joint liability and several guarantee | 2018.1.31 - 2023.11.20 | No | Yes |
| Jilin Wanfeng | 24-June-20 | 12,000 | 2020.11.27 | 8,000 | 2020.11.27 - 2022.11.26 | No | Yes | |
| Jilin Wanfeng | 24-June-20 | 10,000 | 2020.05.22 | 5,000 | 2020.05.22 - 2021.05.21 | No | Yes | |
| Jilin Wanfeng | 24-June-20 | 2020.10.22 | 4,000 | 2020.10.22 - 2021.10.21 | No | Yes | ||
| Jilin Wanfeng | 24-June-20 | 8,000 | Yes | Yes |
| Wanfeng Motorcycle Wheel | 24-June-20 | 16,000 | Joint liability and several guarantee | Yes | Yes | |||
| Wanfeng Motorcycle Wheel | 24-June-20 | 48,500 | 2019.01.11 | 30,600 | 2019.1.11 - 2021.1.11 | No | Yes | |
| Wanfeng Motorcycle Wheel | 24-June-20 | 15,000 | 2020.04.10 | 15,000 | 2020.4.10 - 2021.4.9 | No | Yes | |
| Wanfeng Motorcycle Wheel | 24-June-20 | 5,000 | 2020.03.09 | 5,000 | 2020.3.9 - 2021.3.5 | No | Yes | |
| Wanfeng Motorcycle Wheel | 24-June-20 | 5,000 | 2020.03.20 | 5,000 | 2020.3.20- 2021.3.18 | No | Yes | |
| Wanfeng Motorcycle Wheel | 24-June-20 | 10,000 | 2020.10.19 | 8,000 | 2020.10.19- 2023.10.19 | No | Yes | |
| Wanfeng Motorcycle Wheel | 24-June-20 | 5,000 | Yes | Yes | ||||
| India Wanfeng | 24-June-20 | 21,000 | 2015.05.08 | 11,412 | Joint liability and several guarantee | 2015.5.8 - 2023.5.14 | No | Yes |
| India Wanfeng | 24-June-20 | Yes | Yes | |||||
| India Wanfeng | 24-June-20 | 7,000 | Yes | Yes | ||||
| India Wanfeng | 24-June-20 | 7,000 | 2020.02.18 | 2,669 | 2020.2.18 - 2025.2.18 | No | Yes | |
| Chongqing Wanfeng | 24-June-20 | 10,000 | 2020.01.16 | 10,000 | Joint liability and several guarantee | 2020.1.16 - 2022.1.16 | Yes | Yes |
| Chongqing Wanfeng | 24-June-20 | 9,000 | ||||||
| Chongqing Wanfeng | 24-June-20 | 5,680 | 2020.07.01 | 5,680 | 2020.7.1 - 2023.7.1 | No | Yes | |
| Shanghai Dacromet | 24-June-20 | 2,500 | 2020.11.13 | 2,500 | Joint liability and several guarantee | 2020.11.13 - 2021.11.12 | No | Yes |
| Shanghai Dacromet | 24-June-20 | 8,000 | Yes | Yes | ||||
| Shanghai Dacromet | 24-June-20 | 5,000 | Yes | Yes | ||||
| Meridian New Material | 24-June-20 | 18,000 | 2017.06.23 | 8,227 | Joint liability and several guarantee | 2017.6.23 - 2023.12.25 | No | Yes |
| Guangdong Motorcycle Wheel | 24-June-20 | 15,000 | 2020.06.22 | 12,835 | Joint liability and several guarantee | 2020.6.22 - 2021.6.20 | No | Yes |
| Ningbo Dacromet | 24-June-20 | 2,000 | Joint liability and several guarantee | Yes | Yes | |||
| Shangda Tu Fu | 24-June-20 | 2,000 | Joint liability and several guarantee | Yes | Yes | |||
| Wuxi Xiongwei | 24-June-20 | 15,000 | 2020.12.02 | 10,000 | Joint liability and several guarantee | 2020.12.02 - 2021.03.23 | No | Yes |
| Wuxi Xiongwei | 24-June-20 | 10,000 | Yes | Yes | ||||
| Total Amount of Guarantees to Subsidiaries Approved during the Reporting Period (B1) | 356,680 | Total Amount of Guarantees Towards Subsidiaries Actually Occurred during the Reporting Period (B2) | 110,984.18 | |||||
| Total Amount of Guarantees to Subsidiaries Approved by the End of the Reporting Period (B3) | 356,680 | Total Outstanding Guarantee Balance Towards Subsidiaries at the End of the Reporting Period (B4) | 189,423.04 | |||||
| Subsidiaries' Guarantees to Subsidiaries | ||||||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Amount | Guarantee Amount | Actual Occurrence Date | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not |
| The total amount of the Company's guarantees (the total of the above three items) | ||||||||
| Total Amount of Guarantees Approved during the Reporting Period (A1+B1+C1) | 506,680 | Total Amount of Guarantees Actually Occurred during the Reporting Period (A2+B2+C2) | 163,183.38 |
| Total Amount of Guarantees Approved by the End of the Reporting Period (A3+B3+C3) | 506,680 | Total Outstanding Guarantees Balance at the End of the Reporting Period (A4+B4+C4) | 241,622.24 |
| Total Amount of Actual Guarantees (A4+B4+C4) as a Percentage of the Company's Net Assets | 45.13% | ||
| Of which： | |||
| The balance of guarantees provided for shareholders, actual controllers and their related parties (D) | 52,199.2 | ||
| Balance of Debt Guarantees Directly or Indirectly Offered to Guaranteed Objects with Asset-liability Ratio Exceeding 70% (E) | 0 | ||
| The amount of the total guarantee exceeding 50% of the net assets (F) | 112,881.43 | ||
| Total Amount of the Above Three Guarantees (D+E+F) | 165,080.63 | ||
| none | |
| Instructions for providing external guarantees in violation of prescribed procedures (if any) | none |
√Applicable □ Not applicable
Unit: 10,000 RMB
| Guaranteed Party | Relationship with Listed Company | Amount of Non-compliance Guarantees | Percentage of the most Recent Audited Net Assets | Type of Guarantee | Term of Guarantee | Balance of Non-compliance Guarantees at the End of Reporting Period | Percentage of the most Recent Audited Net Assets | Expected Release Method | Estimated Release Amount | Estimated Release Time (Month) |
| Wanfeng Group | Controlling shareholder | 31,350 | 5.10% | Pledge guarantee | 2019.01.15-2020.01.15 | 0 | 0% | Released | Released | |
| Wanfeng Group | Controlling shareholder | 31,600 | 5.14% | 2019.10.24-2020.10.23 | 0 | 0% | Released | Released | ||
| Wanfeng Group | Controlling shareholder | 69,762 | 11.34% | Joint liability and several guarantee | 2019.07.19-2024.07.18 | 0 | 0% | Released | Released | |
| Total | 132,712 | 21.58% | 0 | 0% | ||||||
3. Entrust others to manage cash assets
(1) Entrusted wealth management
√Applicable □ Not applicable
Unit: 10,000 RMB
| Specific types | Capital source | Amount | Balance before maturity | Overdue uncollected amount |
| Bank financial products | The Company’s owned funds | 267.44 | 0 | 0 |
| Total | 267.44 | 0 | 0 | |
recognized and long-standing enterprise”, and the goal of “being strong,reputable and sustainable”.The Company strictly follows the Company Law, Shenzhen Stock ExchangeListed Companies Stock Listing Rules, Shenzhen Stock Exchange ListedCompanies Standard Operation Guidelines and other relevant laws andregulations, continuously improves the corporate governance, optimizes theinternal control system, and standardizes operations. The Company activelyfulfills information disclosure obligations, holds performance briefings inaccordance with regulations, and answers questions related to periodic reportsand company operations within the scope of the rules. The Company activelymaintains effective communication with investors, accepts institutional researchand releases the "Investor Relations Activity Record Sheet" in a timely manner,and communicates with investors through various methods such as investortelephone calls, faxes, company websites, and investor relations interactiveplatforms, which has improved the Company’s transparency and integrity.With the responsibility and mission of "providing customers with high-qualityproducts and satisfactory services", while continuously creating value forshareholders, the Company also actively assumes responsibilities toemployees, customers, suppliers, society and other related parties, andadheres to the equal emphasis on economic, social and environmental benefitsto achieve the Company's sustainable development.The Company implements five major projects, including the "Caring Project,Democracy Project, Quality Project, Housing Project, and Health Project",strictly abides by the Labor Law and Labor Contract Law, establishes a careand rights protection organization, implements collective contracts, andprotects the legal rights of employees in accordance with the law; improve thelabor safety and health system, improve the labor environment, ensure thesafety of employees, reduce the rate of work-related accidents, and ensure thephysical and mental health of employees; conduct education and training andvarious recreational and sports activities to cultivate employee sentiment,created the corporate spirit of "efficiency, excellence, service, dedication",further enhance corporate cohesion, and build a harmonious win-winrelationship between labor and capital; focus on the career development ofemployees, actively carry out employee training, encourage and supportemployees to participate in external training, and improve their comprehensiveability, provide more opportunities for employee development.For shareholders, the Company improves corporate governance, strictlyenforces the decisions of the shareholders meeting, accepts the supervision ofthe shareholders meeting, and discloses information according to law. Whileprotecting the legitimate rights and interests of shareholders, the Companyattaches importance to the return to shareholders. The Company hasformulated a shareholder dividend return plan, implemented a relatively stableprofit distribution plan, and provided investors with stable and reasonablereturns on the premise of ensuring the Company's normal operation and long-
term development. For creditors, the Company formulates strict and feasibleborrowing and repayment plans every year, and all due debts can be paid offin time, to establish a good corporate image for creditors and keep the debtfinancing channels open.While pursuing economic benefits, the Company attaches great importance toenvironmental protection, energy conservation and consumption reduction, andregards building a green enterprise as an important part of its sustainabledevelopment strategy. The Company pays attention to social impact and socialbenefits to ensure that production activities meet the requirements ofenvironmental management and reduce the impact on the environment. Theenvironmental policy formulated by the Company is: focus on energyconservation and emission reduction, create a green environment, and build ahappy home. On the one hand, comply with the laws, regulations and standardsrelated to the ecological and environmental protection of the country (region)where it operates, and formulate and implement effective air, wastewater,waste management, and energy and water use goals, plans and measures ,reduce the adverse impact on the environment; on the other hand, establish aneffective information communication and consultation mechanism with theCompany’s internal and external stakeholders, and accept the supervision ofinvestors and the public.Adhering to the value of "eternally enhance value and continue to contribute tosociety", while the Company is growing, it actively contributes to the society.The Company focuses on four public welfare themes of "charitable donations,education, cultural and sports, community development ". After the outbreak ofCovid-19, the Company immediately donated 1 million yuan to the ZhejiangCharity Federation. In the future, the Company will continue to take the initiativeto assume social responsibility, support public welfare undertakings with its ownactions, benefit the society, and make contributions to the construction of aharmonious and beautiful society contribution.
2. Fulfillment of the social responsibility of targeted poverty alleviationIn the reporting year, the Company has not carried out targeted povertyalleviation work, and there is no follow-up targeted poverty alleviation plan forthe time being.
3. Environmental protection
Whether the Company or the Company’s subsidiaries are critical pollutantenterprises disclosed by environmental protection authoritiesYes
| Name of Company or subsidiary | Name of main pollutants and characteristic pollutants | Emission mode | Number of outlets | Distribution of emission outlets | Emission concentration | Emission standards | Total emissions | Approved total emission | Over standard emission |
| Wanfeng Auto Wheel | CODcr | After being treated by the sewage station, it will be discharged through nanotube | 1 | Inside the factory | 86mg/l | GB8978-1996-level 3 | 13.59 ton | 33.26 T/year | Reach the standard |
| Wanfeng Auto Wheel | Ammonia nitrogen | After being treated by the sewage station, it will be discharged through nanotube | 1 | Inside the factory | 4.93mg/l | GB8978-1996-level 3 | 0.95 ton | 3.33 T/year | Reach the standard |
| Wanfeng Auto Wheel | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 5 | Inside the factory | 17.8mg/m3 | GB16297-1996-level 2 | 34.93 ton | 83.03 T/year | Reach the standard |
| Wanfeng Auto Wheel | SO2 | After treatment, it is discharged through a 15-meter pipeline to high altitude | 3 | Inside the factory | 3 mg/m3 | GB16297-1996-level 2 | 3.26 ton | 16.5 T/ year | Reach the standard |
| Wanfeng Auto Wheel | Nox | After treatment, it is discharged through a 15-meter pipeline to high altitude | 3 | Inside the factory | 1.34mg/m3 | GB16297-1996-level 2 | 23.36 ton | 75 T/year | Reach the standard |
| Wanfeng Motorcycle Wheel | CODcr | After being treated by the sewage station, it will be discharged through nanotube | 2 | Inside the factory | 86mg/l | GB8978-1996-level 3 | 8.25 ton | 24.62 T/ year | Reach the standard |
| Wanfeng Motorcycle Wheel | Ammonia nitrogen | After being treated by the sewage station, it will be discharged through nanotube | 2 | Inside the factory | 4.93mg/l | GB8978-1996-level 3 | 0.825 ton | 2.462 T/ year | Reach the standard |
| Wanfeng Motorcycle Wheel | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 6 | Inside the factory | 28.54mg/ m3 | GB16297-1996-level 2 | 16.74 ton | 164.94 T/ year | Reach the standard |
| Wanfeng Motorcycle Wheel | SO2 | After treatment, it is discharged through a 15-meter pipeline to high altitude | 7 | Inside the factory | 1.5mg/ m3 | GB16297-1996-level 2 | 1.91 ton | 13.32 T/ year | Reach the standard |
| Wanfeng Motorcycle Wheel | NOx | After treatment, it is discharged through a 15-meter pipeline to high altitude | 7 | Inside the factory | 24mg/ m3 | GB16297-1996-level 2 | 20.05 ton | 63.2 T/ year | Reach the standard |
| Shanghai Dacromet | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 2 | Inside the factory | 32.7mg/m3 | DB31/933-2015 | / | / | Reach the standard |
| Weihai Wanfeng | CODcr | After being treated by the sewage station, it will be discharged through nanotube | 1 | Northwest corner of the factory | 28mg/l | GB8978-1996-level 3 | 5.88 ton | 6.22 T/year | Reach the standard |
| Weihai Wanfeng | Ammonia nitrogen | After being treated by the sewage station, it will be discharged through nanotube | 1 | Northwest corner of the factory | 0.92 mg/l | GB8978-1996-level 3 | 0.59 ton | 0.62 T/year | Reach the standard |
| Weihai Wanfeng | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 2 | Inside the factory | 2.25mg/m3 | DB37/2801.5-2018 | 7.12 ton | 9.295 T/ year | Reach the standard |
| Weihai Wanfeng | NOx | After treatment, it is discharged through a 15-meter pipeline to high altitude | 3 | Inside the factory | 148mg/m3 | GB16297-1996-level 2；DB37/2376-2013 | 6.02 ton | 6.134 T/year | Reach the standard |
| Weihai Wanfeng | SO2 | After treatment, it is discharged through a 15-meter pipeline to high altitude | 3 | Inside the factory | 7.5mg/m3 | GB16297-1996- level 2；DB37/2376-2013 | 1.12 ton | 1.87 T/year | Reach the standard |
| Jilin Wanfeng | SO2 | After treatment, it is discharged through a 15-meter pipeline to high altitude | 18 | Inside the factory | 9mg/ m3 | GB16297-1996-level 2 | 5.1ton | 16.3 T/year | Reach the standard |
| Jilin Wanfeng | NOx | After treatment, it is discharged through a 15-meter pipeline to high altitude | 18 | Inside the factory | 31mg/ m3 | GB16297-1996-level 2 | 15.7 ton | 47.7 T/year | Reach the standard |
| Jilin Wanfeng | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 2 | Inside the factory | 12.56mg/ m3 | GB16297-1996-level 2 | 48.2 ton | 124.8 T/year | Reach the standard |
| Jilin Wanfeng | CODcr | After being treated by the sewage station, it will be discharged through nanotube | 1 | Inside the factory | 110mg/L | GB8979-1996-level 3 | 18.2 ton | 62 T/year | Reach the standard |
| Jilin Wanfeng | Ammonia nitrogen | After being treated by the sewage station, it will be discharged through nanotube | 1 | Inside the factory | 2.05 mg/L | GB8979-1996-level 3 | 0.34 ton | 0.9 T/year | Reach the standard |
| Weihai Magnesium | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 2 | Inside the factory | 4.4mg/l | DB37/2801.5-2018 | 1.6 ton | / | Reach the standard |
| Weihai Magnesium | NOx | After treatment, it is discharged through a 15-meter pipeline to high altitude | 1 | Inside the factory | 20mg/l | GB16297-1996-level 2；DB37/2376-2013 | 0.86 ton | / | Reach the standard |
| Guangdong Motorcycle Wheel | VOCs | After treatment, it is discharged through a 15-meter pipeline to high altitude | 2 | Inside the factory | 25.7mg/l | DB-44/816-2010-Second period | 8.41 ton | 26.68 T/year | Reach the standard |
(3) Solid waste treatment
In order to strengthen environmental management, raise awareness ofenvironmental protection, and control the storage and disposal of hazardouswaste, the Company supervises its subsidiaries to build standardizedhazardous waste storage sites in strict accordance with the Hazardous WasteStorage Pollution Control Standard" (GB18597-2001), and entrust relevantqualified institutions to regulate the disposal. The relevant formalities arecomplete. As for general industrial solid wastes temporarily unused or unusable,our company set up storage sites or adopt harmless disposal measures.
Environmental Impact Assessment (EIA) of construction projects andother administrative permits for environmental protectionThe environmental impact assessment and acceptance of construction projectsof the Company and its subsidiaries are declared and approved in accordancewith relevant regulations, and the procedures and corresponding documentsare complete.
Environmental Contingency PlanIn accordance with the requirements of relevant regulations, the Company andits subsidiaries have prepared and filed "Contingency Plan for SuddenEnvironmental Incidents". Combined with the implementation of environmentalemergency plans, the Company evaluates environmental risks, drafts plan andconducts drills annually.
Environmental self-monitoring programThe Company and its subsidiaries are equipped with automatic wastewatermonitors for 7*24. The monitoring indicators, monitoring methods,implementation of emission standards and standard limits for pollutants havebeen clearly specified and strictly implemented. At the same time, a third-partytesting agency is regularly entrusted to conduct wastewater and exhaust gastesting and issue testing reports annually.Other environmental information that should be disclosedNot applicableOther environmental informationNot applicable
4. Fulfillment of the social responsibility of targeted poverty alleviation
Not applicable
XIX. Other Significant Events
□ Applicable √ Not applicable
There were no other significant issues that need to be explained during thecurrent reporting period.
XX. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
Section VI: Changes in Shares and Information about Shareholders
I. Changes in shares
1. Changes in shares
Unit: Share
| Before | Changes in the period (+, -) | After | |||||||
| Shares | Ratio | New Shares Issued | Bonus share | Share transferred from capital reserve | Others | Subtotal | Shares | Ratio | |
| 1. Shares with restriction | 73,144,170 | 3.34% | 24,381,390 | 24,381,390 | 97,525,560 | 4.46% | |||
| 1) Shares held by state | |||||||||
| 2) Shares held by state-owned legal person | |||||||||
| 3) Other domestic shares | 73,144,170 | 3.34% | 24,381,390 | 24,381,390 | 97,525,560 | ||||
| Of which: Shares held by domestic legal person | |||||||||
| Shares held by domestic natural person | 73,144,170 | 3.34% | 24,381,390 | 24,381,390 | 97,525,560 | ||||
| 4) Foreign shares | |||||||||
| Of which: Shares held by foreign legal person | |||||||||
| Shares held by foreign natural person | |||||||||
| 2. Shares without restriction | 2,113,735,508 | 96.66% | -24,381,390 | -24,381,390 | 2,089,354,118 | 95.54% | |||
| 1) RMB ordinary shares | 2,113,735,508 | 96.66% | -24,381,390 | -24,381,390 | 2,089,354,118 | 95.54% | |||
| 2) Domestically listed foreign shares | |||||||||
| 3) Overseas listed foreign shares | |||||||||
| 4) Others | |||||||||
| 3. Total | 2,186,879,678 | 100.00% | 2,186,879,678 | 100.00% |
Transfer of shares
□Applicable √Not applicable
Information about the implementation of share repurchase
√Applicable □Not applicable
1) The Company held the 24th meeting of the sixth Board of Directors onDecember 25, 2018 and approved the "Proposal on the Repurchase ofCompany Shares". As of December 24, 2019, the Company sharerepurchase plan has expired. Accumulatively through the repurchasespecial securities account, 45,312,250 shares were repurchased throughcentralized auction trading, with a total transaction amount of332,172,772.73 yuan. The Company's share repurchase plan has beenimplemented.
2) The Company held the 32nd meeting of the sixth Board of Directors onDecember 26, 2019 and approved the "Proposal on the Repurchase ofCompany Shares". As of December 25, 2020, the Company sharerepurchase plan has expired. Accumulatively through the repurchasespecial securities account, 35,501,808 shares were repurchased through acentralized bidding transaction, accounting for 1.62% of the company's totalshare capital, and the total transaction amount was 239,640,478.46 yuan.The Company's share repurchase plan has been implemented.
3) The Company held the sixth meeting of the seventh Board of Directors onDecember 30, 2020 and Approved the "Proposal on the Repurchase ofCompany Shares". The repurchase is to trade through the Shenzhen StockExchange with its own funds or self-raised funds through centralized bidding.The total amount of the repurchased shares is not less than RMB 100 millionand not more than RMB 200 million. The repurchase price does not exceedRMB 11 per share (inclusive). The repurchase period is no more than 12months from the date of approval of this repurchase plan by board ofdirectors.
As of December 31, 2020, the Company's share repurchase plan has not yetbeen implemented. As of February 5, 2021, 33,958,100 shares wererepurchased through a centralized bidding transaction through a specialsecurity repurchase account, accounting for 1.55% of the company’s total sharecapital. The highest transaction price was RMB 6.91 per share and the lowesttransaction price was RMB 5.25 per share, with a total transaction amount of199,999,589.41 yuan. The Company's share repurchase plan has beenimplemented.
As of the disclosure date of this report, the Company has cumulativelyrepurchased 114,772,158 shares through centralized bidding transactionsthrough special securities repurchase accounts, accounting for 5.25% of thecompany's total share capital, and the total transaction amount is771,812,840.60 yuan.
The progress on reduction of re-purchase shares by means of centralizedbidding
□Applicable √Not applicable
Effects of changes in share capital on the basic earnings per share (EPS),diluted EPS, net assets per share attributable to common shareholders of theCompany, and other financial metrics over the last year and last period
□Applicable √Not applicable
Other contents that the Company considers necessary or required by thesecurity’s regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
Unit: Share
| Name of shareholder | Opening balance of restricted shares | Vested in current period | Unlock shares in current period | Closing balance of restricted shares | Note for restricted shares | Date of unlocking |
| Ms. Chen Ailian | 73,144,170 | 24,381,390 | 0 | 97,525,560 | During the reporting period, Ms. Chen Ailian ceased to be a director of the Company, and all the shares she held became restricted shares. | Jan 2021 |
| Total | 73,144,170 | 24,381,390 | 0 | 97,525,560 | -- | -- |
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
| Total number of shareholders of common stocks at the end of the reporting period | 53,208 | Total number of shareholders of common stocks at previous month-end of this report’s disclosure | 48,790 | Total number of shareholders of preferred stock with resumed voting right at the end of the reporting period | 0 | Total number of shareholders of preferred stock with resumed voting rights at previous month-end of this report’s disclosure | 0 |
| Name | Nature | Ownership | Quantity of stocks at the reporting period end | Quantity of restricted stocks held | Pledged or frozen stocks | |
| Status | Quantity | |||||
| Wanfeng Auto Holding Group | Domestic non-state-owned corporate | 33.37% | 729,697,747 | Pledged | 575,419,088 | |
| Aeon Life Insurance Company Limited – traditional insurance products | Other | 6.28% | 137,414,138 | |||
| Chen Ailian | Domestic natural person | 4.46% | 97,525,560 | 97,525,560 | Pledged | 79,380,000 |
| Zhejiang Wanfeng Auto Wheel Co., Ltd - Dedicated Securities Account for Repurchase | Other | 3.70% | 80,814,058 | |||
| Shanghai Perseverance Asset Management L.L.P - Gaoyi Linshan No. 1 Yuanwang Fund | Other | 2.03% | 44,500,000 | |||
| Aeon Life Insurance Company Limited – participating insurance products | 1.94% | 42,329,493 | ||||
| Shanghai Raas Blood Products Co. Ltd | Domestic non-state-owned corporate | 1.83% | 39,960,800 | |||
| Shaanxi Intl Trust-Shan Guo Tou- Jixiang Ruyi No.2 Targeted trust plan of assembled funds | Other | 1.68% | 36,700,000 | |||
| CCB Principal Asset Management- Industrial Bank- China Fortune Trust- China Fortune Trust·Huizhi Investments No.54 Structural trust plan of assembled funds | Other | 1.67% | 36,523,687 | |||
| Chang’An International Trust Co., Ltd. – Chang’An Trust- Chang’An Investment No.633 Securities Investments trust plan of assembled funds | Other | 1.67% | 36,420,000 | |||
| Explanation on the above-mentioned shareholders’ affiliated relationship or concerted action | Among the above-mentioned top ten shareholders, Wanfeng Auto Holding Group holds 33.37% of the Company’s shares and is the controlling shareholder. Ms. Ailian Chen holds 4.46% of the Company’s shares and owns 39.6% of Wanfeng Auto Holding Group, therefore the actual controller of the Company. Among other shareholders, CCB Principal Asset Management- Industrial Bank- China Fortune Trust- China Fortune Trust · Huizhi Investments No.54 Structural Pooled Funds Trust Plan became a shareholder through private placement in 2015. Aeon Life Insurance Company Limited – traditional insurance products and Aeon Life Insurance Company Limited – participating insurance products are persons acting in concert. The Company is not made aware whether there is any affiliated relationship between the other shareholders or whether they are persons acting in concert. | |||||
| Explanation on the above-mentioned top ten shareholders that are engaged in margin trading business (if any) | Not applicable | |||||
Shareholding status of the top 10 non-restricted shareholders
Unit: Share
| Name of Shareholder | Number of Common Shares Held without Restrictions at the End of the Reporting Period | Type of shares | |
| Type | Amount | ||
| Wanfeng Auto Holding Group | 729,697,747 | RMB common stock | 729,697,747 |
| Aeon Life Insurance Company Limited – traditional insurance products | 137,414,138 | RMB common stock | 137,414,138 |
| Zhejiang Wanfeng Auto Wheel Co., Ltd - Dedicated Securities Account for Repurchase | 80,814,058 | RMB common stock | 80,814,058 |
| Shanghai Perseverance Asset Management L.L.P - Gaoyi Linshan No. 1 Yuanwang Fund | 44,500,000 | RMB common stock | 44,500,000 |
| Aeon Life Insurance Company Limited – participating insurance products | 42,329,493 | RMB common stock | 42,329,493 |
| Shanghai Raas Blood Products Co. Ltd | 39,960,800 | RMB common stock | 39,960,800 |
| Shaanxi Intl Trust-Shan Guo Tou- Jixiang Ruyi No.2 Targeted trust plan of assembled funds | 36,700,000 | RMB common stock | 36,700,000 |
| CCB Principal Asset Management- Industrial Bank- China Fortune Trust- China Fortune Trust·Huizhi Investments No.54 Structural trust plan of assembled funds | 36,523,687 | RMB common stock | 36,523,687 |
| Chang’An International Trust Co., Ltd. – Chang’An Trust- Chang’An Investment No.633 Securities Investments trust plan of assembled funds | 36,420,000 | RMB common stock | 36,420,000 |
| Chang’An International Trust Co., Ltd. – Chang’An Trust- Chang’An Investment No.669 Securities Investments trust plan of assembled funds | 34,720,374 | RMB common stock | 34,720,374 |
| Explanation of Associated Relationship or Concerted Actions among Top Ten Common Shareholders without Trading Restrictions, and between Top Ten Common Shareholders without Trading Restrictions and Top Ten Common Shareholders | Among the above-mentioned top ten shareholders, Wanfeng Auto Holding Group holds 33.37% of the Company’s shares and is the controlling shareholder. Ms. Ailian Chen holds 4.46% of the Company’s shares and owns 39.6% of Wanfeng Auto Holding Group, therefore the actual controller of the Company. Among other shareholders, CCB Principal Asset Management- Industrial Bank- China Fortune Trust- China Fortune | ||
| Trust · Huizhi Investments No.54 Structural Pooled Funds Trust Plan became a shareholder through private placement in 2015. Aeon Life Insurance Company Limited – traditional insurance products and Aeon Life Insurance Company Limited – participating insurance products are persons acting in concert. The Company is not made aware whether there is any affiliated relationship between the other shareholders or whether they are persons acting in concert. | |
| Explanation of Top Ten Common Shareholders’ Participation in Securities Margin Trading (If Any) (Refer to Note 4) | Not applicable |
| Name | Legal Representative /People in charge | Date of establishment | Organization code | Business scope |
| Wanfeng Auto Holding Group Co., Ltd. | Chen Ailian | 4-Mar-98 | 91330624704501065X |
| Shares held by the controlling shareholder in other listed companies through controlling or holding during the reporting period | No |
| Name | Relationship with the actual controller | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Ms. Chen Ailian | Herself | China | No |
| Wu Liangding family (Mr. Wu Liangding and Mr. Wu Jie) | Themselves | China | No |
| Main occupation and position | Ms. Chen Ailian: Chinese nationality, no permanent residency abroad, born in January 1958, postgraduate degree, senior economics professional qualification; Chair of the Board of Directors of Wanfeng Auto Holding Group Co., Ltd. And Chair of Wanfeng Jinyuan Holding Group Co., Ltd.; successively won honors and titles of Chinese Business Master, National Outstanding Entrepreneur, National Outstanding Builder of Socialist Society with Chinese Characteristics, National “March 8th” Red Flag Bearer, “China’s Top Ten Outstanding Women”, “Zhejiang Merchants”, China’s most influential “Business Women Diamond Mulan”, “Hu Run Top 100 Richest Entrepreneurs”; elected as a representative of the 17th National Congress of the Communist Party of China, a representative of the 12th and 13th National People’s Congress, a member of the Non-Public Special Committee of the National Party Building Research Association, a party representative of the 11th, 12th, 13th, 14th of the Zhejiang Provincial Committee of the Communist Party of China; served as Vice President of China Enterprise Confederation, Vice President of Zhejiang Chamber of Commerce, Vice President of Zhejiang Federation of Industry and Commerce, President of Zhejiang Women Entrepreneurs Association, Secretary of Party Committee of Zhejiang Chamber of Commerce in Shanghai, etc. Mr. Wu Liangding: Chinese nationality, no permanent residency abroad, born in September 1946, senior economics professional qualification, “National Light Industry Labor Model”, founder of Zhejiang Zhongbao Industrial Holding Co., Ltd. And Zhejiang Rifa Holding Group Co., Ltd. Mr. Wu Jie: Chinese nationality, no permanent residency abroad, born in October 1967, Master Degree of Law, economist, currently Chair, CEO and President of Zhejiang Rifa Holding Group Co., Ltd., Chair of Zhejiang Rifa Precision Machinery Co., Ltd. He won the second prize of the National Science and Technology Progress Award, the National 863 Program CIMS Theme Work Advanced Worker, Zhejiang Outstanding Private Entrepreneur, the 3rd Zhejiang Youth Science and Technology Gold Award, Shaoxing City Youth Construction Hero, the third price of Zhejiang Textile Industry Science, and Technology Progress Award. He is the Vice-Chair of Zhejiang Private Economic Research Association, Standing Director of China Economic Development Forum, Standing Director of Zhejiang Enterprise Confederation 5th Standing Director, 7th Shaoxing Municipal People's Congress, and many others honorary titles. |
| Domestic and foreign listed companies controlled in the past 10 years | Ms. Chen Ailian, Mr. Wu Liangding and Mr. Wu Jie are the actual controllers of Rifa Precision Machinery (002520.SZ). Ms. Chen Ailian is one of the actual controllers of Changchun Jingkai (600215.SH). |
No such change during the reporting period.
The ownership and controlling relationship between the actual controller andthe Company is detailed as follows:
The actual controller controls the Company via trust or other ways of assetmanagement
□ Applicable √ Not applicable
4. Particulars about other corporate shareholders with shareholdingproportion over 10%
□ Applicable √ Not applicable
5. Particulars on shareholding reduction restrictions for the controlling
shareholders, actual controller, restructurer or other committingparties
□ Applicable √ Not applicable
| Ailian Chen Liangding Wu’s Family Wanfeng Auto Holding Co., Ltd Wanfeng Auto Wheel Co., Ltd | ||||||||||
| 39.60% | 26.26% | |||||||||
| 4.46% | 0.57% | |||||||||
| 33.37% | ||||||||||
Section VII: Information of Preferred Shares
□ Applicable √ Not applicable
No existing preferred shares for the Company during the current reportingperiod.
Section VIII: Information about Convertible Bonds
□ Applicable √ Not applicable
No existed Convertible bonds for the Company during the current reporting period.
Section IX: Information about Directors, Supervisors, Senior Management
I. Shareholding Changes of Directors, Supervisors, Senior Management
| Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (Shares) | Shares decreased during the Period (Shares) | Other changes (Shares) | Shares held at the end of the Period (Shares) |
| Chen Ailian | Director | Resigned | Female | 63 | 2017.02.28 | 2020.06.08 | 97,525,560 | 0 | 0 | 0 | 97,525,560 |
| Chen Bin | Chair | Incumbent | Male | 41 | 2019.03.25 | 2023.06.07 | |||||
| Chen Hanxia | Director | Incumbent | Female | 50 | 2020.06.08 | 2023.06.07 | |||||
| Dong Ruiping | Director General Manager | Incumbent | Male | 50 | 2017.02.28 | 2023.06.07 | |||||
| Li Yun | Director | Incumbent | Male | 43 | 2017.02.28 | 2023.06.07 | |||||
| Wu Xingzhong | Director | Incumbent | Male | 52 | 2020.06.08 | 2023.06.07 | |||||
| Zhang Yinfeng | Deputy General Manager, Director, Secretary to Board of Directors | Incumbent | Female | 47 | 2020.06.08 | 2023.06.07 | |||||
| Bu Yong | Director | Resigned | Male | 50 | 2017.02.28 | 2020.06.08 |
| He Qiongwen | Director | Incumbent | Female | 48 | 2020.06.08 | 2023.06.07 | |||||
| Yang Haifeng | Independent Director | Resigned | Male | 50 | 2017.02.28 | 2020.06.08 | |||||
| Chu Minhong | Independent Director | Incumbent | Male | 45 | 2017.02.28 | 2023.06.07 | |||||
| Wang Xiao | Independent Director | Resigned | Male | 45 | 2017.02.28 | 2020.06.08 | |||||
| Xie Tao | Independent Director | Incumbent | Male | 57 | 2020.06.08 | 2023.06.07 | |||||
| Guan Zheng | Independent Director | Incumbent | Male | 47 | 2020.06.08 | 2023.06.07 | |||||
| Yang Huihui | Chair of Board of Supervisors | Resigned | Female | 52 | 2017.02.28 | 2020.06.08 | |||||
| Xu Zhenyu | Chair of Board of Supervisors | Resigned | Male | 42 | 2020.06.08 | 2020.08.16 | |||||
| Xu Zhiliang | Chair of Board of Supervisors | Incumbent | Male | 50 | 2020.06.08 | 2023.06.07 | |||||
| Yu Guangyao | Supervisor | Incumbent | Male | 49 | 2017.02.28 | 2023.06.07 | |||||
| Tong Shengkun | Supervisor | Incumbent | Male | 50 | 2017.02.28 | 2023.06.07 | |||||
| Yu Tingting | Supervisor | Resigned | Female | 41 | 2017.05.22 | 2020.06.08 | |||||
| Hu Xingxing | Supervisor | Incumbent | Female | 34 | 2020.09.07 | 2023.06.07 | |||||
| Chen Weidong | Supervisor | Incumbent | Male | 44 | 2020.06.08 | 2023.06.07 | |||||
| Yang Huasheng | Deputy General Manager | Incumbent | Male | 50 | 2019.01.10 | 2023.06.07 |
| Wu Shaoying | Deputy General Manager | Incumbent | Male | 46 | 2017.05.22 | 2023.06.07 | |||||
| Chen Shanfu | CFO | Incumbent | Male | 45 | 2017.02.28 | 2023.06.07 | |||||
| Total | -- | -- | -- | -- | -- | -- | 97,525,560 | 0 | 0 | 0 | 97,525,560 |
| Name | Position | Type | Date | Reason |
| Chen Ailian | Director | Leave the position when term of office expires | 2020.06.08 | -- |
| Zhang Yinfeng | Director | Leave the position when term of office expires | 2020.06.08 | -- |
| Bu Yong | Director | Leave the position when term of office expires | 2020.06.08 | -- |
| Yang Haifeng | Independent Director | Leave the position when term of office expires | 2020.06.08 | -- |
| Wang Xiao | Independent Director | Leave the position when term of office expires | 2020.06.08 | -- |
| Yang Huihui | Chair of Board of Supervisors | Leave the position when term of office expires | 2020.06.08 | -- |
| Xu Zhenyu | Chair of Board of Supervisors | Resigned | 2020.08.16 | Passed away on 2020.08.16 |
| Yu Tingting | Supervisor | Leave the position when term of office expires | 2020.06.08 | -- |
III. Positions and IncumbencyProfessional background, work experience and main responsibilities of theCompany's current directors, supervisors, and senior management personnel.
1. Mr. Chen Bin: Male, born in 1979, MBA, University of Hull. He is the Chairof Zhejiang Wanfeng Auto Wheel Co., Ltd., Director and President ofWanfeng Auto Holding Group, Chair of Wanfeng Aviation Industry Co., Ltd.,Chair of Wanfeng Aircraft Industry Co., Ltd. He has successively won theawards and honors of “Chinese Master of Business Management”, “ChineseSenior Economist”, “Person of Year, Zhejiang Provincial Economy”,“Provincial Outstanding Entrepreneur”, “Provincial Outstanding Youth”,“Provincial Top Ten Rising Star Zhejiang Entrepreneurs Award”, “ProvincialTop Ten Innovative Zhejiang Entrepreneurs”, “Provincial New ZhejiangEntrepreneurs”, “Provincial New Generation Entrepreneur”, “ProvincialYouth Entrepreneurship Award”, Zhejiang "Ten Thousand Talents Program"talents etc. He was elected as the representative of the 12th and 13thPeople's Congress of Jilin Province, member of the 7th and 8th StandingCommittee of the Shaoxing City of the CPPCC, and served as the Chair ofthe Wheel Committee of the China Automobile Manufacturers Association,the first Chair of the Zhejiang General Aviation Industry Association(Alliance), and the vice-Chair of the Zhejiang New GenerationEntrepreneurs Association.
2. Mr. Dong Ruiping: Male, born in July 1970, EMBA of Fudan University,
senior economics professional qualification. He is the Director and GeneralManager of Zhejiang Wanfeng Auto Wheel Co., Ltd., Chair of WeihaiWanfeng Auto Wheel Co., Ltd., Chair of Zhejiang Wanfeng MotorcycleWheel Co., Ltd., Chair of Shanghai Fengtu Automobile Technology Co., Ltd.,Chair of Chongqing Wanfeng Auto Aluminum Wheel Co., Ltd., Director ofWanfeng Auto Holding Group Co., Ltd.; Concurrently served as arepresentative of the Xinchang County People's Congress of Shaoxing City;Won the Top Ten Outstanding Youth of Weihai City and the Top TenOutstanding Professional Managers of Zhejiang Province in 2018; He usedto be the general manager and deputy general manager of Weihai WanfengAuto Wheel Co., Ltd.
3. Mr. Li Yun: Male, born in September 1977, EMBA of Fudan University. He
is the Director of Zhejiang Wanfeng Auto Wheel Co., Ltd., Director of NingboAoweier Wheel Co., Ltd., and General Manager of Jilin Wanfeng AutoWheel Co., Ltd. He used to be the general manager of Jilin Wanfeng AutoWheel Co., Ltd, general manager of Ningbo Aoweier Wheel Co., Ltd., thedirector of the president office of Wanfeng Auto Holding Group Co., Ltd., theOffice Director, Party Group Member, and Office Director of the XinchangCounty Chengdong New District Management Committee, and the DeputyMayor of Shaxi Town Government of Xinchang County.
4. Mr. Wu Xingzhong: Male, born in October 1968, university graduate, seniorengineer. He is the Director of Zhejiang Wanfeng Auto Wheel Co., Ltd., andthe General Manager of Wuxi Xiongwei Precision Technology Co., Ltd. Heused to be the Director of the technology center of Wanfeng Auto HoldingGroup, the General Manager of the coating department of ZhejiangWanfeng Technology Development Co., Ltd., and the Assistant GeneralManager and Deputy General Manager (in charge of marketing) of ZhejiangWanfeng Auto Wheel Co., Ltd.
5. Ms. Chen Hanxia: Female, born in September 1971, EMBA student. Sheis the Director of Zhejiang Wanfeng Auto Wheel Co., Ltd., the Director andVice president of Wanfeng Auto Holding Group Co., Ltd. She used to be theChief Financial Officer Assistant and Deputy Chief Financial Officer ofWanfeng Auto Holding Group Co., Ltd., and the Financial Manager ofZhejiang Wanfeng Auto Wheel Co., Ltd.
6. Ms. He Qiongwen: Female, born in October 1972, Master Degree in Real
Estate Finance, University of Cambridge. She is Director of ZhejiangWanfeng Auto Wheel Co., Ltd., the Deputy General Manager of Aeon LifeInsurance Asset Management Co., Ltd. She successively held relevantmanagement and investment positions in Ping An Insurance Company andXinhua Asset Management Co., Ltd. She joined Aeon Life Insurance Co.,Ltd. in May 2011, and successively served as Deputy General Manager ofthe investment department and Deputy General Manager of the assetmanagement center of Aeon Life Insurance Co., Ltd.
7. Mr. Chu Minhong: Male, born in June 1975, master’s degree. He is theIndependent Director of Zhejiang Wanfeng Auto Wheel Co., Ltd., VicePresident, Secretary of the Board and Chief Financial Officer of ShanghaiPlite Composite Materials Co., Ltd. He used to serve as Executive Directorof Shenwan Hongyuan Securities Underwriting Sponsor Co., Ltd.
8. Mr. Xie Tao: born in August 1963, bachelor’s degree, member of ACCA,Singapore nationality. He is the Independent Director of Zhejiang WanfengAuto Wheel Co., Ltd., an Independent Director of China Yuchai InternationalLimited and an Independent Director of Bull Group Co., Ltd. He used to bea former partner of PricewaterhouseCoopers, CEO of Agria Corporation,partner of Ernst & Young, partner of Housheng Investment Fund, CEO ofHunan Dakang International Agri-Food Co., Ltd.
9. Mr. Guan Zheng: Male, born in December 1973, MBA of Oxford University,Chair of Invest industrial Asia, Former Chair of Deutsche Bank North Asia,Managing Director Edmund Rothschild.
10. Mr. Xu Zhiliang: Male, born in March 1971, undergraduate, Chair of Board
of Supervisors of Zhejiang Wanfeng Auto Wheel Co., Ltd. Director andDeputy Secretary of the party committee, and Director of the president'soffice of Wanfeng Auto Holding Group Co., Ltd., Zhejiang General AviationIndustry Association ( Alliance) Deputy Secretary-General, member of the10th Xinchang County Committee of the Chinese People's PoliticalConsultative Conference, and the 13th Party Representative of XinchangCounty of the Communist Party of China; formerly Deputy Director,Organization Section Chief, Director of the Office, Member of theDepartmental Conference of Shaoxing Yuecheng District OrganizationDepartment Office, Xinjiang Deputy principal of Yutian No. 2 Middle Schoolin Hetian District (Aid Xinjiang), and vice-principal of Gaobu Town MiddleSchool in Yuecheng District, Shaoxing City.
11. Mr. Chen Weidong: Male, born in December 1976, bachelor’s degree,
statistician, International Certified Internal Auditor. He is the supervisor,manager of the audit department of Zhejiang Wanfeng Auto Wheel Co., Ltd.,and once served in the marketing department, assistant of comprehensivestatistics, manufacturing manager Assistant of Weihai Wanfeng Auto WheelCo., Ltd, audit manager of Wanfeng Holding Group Co., Ltd. He has wonthe recognition from provincial and departmental level and prefecture (city)level once each.
12. Mr. Tong Shengkun: Male, born in August 1970, university degree,Supervisor and Chief Engineer of Zhejiang Wanfeng Auto Wheel Co., Ltd.He has presided over the development of more than 1,600 aluminum wheels,passed 22 provincial new product appraisals, and is responsible for theimplementation of 2 national innovation projects and 3 provincial innovationprojects. 2 national standards and 2 industry standards have beenformulated and released. He is the Company's technical expert talent andhas received the following honors: “The Top Ten Best New Xinchang Peoplein 2005”, “The Seventh Batch of Top-notch Professional and TechnicalTalents in Xinchang County in 2007", the third-level training personnel ofthe "New Century 151 Talent Project" in Zhejiang Province in 2007, the TopTen Enterprises Innovative Talents in Xinchang County in 2009，ExcellentEnterprise Manager of Zhejiang Machinery Industry in 2016, Chief Engineerof Outstanding Project of China Transportation Association in 2019
13. Mr. Yu Guangyao: Male, born in October 1971, college degree, Supervisor
of Zhejiang Wanfeng Auto Wheel Co., Ltd., and Manager of safety andenvironmental protection department. He used to serve as Director ofGeneral Manager Office and Chair of Labor Union, Manager of InternalAffairs Department of Manufacturing Center, Manager of OutsourcingDepartment, Factory Directorof Zhejiang Wanfeng Auto Wheel., Ltd.,Director of Party Committee Office, Head of Discipline Inspection andSupervision Department of Wanfeng Auto Holding Group Co., Ltd. He has
received the following honors: Excellent Trade Union Worker of XinchangCounty Federation of Trade Unions in 2002, Outstanding Trade UnionWorker of Xinchang County Federation of Trade Unions in 2005, ActiveWorker of Shaoxing City Trade Union in 2011, Outstanding IndividualProduction Safety of Xinchang County in 2020.
14. Hu Xingxing: Female, born in January 1987, bachelor’s degree, Supervisorof Zhejiang Wanfeng Auto Wheel Co., Ltd., a supervisor of Wanfeng AutoHolding Group Co., Ltd., and deputy director of the Legal Affairs Center;formerly, she has served as the head of the Risk Management and ControlDepartment of the Legal Center, Chief of the Compliance ManagementDepartment, Deputy Head of Risk Management and Control Department ofWanfeng Auto Holding Group Co., Ltd.,
15. Ms. Zhang Yinfeng: Female, born in February 1974, bachelor degree,
Deputy General Manager and Secretary of the Board of Directors ofZhejiang Wanfeng Auto Wheel Co., Ltd., Secretary of the Board of Directorsof Weihai Wanfeng Auto Wheel Co., Ltd., Secretary of the Board of Directorsof Ningbo Wanfeng Aoweier Wheel Co., Ltd., Secretary of the Board ofDirectors of Weihai Wanfeng Magnesium Technology Development Co.,Ltd., Secretary of the Board of Directors of Jilin Wanfeng Auto Wheel Co.,Ltd., Secretary of the Board of Directors of Chongqing Wanfeng AutoAluminum Wheel Co., Ltd., Secretary of the Board of Directors of ZhejiangWanfeng Motorcycle Wheel Co., Ltd., Secretary of the Board of Directors ofShanghai Dacromet Coating Industry Co., Ltd; She used to serve asSecurities Affairs Representative of Zhejiang Wanfeng Auto Wheel Co., Ltd.,and Assistant General Manager of Zhejiang Wanfeng TechnologyDevelopment Co., Ltd.
16. Mr. Wu Shaoying: Male, born in November 1974, college degree, DeputyGeneral Manager of Zhejiang Wanfeng Auto Wheel Co., Ltd. in charge ofproduction. He used to be the Supervisor, the Director of the third plant andManager of the manufacturing department of Zhejiang Wanfeng Auto WheelCo., Ltd., Deputy General Manager and General Manager of NingboAoweier Wheel Co., Ltd., and Deputy General Manager of Jilin WanfengAuto Wheel Co., Ltd.
17. Mr. Yang Huasheng: Male, born in August 1970, master’s degree, DeputyGeneral Manager of Zhejiang Wanfeng Auto Wheel Co., Ltd. He used to bethe General Manager Assistant, the Manager of the first internationaldepartment, the Manager of the OEM department, the Deputy Manager ofthe second marketing center of Zhejiang Wanfeng Auto Wheel Co., Ltd.,and the Business Director of the German SCHOTT Group.
18. Mr. Chen Shanfu: Male, born in April 1976, university degree, professional
talent in corporate management. He is the CFO of Zhejiang Wanfeng AutoWheel Co., Ltd., He used to be the Financial Manager of Shanghai WanfengAluminum and Chongqing Wanfeng Motorcycle Wheel Co., Ltd, and theDirector of capital management and the Deputy Financial Director ofWanfeng Auto Holding Group Co., Ltd.
Position held in shareholders’ entities
√Applicable □ Not applicable
| Name | Shareholder's entity | Position in shareholders’ entities | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders' entity |
| Chen Bin | Wanfeng Auto Holding Group Co., Ltd. | President, Director | 6-Feb-15 | No | |
| Chen Hanxia | Wanfeng Auto Holding Group Co., Ltd. | Vice President | 1-Jan-17 | Yes | |
| He Qiongwen | Aeon Life Insurance Asset Management Co., Ltd. | Deputy General Manager | 1-Jan-17 | Yes | |
| Xu Zhiliang | Wanfeng Auto Holding Group Co., Ltd. | Director | 26-Jul-18 | Yes | |
| Dong Ruiping | Wanfeng Auto Holding Group Co., Ltd. | Director | 26-Jul-18 | No | |
| Hu Xingxing | Wanfeng Auto Holding Group Co., Ltd. | Supervisor | 29-Sept-20 | Yes | |
| Description of the position in shareholders’ entities | N/A | ||||
| Name | Name of other entities | Position in other entities | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders' entity |
| Chu Minhong | Shanghai Plite Composite Materials Co., Ltd. | Vice President, Chief Financial Officer and Secretary of the Board of Directors | 26-Feb-16 | Yes | |
| Xie Tao | China Yuchai International Limited | Independent Director | 1-Apr-19 | Yes | |
| Xie Tao | Bull Group Co., Ltd. | Independent Director | 23-Dec-17 | Yes | |
| Guan Zheng | Investindustrial | Chair of Asia Region | 1-Mar-20 | Yes | |
| Description of the position in other entities | N/A | ||||
| Decision-making procedures for the remuneration of directors, supervisors, and senior executives | The work group under Remuneration Committee proposes data and calculation basis, and the Committee puts forward a salary appraisal plan. This remuneration plan of directors and supervisors will be approved by the Board of directors and implement after the general meeting of shareholders. The remuneration plan for senior management will be approved by the board of directors. Directors, supervisors, and senior management submit reports and self-assessments of the annual appraisal, and the Committee conducts appraisal based on the standards and completed performance (performance indicators are subject to external audit data), the appraisal results are submitted to the Board of Directors for approval by procedures. |
| The basis for determining the remuneration of directors, supervisors, and senior managers | Remuneration is determined based on job responsibilities of directors and supervisors, the scope of the position, the Company’s profit growth, and the remuneration level of comparable companies. The monthly salary is assessed by the Company's human resources department, and the Company's actual completion indicators (subject to the external audit data) will be evaluated in accordance with the standards. The actual annual salary will be determined after the evaluation results are submitted for approval in accordance with regulations. |
| Actual payment of remuneration for directors, supervisors, and senior executives | During the reporting period, a total of RMB 8,555,300 paid to directors, supervisors, and senior management.. |
| Name | Title | Gender | Age | Tenure status | Total remuneration from the Company | Remuneration from related parties (Y/N) |
| Chen Ailian | Director | Female | 63 | Resigned | Yes | |
| Chen Bin | Chair | Male | 41 | Incumbent | 346.03 | |
| Chen Hanxia | Director | Female | 50 | Incumbent | Yes | |
| Dong Ruiping | Director General Manager | Male | 50 | Incumbent | 75.03 | |
| Li Yun | Director | Male | 43 | Incumbent | 63.96 | |
| Wu Xingzhong | Director | Male | 52 | Incumbent | 68.67 | |
| Zhang Yinfeng | Deputy General Manager Director, Secretary to Board of Directors | Female | 47 | Incumbent | 44.34 | |
| Bu Yong | Director | Male | 50 | Resigned | ||
| He Qiongwen | Director | Female | 48 | Incumbent | Yes | |
| Yang Haifeng | Independent Director | Male | 50 | Resigned | 5 | |
| Chu Minhong | Independent Director | Male | 45 | Incumbent | 6 | |
| Wang Xiao | Independent Director | Male | 45 | Resigned | 3 | |
| Xie Tao | Independent Director | Male | 57 | Incumbent | 5 | |
| Guan Zheng | Independent Director | Male | 47 | Incumbent | 3 |
| Yang Huihui | Chair of Board of Supervisors | Female | 52 | Resigned | ||
| Xu Zhenyu | Chair of Board of Supervisors | Male | 42 | Resigned | ||
| Xu Zhiliang | Chair of Board of Supervisors | Male | 50 | Incumbent | Yes | |
| Yu Guangyao | Supervisor | Male | 49 | Incumbent | 30.6 | |
| Tong Shengkun | Supervisor | Male | 50 | Incumbent | 53.45 | |
| Yu Tingting | Supervisor | Female | 41 | Resigned | 7.25 | |
| Hu Xingxing | Supervisor | Female | 34 | Incumbent | Yes | |
| Chen Weidong | Supervisor | Male | 44 | Incumbent | 9.01 | |
| Yang Huasheng | Deputy General Manager | Male | 50 | Incumbent | 48.48 | |
| Wu Shaoying | Deputy General Manager | Male | 46 | Incumbent | 53.43 | |
| Chen Shanfu | CFO | Male | 45 | Incumbent | 33.28 | |
| Total | -- | -- | -- | -- | 855.53 |
| Number of incumbent employees in the parent company | 1,487 |
| Number of incumbent employees in major subsidiaries | 10,319 |
| Number of incumbent employees | 11,806 |
| Number of employees receiving salaries in current period | 11,806 |
| Number of retired employees requiring the parent Company and its subsidiaries to bear costs | 0 |
| Professional structure | |
| Tier | Number of employees |
| Production staff | 8,827 |
| Sales staff | 172 |
| Technical staff | 1,576 |
| Financial staff | 135 |
| Administrative Staff | 1,096 |
| Total | 11,806 |
| Educational background | |
| Education background | Number of employees |
| Master and/or doctor/or above | 159 |
| Bachelor | 1,143 |
| College | 2,206 |
| High school and below | 8,298 |
| Total | 11,806 |
Section X: Corporate Governance
I. Corporate Governance OverviewDuring the reporting period, the Company strictly followed the requirements ofthe Company Law, Securities Law and relevant laws and regulations of theChina Securities Regulatory Commission to continuously improve the corporategovernance of the Company and establish and improve internal managementand control systems. As of the end of the reporting period, the Company'soperations, information disclosure practices, and the actual status of corporategovernance basically met the requirements of the regulatory documents onlisted company governance issued by the China Securities RegulatoryCommission. In the future work, the Company will continue to improve thecorporate governance structure of the Company in accordance with relevantlaws and regulations and the requirements of the Shenzhen Stock Exchange,further standardize the operation of the company, and improve the level ofcorporate governance.
1. About shareholders and general meeting of shareholdersThe Company convenes a general meeting of shareholders in strict accordancewith the Articles of Association and Rules of Procedure of the General Meetingof Shareholders to ensure that all shareholders, especially small and mediumshareholders, enjoy equal status and fully exercise their rights.
2. About the Company and its controlling shareholdersThe Company has independent businesses and autonomous operatingcapabilities, separate from controlling shareholder in terms of business,personnel, assets, organizations, and finances. The controlling shareholder ofthe Company strictly regulates their own behavior and does not directly orindirectly interfere with the Company’s decision-making and business activitiesbeyond the Company’s general meeting of shareholders. The Company's boardof directors, board of supervisors and internal units operate independently.
3. About directors and the board of directors
The Company elects directors in strict accordance with the selection andappointment procedures stipulated in the Articles of Incorporation; theCompany currently has 3 independent directors, accounting for one third of alldirectors. The number and composition of the board of directors comply withthe requirements of laws and regulations and the Articles of Association. Alldirectors of the Company carry out their duty in accordance with the Rules ofProcedure of the Board of Directors, Guidance Note on Independent Directors,Conduct Code of Directors of Listed Companies in the SME Board, attend theboard meetings and general meeting of shareholders on time, activelyparticipate in relevant knowledge training, and are familiar with relevant lawsand regulations.
4. About the supervisors and the board of supervisors
The Company’s board of supervisors has 5 supervisors, including 2 employeerepresentatives. The number and composition of the board of supervisors meetthe requirements of relevant laws and regulations; the board of supervisorsconvenes meetings in strict accordance with the Articles of Associationand Rules of Procedures for the Board of Supervisors; Supervisors canearnestly perform their duties and effectively supervise the Company's majorinvestment and financing decisions, financial status, and performance ofdirectors and senior management.
5. About performance evaluation and incentive restraint mechanismThe Company has gradually established fair and transparent performanceevaluation standards and incentive restraint mechanisms for directors,supervisors, and managers. The remuneration of senior managers is linked tothe Company’s business performance indicators, and the recruitmentprocedure of managerial level employees is open and transparent in line withlaws and regulations.
6. About relevant stakeholders
The Company fully respects and safeguards the legitimate rights and interestsof relevant stakeholders, balances the interests of society, shareholders,employees and the Company, and jointly promotes the Company's sustainabledevelopment.
7. About information disclosure and transparency
The Company has designated the secretary of the board of directors to overseeinformation disclosure, investor relations management, and reception of visitsand inquiries from shareholders; designated Securities Times andCNINFO.COM as the Company’s information disclosure newspapers and thewebsite. The Company ensures that all shareholders have a fair opportunity toobtain information by disclosing information truthfully, accurately and in a timelymanner, in strict accordance with relevant laws and regulations,
8. About the internal audit system
The Company has established an audit department with three auditors. Underthe leadership of the audit committee of the board of directors, the internal auditfunction supervises the Company and its subsidiaries’ business activities andresults, internal control system and implementation, usage of various expensesand asset update-to-date status to ensure compliance with corporategovernance standards.
II. Independence of Business, Personnel, Assets, Organizations,
Finances from Controlling ShareholderThe Company is independent of its controlling shareholders in terms ofbusiness, personnel, assets, organization, and finance. The Company hasindependent and complete business and independent management capabilities.
1. Business
The Company's business is independent of the controlling shareholder and itssubsidiaries, has an independent and complete supply, production and salessystem, and conducts business independently without relying on shareholdersor any other related parties.
2. Personnel
The Company’s personnel, labor, human resources management and wagesare completely independent. The Company’s Chair, general manager, deputygeneral managers, secretary of the board of directors, chief financial officer andother senior management personnel all work in the Company and receivesalaries, and there is no part-time job prohibited by relevant laws andregulations.
3. Assets
Except for some of the office buildings used by the Company which are leasedfrom related parties, the Company has a production and operation siteindependent of the controlling shareholder, an independent and complete assetstructure, an independent production system, auxiliary production system andsupporting facilities, and land use rights, property ownership right, independentprocurement and sales systems.
4. Organization
The Company has established a sound organizational system, operatesindependently, and has no affiliation with controlling shareholders or otherfunctional departments.
5. Finance
The Company has an independent financial department, has established anindependent accounting system and financial management system, andindependently makes financial decisions. The Company opens bank accountsand pays taxes independently.
III. Horizontal Competition
□ Applicable √ Not applicable
IV. Information about the Annual General Meeting and Extraordinary
General Meeting held During the Reporting Period
1. Annual General Meeting convened during the reporting period
| Meeting | Type | Proportion of participating investors | Convened Date | Disclosure date | Disclosure Index |
| 2020 1st extraordinary general meeting | extraordinary general meeting | 60.52% | 2020.01.13 | 2020.01.14 | Announcement of the 1st Extraordinary General Meeting of Shareholders in 2020 (2020-002) published in the Securities Times and CNINFO |
| 2020 2nd extraordinary general meeting | extraordinary general meeting | 71.57% | 2020.03.20 | 2020.03.21 | Announcement of the 2nd Extraordinary General Meeting of Shareholders in 2020 (2020-002) published in the Securities Times and CNINFO |
| 2020 3rd extraordinary general meeting | extraordinary general meeting | 61.29% | 2020.06.08 | 2020.06.09 | Announcement of the 3rd Extraordinary General Meeting of Shareholders in 2020 (2020-038) published in the Securities Times and CNINFO |
| 2019 annual general meeting | annual general meeting | 64.58% | 2020.07.15 | 2020.07.16 | Announcement of 2019 Annual General Meeting of Shareholders (2020-059) published in the Securities Times and CNINFO |
| 2020 4th extraordinary general meeting | extraordinary general meeting | 51.79% | 2020.08.19 | 2020.08.20 | Announcement of the 4th Extraordinary General Meeting of Shareholders in 2020 (2020-079) published in the Securities Times and CNINFO |
| 2020 5th extraordinary general meeting | extraordinary general meeting | 43.71% | 2020.09.07 | 2020.09.08 | Announcement of the 5th Extraordinary General Meeting of Shareholders in 2020 (2020-086) published in the Securities Times and CNINFO |
| 2020 6th extraordinary general meeting | extraordinary general meeting | 42.61% | 2020.11.02 | 2020.11.03 | Announcement of the 6th Extraordinary General Meeting of Shareholders in 2020 (2020-098) published in the Securities Times and CNINFO |
| Attendance of independent directors in board meetings and general meetings | |||||||
| Name of Independent Director | Board meeting presence required in the reporting period (times) | Board meeting presence on site (times) | Board meeting presence by telecom- communication (times) | Board meeting presence through a proxy (times) | Board meeting absence (times) | Board meeting not attended in person for two consecutive times | Presence of independent directors in general meetings (times) |
| Yang Haifeng | 4 | 0 | 4 | 0 | 0 | No | 2 |
| Chu Minhong | 10 | 1 | 9 | 0 | 0 | No | 7 |
| Wang Xiao | 4 | 0 | 4 | 0 | 0 | No | 1 |
| Xie Tao | 6 | 0 | 6 | 0 | 0 | No | 4 |
| Guan Zhen | 6 | 0 | 6 | 0 | 0 | No | 2 |
2. Objections from independent directors on related issues of theCompanyWere there any objections on related issues of the Company from independentdirectors?
□ Yes √ No
3. Other details about the performance of duties by independent directorsWere there any suggestions from independent directors accepted by theCompany?
√ Yes □ No
During the reporting period, the independent directors of the Company followedthe Company Law, Guiding Opinions on Establishing an Independent DirectorSystem in Listed Companies, Guidelines for the Normative Operation of ListedCompanies on the Shenzhen Stock Exchange, Articles of Association andIndependent Director Work System, and other relevant laws, regulations andrules and regulations. They were diligent, responsible, and independentlyperformed their duties; pay close attention to the industry trends and theopportunities and challenges in the Company’s business, and promptly alertrisks; review the regular reports and temporary announcements provided by theCompany; carefully review each proposal and play a positive role in thedecision-making, management and operation of the board of directors; payclose attention to the Company's internal control operation status, and putforward constructive opinions, which effectively safeguard the interests of thesmall and medium shareholders. The Company accepted reasonablesuggestions raised by independent directors.
VI. Performance of Special Committees under the Board of Directors
During the Reporting Period
1. Performance of the duties of the Strategy CommitteeThe Strategy Committee of the Board of Directors performs its duties inaccordance with the Articles of Association and Working Rules of the StrategyCommittee. It is mainly responsible for conducting feasibility studies onimportant issues such as the Company's strategic planning, investment andfinancing plans, and making reasonable suggestions. During the reportingperiod, the Strategy Committee mainly carried out the following tasks: (1)Provided guiding suggestions for the Company's entry into general aviationaircraft manufacturing business, and the transformation from solo auto parts todual-engine strategy. (2) In-depth analysis of the Company's industry prospects
and operating conditions in various business areas, exchanges with companydirectors and senior management and putting forward constructive opinionsand playing an important role in the decision-making of the board of directorsand the Company's high-quality development.
2. The performance of the duties of the Audit CommitteeThe Audit Committee of the Board of Directors performs its duties inaccordance with the Articles of Association and Working Rules of the AuditCommittee. It is mainly responsible for supervising the implementation of theCompany's internal audit, reviewing internal control, external guarantees, etc.and making reasonable suggestions; strengthening the communicationbetween internal and external auditing; reviewing the Company’s financialinformation and its disclosure, and proposing to hire an audit agency. Duringthe reporting period, the audit committee carefully reviewed the Company’speriodic reports of financial information and its disclosure, reviewed the routineaudit reports with internal audit department, and put forward constructivesuggestions on the effective implementation of internal control, the selectionand appointment of external audit institutions and the annual audit work. In theannual report audit, in accordance with the relevant requirements of the ChinaSecurities Regulatory Commission, it fully communicated with the Company’saudit department, finance department and annual audit accountants,reasonably determined the annual audit work plan, proposed reasonablesolutions to the problems in the audit process, and timely reviewed theCompany’s the unaudited financial statements and draft of accountants' auditreport, and earnestly performed the duties of the audit committee.
3. Performance of the duties of the Remuneration and AppraisalCommitteeThe Remuneration and Appraisal Committee of the Board of Directorsperforms its duties in accordance with the Articles of Association and theWorking Rules of the Remuneration and Appraisal Committee. It is mainlyresponsible for formulating the remuneration plan for directors and seniormanagement personnel of the Company, reviewing their performance, carryingout annual performance appraisal and supervising the implementation of theCompany's remuneration system. During the reporting period, theRemuneration and Appraisal Committee conducted a serious review of theremuneration appraisal methods of the Company’s directors and seniormanagement personnel, and believed that the Company could strictly follow theremuneration and relevant incentive appraisal system, and the remunerationpayment complied with provisions of relevant laws, regulations and the Articlesof Association.
4. Performance of the duties of Nomination Committee
The Nomination Committee of the Board of Directors performs its duties inaccordance with the Articles of Association and Working Rules of theNomination Committee. It is mainly responsible for formulating the selectioncriteria and procedures for directors and senior managers, searching forqualified directors and senior managers, conducting reviews and makingrecommendations. During the reporting period, the term of office of the sixthboard of directors and senior executives expired. The Nomination Committeereviewed the qualifications and capabilities of the new directors, seniorexecutives and other personnel. It believed that the nominated persons arecapable of fulfilling the responsibilities of the corresponding positions, which willfurther promote the stability of the Company’s management team and benefitthe development of the Company.
VII. Performance of Supervisors Board
Were there any risks to the Company identified by Supervisory Committeewhen performing its duties during the Reporting Period?
□ Yes √ No
The Board of Supervisors has no objection to the supervision matters duringthe reporting period.
VIII. Assessment and incentive mechanism for the senior management
According to the remuneration appraisal plan for senior executives approvedby the Remuneration and Appraisal Committee of the Board of Directors, a dualappraisal system of operating and management task indicators wasimplemented for senior executives, and the business and managementobjectives were quantified. 2020 Responsibilities, Authority and PerformanceTargets was signed. The annual task indicators are broken down to each month,monthly and annual performance evaluations are implemented according to thecompletion of business and management indicators, and salary ratings, jobarrangements, and hiring are determined based on the results of the evaluation.The Company will continue to improve the assessment and incentivemechanism for senior managers to maximize the potential of senior managers.
IX. Internal Control evaluation Report
1. Any significant internal control deficiencies during the reporting period
□ Yes √ No
2. Self-evaluation report on internal control
| Disclosure date of full text of self-evaluation report on internal control | April 30, 2021 | |
| Disclosure index of full text of self-evaluation report on internal control | Self-evaluation Report on Internal Control of the Company in 2020 http://www.cninfo.com.cn | |
| Proportion of assets evaluated in total assets per consolidated financial statement | 100.00% | |
| Proportion of revenue evaluated in total revenue per consolidated financial statement | 99.6% | |
| Recognition standard of deficiencies | ||
| Nature | Financial report | Non-financial report |
| Qualitative criteria | Major deficiencies: Single deficiencies or in combination with other deficiencies lead to failure to prevent or detect and correct major misstatements in financial reports in a timely manner. If the following circumstances occur, it is deemed as a major defect: ①The control environment is invalid; ②The fraudulent behavior of directors, supervisors and senior management; ③Major deficiencies that have been discovered and reported to the management have not been corrected after a reasonable time; ④The supervision of internal control by the company’s audit committee and the audit department is invalid; ⑤Other defects that may affect the correct judgment of the report users. Important defects: Individual defects or other defects that cannot be prevented or detected and corrected in a timely manner in the financial report, although the level of importance is not reached or exceeded, the misstatement should | The determination of non-financial report deficiencies is mainly based on the degree of influence of the deficiencies on the effectiveness of the business process and the possibility of occurrence. If the probability of occurrence of a defect is ow, or it will reduce work efficiency or effectiveness, or increase the uncertainty of the effect, or make it deviate from the expected target, it is deemed as a general defect; if the probability of occurrence of a defect is high, or it will significantly reduce work efficiency or effectiveness, or significantly increase the uncertainty of the effect, or make it significantly deviate from the expected target, it is deemed as an material defect; if the probability of occurrence of the defect is high, or it will seriously reduce the work efficiency or effectiveness, or seriously |
| still be paid attention to by management. General defects: other internal control defects that do not constitute major defects or important defects. | increase the uncertainty of the effect, or make it seriously deviate from the expected target, it is deemed as a major defect. | |
| Quantitative criteria | Losses that may be caused by internal control defects and related to the income statement, are measured by the total profit indicator. If this defect alone or in combination with other defects may cause the financial report misstatement amount to exceed 10% of the total profit, it is deemed a major defect; if it is less than 10% of the total profit, more than 5% is deemed a major defect; if it is less than 5% of the total profit, it is regarded as a general defect. Losses that may be caused by internal control deficiencies are related to asset management, are measured by the total assets indicator. If the financial report misstatement amount caused by the defect alone or in combination with other defects exceeds 1% of the total assets, it is considered a major defect; if it is less than 1% of the total assets and more than 0.5%, it is considered a major defect; if it is less than the total assets 0.5% is regarded as a general defect. | The quantitative standards for the determination of defects in non-financial reports are mainly determined based on the absolute amount of direct property losses that the defects may cause. If the amount of direct property loss exceeds 10% of the total profit, it is deemed a major defect; if it is less than 10% of the total profit, more than 5%, it is deemed a major defect; if it is less than 5% of the total profit, it is deemed a general defect. |
| Number of significant deficiencies in financial report | 0 | |
| Number of significant deficiencies in non-financial report | 0 | |
| Number of important deficiencies in financial report | 0 | |
| Number of important deficiencies in non-financial report level | 0 | |
Section XI: Corporate Bonds
Whether the Company has publicly issued corporate bonds on Stock Exchange,which has not terminated or terminated but fail to collect the full payment beforeannual report authorized disclosure date.
□Yes √No
Section XII: Financial Statements
I. Auditor Report
| Type of audit opinion | Standard Unqualified opinion |
| Date of signing of audit report | April 28, 2021 |
| Name of audit firm | Ernst & Young Hua Ming LLP |
| Document number of audit report | Ernst & Young Huaming (2021) Audit No. 60468741_B01 |
| Name of the certified accountants | Yin Guowei, Zhou Hao |
express a separate opinion on these matters.We have fulfilled the responsibilities described in the "Certified Accountants'Responsibilities for the Audit of Financial Statements" section of this report,including those related to these key audit matters. Correspondingly, ouraudit work includes the implementation of audit procedures designed to dealwith the risk of material misstatement of assessed financial statements. Theresults of our audit procedures, including the procedures performed inresponse to the following key audit matters, provide a basis for the overallaudit opinion of the financial statements.
| Key audit matters | How the matter was dealt with in the audit |
| Goodwill impairment | |
| As of December 31, 2020, the book value of goodwill of Zhejiang Wanfeng Auto Wheel Co., Ltd., and its subsidiaries (hereinafter referred to as "the Group") totaled RMB 1,662.99 million. The Accounting Standards for Business Enterprises require the Group to conduct a goodwill impairment test at least annually. The assessment of goodwill impairment is based on the recoverable amount of each cash-generating unit (CGU) or group of CGUs to which the goodwill belongs. We identified the impairment of goodwill as a key audit matter because of the importance of the Group’s goodwill balance to financial reporting and the complexity of the assessment process of goodwill impairment. The management involves the use of significant judgments when determining whether goodwill is impaired, and there is inherent uncertainty in estimating future cash flows. The disclosure of the impairment of goodwill is included in notes V, 31, 43 and notes VII and 28 of the financial statements, respectively. | During the audit process, we assessed the Group management’s identification of CGUs and group of CGUs and the goodwill allocated to CGUs and group of CGUs. With the assistance of internal valuation experts, we evaluated the rationality of the major assumptions and evaluation methods used by the Group management in predicting the recoverable amount of the CGU, including the discount rate and long-term growth rate, etc. In addition, we evaluated the rationales of the estimated sales revenue and operating performance in the future and compared it with its historical operating performance. We also reviewed the sensitivity analysis on the recoverable amount of the CGU and assessed whether the possible reasonable changes in key assumptions would cause the book value of the CGU to exceed its recoverable amount. In addition, we have checked the adequacy of the relevant disclosures of the Group in the notes to the financial statements. |
| Non-current asset impairment | |
| Meridian Technologies Mexico, S. de R.L. de C.V., a subsidiary of the Group, is in a state of continuous loss, and the corresponding fixed assets and non-current assets such as long-term deferred expenses have signs of impairment. According to the requirements of the Accounting Standards for Business Enterprises, the Group is required to conduct an impairment test on the non-current assets. The recoverable amount of the non-current assets shall be determined based on the higher of the net value of the fair value of the assets minus the disposal expenses and the present value of the expected future cash flows of the assets. In 2020, the book value of the non-current assets of Meridian Technologies Mexico, S. de R.L. de C.V. totaled RMB 88.44 million. The recoverable amount is determined based on the net | During the audit process, with the assistance of internal valuation experts, we assessed the rationality of the management’s method of estimating the recoverable amount. Communicating with the management on the estimation process, methods and important assumptions, we also conducted a sensitivity analysis on the net value of the fair value of non-current assets minus disposal expenses. In addition, we have checked the adequacy of the relevant disclosures of the Group in the notes to the financial statements. |
amount of the fair value of the asset minus thedisposal expenses, and the non-current assets havenot been impaired. The Group's estimation of therecoverable amount of non-current assets involves theuse of significant judgments and assumptions,including fair value assessment and disposal costforecasts. Given the importance and complexity of theestimation of the recoverable amount of non-currentassets, we have identified it as a key audit matter.
The disclosure of the above-mentioned non-currentasset impairment provision is included in the financialstatement notes V, 24, and 31, and notes VII, 21, and29.
4. Other Information
The management of Zhejiang Wanfeng Auto Wheel Co., Ltd. is responsible forother information. Other information includes the information covered in theannual report but does not include the financial statements and our audit report.Our audit opinions on the financial statements do not cover other information,and we do not issue any form of assurance conclusions on other information.In conjunction with our audit of the financial statements, our responsibility is toread other information. In this process, consider whether the other informationis materially inconsistent with the financial statements or what we have learnedduring the audit or there seems to be a material misstatement.Based on the work we have performed, if we determine that there is a materialmisstatement of other information, we should report that fact. In this regard, wehave nothing to report.
5. Responsibilities of the Management, Board of Directors andSupervisory BoardThe management is responsible for preparing andpresenting fairly the financial statements in accordance with theprovisions of China Accounting Standards for Business Enterprises,and designing, implementing and maintaining necessary internalcontrols so that there are no major misstatements due to fraud orerrors in the financial statements.When preparing the financial statements, the management is responsible forassessing Zhejiang Wanfeng Auto Wheel Co., Ltd.’s ability to continue as agoing concern , disclosing matters related to going concern (if applicable), andusing the going concern basis of accounting unless the Management intends toliquidate the Company or to cease operations, or has no realistic alternative butto do so.Those charged with governance are responsible for overseeing the financialreporting process of Zhejiang Wanfeng Auto Wheel Co., Ltd.
6. Certified Public Accountant’s Responsibilities for the Audit of the
Financial StatementsOur objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance, but it is not a guaranteethat we will always detect a material misstatement even though our auditingwork conducted in accordance with Chinese Standards on Auditing.Misstatement can arise from fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influencethe economic decisions of users relying on these financial statements.We exercise professional judgment and maintain professional skepticismthroughout the audit performed in accordance with Chinese Standards onAuditing. We also:
(1) Identify and assess the risks of material misstatement of the financialstatements, whether due to fraud or error, design and perform audit proceduresresponsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit to designaudit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the Company’sinternal control.
(3) Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by theManagement.
(4) Conclude on the appropriateness of the Management’s use of the goingconcern basis of accounting and, based on the audit evidence obtained,whether a material uncertainty exists related to events or conditions that maycast significant doubt on Zhejiang Wanfeng Auto Wheel Co., Ltd.’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists,we are required to draw attention in our auditor’s report to the relateddisclosures in the financial statement or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtainedup to the date of our auditor’s report. However, future events or conditions maycause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation (including disclosure), structure andcontent of the financial statements, and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
(6) Obtain sufficient and appropriate audit evidence regarding the financial
information of the entities or business activities within the Company to expressan opinion on the financial statements. We are responsible for the direction,supervision and performance of the Group audit. We remain sole responsibilityfor our audit opinion.We communicate with those charged with governance regarding the plannedaudit scope, time schedule and significant audit findings, including anydeficiencies in internal control of concern that we identify during our audit.We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence, and tocommunicate with them all relationships and other matters that may reasonablybe thought to bear on our independence, and where applicable, relatedsafeguards. (if applicable)From the matters communicated with those charged with governance, wedetermine those matters of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances,we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
II. Financial Statements
1. Consolidated Balance Sheet
Prepared by: Zhejiang Wanfeng Auto Wheel Co., Ltd.
December 31, 2020
Unit: RMB
| Items | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and cash equivalents | 1,674,978,958.17 | 2,452,754,083.38 |
| Provision of settlement fund | ||
| Loans to other banks | ||
| Held-for-trading financial assets | 5,312,974.87 | 63,034,283.90 |
| Derivative financial assets | ||
| Notes receivable | 0.00 | 0.00 |
| Accounts receivable | 2,314,980,882.28 | 2,555,697,203.97 |
| Accounts receivable Financing | 382,204,743.00 | 378,904,590.58 |
| Advances paid | 158,136,290.24 | 173,597,304.56 |
| Premium receivable |
| Reinsurance accounts receivable | ||
| Reinsurance reserves receivable | ||
| Other receivables | 68,318,081.18 | 916,325,582.02 |
| Including: Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 0.00 |
| Financial assets under reverse repo | ||
| Inventories | 2,309,913,390.26 | 2,393,951,480.24 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Non-current assets due within one year | ||
| Other current assets | 95,604,249.64 | 117,007,873.14 |
| Total current assets | 7,009,449,569.64 | 9,051,272,401.79 |
| Non-current assets: | ||
| Loans and advances paid | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivable | ||
| Long-term equity investments | 567,810.84 | 12,612,542.86 |
| Other equity instrument investments | 4,733,395.22 | 4,942,489.56 |
| Other non-current financial assets | ||
| Investment property | 0.00 | 0.00 |
| Fixed assets | 4,872,464,413.48 | 5,113,660,627.42 |
| Construction in progress | 258,966,481.11 | 426,345,202.99 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 1,665,433,876.04 | 1,778,179,906.06 |
| Development expenditures | 70,537,893.00 | 0.00 |
| Goodwill | 1,662,994,509.32 | 1,701,158,115.52 |
| Long-term prepayments | 157,174,258.10 | 159,712,622.07 |
| Deferred tax assets | 263,442,276.75 | 188,710,115.07 |
| Other non-current assets | 7,461,417.37 | 50,655,894.55 |
| Total non-current assets | 8,963,776,331.23 | 9,435,977,516.10 |
| Total assets | 15,973,225,900.87 | 18,487,249,917.89 |
| Current liabilities: | ||
| Short-term borrowings | 3,544,296,670.02 | 3,070,118,768.19 |
| Central bank loans | ||
| Loans from other banks | ||
| Held-for-trading financial liabilities | 0.00 | 1,324,581.60 |
| Derivative financial liabilities | ||
| Notes payable | 192,867,169.90 | 218,601,865.08 |
| Accounts payable | 935,542,222.20 | 1,083,181,883.19 |
| Unearned revenue | 0.00 | 653,874,136.71 |
| Contract liabilities | 512,836,059.89 | 0.00 |
| Financial liabilities under repo | ||
| Absorbing deposit and interbank deposit | ||
| Deposit for agency security transaction | ||
| Deposit for agency security underwriting | ||
| Employee benefits payable | 231,516,785.37 | 238,740,090.73 |
| Tax payable | 113,185,854.56 | 71,472,056.11 |
| Other payables | 384,220,500.31 | 759,261,155.63 |
| Including: Interest Payable | 0.00 | 0.00 |
| Dividends Payable | 0.00 | 0.00 |
| Handling fee and commission payable | ||
| Reinsurance accounts payable | ||
| Held-for-sale liabilities | ||
| Non-current liabilities due within one year | 694,425,998.19 | 571,968,504.83 |
| Other current liabilities | 4,192,272.05 | 0.00 |
| Total current liabilities | 6,613,083,532.49 | 6,668,543,042.07 |
| Non-current liabilities: | ||
| Insurance policy reserve | ||
| Long-term borrowings | 1,179,201,272.08 | 1,165,220,492.00 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | 189,197,618.87 | 174,680,866.90 |
| Deferred income | 214,274,852.58 | 202,630,087.75 |
| Deferred tax liabilities | 268,634,907.53 | 268,233,346.43 |
| Other non-current liabilities | ||
| Total non-current liabilities | 1,851,308,651.06 | 1,810,764,793.08 |
| Total liabilities | 8,464,392,183.55 | 8,479,307,835.15 |
| Equity: | ||
| Share capital | 2,186,879,678.00 | 2,186,879,678.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 0.00 | 1,691,289,940.77 |
| Less: Treasury shares | 571,813,251.19 | 333,092,868.42 |
| Other comprehensive income | -54,828,527.62 | 74,589,529.22 |
| Special reserve | 13,513,057.42 | 10,261,018.12 |
| Surplus reserve | 47,015,012.60 | 427,043,757.25 |
| General risk reserve | ||
| Undistributed profit | 3,732,843,061.00 | 3,935,484,397.57 |
| Total equity attributable to the parent Company | 5,353,609,030.21 | 7,992,455,452.51 |
| Non-controlling interest | 2,155,224,687.11 | 2,015,486,630.23 |
| Total equity | 7,508,833,717.32 | 10,007,942,082.74 |
| Total liabilities & equity | 15,973,225,900.87 | 18,487,249,917.89 |
| Items | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and cash equivalents | 173,973,126.72 | 1,004,904,910.05 |
| Held-for-trading financial assets | 0.00 | 60,034,900.00 |
| Derivative financial assets | ||
| Notes receivable | 0.00 | 0.00 |
| Accounts receivable | 512,371,249.54 | 678,186,227.12 |
| Accounts receivable Financing | 188,767,363.39 | 159,939,620.65 |
| Advances paid | 31,624,593.38 | 28,429,672.81 |
| Other receivables | 241,713,997.31 | 494,780,887.10 |
| Including: Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 129,600,000.00 |
| Inventories | 182,348,341.74 | 243,049,665.85 |
| Contract assets | ||
| Assets classified as held for sale | ||
| Non-current assets due within one year |
| Other current assets | 17,591,154.73 | 17,910,061.89 |
| Total current assets | 1,348,389,826.81 | 2,687,235,945.47 |
| Non-current assets: | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivable | ||
| Long-term equity investments | 6,104,568,111.43 | 4,198,711,501.05 |
| Other equity instrument investments | ||
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 334,702,051.77 | 364,884,432.10 |
| Construction in progress | 44,769,695.54 | 57,506,951.74 |
| Productive biological assets | ||
| Oil & gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 51,462,555.18 | 53,332,915.40 |
| Development expenditures | ||
| Goodwill | ||
| Long-term prepayments | 7,921,595.36 | 9,208,148.95 |
| Deferred tax assets | 19,218,317.44 | 2,777,151.86 |
| Other non-current assets | 2,731,215.11 | 38,683,336.01 |
| Total non-current assets | 6,565,373,541.83 | 4,725,104,437.11 |
| Total assets | 7,913,763,368.64 | 7,412,340,382.58 |
| Current liabilities: | ||
| Short-term borrowings | 1,772,075,155.81 | 1,282,185,084.02 |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Note payable | 105,954,728.08 | 290,920,548.28 |
| Account payable | 295,956,510.99 | 417,556,226.11 |
| Unearned revenue | 0.00 | 3,103,027.57 |
| Contract liabilities | 4,359,811.90 | 0.00 |
| Employee benefits payable | 28,661,855.99 | 35,028,390.32 |
| Tax payable | 3,133,619.85 | 3,998,075.37 |
| Other payables | 1,630,748,176.80 | 891,820,777.91 |
| Including: Interest Payable | 0.00 | 0.00 |
| Dividends Payable | 0.00 | 0.00 |
| Held-for-sale liabilities | ||
| Non-current liabilities due within one year | 409,189,611.17 | 265,717,562.36 |
| Other current liabilities |
| Total current liabilities | 4,250,079,470.59 | 3,190,329,691.94 |
| Non-current liabilities: | ||
| Long-term borrowings | 540,000,000.00 | 396,962,631.92 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 1,361,000.00 | 1,872,600.00 |
| Deferred tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 541,361,000.00 | 398,835,231.92 |
| Total liabilities | 4,791,440,470.59 | 3,589,164,923.86 |
| Equity: | ||
| Share capital | 2,186,879,678.00 | 2,186,879,678.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 546,877,912.39 | 1,059,096,302.01 |
| Less: Treasury shares | 571,813,251.19 | 333,092,868.42 |
| Other comprehensive income | ||
| Special reserve | 3,545,315.73 | 1,919,506.02 |
| Surplus reserve | 474,058,769.85 | 427,043,757.25 |
| Undistributed profit | 482,774,473.27 | 481,329,083.86 |
| Total equity | 3,122,322,898.05 | 3,823,175,458.72 |
| Total liabilities & equity | 7,913,763,368.64 | 7,412,340,382.58 |
| Items | 2020 FY | 2019 FY |
| I. Total operating revenue | 10,699,224,904.57 | 12,635,131,976.26 |
| Including: Operating revenue | 10,699,224,904.57 | 12,635,131,976.26 |
| Interest income | ||
| Premium earned | ||
| Revenue from handling charges and commission | ||
| II. Total operating cost | 9,993,785,587.88 | 11,625,527,060.84 |
| Including: Operating cost | 8,539,410,065.42 | 9,898,549,079.42 |
| Interest expenses | ||
| Handling charges and commission expenditures |
| Surrender value | ||
| Net payment of insurance claims | ||
| Net provision of insurance policy reserve | ||
| Premium bonus expenditures | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 54,029,485.53 | 66,026,715.09 |
| Selling expenses | 202,937,418.90 | 326,373,313.10 |
| Administrative expenses | 590,837,746.38 | 669,461,795.85 |
| R&D expenses | 337,448,870.68 | 446,102,958.85 |
| Financial expenses | 269,122,000.97 | 219,013,198.53 |
| Including: Interest expenses | 245,818,075.95 | 241,813,490.17 |
| Interest income | 34,003,395.60 | 46,585,659.98 |
| Add: Other income | 104,562,193.16 | 91,765,417.17 |
| Investment income (loss) | 612,550.85 | 2,020,850.00 |
| Including: Investment income from associates and joint ventures | -876,459.23 | 633,198.02 |
| Gains from derecognition of financial assets at amortized cost | ||
| Gains (Losses) on foreign exchange | ||
| Gains (Losses) on net exposure to hedging risk | ||
| Gains (Losses) on changes in fair value | 2,246,554.36 | -255,950.82 |
| Credit impairment loss | -7,223,519.05 | -32,936,944.78 |
| Asset impairment loss | -10,179,361.63 | -18,650,416.29 |
| Gains (Losses) on asset disposal | 501,156.94 | -783,226.18 |
| III. Operating profit (Loss) | 795,958,891.32 | 1,050,764,644.52 |
| Add: Non-operating revenue | 43,050,711.82 | 170,199,098.05 |
| Less: Non-operating expenditures | 9,986,870.11 | 6,935,181.29 |
| IV. Profit before tax (Loss) | 829,022,733.03 | 1,214,028,561.28 |
| Less: Income tax expense | 64,146,512.15 | 172,794,219.07 |
| V. Net profit (Loss) | 764,876,220.88 | 1,041,234,342.21 |
| (I) Categorized by the continuity of operations | ||
| 1. Net profit (loss) from continuing operations | 764,876,220.88 | 1,041,234,342.21 |
| 2. Net profit (loss) from discontinued operations | ||
| (II) Categorized by the portion of equity ownership | ||
| 1. Net profit (loss) attributable to owners of parent Company | 565,820,630.75 | 895,769,920.83 |
| 2. Net profit (loss) attributable to non-controlling shareholders | 199,055,590.13 | 145,464,421.38 |
| VI. Other comprehensive income after tax | -148,446,465.82 | 129,200,209.01 |
| Items attributable to the owners of the parent Company | -129,418,056.84 | 98,544,238.16 |
| (I) Not to be reclassified subsequently to profit and loss | 0.00 | 0.00 |
| 1.Changes in remeasurement on the net defined benefit plan | ||
| 2. Items under equity method that will not be reclassified to profit and loss | ||
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of own credit risk | ||
| 5. Others | ||
| (II) To be reclassified subsequently to profit and loss | -129,418,056.84 | 98,544,238.16 |
| 1. Items under equity method that may be reclassified to profit and loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Profit and loss from reclassification of financial assets into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | -129,418,056.84 | 98,544,238.16 |
| 7. Others | ||
| Items attributable to non-controlling shareholders | -19,028,408.98 | 30,655,970.85 |
| VII. Total comprehensive income | 616,429,755.06 | 1,170,434,551.22 |
| Items attributable to the owners of the parent Company | 436,402,573.91 | 994,314,158.99 |
| Items attributable to non-controlling shareholders | 180,027,181.15 | 176,120,392.23 |
| VIII. Earnings per share (EPS): | ||
| (I) Basic EPS (yuan per share) | 0.27 | 0.41 |
| (II) Diluted EPS (yuan per share) | 0.27 | 0.41 |
previous period was 229,910,806.31 yuan.
Legal representative: Chen Bin Officer in charge of accounting: Dong Ruiping Head of accounting department: Chen Shanfu
4. Income Statement of Parent Company
Unit: RMB
| Items | 2020 FY | 2019 FY |
| I. Total operating revenue | 2,349,143,663.22 | 3,139,659,207.59 |
| Less: Operating cost | 2,036,931,290.14 | 2,605,922,606.23 |
| Taxes and surcharges | 10,520,889.86 | 13,383,767.86 |
| Selling expenses | 30,034,081.55 | 45,416,077.55 |
| Administrative expenses | 73,910,484.22 | 75,155,827.27 |
| R&D expenses | 97,470,913.47 | 116,425,011.43 |
| Financial expenses | 152,395,765.07 | 90,542,907.65 |
| Including: Interest expenses | 168,222,674.30 | 111,391,522.53 |
| Interest income | 37,369,509.04 | 19,909,734.18 |
| Add: Other income | 7,015,547.09 | 13,610,933.42 |
| Investment income (loss) | 501,406,627.81 | 116,260,000.00 |
| Including: Investment income from associates and joint ventures | 0.00 | 0.00 |
| Gains from derecognition of financial assets at amortized cost | ||
| Gains (Losses) on foreign exchange | ||
| Gains (Losses) on changes in fair value | 0.00 | -1,305.00 |
| Credit impairment loss | 4,341,633.88 | -4,167,701.30 |
| Asset impairment loss | -1,396,874.52 | -4,172,696.45 |
| Gains (Losses) on asset disposal | -581,524.59 | -634,061.65 |
| II. Operating profit (Loss) | 458,665,648.58 | 313,708,178.62 |
| Add: Non-operating revenue | 2,493,796.90 | 35,452,610.95 |
| Less: Non-operating expenditures | 2,022,804.87 | 108,064.92 |
| III. Profit before tax (Loss) | 459,136,640.61 | 349,052,724.65 |
| Less: Income tax expense | -11,013,485.40 | 17,526,555.12 |
| IV. Net profit (Loss) | 470,150,126.01 | 331,526,169.53 |
| (I) Net profit (Loss) from the continuity of operations | 470,150,126.01 | 331,526,169.53 |
| (II) Net profit (Loss) from the discontinuity of operations | ||
| V. Other comprehensive income after tax | ||
| (I) Not to be reclassified subsequently to profit and loss | ||
| 1.Changes in remeasurement on the net defined benefit plan | ||
| 2. Items under equity method that will not be reclassified to profit and loss |
| 3. Changes in fair value of other equity instrument investments | ||
| 4. Changes in fair value of own credit risk | ||
| 5. Others | ||
| (II) To be reclassified subsequently to profit and loss | ||
| 1. Items under equity method that may be reclassified to profit and loss | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Profit and loss from reclassification of financial assets into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Cash flow hedging reserve | ||
| 6. Translation reserve | ||
| 7. Others | ||
| VI. Total comprehensive income | 470,150,126.01 | 331,526,169.53 |
| VII. Earnings per share (EPS): | ||
| (I) Basic EPS (yuan per share) | 0.22 | 0.15 |
| (II) Diluted EPS (yuan per share) | 0.22 | 0.15 |
| Items | 2020 FY | 2019 FY |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods or rendering of services | 10,748,387,602.66 | 12,425,185,321.70 |
| Net increase of client deposit and interbank deposit | ||
| Net increase of central bank loans | ||
| Net increase of loans from other financial institutions | ||
| Cash receipts from original insurance contract premium | ||
| Net cash receipts from reinsurance | ||
| Net increase of policy-holder deposit and investment |
| Cash receipts from interest, handling charges and commission | ||
| Net increase of loans from others | ||
| Net increase of repurchase | ||
| Net cash receipts from agency security transaction | ||
| Cash receipts of tax and fee refund | 135,380,632.65 | 230,368,027.14 |
| Other cash receipts related to operating activities | 208,261,628.71 | 168,076,148.82 |
| Subtotal of cash inflows from operating activities | 11,092,029,864.02 | 12,823,629,497.66 |
| Cash payments for goods purchased and services received | 6,504,776,125.54 | 8,010,207,900.09 |
| Net increase of loans and advances to clients | ||
| Net increase of central bank deposit and interbank deposit | ||
| Cash payments for insurance indemnities of original insurance contracts | ||
| Net increase of loans to others | ||
| Cash payments for interest, handling charges and commission | ||
| Cash payments for policy bonus | ||
| Cash paid to and on behalf of employees | 1,786,434,955.90 | 1,982,012,404.38 |
| Cash payments for tax and fee | 345,568,987.48 | 480,299,957.07 |
| Other cash payments related to operating activities | 719,468,888.68 | 930,740,356.35 |
| Subtotal of cash outflows from operating activities | 9,356,248,957.60 | 11,403,260,617.89 |
| Net cash flows from operating activities | 1,735,780,906.42 | 1,420,368,879.77 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 37,264,900.00 | 369,821,633.24 |
| Cash receipts from investment income | 0.00 | 2,826,628.60 |
| Net cash receipts from the disposal of fixed assets, intangible asset and other long-term asset | 48,807,553.01 | 5,744,155.38 |
| Net cash receipts from the disposal of subsidiaries & other business units | 10,461,733.98 | 0.00 |
| Other cash receipts related to investing activities | 1,576,698,931.75 | 2,113,790,191.03 |
| Subtotal of cash inflows from investing activities | 1,673,233,118.74 | 2,492,182,608.25 |
| Cash payments for the acquisition of fixed assets, intangible asset and other long-term asset | 470,883,605.98 | 980,086,310.09 |
| Cash payments for investments | 37,230,000.00 | 244,525,588.90 |
| Net increase of pledged borrowings | ||
| Net cash payments for the acquisition of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash payments related to investing activities | 90,588,740.00 | 1,884,897,477.00 |
| Subtotal of cash outflows from investing activities | 598,702,345.98 | 3,109,509,375.99 |
| Net cash flows from investing activities | 1,074,530,772.76 | -617,326,767.74 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 0.00 | 91,500,000.00 |
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | 0.00 | 0.00 |
| Cash receipts from borrowings | 4,528,609,710.84 | 5,060,014,993.61 |
| Other cash receipts related to financing activities | 218,800,000.00 | 58,929,200.00 |
| Subtotal of cash inflows from financing activities | 4,747,409,710.84 | 5,210,444,193.61 |
| Cash payments for the repayment of borrowings | 3,978,582,138.60 | 4,211,260,285.60 |
| Cash payments for distribution of dividends or profits and for interest expenses | 712,806,601.09 | 973,540,594.14 |
| Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit | 39,905,253.01 | 62,801,879.35 |
| Other cash payments related to financing activities | 2,886,795,382.77 | 601,892,868.42 |
| Subtotal of cash outflows from financing activities | 7,578,184,122.46 | 5,786,693,748.16 |
| Net cash flows from financing activities | -2,830,774,411.62 | -576,249,554.55 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | 6,181,618.57 | 31,887,296.59 |
| V. Net increase in cash and cash equivalents | -14,281,113.87 | 258,679,854.07 |
| Add: Opening balance of cash and cash equivalents | 1,426,647,961.41 | 1,167,968,107.34 |
| VI. Closing balance of cash and cash equivalents | 1,412,366,847.54 | 1,426,647,961.41 |
| Items | 2020 FY | 2019 FY |
| I. Cash flows from operating activities: | ||
| Cash receipts from sale of goods or rendering of services | 2,733,114,976.71 | 3,051,573,302.62 |
| Cash receipts of tax and fee refund | 66,559,713.45 | 126,777,169.39 |
| Other cash receipts related to operating activities | 80,694,298.23 | 29,607,387.39 |
| Subtotal of cash inflows from operating activities | 2,880,368,988.39 | 3,207,957,859.40 |
| Cash payments for goods purchased and services received | 1,814,822,275.21 | 2,361,560,613.29 |
| Cash paid to and on behalf of employees | 185,943,926.44 | 206,274,202.85 |
| Cash payments for tax and fee | 9,654,062.38 | 53,332,603.08 |
| Other cash payments related to operating activities | 106,169,002.16 | 205,178,776.90 |
| Subtotal of cash outflows from operating activities | 2,116,589,266.19 | 2,826,346,196.12 |
| Net cash flows from operating activities | 763,779,722.20 | 381,611,663.28 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 34,900.00 | 97,885,700.00 |
| Cash receipts from investment income | 608,727,020.93 | 106,291,097.13 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 585,896.09 | 584,336.51 |
| Net cash receipts from the disposal of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash receipts related to investing activities | 1,211,313,748.92 | 1,523,450,378.58 |
| Subtotal of cash inflows from investing activities | 1,820,661,565.94 | 1,728,211,512.22 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 12,712,815.29 | 91,123,117.31 |
| Cash payments for investments | 2,418,075,000.00 | 36,205.00 |
| Net cash payments for the acquisition of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash payments related to investing activities | 403,015,284.50 | 1,188,643,952.79 |
| Subtotal of cash outflows from investing activities | 2,833,803,099.79 | 1,279,803,275.10 |
| Net cash flows from investing activities | -1,013,141,533.85 | 448,408,237.12 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 0.00 | 0.00 |
| Cash receipts from borrowings | 4,491,107,248.30 | 3,049,613,485.16 |
| Other cash receipts related to financing activities | 161,000,000.00 |
| Subtotal of cash inflows from financing activities | 4,652,107,248.30 | 3,049,613,485.16 |
| Cash payments for the repayment of borrowings | 3,641,165,775.06 | 2,484,507,491.30 |
| Cash payments for distribution of dividends or profits and for interest expenses | 590,335,992.12 | 770,757,962.38 |
| Other cash payments related to financing activities | 238,720,382.77 | 531,892,868.42 |
| Subtotal of cash outflows from financing activities | 4,470,222,149.95 | 3,787,158,322.10 |
| Net cash flows from financing activities | 181,885,098.35 | -737,544,836.94 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -942,299.26 | 580,136.64 |
| V. Net increase in cash and cash equivalents | -68,419,012.56 | 93,055,200.10 |
| Add: Opening balance of cash and cash equivalents | 185,112,728.92 | 92,057,528.82 |
| VI. Closing balance of cash and cash equivalents | 116,693,716.36 | 185,112,728.92 |
7. Consolidated Statement of Changes in Owner’s EquityAmount in the current period
Unit: 10,000 RMB
| Items | 2020 FY | ||||||||||||||
| Equity Attributable to parent Company | Non-controlling interest | Total equity | |||||||||||||
| Share Capital | Other equity instruments | Capital reserve | Less: treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of prior year | 218,688 | 11,496 | 33,309 | 5,568 | 1,026 | 42,704 | 368,909 | 615,082 | 51,001 | 666,083 | |||||
| Add: Cumulative changes of accounting policies | |||||||||||||||
| Error correction of prior period | |||||||||||||||
| Business combination under | 157,633 | 1,891 | 24,639 | 184,163 | 150,548 | 334,711 | |||||||||
| common control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the beginning of current year | 218,688 | 169,129 | 33,309 | 7,459 | 1,026 | 42,704 | 393,548 | 799,246 | 201,549 | 1,000,794 | |||||
| III. Current period increase (or "-" decrease) | -169,129 | 23,872 | -12,941 | 325 | -38,003 | -20,264 | -263,885 | 13,974 | -249,911 | ||||||
| (I) Total comprehensive income | -12,942 | 56,582 | 43,640 | 18,003 | 61,643 | ||||||||||
| (II) Capital contributed or withdrawn by owners | -169,129 | 23,872 | -42,704 | -29,976 | -265,681 | -38,387 | -265,720 | ||||||||
| 1. Ordinary shares contributed by owners |
| 2. Capital contributed by holders of other equity instruments | |||||||||||||||
| 3. Amount of share-based payment included in equity | |||||||||||||||
| 4. Others | -169,129 | 23,872 | -42,704 | -29,976 | -265,681 | -38,387 | -265,720 | ||||||||
| (III) Profit distribution | 4,702 | -46,870 | -42,169 | -3,991 | -46,159 | ||||||||||
| 1. Appropriation of surplus reserve | 4,702 | -4,702 | |||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Appropriation of | -42,169 | -42,169 | -3,991 | -46,159 |
| profit to owners | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over within equity | |||||||||||||||
| 1. Transfer of capital reserve to capital | |||||||||||||||
| 2. Transfer of surplus reserve to capital | |||||||||||||||
| 3. Surplus reserve to cover losses | |||||||||||||||
| 4. Changes in defined benefit plan carried over to retained |
| earnings | |||||||||||||||
| 5. Other comprehensive income carried over to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | 325 | 325 | 325 | ||||||||||||
| 1. Appropriation of current period | 2,098 | 2,098 | 2,098 | ||||||||||||
| 2. Application of current period | -1,773 | -1,773 | -1,773 | ||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 218,688 | 57,181 | -5,483 | 1,351 | 4,702 | 373,284 | 535,361 | 215,522 | 750,883 |
| Items | 2019 FY | ||||||||||||||
| Equity Attributable to parent Company | Non-controlling interest | Total equity | |||||||||||||
| Share Capital | Other equity instruments | Capital reserve | Less: treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Subtotal | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Balance at the end of prior year | 218,688 | 11,496 | 670 | 690 | 39,389 | 362,122 | 633,054 | 50,859 | 683,913 | ||||||
| Add: Cumulative changes of accounting policies | -1,223 | -1,223 | -63 | -1,286 | |||||||||||
| Error correction of prior period | |||||||||||||||
| Business combination under common control | 157,633 | -3,066 | 11,994 | 166,562 | 137,136 | 303,698 | |||||||||
| Others | |||||||||||||||
| II. Balance at the | 218,688 | 169,129 | -2,395 | 690 | 39,389 | 372,893 | 798,393 | 187,932 | 986,325 | ||||||
| beginning of current year | |||||||||||||||
| III. Current period increase (or “-” decrease) | 33,309 | 9,854 | 337 | 3,315 | 20,655 | 852 | 13,617 | 14,469 | |||||||
| (I) Total comprehensive income | 9,854 | 89,577 | 99,431 | 17,612 | 117,043 | ||||||||||
| (II) Capital contributed or withdrawn by owners | 33,309 | -33,309 | 40 | -33,269 | |||||||||||
| 1. Ordinary shares contributed by owners | 40 | 40 | |||||||||||||
| 2. Capital contributed by holders of other equity instruments |
| 3. Amount of share-based payment included in equity | |||||||||||||||
| 4. Others | 33,309 | -33,309 | -33,309 | ||||||||||||
| (III) Profit distribution | 3,315 | -68,922 | -65,606 | -4,035 | -69,642 | ||||||||||
| 1. Appropriation of surplus reserve | 3,315 | -3,315 | |||||||||||||
| 2. Appropriation of general risk reserve | |||||||||||||||
| 3. Appropriation of profit to owners | -65,606 | -65,606 | -4,035 | -69,642 | |||||||||||
| 4. Others | |||||||||||||||
| (IV) Internal carry-over |
| within equity | |||||||||||||||
| 1. Transfer of capital reserve to capital | |||||||||||||||
| 2. Transfer of surplus reserve to capital | |||||||||||||||
| 3. Surplus reserve to cover losses | |||||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | |||||||||||||||
| 5. Other comprehensive income carried over to retained |
| earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | 337 | 337 | 337 | ||||||||||||
| 1. Appropriation of current period | 2,773 | 2,773 | 2,773 | ||||||||||||
| 2. Application of current period | -2,436 | -2,436 | -2,436 | ||||||||||||
| (VI) Others | |||||||||||||||
| IV. Balance at the end of current period | 218,688 | 169,129 | 33,309 | 7,459 | 1,026 | 42,704 | 393,548 | 799,246 | 201,549 | 1,000,794 |
| Items | 2020 FY | |||||||||||
| Share Capital | Other equity instruments | Capital reserve | Less: treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the end of prior year | 218,688 | 105,910 | 333,092,868.42 | 192 | 42,704 | 48,133 | 382,318 | |||||
| Add: Cumulative changes of accounting policies | ||||||||||||
| Error correction of prior period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the beginning of current year | 218,688 | 105,910 | 33,310 | 192 | 42,704 | 48,133 | 382,318 | |||||
| III. Current period increase (or “-”decrease) | -51,222 | 23,872 | 162,581 | 4,702 | 145 | -70,085 | ||||||
| (I) Total comprehensive income | 47,015 | 47,015 | ||||||||||
| (II) Capital contributed or withdrawn by owners | -51,222 | 23,872 | -75,094 | |||||||||
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payment included in equity | ||||||||||||
| 4. Others | -51,222 | 23,872 | -75,094 |
| (III) Profit distribution | 4,702 | -46,870 | -42,169 | |||||||||
| 1. Appropriation of surplus reserve | 4,702 | -4,702 | ||||||||||
| 2. Appropriation of profit to owners | -42,169 | -42,169 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over within equity | ||||||||||||
| 1. Transfer of capital reserve to capital | ||||||||||||
| 2. Transfer of surplus reserve to capital | ||||||||||||
| 3. Surplus reserve to cover losses | ||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | ||||||||||||
| 5. Other comprehensive income carried over to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | 163 | 163 | ||||||||||
| 1. Appropriation of current period | 456 | 456 |
| 2. Application of current period | -294 | -294 | ||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 218,688 | 54,688 | 57,181 | 355 | 47,406 | 48,277 | 312,232 |
| Items | 2019 FY | |||||||||||
| Share Capital | Other equity instruments | Capital reserve | Less: treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Balance at the end of prior year | 218,688 | 105,910 | 39,389 | 84,460 | 448,447 | |||||||
| Add: Cumulative changes of accounting policies | -558 | -558 | ||||||||||
| Error correction of prior period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the beginning of current year | 218,688 | 105,910 | 39,389 | 83,902 | 447,889 | |||||||
| III. Current period increase (or “-” decrease) | 33,309 | 192 | 3,315 | -35,769 | -65,571 | |||||||
| (I) Total comprehensive income | 33,153 | 33,153 | ||||||||||
| (II) Capital contributed or withdrawn by owners | 33,309 | -33,309 | ||||||||||
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contributed by holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payment included in equity | ||||||||||||
| 4. Others | 33,309 | -33,309 | ||||||||||
| (III) Profit distribution | 3,315 | -68,922 | -65,606 | |||||||||
| 1. Appropriation of surplus reserve | 3,315 | -3,315 | ||||||||||
| 2. Appropriation of profit to owners | -65,606 | -65,606 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Internal carry-over within equity | ||||||||||||
| 1. Transfer of capital reserve to capital |
| 2. Transfer of surplus reserve to capital | ||||||||||||
| 3. Surplus reserve to cover losses | ||||||||||||
| 4. Changes in defined benefit plan carried over to retained earnings | ||||||||||||
| 5. Other comprehensive income carried over to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | 192 | 192 | ||||||||||
| 1. Appropriation of current period | 468 | 468 | ||||||||||
| 2. Application of current period | -276 | -276 | ||||||||||
| (VI) Others | ||||||||||||
| IV. Balance at the end of current period | 218,688 | 105,910 | 33,309 | 192 | 42,704 | 48,133 | 382,318 |
III. Basic information of the Company
Zhejiang Wanfeng Auto Wheel Co., Ltd. ("the Company" or "Wanfeng AutoWheel") is a joint-stock limited company registered in Zhejiang, China and wasestablished in September 30, 2001. The ordinary A shares denominated inRMB issued by the Company have been listed on the Shenzhen StockExchange. The Company is headquartered in Xinchang County Industrial Zone(Houxi), Zhejiang, China. The principal business of the Company includes:
production, sales and technical consultation, service of automobile aluminumalloy wheels, motorcycle aluminum alloy wheels and other parts; Design,research and development, manufacturing and sales of lightweight magnesiummaterials and components for automobiles and motorcycles; Research,development, manufacturing, sales and related technical services of metal,non-metallic materials and their products, karts, and environmental protectionequipment; Manufacturing and processing of metal bolts, coating treatment ofmechanical parts, coating equipment, manufacturing of coating solvents,coating technology services; Manufacturing of textile machinery and parts(excluding cotton spinning frames and accessories); Manufacturing andprocessing of molds, mechanical parts, and auto parts; operating imports andexports business; Design, test, production, sales, maintenance and repair ofgeneral aviation aircraft, helicopters, aero engines, and avionics electrical andmechanical systems; Technology development and consulting services for thegeneral aviation industry; Import and export of goods and technology.
The parent and ultimate parent of the Company is Wanfeng Auto Holding GroupCo., Ltd. (hereinafter referred to as "Wanfeng Group") established in thePeople's Republic of China.
As of December 31, 2020, Wanfeng Group currently holds 33.37% shares ofthe Company and is the Company’s controlling shareholder. Ms. Chen Ailianand Mr. Wu Liangding hold 4.46% and 0.57% shares of the Companyrespectively. Ms. Chen Ailian, Mr. Wu Liangding, and Mr. Wu Jie hold 39.60%,
22.50%, and 3.76% shares of Wanfeng Group respectively. Ms. Chen Ailianand Mr. Wu Liangding are in a husband-wife relationship. Mr. Wu Liangdingand Mr. Wu Jie are a father-son relationship. Ms. Chen Ailian and the WuLiangding family (Mr. Wu Liangding and Mr. Wu Jie) are jointly the actualcontrollers of the Company.
This financial statement was approved by the Company's Board of Directors onApril 28, 2021. According to the Articles of Association of the Company, thisfinancial statement will be submitted to the general meeting of shareholders fordeliberation.
The consolidation scope of the consolidated financial statements is determinedon the basis of control. Please refer to Note VIII for changes in this year.
IV. Preparation Basis of the Financial Statements
1. Preparation basis
The financial statements are prepared according to the Accounting Standardsfor Business Enterprises-Basic Standards promulgated by the Ministry ofFinance and specific accounting standards, application guidelines,interpretations, and other relevant regulations (collectively referred to as"Accounting Standards for Business Enterprises") promulgated and revisedthereafter.
This financial statement is presented based on going concern basis.When preparing these financial statements, except for certain financialinstruments, historical cost is used as the pricing principle. If an asset isimpaired, the corresponding provision for impairment shall be made accordingto relevant regulations.
The influence of business combination under the common control on thepreparation basis of financial statements:
Wanfeng Aircraft Industry Co., Ltd. was established on March 16, 2018(hereinafter referred to as "Aircraft Industry") as a limited company registeredin Zhejiang, China.
The parent company of the Aircraft Industry is Wanfeng Aviation Industry Co.,Ltd., and the ultimate controlling shareholder is Wanfeng Group.The Company held the 33rd meeting of the sixth board of directors on February22, 2020, and the second extraordinary general meeting of shareholders in2020 on March 20, 2020, and passed the resolutions of using its own and self-raised funds purchased a 55% stake in Wanfeng Aircraft Industry Co., Ltd. fromWanfeng Aviation Industry Co., Ltd.
On April 16, 2020, the Company acquired a 55% equity interest in the AircraftIndustry from Wanfeng Aviation Industry Co., Ltd. for RMB 2,418,075,000.00 incash.
As before and after the combination, the Company and Aircraft Industry areultimately controlled by Wanfeng Group and the control is not temporary.Therefore, the assets and liabilities of the Aircraft Industry acquired by theCompany in accordance with the relevant requirements for businesscombinations under the common control are measured based on the bookvalue of the Aircraft Industry on the combination date.
In accordance with the relevant requirements for business combinations underthe common control, the operating results and cash flows of the Aircraft Industryhave been included in the consolidated financial statements from the date whenAircraft Industry and the Company are under the control of the ultimate
controlling party. And the transactions balance and amount between the twoshall be offset at the time of the combination. The reporting entity formed afterthe combination is deemed to have always existed since the ultimate controllingparty began to exercise control. Therefore, when the Company prepared the2020 financial statements, it restated the consolidated balance sheet onDecember 31, 2019, the consolidated income statement, the consolidated cashflow statement, and the consolidated statement of changes in owner’s equity in2019. (Hereinafter referred to as "restatement").
2. Going concern
The Company has no events or conditions that may cast significant doubts uponthe Company’s ability to continue as a going concern within the 12 months afterthe balance sheet date.
V. Significant Accounting Polices and Accounting Estimates
Notes to specific accounting policies and accounting estimates:
The Group has formulated specific accounting policies and accountingestimates based on actual production and operation characteristics, reflectedin the allowance of doubtful debt receivables, inventory valuation methods,fixed asset depreciation, intangible asset amortization, and revenue recognitionand measurement.
1. Statement of compliance with China Accounting Standards for
Business EnterprisesThe financial statements have been prepared in accordance with therequirements of China Accounting Standards for Business Enterprises(CASBEs), and present truly and completely the financial position on December31, 2020, results of operations and cash flows of the Company of 2020.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December ofeach calendar year.
3. Operating cycle
The Company has a relatively short operating cycle for its business, and anasset or a liability is classified as current if it is expected to be realized or duewithin 12 months.
4. Functional currency
The Company's functional currency and the currency used in the financialstatements are both RMB. Unless otherwise specified, they are all expressedin RMB or yuan.
Subsidiaries of the Group determine their accounting currency based on theeconomic environment in which they operate and convert them into RMB in
accordance with the policies described in Note V. 9 when preparing financialstatements.
5. Accounting treatments of business combination under and not under
common controlBusiness combinations are divided into business combinations under commoncontrol and business combinations not under common control.
Accounting treatment of business combination under common controlThe enterprises participating in the combination are ultimately controlled by thesame party or the same multiple parties before and after the combination. Thecontrol is not temporary and is a business combination under common control.In a business combination under common control, the party that obtains controlof other participating companies on the combination date is the combining party .The other companies participating in the merger are the combined parties. Thecombination date refers to the date on which the combining party obtains controlof the combined party.
The assets and liabilities obtained by the combining party in a businesscombination under a common control (including the goodwill formed by theultimate controlling party’s acquisition of the combined party) shall beaccounted for based on the book value in the ultimate controlling party’sfinancial statements on the combination date. The difference between the bookvalue of the net assets obtained by the combining party and the book value ofthe actual paid (or the total par value of the issued shares) shall be adjusted forthe equity premium in the capital reserve and the balance transferred from thecapital reserve of the original system. If it is insufficient to offset, the retainedearnings will be adjusted.
Accounting treatment of business combination not under common controlIf the enterprises participating in the combination are not ultimately controlledby the same party or the same multiple parties before and after the combination,it is a business combination not under common control. In a businesscombination not under common control, the party that obtains control of otherparticipating companies on the purchase date is the acquirer. The othercompanies participating in the combination are the acquiree. The purchase daterefers to the date on which the acquirer obtains control of the acquiree.
The identifiable assets, liabilities, and contingent liabilities of the acquireeobtained in a business combination not under common control are measuredat their fair value on the acquisition date.
The difference between combination cost and the fair value of identifiable netassets obtained from the acquiree at the acquisition date is recognized asgoodwill. Otherwise, the fair value of identifiable assets, liabilities andcontingent liabilities, and the measurement of the combination cost are
reviewed, then the difference is recognized in profit and loss. The subsequentmeasurement is made based on cost minus accumulated impairment loss.
6. Compilation method of consolidated financial statementsThe scope of the consolidated financial statements is based on control,including the financial statements of the Company and all its subsidiaries.Subsidiary refers to the entity controlled by the Company (including the divisiblepart of the enterprise and the invested unit, and the structured entity controlledby the Company, etc.).
When preparing consolidated financial statements, the subsidiary adopts thesame fiscal year and accounting policies as the Company. All assets, liabilities,equity, income, expenses, and cash flows arising from transactions betweencompanies within the group are fully offset at the time of consolidation.
If the current loss shared by the minority shareholders of a subsidiary exceedsthe initial shareholders’ equity of the subsidiary, the balance shall still be offsetagainst the minority shareholders’ equity.
For subsidiaries not under common control, the operating results and cashflows of the acquiree will be included in the consolidated financial statementsfrom obtaining the control of the acquiree. When preparing consolidatedfinancial statements, the financial statements of subsidiaries are adjustedbased on the fair value of the identifiable assets, liabilities, and contingentliabilities on the purchase date.
For subsidiaries under common control, the operating results and cash flows ofthe combined party are included in the consolidated financial statements fromthe beginning of the combination. When preparing the consolidated financialstatements, the relevant items of the previous financial statements are adjusted.The reporting entity formed after the combination is deemed to have alwaysexisted since the ultimate controlling party began to exercise control.If changes in relevant facts and circumstances lead to changes in one or moreof the control elements, the Company will reassess whether to control theinvestee.
7. Classification of joint arrangement and accounting treatment method
of joint operationJoint arrangements can be classified into joint operations and joint ventures.Joint operation refers to the arrangement in which a joint party party has rightsto the related assets of such arrangement and assumes the related liabilities ofsuch arrangement. A joint venture refers to the arrangement that the jointventure party only has rights to the net asset’s of such arrangement.
8. Recognition criteria of cash and cash equivalents
Cash refers to cash on hand and deposit on demand for payment. Cash
equivalents refer to short-term, highly liquid investments that can be readilyconverted to cash and that are subject to an insignificant risk of changes invalue.
9. Foreign currency translation
The Group converts foreign currency amounts into functional currency amountsfor foreign currency transactions.
Transactions denominated in foreign currency are translated into functionalcurrency amounts at the spot exchange rate at the transaction date at initialrecognition. Monetary items denominated in foreign currency are translated atthe spot exchange rate at the balance sheet date. The difference will berecognized through profit and loss, except for those arising from the principaland interest of exclusive borrowings eligible for capitalization. Non-monetaryitems carried at historical costs in foreign currency are translated at the spotexchange rate at the transaction date, with its functional currency amountsunchanged. Non-monetary items carried at fair value in foreign currency aretranslated at the spot exchange rate at the date when the fair value wasdetermined. The difference will be recognized through profit and loss, or othercomprehensive income depending on the nature of those non-monetary items.For overseas operations, the Group converts its functional currency amountsinto RMB when preparing financial statements: The assets and liabilities in thebalance sheet are translated into RMB at the spot rate at the balance sheetdate; the equity items, other than undistributed profit, are translated at the spotrate at the transaction date; the revenues and expenses in the incomestatement are translated into RMB at the average exchange rate during thetransaction period. The difference arising from the aforementioned foreigncurrency translation is recognized in other comprehensive income. In terms ofdisposal of an overseas operation, the other comprehensive income related tothe overseas operation is transferred to the current profit and loss. The partialdisposal is calculated according to the disposal ratio.
Foreign currency cash flows and cash flows of overseas subsidiaries aretranslated using the average exchange rate. The impact of exchange ratechanges on cash is treated as an adjustment item and presented separately inthe cash flow statement.
10. Financial instruments
Financial instruments refer to contracts that form one party’s financial assetsinto other parties’ financial liabilities or equity instruments.
Recognition and derecognition of financial instruments
When the Company becomes a party to a financial instrument, it is recognizedas a financial asset or financial liability.
If the following conditions are met, the derecognition of a financial asset (or partof a financial asset, or part of a group of similar financial assets) shall be writtenoff from its account and balance sheet:
(1) The right to receive cash flows of financial assets expires.
(2) The right to collect the cash flow of financial assets is transferred, or theobligation to fully pay the collected cash flow to a third party on time under the"pass-through agreement", and satisfied one of the following criteria:
(a) all the risks and rewards related to the ownership of the financial assetshave been transferred.(b) Although all the risks and rewards of the ownership financial assets areneither transferred nor retained, the control of the financial assets has beenabandoned.
If the responsibility of the financial liability has been fulfilled, canceled, orexpired, the financial liability shall be derecognized. If an existing financialliability is replaced by the same creditor with another financial liability withalmost completely different terms, or almost all the terms of the existing liabilityare substantially modified, such replacement or modification shall be regardedas the derecognition of the original liability and the recognition of the new liability.For debt treatment, the difference is included in the current profit and loss.
The purchase and sale of financial assets in a conventional manner shall berecognized and derecognized according to the transaction day. Theconventional way of buying and selling financial assets refers to the receipt ordelivery of financial assets within the time limit stipulated by laws andregulations or common practices in accordance with the terms of the contract.Transaction date refers to the date on which the Group promises to buy or sellfinancial assets.
Classification and measurement of financial assets
The Company’s financial assets are classified according to the business modelof the Group’s corporate management of financial assets and the contractualcash flow characteristics of financial assets at initial recognition. It can beclassified into financial assets measured at fair value through profit and loss,financial assets measured at amortized cost, and financial assets measured atfair value through other comprehensive income.
Financial assets initially recognized by the Company and measured at fair value.hHowever, for accounts receivable as a result of selling goods or providingservices that do not contain a significant financing component or not considerfinancing components with an associated period less than one year, theCompany measures at their transaction price.
For the financial assets measured at fair value and the changes recognizedthrough the current profit and loss, the transaction expenses thereof are directlyincluded in profit and loss. For other categories of financial assets and financialliabilities, the transaction expenses thereof are included in the initiallyrecognized amount.
The subsequent measurement of financial assets depends on theirclassification:
Debt investments measured at amortized cost
Financial assets that meet the following conditions are classified as financialassets measured at amortized cost: The financial assets aim to collect contractcash flow; The contract terms of the financial asset stipulate that the cash flowgenerated on a specific date is only used to pay for the principal and interest.Such financial assets use the effective interest rate method to recognizeinterest income. The gains and losses arising from the derecognition,modification, or impairment are included in the current profit and loss.
Debt Investment measured at fair value and the changes recognized throughother comprehensive income
Financial assets that meet the following conditions are classified as financialassets measured at fair value and the changes recognized through othercomprehensive income: The financial assets aim to collect contractual cashflow and to sell financial assets. The contract terms of the financial assetsstipulate that the cash flow generated on a specific date is only used to pay forthe principal and interest. Such financial assets use the effective interestmethod to recognize interest income. Except for interest income, impairmentlosses, and exchange differences recognized as current profits and losses, theother fair value changes are recognized in other comprehensive income. Whenfinancial assets are derecognized, the accumulated gains and losses previouslyincluded in other comprehensive income are transferred to current profit andloss.
Equity instrument investment measured at fair value and the changesrecognized through other comprehensive income
The Group irrevocably chooses to designate some non-trading equityinstrument investments as financial assets measured at fair value and thechanges recognized through other comprehensive income. Only the relevantdividend income (except for the dividend income that is clearly recovered aspart of the investment cost) is included in the current profit and loss, andsubsequent changes in the fair value are included in other comprehensiveincome, and no impairment provision is required. When financial assets arederecognized, the accumulated gains and losses previously included in other
comprehensive income are transferred from other comprehensive income toretained earnings.
Financial assets measured at fair value and the changes recognized throughcurrent profit and loss
Other financial assets, except for financial assets measured at amortized costand other than financial assets measured at amortized cost and financial assetsmeasured at fair value and the changes recognized through othercomprehensive, are classified as financial assets measured at fair valuethrough current profits and losses. Such financial assets, fair value is used forsubsequent measurement, and all changes in fair value are recognized in thecurrent profit and loss.
Classification and measurement of financial liabilities
The Company’s financial liabilities are classified at initial recognition: financialliabilities measured at fair value through current profits and losses and otherfinancial liabilities. For financial liabilities measured at fair value through currentprofit and loss, the related transaction costs are directly included in the currentprofit and loss. For other financial liabilities, the related transaction costs areincluded in the initial recognition amount.
The subsequent measurement of financial liabilities depends on itsclassification:
Financial liabilities measured at fair value and the changes recognized throughcurrent profit and loss
Financial liabilities measured at fair value and the changes recognized throughcurrent profits and losses include trading financial liabilities (includingderivatives that are financial liabilities) and financial liabilities measured at fairvalue through current profits and losses designated at the initial recognition.Trading financial liabilities (including derivatives that are financial liabilities) aresubsequently measured at fair value, and all changes in fair value arerecognized in the current profit and loss. For financial liabilities measured at fairvalue through current profit and loss, subsequent measurement is carried outat fair value. Except for changes in fair value caused by the Group’s own creditrisk are recognized through other comprehensive income, other changes in fairvalue are included in the current profit and loss. If changes in fair value throughother comprehensive income caused by Group's credit risk cause or enlargethe accounting mismatch in profit and loss, the Group will include all changesin fair value (including the amount affected by changes in its own credit risk) incurrent profit and loss.
Other financial liabilities
For such financial liabilities, the effective interest rate method is adopted, andsubsequent measurement is carried out in accordance with amortized cost.
Impairment of financial instruments
Based on expected credit losses, the Company recognized the impairment offinancial assets measured at amortized cost and debt instrument investmentsmeasured at fair value and the changes recognized through othercomprehensive income.
For receivables that do not contain significant financing provisions, theCompany simplified measurement methods to measure the loss provisionequivalent to the expected credit loss during the entire duration.
For financial assets other than the above-mentioned simplified measurementmethods, the Company separately measures the expected credit losses offinancial instruments at different stages on the balance sheet date. In the firststage, if the credit risk of a financial instrument has not increased significantlysince the initial recognition, the loss provision is measured according to theexpected credit loss in the next 12 months. The interest income is calculatedbased on the book balance and the effective interest rate. In the second stage,if the credit risk of a financial instrument has increased significantly since itsinitial recognition but no credit impairment has occurred, the loss provision ismeasured based on the expected credit loss for the entire duration. The interestincome is calculated based on the book balance and the effective interest rate.In the third stage, if a financial instrument has been credit-impaired since itsinitial recognition, the loss provision is measured based on the expected creditloss for the entire duration. The interest income is based on amortized cost andeffective interest rate. For financial instruments with relatively low credit risk onthe balance sheet date, the Company assumes that their credit risk has notincreased significantly since the initial recognition.
The Company assesses the expected credit losses of financial instrumentsbased on individual items and portfolios. The Company considers the credit riskcharacteristics of different customers and evaluates the expected credit loss ofthe accounts receivable based on the aging combination.
Please refer to Note X. 4 for the disclosure of the Company's criteria fordetermining a significant increase in credit risk, the definition of credit-impairedassets, and the assumptions for the measurement of expected credit losses.
When the Company no longer reasonably expects to recover all or part of thecontractual cash flow of a financial asset, the Company directly writes down thebook value of the financial asset.
Offsetting financial instrument
If the following conditions are all met, the financial assets and financial liabilitiesare listed in the balance sheet as the net amount after offsetting each other:
Financial assets have the statutory right to offset the confirmed amount, andthis statutory right is currently enforceable. The plan is to settle on a net basisor to realize the financial assets and pay off the financial liabilities at the sametime.
Financial asset transfer
If the Group has transferred almost all the risks and rewards of financial assetsto the transferee, it shall terminate the recognition of the financial assets. If theGroup retains almost all the risks and rewards of financial assets, it shall notterminate the recognition of the financial assets.
If the Group neither transfers nor retains almost all the risks and rewards offinancial assets, it shall be dealt with as follows:
If the control of the financial assets is abandoned, the financial assets shall bederecognized, and the assets and liabilities shall be confirmed. If the financialasset is in control, the relevant financial assets shall be recognized accordingto the extent of its continued involvement in the transferred financial assets, andthe relevant liabilities shall be recognized accordingly.
Financial assets that are involved through the provision of financial guarantees,the value of the assets will be the lower of financial assets book value andfinancial guarantees. The financial guarantee amount refers to the highestamount required to be repaid among the consideration received.
11. Notes receivable
Refers to note v.10 “Financial instrument”.
12. Accounts receivable
Refers to note v.10 “Financial instrument”.
13. Accounts receivable financing
Refers to note v.10 “Financial instrument”.
14. Other receivables
The determination method and accounting treatment method of the expectedcredit loss of other receivables
Refers to note v.10 “Financial instrument”.
15. Inventories
Inventories include raw material, work in process product, semi-product, low-value consumables, and finished goods.
Inventories are initially measured at historical cost. Inventory costs includepurchase costs, processing costs, and other costs. The weighted averagemethod is used to determine the actual cost when inventory is sold. Low-valueconsumables are amortized with the one-shot write-off method.
The perpetual inventory system is adopted here.
On the balance sheet date, inventories are measured at the lower of cost or netrealizable value. Provisions for inventory write-down are made on the excessof its cost over the net realizable value. The difference will be included in theprofit and loss. If the factors influencing the previous provision for inventorydepreciation have disappeared, making the net realizable value of the inventoryhigher than its book value, the previously deducted amount of the inventorydepreciation reserve amount will be restored and the amount transferred backin the current profit and loss.
The net realizable value refers to the amount of the estimated selling price ofthe inventory minus the estimated cost, estimated selling expenses, and relatedtaxes and fees at the time of completion in daily activities. When makingprovision for inventory depreciation, raw materials are accrued by category, andfinished products are accrued according to individual inventory items.
16. Contract assets
The Company presents contract assets or contract liabilities in the balancesheet based on the relationship between its performance obligations andcustomers’ payments. Contract assets and contract liabilities under the samecontract shall offset each other and be presented on a net basis.
Contract assets refer to the right to receive consideration for the transfer ofgoods or services to customers, and this right depends on factors other thanthe passage of time.
17. Contract cost
No
18. Assets classified as held for sale
No
19. Debt investments
No
20. Other debt investments
No
21. Long-term receivable
No
22. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, jointventures, and associates.
Long-term equity investment is initially measured at the initial investment costwhen it is acquired. For business combination under common control, on thedate of combination, it regards the share of the carrying amount of the equity ofthe combined party included the consolidated financial statements of theultimate controlling party as the initial cost of the investment. The differencebetween the initial cost of the long-term equity investments and the carryingamount of the combination consideration paid or the par value of shares issuedoffsets capital reserve. (If the balance of capital reserve is insufficient to offset,any excess is adjusted to retained earnings.)
Other comprehensive income before the combination date shall be accountedfor on the same basis as the investee’s direct disposal of related assets orliabilities. Shareholders’ equity recognized through changes in shareholders’equity other than net profit and loss, other comprehensive income and profitdistribution of the investee shall be transferred to the current profit and losswhen disposing of the investment.
Among them, those that are still long-term equity investments after disposal arecarried forward in proportion, and those that are converted into financialinstruments after disposal are carried forward in full amount. For businesscombinations not under common control, the combination cost is used as theinitial investment cost. The combination cost includes the sum of the assetspaid by the purchaser, the liabilities incurred or assumed, and the fair value ofthe issued equity securities. For the other comprehensive income that is heldbefore the purchase date using the equity method, when disposing of theinvestment, the same basis as the direct disposal of related assets or liabilities
by the investee is used for accounting treatment. Shareholders’ equityrecognized due to changes in shareholders’ equity other than net profit and loss,other comprehensive income and profit distribution of the investee, shall betransferred to the current profit and loss. Among them, those that are still long-term equity investments after disposal are carried forward in proportion andthose that are converted into financial instruments after disposal are carriedforward in full amount. The equity investment held before the purchase date asa financial instrument is included in other comprehensive income and thecumulative fair value changes are all transferred to retained earnings when thecost method is changed. For long-term equity investments except the long-termequity investment formed by business combinations, the initial investment costshall be determined as follows: for the long-term investment obtained throughpaying cash, the actual purchase price paid and the expenses, taxes, and othernecessary expenses directly related to the acquisition of long-term equityinvestment shall be the initial investment cost; for the long-term investmentobtained through the issuance of equity securities, the fair value of the equitysecurities shall be the initial investment cost.
The long-term equity investment that the Company is able to exercise controlover the investee is accounted for by the cost method in the Company'sindividual financial statements. Control refers to having the power over theinvestee, enjoying variable returns by participating in the relevant activities ofthe investee, and having the ability to use the power over the investee to affectthe amount of return.
When the cost method is adopted, long-term equity investments are priced atthe initial investment cost. In case of additional or recovery of investment, thecost of long-term equity investment shall be adjusted. The cash dividends orprofits declared to be distributed shall be recognized as investment income forthe current period.
Long-term equity investments with joint control or significant influencerelationship are accounted for with the equity method. Joint control refers to thecommon control of an arrangement in accordance with relevant agreements,and the relevant activities of the arrangement must be agreed by theparticipants who share control rights before making decisions. Significantinfluence refers to the power to participate in decision-making on the financialand operating policies of the investee, but not the ability to control or jointlycontrol the formulation of these policies with other parties.
When the equity method is adopted, if the initial investment cost is greater thanthe fair value of the investee's identifiable net assets at the time of investment,it shall be included in the initial investment cost of the long-term equityinvestment. Otherwise, the difference shall be included in the current profit andloss, and the cost of the long-term equity investment shall be adjusted at thesame time.
When using the equity method, the investment profits and losses and othercomprehensive income shall be recognized according to the share of the netprofits and losses and other comprehensive income realized by the investedentity, and the book value of the long-term equity investment shall be adjusted.When confirming the share of the net profit and loss of the investee, it is basedon the fair value of the investee’s identifiable assets at the time the investmentis obtained. In accordance with the Group’s accounting policies and accountingperiod, and offsetting the share of the investment with associates and jointventures, the internal transaction gains and losses that occur between the twoparties are calculated according to the proportion that should be enjoyed by theinvestor (if the internal transaction loss is an asset impairment loss, it should berecognized in full amount), and the net profit of the investee is adjusted andconfirmed, unless the invested or sold assets constitute a business. Calculatethe portion that should be enjoyed based on the declared profit or cashdividends of the invested entity, and reduce the book value of the long-termequity investment accordingly. The Group recognizes the net loss incurred bythe investee, and the book value of the long-term equity investment and otherlong-term equity that constitutes the net investment in the investee is writtendown to zero, unless the group is liable for additional loss obligations. For otherchanges in shareholders' equity in addition to net profit and loss, othercomprehensive income and profit distribution of the investee, the book value oflong-term equity investment is adjusted and included in shareholders' equity.
When disposing of a long-term equity investment, the difference between itsbook value and the actual purchase price shall be included in the current profitand loss. For long-term equity investments accounted for using the equitymethod, if the equity method is terminated due to disposal, the relevant othercomprehensive income accounted for by the original equity method shall beaccounted for on the same basis as the investee’s direct disposal of relatedassets or liabilities. Shareholders’ equity confirmed by changes in othershareholders’ equity other than profit and loss, other comprehensive incomeand profit distribution shall be transferred to current profits and losses. If theequity method is still adopted, the relevant other comprehensive incomecalculated by the original equity method shall be accounted for on the samebasis as the investee’s direct disposal of related assets or liabilities andtransferred to the current profit and loss on a pro rata basis. Shareholders’equity confirmed by changes in other shareholder’s equity other than thedistribution of income and profits shall be transferred to the current profit andloss according to the corresponding proportion.
23. Investment property
Investment property measurement model
Not applicable
24. Fixed assets
(1) Recognition principles of fixed assets
Fixed assets are only recognized when the economic benefits associated withassets are likely to flow into the Group and the costs can be measured reliably.Subsequent expenditures related to fixed assets that meet the recognitionconditions shall be included in the cost of fixed assets, and derecognise thebook value of the replaced part. Otherwise, it shall be included in the currentprofit and loss when incurred.Fixed assets are initially measured at historical cost, considering the impact ofexpected abandonment cost factors. The cost of purchasing a fixed assetincludes the purchase price, relevant taxes, and other expenditures directlyattributed to the asset that occurs before the fixed asset reaches its intendeduseable state.The depreciation of fixed assets is calculated using the average life method.The depreciation life, estimated net residual value rate and annual depreciationrate of various fixed assets are as follows:
(2) Depreciation method of different categories of fixed assets
| Categories | Depreciation method | Useful life (years) | Estimated residual value proportion (%) | Annual depreciation rate (%) |
| Buildings and structures | Straight-line method | 5-35 years | 3-10% | 2.57-19.40% |
| Specialized equipment | Straight-line method | 3-17 years | 3-10% | 5.29-32.33% |
| Vehicle | Straight-line method | 4-10 years | 3-10% | 9.00-24.25% |
| General tools | Straight-line method | 3-10 years | 3-10% | 9.00-32.33% |
| Decoration | Straight-line method | 5 years | 20% |
expenditures, including various necessary project expenditures incurred duringthe construction period, capitalized borrowing costs before the project reachesits intended use status and other related expenses.
Construction in progress is transferred to fixed assets when it reaches theexpected usable state.
26. Borrowing costs
Borrowing costs refer to the interest and other related costs incurred by theGroup due to borrowings, including borrowing interest, amortization ofdiscounts or premiums, auxiliary expenses, and exchange differences arisingfrom foreign currency borrowings. Borrowing costs that can be directlyattributable to the acquisition, construction or production of assets that meet thecapitalization conditions shall be capitalized, and other borrowing costs shall berecognized in the current profit and loss. Assets that meet the conditions forcapitalization refer to fixed assets, investment property, inventory, and otherassets that require a long period of acquisition, construction or productionactivities to reach the intended usable or saleable state.
Borrowing costs can be capitalized only if the following conditions are metsimultaneously:
(1) Asset expenditure has occurred.
(2) Borrowing costs have been incurred.
(3) The purchase, construction or production activities necessary for the assetto reach the intended usable or saleable state have begun.
When the acquisition, construction or production of assets that meet thecapitalization conditions reaches the intended usable or saleable state, thecapitalization of borrowing costs shall cease. Borrowing costs incurredthereafter are included in the current profit and loss.
During the capitalization period, the amount of interest capitalization in eachaccounting period is determined in accordance with the following methods:
(1) Special borrowings are determined by the amount of interest expensesactually incurred in the current period, minus temporary deposit interest incomeor investment income.
(2) General borrowings are calculated and determined based on the weightedaverage number of asset expenditures of the accumulated asset expenditureexceeding the portion of special borrowings multiplied by the weighted averageinterest rate of the occupied general borrowings.
During the acquisition, construction or production process of assets that meetthe conditions for capitalization, the capitalization of borrowing costs shall besuspended if there is an abnormal interruption other than the proceduresnecessary to reach the intended usable or saleable state, and the interruption
lasts for more than 3 months. The borrowing costs incurred during theinterruption period are recognized as expenses and included in the currentprofit and loss until the acquisition, construction or production activities of theasset restart.
27. Productive biological assets
No
28. Oil & gas assets
No
29. Right-of-use assets
No
30. Intangible assets
(1) Valuation method, service life, impairment test
Intangible assets are recognized, only if the economic benefits are likely to flowinto the Group, and the costs can be measured reliably. The initialmeasurement of intangible assets is based on its cost. However, if the fair valueof an intangible asset obtained in a business combination not under commoncontrol can be reliably measured, it is separately recognized as an intangibleasset and measured at its fair value.The useful life of intangible assets is determined according to the period duringwhich it can bring economic benefits to the Group. If it is impossible to foreseethe period of time that it will bring economic benefits to the Group, it is regardedas an intangible asset with an indefinite useful life.The useful life of each intangible asset is as follows:
| Useful Life | |
| Land use right | 292-600 months or perpetual |
| Application software | 3-10 years |
| Customer relations | 20 years |
| Patented technology | 7-40 years |
| Trademark | 10 years or uncertain |
| Technology authorization | 21 years |
workshops, relevant land use rights and buildings are accounted for asintangible assets and fixed assets respectively. The price paid for thepurchased land and buildings is allocated to the land use rights and thebuildings. If it is difficult to allocate them reasonably, they shall all be treated asfixed assets.Intangible assets with a definite service life are amortized using the straight-linemethod during their service life. The Group reviews the useful life andamortization method of intangible assets with a definite useful life at the end ofeach year and adjusts it if necessary.For intangible assets with uncertain service life, regardless of whether there aresigns of impairment, an impairment test is carried out every year. Suchintangible assets are not amortized, and their useful lives are reviewed in eachaccounting period. If there is evidence that the service life is limited, theaccounting treatment shall be carried out according to the abovementionedpolicy for intangible assets with definite service life.
(2) Accounting policy for internal R&D expenditure
The Group divides R&D expenditures into research phase expenditures anddevelopment phase expenditures. Expenditures in the research phase areincluded in the current profit and loss. Expenditures in the development stagecan be capitalized only when the following conditions are met at the same time:
it is technically feasible to complete the intangible asset so that it can be usedor sold; it has the intention to complete the intangible asset and use or sell it;Intangible assets generate economic benefits, including the ability to prove thatthe products produced by the intangible assets exist in the market or theintangible assets themselves exist in the market, or intangible assets will beused internally and can prove their usefulness; The Group has sufficienttechnology, financial resources, and other resource support to complete thedevelopment of the intangible asset and can use or sell the intangible asset;The expenditure attributable to the development of the intangible asset can bemeasured reliably. Development expenditures that do not meet the aboveconditions are included in the current profits and losses when incurred.
31. Impairment of long-term assets
The Group determines the impairment of assets excluding inventories, deferredincome tax, and financial assets according to the following methods: The Groupjudges on the balance sheet date whether there are signs of possibleimpairment of assets. If there are signs of impairment, the Group will estimateits recoverable amount and conduct impairment tests. No matter whether thereare signs of impairment, the goodwill recognized as a result of businesscombination shall be tested for impairment at least once a year. Intangibleassets that have not yet reached the usable state, an impairment test is alsocarried out annually.
The recoverable amount is determined based on the higher of the net value ofthe asset’s fair value minus the disposal expenses and the present value of theasset’s expected future cash flow. The Group estimates its recoverable amounton the basis of a single asset. If it is difficult to estimate the recoverable amountof a single asset, the recoverable amount of the CGU is determined based onthe CGU to which the asset belongs. The identification of an CGU is based onwhether the main cash inflow generated by the CGU is independent of the cashinflows of other assets or CGUs.
When the recoverable amount of an asset or CGU is lower than its book value,the Group writes down its book value to the recoverable amount. The reducedamount is included in the current profit and loss, and the corresponding assetimpairment provision is made simultaneously.
As for the impairment test of goodwill, the book value of goodwill shall beallocated to the relevant CGU according to a reasonable method from the dateof purchase. If it is difficult to allocate to the relevant CGU, it shall be allocatedto a group of CGUs. The related CGU or group of CGUs is the CGU or groupof CGUs that can benefit from the synergies of the business combination andis not larger than the reporting segment determined by the Group. Whenperforming an impairment test on a related CGU or group of CGUs that containsgoodwill, if there are signs of impairment, an impairment test will be performedfirst on the CGU or group of CGUs that do not contain goodwill, determiningrecoverable amount and impairment losses. Then conduct an impairment teston the CGU or group of CGUs containing goodwill and compare its book valuewith the recoverable amount. If the recoverable amount is lower than the bookvalue, the amount of impairment loss is first offset and allocated to the bookvalue of the goodwill in the CGU or group of CGUs. Then, according to theproportion of the book value of each asset other than goodwill in the CGU orgroup of CGUs, the book value of other assets is deducted proportionally.
Once the aforementioned asset impairment loss is confirmed, it will not bereversed in the subsequent accounting periods.
32. Long-term prepayments
Long-term prepayments are mainly for molds, which are amortized using theproduction method or the straight-line method.
33. Contract liabilities
The Group lists contract assets or contract liabilities in the balance sheet basedon the relationship between performance obligations and customer payments.The Group offsets the contract assets and contract liabilities under the samecontract as the net amount.
Contract liabilities refer to the obligation to transfer goods or services tocustomers for the consideration received or receivable from customers, suchas the amount that an enterprise has received before the transfer of promisedgoods or services.
34. Employee benefits
(1) Short-term employee benefits
Employee remuneration refers to the various forms of remuneration orcompensation provided by the Group to obtain services provided by employeesor terminate the labor relationship. Employee compensation includes short-termcompensation and post-employment benefits. The benefits provided by theGroup to employee spouses, children, dependents, survivors of deceasedemployees, and other beneficiaries are also employee compensation.Short-term salaryDuring the accounting period when employees provide services, the actualshort-term compensation is recognized as a liability and included in the currentprofit and loss or the cost of related assets.
(2) Post-employment benefits
Post-employment benefits (set a deposit plan)The Group employees participate in pension and unemployment insurancemanaged by the local government, and the corresponding expenditures areincluded in the current profits and losses when incurred.Other long-term employee benefitsFor other long-term employee benefits provided to employees, the relevantregulations on post-employment benefits shall be applied to confirm andmeasure the net liabilities or net assets of other long-term employee benefits,but the changes are included in the current profit and loss or the cost of relatedassets.
(3) Termination benefits
No
(4) Other long-term employee benefits
No
35. Lease liabilities
No
36. Provisions
Except for the contingent consideration and the contingent liabilities assumedin the business combination not under the common control, when theobligations related to the contingent events meet the following conditions at thesame time, the Group recognizes them as provisions:
(1) The obligation is the current obligation assumed by the Group.
(2) The performance of this obligation is likely to cause economic benefitsoutflow.
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured in accordance with the best estimate ofthe expenditure required to perform the relevant current obligations, andcomprehensively consider factors such as risks, uncertainties and time value ofmoney related to contingencies. The book value of provisions is reviewed oneach balance sheet date. If there is conclusive evidence that the book valuecannot reflect the current best estimate, the book value shall be adjustedaccording to the current best estimate.
The contingent liabilities of the acquiree obtained in a business combination notunder the common control are measured at fair value initially. After the initialrecognition, the amount recognized in accordance with the provisions, and thebalance of the initially recognized amount after deducting the accumulatedamortization determined by the revenue recognition principle shall besubsequently measured at the higher of the two.
37. Share-based payment
No
38. Preferred shares, Perpetual bonds, and Other financial instrument
No
39. Revenue
Accounting policies used in revenue recognition and measurement
The Group has fulfilled the performance obligations in the contract, that is,revenue is recognized when the customer obtains control of the relevant goodsor services. Obtaining control over related goods or services means being ableto lead the use of the goods or the provision of the service and obtaining almostall of the economic benefits from it.
Sales contract
Goods sales contracts between the Group and customers usually only includeperformance obligations for the transferred goods. The Group generallyconsiders the following factors and recognizes revenue when the customerobtains control of the relevant product: the current right to receive payment forthe product, the transfer of major risks and rewards in the ownership of theproduct, the transfer of legal ownership of the product, the transfer of thephysical assets of the product, and the customer's acceptance of the product.
Service contract
Service provision contracts between the Group and customers usually includeperformance obligations for services to customers. The performanceobligations of the service provided by the Group do not meet the conditions forfulfilling the performance obligations within a period. The Group usuallyrecognizes revenue at the time when the customer obtains the service or thecontrol of the service-related asset based on comprehensive consideration ofthe following factors: Obtain the current right of collection of assets, the transferof major risks and rewards of asset ownership, the transfer of legal ownershipof assets, the transfer of physical assets, and the customer's acceptance of theasset.
Consideration payable to customers
For the consideration payable to customers, the Group offsets it against thetransaction price. And at the time when the relevant income is recognized andcustomer consideration is paid (or promised), whichever is later, the currentincome is offset, unless the consideration payable is to obtain otherdistinguishable goods or services from the customer.
Warranty obligations
In accordance with contractual agreements and legal provisions, the Groupprovides quality assurance for the products sold. For guaranteed qualityassurance to ensure that the products sold meet the established standards, theGroup conducts accounting treatment in accordance with Note V. 43. For theservice quality assurance that provides a separate service in addition to theestablished standards to ensure that the goods sold meet the establishedstandards, the Group regards it as a single performance obligation andallocates part of the transaction price to the service quality assurance based onthe relative proportion of the stand-alone selling price of the goods and servicesquality assurance provided, and recognizes revenue when the customerobtains the control of the service. When assessing whether the qualityassurance provides a separate service in addition to ensuring that the productssold meet the established standards, the Group considers whether the quality
assurance is a legal requirement, the quality assurance period, and the natureof the Group's commitment to performing tasks.
Differences in accounting policies for revenue recognition caused by theadoption of different business models for similar businessesNo
40. Government grants
Government grants are recognized when they can meet the attached conditionsand can be received. Monetary government grants are measured at the amountreceived or receivable. Non-monetary government grants are measured at fairvalue, and can be measured at the nominal amount in the circumstance thatfair value can’t be assessed.
Government grants related to assets are government grants with which theGroup construct or otherwise acquire long-term assets under requirements ofgovernment. In the circumstances that there is no specific governmentrequirement, the Group shall determine based on the primary condition toacquire the grants and government grants related to assets are governmentgrants whose primary condition is to construct or otherwise acquire long-termassets. Other government grants are recognized as income.
Government grants are calculated using the gross method.
For government grants related to income used for compensating the relatedfuture cost, expenses or losses of the Group are recognized as deferred incomeand are included in profit and loss during the period in which the relevant cost,expenses or losses are recognized. For government grants related to incomeused for compensating the related cost, expenses or losses already incurred tothe Group, they are directly included in profit and loss.
Government subsidies related to assets are recognized as deferred income,and are included in profit and loss according to a reasonable and systematicmethod within the useful life of the relevant asset. For assets sold, transferred,disposed or damaged within the useful lives, the balance of unamortizeddeferred income is transferred into profit and loss of the year in which thedisposal occurred.
41. Deferred tax assets/Deferred tax liabilities
Income tax includes current income tax and deferred income tax. Except for theadjusted goodwill arising from a business combination, or the transactions orevents directly included in the shareholders' equity, all of them are included inthe current profit and loss as income tax expenses or income.
The Group's current income tax liabilities or assets formed in the current andprevious periods are measured in accordance with the expected amount ofincome tax to be paid or returned as calculated in accordance with the tax law.
Based on the temporary difference between the book value of assets andliabilities on the balance sheet date and the tax basis, as well as temporarydifferences arising from the difference between the book value of items that arenot recognized as assets and liabilities but whose tax base can be determinedin accordance with the tax law and the tax base, the Group uses the balancesheet debt method to accrue deferred income tax.
Various taxable temporary differences are used to recognize deferred incometax liabilities, unless:
1. The temporary differences are generated in the following transactions: uponthe initial recognition of goodwill, or the initial recognition of assets or liabilitiesarising from transactions with the following characteristics: the transaction isnot a business combination, and neither affects accounting profits nor taxableincome or deductible losses when the transaction occurs.
2. For temporary differences related to investments in subsidiaries, jointventures and associates, the time for the reversal of the temporary differencescan be controlled and the temporary differences may not be reversed in theforeseeable future.
For deductible temporary differences, deductible losses and tax deductions thatcan be carried forward to future years, the Group recognizes the deferredincome tax assets within the limit of the future taxable income that is likely tobe used to deduct deductible temporary differences, deductible losses and taxdeductions, unless:
1. The deductible temporary difference is generated in the following transaction:
the transaction is not a business combination, and when the transaction occurs,it neither affects accounting profits nor taxable income or deductible losses.
2. For the investment of subsidiaries, joint ventures and associates, thecorresponding deferred income tax assets are recognized when the followingconditions are met at the same time: Temporary differences are likely to bereversed in the foreseeable future, and the taxable income that can be used todeduct temporary differences is likely to be obtained in the future.
The Group calculates deferred income tax assets and deferred income taxliabilities in accordance with the provisions of the tax law and applicable tax rateon the balance sheet date. It also reflects the income tax impact of the expectedreturn of assets or settlement of liabilities on the balance sheet date.
On the balance sheet date, the Group reviews the book value of deferredincome tax assets. If it is probable that sufficient taxable income cannot beobtained in the future period to deduct the benefits of deferred income taxassets, the amount of deferred income tax assets shall be reduced. On thebalance sheet date, the Group reassess the unrecognized deferred income taxassets, and recognizes the deferred income tax assets to the extent that it islikely to obtain sufficient taxable income for the reversal of all or part of thedeferred income tax assets.
Deferred income tax assets and deferred income tax liabilities are listed as thenet amount after offset if the following conditions are met simultaneously: theGroup has the legal right to settle current income tax assets and current incometax liabilities on a net basis. Deferred income tax assets and deferred incometax liabilities are related to the same tax administration department or todifferent taxation entities, but in the future period of reversal of each importantdeferred income tax asset and deferred income tax liability, the taxpayerintends to settle the current income tax assets and current income tax liabilitieson a net basis or obtain assets and pay off debts at the same time.
42. Leases
(1) Accounting of operating lease
Leases that have substantially transferred all the risks and rewards related toasset ownership are finance leases, and all other leases are operating leases.As an operating lease lesseeThe rental expenses are included in the relevant asset cost or current profit andloss according to the straight-line method during each lease term, and thecontingent rent is included in the current profit and loss when it actually occurs.As an operating lease lessorThe rental income is recognized as current profit and loss on a straight-linebasis during each lease term, and contingent rent is included in current profitand loss when it actually occurs.
(2) Accounting of finance lease
No
43. Other significant accounting policies and estimates
The preparation of financial statements requires management to makejudgments, estimates and assumptions, which will affect the reported amountsand disclosures of income, expenses, assets and liabilities, and the disclosureof contingent liabilities on the balance sheet date. The results of these uncertain
assumptions and estimates may cause significant adjustments to the carryingamount of assets or liabilities in the future.
Judgment
In the process of applying the Group’s accounting policies, the managementteam has made the following judgments that have a significant impact on theamounts recognized in the financial statements:
Business model
The classification of financial assets at initial recognition depends on thebusiness model of the Group’s management of financial assets. When judgingthe business model, the Group considers corporate evaluation and financialasset performance reporting to key management personnel, risks affectingfinancial asset performance and its management method and the way relevantbusiness managers get paid, etc. When evaluating whether to collectcontractual cash flow as the goal, the Group needs to analyze and judge thereasons, time, frequency and value of the financial assets sold before the expirydate.
Contract cash flow characteristics
The classification of financial assets at initial recognition depends on thecontractual cash flow characteristics of financial assets. It is necessary todetermine whether the contractual cash flow is only the payment of principaland interest based on the outstanding principal, including the correction of thetime value of money. In the assessment, it is necessary to judge whether thereis a significant difference compared with the benchmark cash flow. For financialassets that include prepayment characteristics, it is necessary to judge whetherthe fair value of the prepayment characteristics is insignificant, etc.
Uncertainty of estimates
The following are the key assumptions about the future and other key sourcesof estimation uncertainty at the balance sheet date, which may cause significantadjustments to the carrying amounts of assets and liabilities in futureaccounting periods.
Impairment of financial instruments
The Group uses the expected credit loss model to evaluate the impairment offinancial instruments. The application of the expected credit loss model requiressignificant judgments and estimates, and all reasonable and supportiveinformation, including forward-looking information. In making these judgmentsand estimates, the Group infers the expected changes in the owing party's
credit risk based on historical repayment data combined with economic policies,macroeconomic indicators, industry risks and other factors. Different estimatesmay affect the provision for impairment, and the provision for impairment thathas been made may not be equal to the actual amount of impairment losses inthe future.
Impairment of non-current assets other than financial assets (except goodwill)
On the balance sheet date, the Group judges whether non-current assets otherthan financial assets are likely to be impaired. For intangible assets withuncertain service life, in addition to the annual impairment test, an impairmenttest is also performed when there are signs of impairment. Other non-currentassets except financial assets are tested for impairment when there are signsthat the carrying value is not recoverable. An impairment has occurred whenthe book value of an asset or CGU is higher than the recoverable amount, thatis, the higher of the net value of the fair value minus the disposal expenses andthe present value of the expected future cash flow. The net amount of fair valueminus disposal expenses is determined by the sale agreement price of similarassets in a fair transaction or the observable market price, minus theincremental cost directly attributable to the disposal of the asset. Whenpredicting the present value of future cash flows, the management team mustestimate the expected future cash flow of the asset or CGU and select anappropriate discount rate to determine the present value of future cash flows.
Goodwill impairment
The Group takes goodwill impairment tests at least annually. This requires anestimation of the present value of the future cash flow of the CGU or group ofCGUs that goodwill has been allocated. When estimating the present value offuture cash flows, the Group needs to estimate the cash flow generated by thefuture CGU or group of CGUs, and select an appropriate discount rate todetermine the present value of future cash flows. See Note V, 31.
Development expenditure
When determining the amount of capitalization, management must makeassumptions about the expected future cash flow of the asset, the applicablediscount rate, and the expected benefit period.
Deferred tax assets
Deferred income tax assets should be recognized for all unused deductiblelosses if there is likely to be sufficient taxable income to reduce deductiblelosses. This requires the management team to use a lot of judgment to estimatethe time and amount of taxable income in the future, combined with tax planningstrategies, to determine the amount of deferred income tax assets.
Quality assurance
For a combination of contracts with similar characteristics, the Group makesreasonable estimates of the warranty rates based on historical warranty data,current warranty conditions, and after considering all relevant information suchas product improvements and market changes. The estimated warranty ratemay not be equal to the actual future warranty rate. The Group re-evaluates thewarranty rate at least on each balance sheet date and determines the estimatedliabilities based on the re-evaluated warranty rate.
44. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
| Contents and reasons of changes in accounting policies | approval procedure | Note |
| Changes and adjustments to the new revenue standards | It has been approved at the 35th Meeting of the sixth Board of Directors of the Company on April 27, 2020 |
Based on the inspection of sales contracts that have not been executed as ofDecember 31, 2019, the Group believes that the use of simplified processingmethods will not have a significant impact on the Group’s financial statements.The main reason is that the revenue recognized by the Group based on thetransfer of risk rewards is synchronized with the realization of the performanceobligations of the sales contract.The impact of the implementation of the new revenue standard on the 2020financial statements is as follows:
Consolidated balance sheet
Unit: RMB
| Carrying value | According to original strandard | Impact | |
| Contract liabilities | 512,836,059.89 | - | 512,836,059.89 |
| Unearned revenue | - | 517,028,331.94 | （517,028,331.94） |
| Other current liabilities | 4,192,272.05 | - | 4,192,272.05 |
| Account payable | 935,542,222.20 | 911,952,560.39 | 23,589,661.81 |
| Other account payable | 384,220,500.31 | 407,810,162.12 | （23,589,661.81） |
| Carrying value | According to original strandard | Impact | |
| Contract liabilities | 4,359,811.90 | - | 4,359,811.90 |
| Unearned revenue | - | 4,359,811.90 | （4,359,811.90） |
| Account payable | 295,956,510.99 | 290,542,172.86 | 5,414,338.13 |
| Other account payable | 1,630,748,176.80 | 1,636,162,514.93 | （5,414,338.13） |
| Carrying value | According to original strandard | Impact | |
| Operating cost | 8,539,410,065.42 | 8,413,058,402.91 | 126,351,662.51 |
| Sales cost | 202,937,418.90 | 329,289,081.41 | （126,351,662.51） |
| Carrying value | According to original strandard | Impact | |
| Operating cost | 2,036,931,290.14 | 2,026,747,323.25 | 10,183,966.89 |
| Sales cost | 30,034,081.55 | 40,218,048.44 | （10,183,966.89） |
The main effects of retrospective adjustments caused by the aboveaccounting policy changes on the financial statements are as follows:
The Group2020 FYConsolidated balance sheet
Unit: RMB
| Carrying value according to orignal standard Decemeber 31, 2019 | Reclassification | Carrying value according to new standard January 1, 2020 | |
| Contract liabilities | - | 648,572,264.26 | 648,572,264.26 |
| Unearned revenue | 653,874,136.71 | （653,874,136.71） | - |
| Other current liabilities | - | 5,301,872.45 | 5,301,872.45 |
| Account payable | 1,083,181,883.19 | 31,968,469.81 | 1,115,150,353.00 |
| Other account payable | 759,261,155.63 | （31,968,469.81） | 727,292,685.82 |
| Carrying value according to original standard Decemeber 31, 2019 | Reclassification | Carrying value according to new standard January 1, 2020 | |
| Contract liabilities | - | 3,103,027.57 | 3,103,027.57 |
| Unearned revenue | 3,103,027.57 | （3,103,027.57） | - |
| Account payable | 417,556,226.11 | 1,273,036.85 | 418,829,262.96 |
| Other account payable | 891,820,777.91 | （1,273,036.85） | 890,547,741.06 |
| Items | December 31, 2019 | January 1, 2020 | Adjustments |
| Current Assets: | |||
| Cash and cash equivalents | 2,452,754,083.38 | 2,452,754,083.38 | |
| Settlement funds | |||
| Loans to other banks | |||
| Held-for-trading financial assets | 63,034,283.90 | 63,034,283.90 | |
| Derivative financial assets | |||
| Notes receivable | 0.00 | ||
| Accounts receivable | 2,555,697,203.97 | 2,555,697,203.97 | |
| Accounts receivable financing | 378,904,590.58 | 378,904,590.58 | |
| Advances paid | 173,597,304.56 | 173,597,304.56 | |
| Premium receivable | |||
| Reinsurance accounts receivable | |||
| Reinsurance reserves receivable | |||
| Other receivables | 916,325,582.02 | 916,325,582.02 | |
| Including: Interest receivable | 0.00 | ||
| Dividend receivable | 0.00 | ||
| Financial assets under reverse repo | |||
| Inventories | 2,393,951,480.24 | 2,393,951,480.24 | |
| Contract assets | |||
| Assets classified as held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 117,007,873.14 | 117,007,873.14 | |
| Total current assets | 9,051,272,401.79 | 9,051,272,401.79 | |
| Non-current assets: | |||
| Loans and advances paid | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivable | |||
| Long-term equity investments | 12,612,542.86 | 12,612,542.86 | |
| Other equity instrument investments | 4,942,489.56 | 4,942,489.56 | |
| Other non-current financial assets | |||
| Investment property | 0.00 | ||
| Fixed assets | 5,113,660,627.42 | 5,113,660,627.42 |
| Construction in progress | 426,345,202.99 | 426,345,202.99 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 1,778,179,906.06 | 1,778,179,906.06 | |
| Development expenditures | 0.00 | ||
| Goodwill | 1,701,158,115.52 | 1,701,158,115.52 | |
| Long-term prepayments | 159,712,622.07 | 159,712,622.07 | |
| Deferred tax assets | 188,710,115.07 | 188,710,115.07 | |
| Other non-current assets | 50,655,894.55 | 50,655,894.55 | |
| Total non-current assets | 9,435,977,516.10 | 9,435,977,516.10 | |
| Total assets | 18,487,249,917.89 | 18,487,249,917.89 | |
| Current liabilities: | |||
| Short-term borrowings | 3,070,118,768.19 | 3,070,118,768.19 | |
| Central bank loans | |||
| Loans from other banks | |||
| Held-for-trading financial liabilities | 1,324,581.60 | 1,324,581.60 | |
| Derivative financial liabilities | |||
| Notes payable | 218,601,865.08 | 218,601,865.08 | |
| Accounts payable | 1,083,181,883.19 | 1,115,150,353.00 | -31,968,469.81 |
| Unearned revenue | 653,874,136.71 | 653,874,136.71 | |
| Contract liabilities | 0.00 | 648,572,264.26 | -648,572,264.26 |
| Financial liabilities under repo | |||
| Absorbing deposit and interbank deposit | |||
| Deposit for agency security transaction | |||
| Deposit for agency security underwriting | |||
| Employee benefits payable | 238,740,090.73 | 238,740,090.73 | |
| Tax payable | 71,472,056.11 | 71,472,056.11 | |
| Other payables | 759,261,155.63 | 727,292,685.82 | 31,968,469.81 |
| Including: Interest Payable | 0.00 | ||
| Dividends Payable | 0.00 | ||
| Handling fee and commission payable | |||
| Reinsurance accounts payable | |||
| Held-for-sale liabilities |
| Non-current liabilities due within one year | 571,968,504.83 | 571,968,504.83 | |
| Other current liabilities | 0.00 | 5,301,872.45 | -5,301,872.45 |
| Total current liabilities | 6,668,543,042.07 | 6,668,543,042.07 | |
| Non-current liabilities: | |||
| Insurance policy reserve | |||
| Long-term borrowings | 1,165,220,492.00 | 1,165,220,492.00 | |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | 174,680,866.90 | 174,680,866.90 | |
| Deferred income | 202,630,087.75 | 202,630,087.75 | |
| Deferred tax liabilities | 268,233,346.43 | 268,233,346.43 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 1,810,764,793.08 | 1,810,764,793.08 | |
| Total liabilities | 8,479,307,835.15 | 8,479,307,835.15 | |
| Equity: | |||
| Share capital | 2,186,879,678.00 | 2,186,879,678.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,691,289,940.77 | 1,691,289,940.77 | |
| Less: Treasury shares | 333,092,868.42 | 333,092,868.42 | |
| Other comprehensive income | 74,589,529.22 | 74,589,529.22 | |
| Special reserve | 10,261,018.12 | 10,261,018.12 | |
| Surplus reserve | 427,043,757.25 | 427,043,757.25 | |
| General risk reserve | |||
| Undistributed profit | 3,935,484,397.57 | 3,935,484,397.57 | |
| Total equity attributable to the parent Company | 7,992,455,452.51 | 7,992,455,452.51 | |
| Non-controlling interest | 2,015,486,630.23 | 2,015,486,630.23 | |
| Total equity | 10,007,942,082.74 | 10,007,942,082.74 | |
| Total liabilities & equity | 18,487,249,917.89 | 18,487,249,917.89 |
| Items | December 31, 2019 | January 1, 2020 | Adjustments |
| Current Assets: | |||
| Cash and cash equivalents | 1,004,904,910.05 | 1,004,904,910.05 | |
| Held-for-trading financial assets | 60,034,900.00 | 60,034,900.00 | |
| Derivative financial assets | |||
| Notes receivable | 0.00 | ||
| Accounts receivable | 678,186,227.12 | 678,186,227.12 | |
| Accounts receivable financing | 159,939,620.65 | 159,939,620.65 | |
| Advances paid | 28,429,672.81 | 28,429,672.81 | |
| Other receivables | 494,780,887.10 | 494,780,887.10 | |
| Including: Interest receivable | 0.00 | ||
| Dividend receivable | 129,600,000.00 | 129,600,000.00 | |
| Inventories | 243,049,665.85 | 243,049,665.85 | |
| Contract assets | |||
| Assets classified as held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 17,910,061.89 | 17,910,061.89 | |
| Total current assets | 2,687,235,945.47 | 2,687,235,945.47 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivable | |||
| Long-term equity investments | 4,198,711,501.05 | 4,198,711,501.05 | |
| Other equity instrument investments | |||
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 364,884,432.10 | 364,884,432.10 | |
| Construction in progress | 57,506,951.74 | 57,506,951.74 | |
| Productive biological assets | |||
| Oil & gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 53,332,915.40 | 53,332,915.40 | |
| Development expenditures | |||
| Goodwill | |||
| Long-term prepayments | 9,208,148.95 | 9,208,148.95 | |
| Deferred tax assets | 2,777,151.86 | 2,777,151.86 | |
| Other non-current assets | 38,683,336.01 | 38,683,336.01 |
| Total non-current assets | 4,725,104,437.11 | 4,725,104,437.11 | |
| Total assets | 7,412,340,382.58 | 7,412,340,382.58 | |
| Current liabilities: | |||
| Short-term borrowings | 1,282,185,084.02 | 1,282,185,084.02 | |
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Note payable | 290,920,548.28 | 290,920,548.28 | |
| Account payable | 417,556,226.11 | 418,829,262.96 | -1,273,036.85 |
| Unearned revenue | 3,103,027.57 | 3,103,027.57 | |
| Contract liabilities | 0.00 | 3,103,027.57 | -3,103,027.57 |
| Employee benefits payable | 35,028,390.32 | 35,028,390.32 | |
| Tax payable | 3,998,075.37 | 3,998,075.37 | |
| Other payables | 891,820,777.91 | 890,547,741.06 | 1,273,036.85 |
| Including: Interest Payable | 0.00 | ||
| Dividends Payable | 0.00 | ||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one year | 265,717,562.36 | 265,717,562.36 | |
| Other current liabilities | |||
| Total current liabilities | 3,190,329,691.94 | 3,190,329,691.94 | |
| Non-current liabilities: | |||
| Long-term borrowings | 396,962,631.92 | 396,962,631.92 | |
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 1,872,600.00 | 1,872,600.00 | |
| Deferred tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 398,835,231.92 | 398,835,231.92 | |
| Total liabilities | 3,589,164,923.86 | 3,589,164,923.86 | |
| Equity: | |||
| Share capital | 2,186,879,678.00 | 2,186,879,678.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 1,059,096,302.01 | 1,059,096,302.01 | |
| Less: Treasury shares | 333,092,868.42 | 333,092,868.42 |
| Other comprehensive income | |||
| Special reserve | 1,919,506.02 | 1,919,506.02 | |
| Surplus reserve | 427,043,757.25 | 427,043,757.25 | |
| Undistributed profit | 481,329,083.86 | 481,329,083.86 | |
| Total equity | 3,823,175,458.72 | 3,823,175,458.72 | |
| Total liabilities & equity | 7,412,340,382.58 | 7,412,340,382.58 |
liability in an orderly transaction on the measurement date. The Groupmeasures related assets or liabilities at fair value, assuming that the orderlytransaction of selling assets or transferring liabilities takes place in the mainmarket of the relevant assets or liabilities. If there is no main market, the Groupassumes that the transaction proceeds in the most beneficial market to therelevant assets or liabilities. The main market (or the most favorable market) isthe trading market that the Group can enter on the measurement date. TheGroup adopts the assumptions used by market participants to maximize theireconomic benefits when pricing the asset or liability.When measuring non-financial assets at fair value, the Group considers theability of market participants to use the asset for the best purpose to generateeconomic benefits, or to sell the asset to other market participants who can beused for the best purpose to generate economic benefits.The Group adopts valuation techniques that are applicable under currentcircumstances and have sufficient available data and other information tosupport. Priority is given to the use of relevant observable input values, andunobservable input values are used only when observable input values cannotbe obtained or are not practicable.For assets and liabilities that are measured or disclosed at fair value in financialstatements, determine the fair value level to which they belong based on thelowest level of input value that is important for fair value measurement as awhole: The input value of the first level refers to the unadjusted quotation of thesame asset or liability that can be obtained in the active market on themeasurement date; The second-level input value refers to the directly orindirectly observable input value of related assets or liabilities, except for thefirst-level input value; The third level input value refers to the unobservable inputvalue of related assets or liabilities.On each balance sheet date, the Group re-evaluates the assets and liabilitiesrecognized in the financial statements that are continuously measured at fairvalue to determine whether there is a switch between the fair valuemeasurement levels.
VI. Taxes
1. Major categories of taxes and tax rates
| Tax Type | Taxation basis | Tax rate |
| VAT | The taxable revenue of general taxpayers of Chinese coporate calculates output tax at a tax rate of 13%, and pays value-added tax on the difference after deducting the input tax that is allowed to be deducted in the current period. The Mexican subsidiary, Meridian Technologies Mexico, S. de R.L. de C.V., calculates output tax at 16% of taxable revenue and pays VAT based on the difference after deducting the input tax allowed to be deducted in the current period. Wanfeng MLTH Holdings Co., LTD (Hereinafter referred to as "Wanfeng Meridian") and its British subsidiary, Meridian Lightweight Technology UK Limited, calculate the output tax at 20% of the taxable revenue and pay the VAT on the difference after deducting the input tax allowed to be deducted in the current period. The Wanfeng Aluminum Wheels (India) Pty. Co., Ltd applies to the taxation regulations of Delhi, Haryana, India, where it is registered, calculates output tax and pays VAT based on the difference after deducting the input tax allowed to be deducted in the current period. The Austrian subsidiary Diamond Verwaltungs GmbH and its local subsidiary Austro Engine GmbH calculate the output tax at 20% of the taxable revenue, and pay VAT based on the difference after deducting the input tax allowed to be deducted in the current period. | 13%、16%、20% |
| Urban maintenance and construction tax | Chinese corporate pays 5%, 7%,or 0% of the turnover tax actually paid. | 5%、7%、0% |
| Corporate income tax | Chinese corporate income tax is paid at 15% or 25% of the taxable income. Please refer to Note vi 2. Wanfeng MLTH Holdings Co., Ltd is subject to the income tax regulations of Nottinghamshire, Ashfield, England, where it is registered, and the tax rate is 19%. Meridian Lightweight Technology UK Limited are subject to income tax laws and regulations in its place of registration, and the tax rate is 19%. The American subsidiary, Wanfeng North America Co., Ltd., is subject to the income tax regulations of the state of Michigan, where it is registered. Magnesium Products of America Inc. is subject to the income tax regulations of its place of registration. The tax rate for 2019 and 2020 was 23.35%. The Indian subsidiary, Wanfeng Aluminum Wheels (India) Pty Co., Ltd., is subject to the income tax regulations of Delhi, Haryana, India, where it is registered, and the tax rate is 22%. The Mexican subsidiary, Meridian Technologies Mexico, S. de R.L. de C.V., is subject to the income tax regulations of its place of registration, and the tax rate is 30% | 15%、19%、23.35%、22%、30%、25%、26.50% |
| The Canadian subsidiaries, Meridian Lightweight Technologies Inc., Meridian Lightweight Technologies Holdings Inc., Meridian Canada Inc., and Diamond Aircraft Industries Inc. are subject to the income tax regulations of their registered places. Tax rates are 25%, 26.5%, 26.5% and 25%, respectively. The Austrian subsidiary Diamond Verwaltungs GmbH and its subsidiaries Diamond Aircraft Industries GmbH (Austria) and Austro Engine GmbH are subject to the income tax regulations of their registered places, and the tax rate is 25%. | ||
| Sales tax | The Canadian subsidiaries, Meridian Lightweight Technologies Inc., Meridian Lightweight Technologies Holdings Inc., Meridian Canada Inc., and Diamond Aircraft Industries Inc. are taxed at 13% of taxable revenue, and pay sales tax based on the difference after deducting the current allowable tax deduction. | 13% |
| Business activity tax | The Group’s sales revenue in Ohio, the United States is subject to local tax regulations for calculating business activity tax. | |
| Withhold income tax |
| Education supplementary tax | Chinese corporate pays 5% or0% of the turnover tax actually paid. | 5%、0% |
| Water conservancy construction fund | Chinese corporate pays 1%, 0.1%, or 0% of their operating revenue. | 1%、0.1%、0% |
| Taxpayers | Income tax rate |
| The Company, Weihai Wanfeng, Chongqing Wanfeng, Weihai Magnesium, Wanfeng Motorcycle Wheel, Guangdong Motorcycle Wheel, Shanghai Dacromet, Shanghai Meridian, Meridian New Material, Wuxi Xiongwei, Yancheng Xiongwei, Changchun Xiongwei, Wuxi Geoff, Yizheng Xiongwei | 15% |
| Ningbo Aoweier, Jilin Wanfeng, Shanghai Fengtu, Ningbo Dacromet, Aircraft Industry, Diamond Verwaltungs GmbH and local Austrian subsidiary | 25% |
| Wanfeng MLTH Holdings Co., Ltd | Subject to income tax regulations in Nottinghamshire, Ashfield, England, where it was registered, and the tax rate is 19%. |
| Meridian Lightweight Technology UK Limited | Subject to income tax regulations in its place of registration and the tax rate is 19%. |
| American subsidiary: Wanfeng North America Co., Ltd. | Subject to income tax regulations in the state of Michigan, where it was registered. |
| Magnesium Products of America Inc. | Subject to income tax regulations in its place of registration, and the tax rate for 2019 and 2020 was 23.35%. |
| Indian subsidiary: Wanfeng Aluminum Wheels (India) Pty | Subject to income tax regulations in the city of Delhi, Haryana, India, where it was registered, the tax rate is 22%. |
| Mexican subsidiary: Meridian Technologies Mexico, S. de R.L. de C.V. | Subject to income tax regulations in its place of registration, and the tax rate is 30% |
| Canadian subsidiaries, Meridian Lightweight Technologies Inc., Meridian Lightweight Technologies Holdings Inc., Meridian Canada Inc., and Diamond Aircraft Industries Inc. | Subject to income tax regulations in the place of registration. Tax rates are 25%, 26.5%, 26.5% and 25%, respectively. |
| Austrian subsidiar Diamond Verwaltungs GmbH and its subsidiaries Diamond Aircraft Industries GmbH (Austria) and Austro Engine GmbH | Subject to income tax regulations in their place of registration at a rate of 25%. |
need to file special records from 2018, and the income tax will still be paid atthe tax rate of 15% in 2020.
The subsidiary Zhejiang Wanfeng Motorcycle Wheel Co., Ltd. received theHigh-tech Enterprise Certificate (Certificate No. GR201833001613) jointlyissued by Zhejiang Provincial Department of Science and Technology, ZhejiangProvincial Department of Finance, and Zhejiang Provincial Taxation Bureau ofthe State Administration of Taxation on November 30, 2018. The company isrecognized as a high-tech enterprise, and the certification is valid for 3 years.According to Chinese relevant tax policies for high-tech enterprises, the incometax will be 15% within three years (from 2018 to 2020) after the company isrecognized as a high-tech enterprise.
The subsidiary Guangdong Wanfeng Motorcycle Wheel Co., Ltd. received theHigh-tech Enterprise Certificate (Certificate No. GR201844002073) jointlyissued by Guangdong Provincial Department of Science and Technology,Guangdong Provincial Department of Finance, Guangdong Provincial StateTaxation Bureau, and Guangdong Provincial Local Taxation Bureau onNovember 28, 2018. The company is recognized as a high-tech enterprise, andthe certification is valid for 3 years. According to Chinese relevant tax policiesfor high-tech enterprises, the income tax will be 15% within three years (from2018 to 2020) after the company is recognized as a high-tech enterprise.
The subsidiary Shanghai Dacromet Coating Industry Co., Ltd. received theHigh-tech Enterprise Certificate (Certificate No. GR201831000793) jointlyissued by Shanghai Science and Technology Commission, Shanghai FinanceBureau, Shanghai State Taxation Bureau, and Shanghai Local Taxation Bureauon November 2, 2018. The company is recognized as a high-tech enterprise,and the certification is valid for 3 years. According to Chinese relevant taxpolicies for high-tech enterprises, the income tax will be 15% within three years(from 2018 to 2020) after the company is recognized as a high-tech enterprise.
The subsidiary Shanghai Meridian Magnesium Products Co., Ltd. received the"High-tech Enterprise Certificate (Certificate No. GR201931000323) jointlyissued by Shanghai Science and Technology Commission, Shanghai FinanceBureau, Shanghai State Taxation Bureau and Shanghai Local Taxation Bureauon October 8, 2019. The company is recognized as a high-tech enterprise, andthe certification is valid for 3 years. According to Chinese relevant tax policiesfor high-tech enterprises, the income tax will be 15% within three years (from2019 to 2021) after the company is recognized as a high-tech enterprise.
The subsidiary Wanfeng Meridian New Material Technology Co., Ltd. receivedthe High-tech Enterprise Certificate (Certificate No. GR201833001014) jointlyissued by Zhejiang Provincial Department of Science and Technology, ZhejiangProvincial Department of Finance, and Zhejiang Provincial Taxation Bureau ofthe State Administration of Taxation on November 30, 2018. The company is
recognized as a high-tech enterprise, and the certification is valid for 3 years.According to Chinese relevant tax policies for high-tech enterprises, the incometax will be 15% within three years (from 2018 to 2020) after the company isrecognized as a high-tech enterprise.
The subsidiary Wuxi Xiongwei Precision Technology Co., Ltd. received theHigh-tech Enterprise Certificate (Certificate No. GR202032006479) jointlyissued by Jiangsu Provincial Department of Science and Technology, JiangsuProvincial Department of Finance, Jiangsu Provincial State Taxation Bureau,and Jiangsu Provincial Local Taxation Bureau on December 2, 2020. Thecompany is recognized as a high-tech enterprise, and the certification is validfor 3 years. According to Chinese relevant tax policies for high-tech enterprises,the income tax will be 15% within three years (from 2020 to 2022) after thecompany is recognized as a high-tech enterprise.
The subsidiary Changchun Xiongwei Auto Parts Co., Ltd. received the High-tech Enterprise Certificate (Certificate No. GR202022000006) jointly issued byJilin Provincial Department of Science and Technology, Jilin ProvincialDepartment of Finance, Jilin Provincial State Taxation Bureau, and JilinProvincial Local Taxation Bureau on September 10, 2020. The company isrecognized as a high-tech enterprise, and the certification is valid for 3 years.According to Chinese relevant tax policies for high-tech enterprises, the incometax will be 15% within three years (from 2020 to 2022) after the company isrecognized as a high-tech enterprise.
The subsidiary Wuxi Geoff Machinery Technology Co., Ltd. received the High-tech Enterprise Certificate (Certificate No. GR201832004062) jointly issued byJiangsu Provincial Department of Science and Technology, Jiangsu ProvincialDepartment of Finance, and Jiangsu Provincial Taxation Bureau of the StateAdministration of Taxation on November 28, 2018. The company is recognizedas a high-tech enterprise, and the certification is valid for 3 years. According toChinese relevant tax policies for high-tech enterprises, the income tax will be15% within three years (from 2018 to 2020) after the company is recognized asa high-tech enterprise.
The subsidiary Yancheng Xiongwei Auto Parts Co., Ltd. received the High-techEnterprise Certificate (Certificate No. GR202032007938) jointly issued byJiangsu Provincial Department of Science and Technology, Jiangsu ProvincialDepartment of Finance, Jiangsu Provincial State Taxation Bureau, and JiangsuProvincial Local Taxation Bureau on December 2, 2020. The company isrecognized as a high-tech enterprise, and the certification is valid for 3 years.According to Chinese relevant tax policies for high-tech enterprises, the incometax will be 15% within three years (from 2020 to 2022) after the company isrecognized as a high-tech enterprise.
The subsidiary Yizheng Xiongwei Machinery Technology Co., Ltd. received the
High-tech Enterprise Certificate (Certificate No. GR202032002099) jointlyissued by Jiangsu Provincial Department of Science and Technology, JiangsuProvincial Department of Finance, Jiangsu Provincial State Taxation Bureau,and Jiangsu Provincial Local Taxation Bureau on December 2, 2020. Thecompany is recognized as a high-tech enterprise, and the certification is validfor 3 years. According to Chinese relevant tax policies for high-tech enterprises,the income tax will be 15% within three years (from 2020 to 2022) after thecompany is recognized as a high-tech enterprise.
3. Others
No
VII. Notes to Consolidated Financial Statements Items
1. Cash and bank balances
1. Cash and cash equivalents
Unit: RMB
| Items | Closing balance | Opening balance |
| Cash on hand | 928,560.58 | 1,007,340.38 |
| Deposits in bank | 1,463,778,286.96 | 2,200,640,621.03 |
| Other cash equivalents | 210,272,110.63 | 251,106,121.97 |
| Total | 1,674,978,958.17 | 2,452,754,083.38 |
| Items | Closing balance | Opening balance |
| Financial assets measured at fair value and changes recognized through profit and loss | 5,312,974.87 | 63,034,283.90 |
| Including: | ||
| Foreign exchange forward contract | 2,474,818.46 | 440,000.00 |
| Foreign exchange option contract | 207,581.54 | |
| Structured deposits | 60,000,000.00 | |
| Stock | 2,630,574.87 | 2,594,283.90 |
| Including: | ||
| Total | 5,312,974.87 | 63,034,283.90 |
| Items | Closing balance | Opening balance |
| Items | Closing balance | Opening balance |
| Total | 0.00 |
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for doubtful debt | Carrying amount | Book balance | Provision for doubtful debt | Carrying amount | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Including： | ||||||||||
| Including： | ||||||||||
| Items | Closing balance | |||
| Book balance | Provision for doubtful debt | Provision proportion (%) | Reasons | |
| Items | Closing balance | ||
| Book balance | Provision for doubtful debt | Provision proportion (%) | |
| Items | Closing balance | ||
| Book balance | Provision for doubtful debt | Provision proportion (%) | |
| Categories | Opening balance | Changed amount of this period | Closing balance | |||
| Accrual | Recovered or reversed | Written off | Others | |||
| Items | Closing balance of pledged notes |
| Items | Closing balance derecognized | Closing balance not yet derecognized |
| Items | Closing balance of amount transferred to accounts receivable |
| Items | Amount of write-off |
| Company | Nature of notes receivable | Amount of write-off | Reasons for written-off | Write-off procedures | Whether the payment is generated by related party transactions |
| Categories | Closing balance | Opening balance | ||||||||
| Book balance | Provision for doubtful debt | Carrying amount | Book balance | Provision for doubtful debt | Carrying amount | |||||
| Amount | Proportion | Amount | Provision proportion | Amount | Proportion | Amount | Provision proportion | |||
| Receivables with provision made on an individual basis | 46,054,287.07 | 1.93% | 30,158,501.41 | 65.48% | 15,895,785.66 | 41,352,651.84 | 1.58% | 25,154,998.75 | 60.83% | 16,197,653.09 |
| Including: | ||||||||||
| Receivables with provision made on a collective basis | 2,342,524,568.18 | 98.07% | 43,439,471.56 | 1.85% | 2,299,085,096.62 | 2,583,991,841.13 | 98.42% | 44,492,290.25 | 1.72% | 2,539,499,550.88 |
| Including: | ||||||||||
| Total | 2,388,578,855.25 | 100.00% | 73,597,972.97 | 3.08% | 2,314,980,882.28 | 2,625,344,492.97 | 100.00% | 69,647,289.00 | 2.65% | 2,555,697,203.97 |
Unit: RMB
| Items | Closing balance | |||
| Book balance | Provision for doubtful debt | Provision proportion (%) | Reasons | |
| No.1 | 10,619,046.44 | 10,619,046.44 | 100.00% | Estimated collection risk |
| No.2 | 8,280,910.13 | 2,781,910.13 | 33.59% | Estimated collection risk |
| No.3 | 6,625,061.06 | 1,414,787.38 | 21.36% | Product quality disputes |
| No.4 | 4,055,686.16 | 4,055,686.16 | 100.00% | Estimated collection risk |
| No.5 | 3,751,626.02 | 1,875,813.01 | 50.00% | Estimated collection risk |
| Others | 12,721,957.26 | 9,411,258.29 | 73.98% | Estimated collection risk |
| Total | 46,054,287.07 | 30,158,501.41 | -- | -- |
| Items | Closing balance | |||
| Book balance | Provision for doubtful debt | Provision proportion (%) | Reasons | |
| Items | Closing balance | ||
| Book balance | Provision for doubtful debt | Provision proportion (%) | |
| Items | Closing balance | ||
| Book balance | Provision for doubtful debt | Provision proportion (%) | |
| Within 1 year | 2,246,198,613.39 | 23,656,329.43 | 1.05% |
| 1 to 2 years | 66,051,391.45 | 2,793,506.98 | 4.23% |
| 2 to 3 years | 24,766,755.78 | 11,670,494.43 | 47.12% |
| Over 3 years | 5,507,807.56 | 5,319,140.72 | 96.57% |
| Total | 2,342,524,568.18 | 43,439,471.56 | -- |
| Items | Closing balance | ||
| Book balance | Provision for doubtful debt | Provision proportion (%) | |
| Aging | Book balance |
| Within 1 year (inclusive) | 2,254,965,619.41 |
| 1 to 2 years | 74,785,286.02 |
| 2 to 3 years | 51,938,480.19 |
| Over 3 years | 6,889,469.63 |
| 3 to 4 years | 6,889,469.63 |
| Total | 2,388,578,855.25 |
| Categories | Opening balance | Changed amount of this period | Closing balance | |||
| Accrual | Recovered or reversed | Written off | Others | |||
| 2020FY | 69,647,289.00 | 11,932,332.85 | 5,304,843.83 | 2,676,805.05 | 73,597,972.97 | |
| Total | 69,647,289.00 | 11,932,332.85 | 5,304,843.83 | 2,676,805.05 | 73,597,972.97 | |
Significant provision for doubtful debts reversed or recovered in the currentperiod
Unit: RMB
| Company | Amount recovered or reversed | Recovery method |
| Items | Amount of written-off |
| Company | Nature of account receivable | Amount of written- off | Reasons for written off | Write-off procedures | Whether the payment is generated by related party transactions |
| Company | Closing balance of account receivables | Proportion to total closing balance of account receivables | Closing balance of doubtful debt provision |
| No.1 | 145,883,190.32 | 6.11% | 723,764.42 |
| No.2 | 84,570,249.81 | 3.54% | 422,851.24 |
| No.3 | 73,059,587.54 | 3.06% | 365,297.94 |
| No.4 | 72,086,733.75 | 3.02% | 360,433.67 |
| No.5 | 67,556,464.43 | 2.83% | 337,782.32 |
| Total | 443,156,225.85 | 18.56% |
None
(6) The amount of assets and liabilities formed by transferring and continuingto be involved in accounts receivableNoneOther remarks:
None
6. Accounts receivable financing
Unit: RMB
| Items | Closing balance | Opening balance |
| Bank acceptance | 338,736,142.63 | 350,320,590.58 |
| Trade acceptance | 43,468,600.37 | 28,584,000.00 |
| Total | 382,204,743.00 | 378,904,590.58 |
| Categories | 2020FY | 2019FY |
| Bank acceptance | 186,082,811.84 | 132,911,797.58 |
| Trade acceptance | 1,000,000.00 | 14,960,000.00 |
| Total | 187,082,811.84 | 147,871,797.58 |
| Categories | 2020FY | 2019FY | ||
| Derecognized | Not Derecognized | Derecognized | Not derecognized | |
| Bank acceptance | 706,520,717.60 | 60,264,049.38 | 586,953,297.41 | 52,584,811.00 |
| Trade acceptance | - | 1,000,000.00 | - | 10,960,000.00 |
| Total | 706,520,717.60 | 61,264,049.38 | 586,953,297.41 | 63,544,811.00 |
account receivable as follows:
No
7. Advances paid
(1) Advances paid by aging
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 152,570,939.60 | 96.49% | 168,067,208.16 | 96.82% |
| 1 to 2 years | 1,018,291.92 | 0.64% | 1,183,585.18 | 0.68% |
| 2 to 3 years | 225,922.70 | 0.14% | 4,151,292.61 | 2.39% |
| Over 3 years | 4,321,136.02 | 2.73% | 195,218.61 | 0.11% |
| Total | 158,136,290.24 | -- | 173,597,304.56 | -- |
| Company | Relationship with the Group | Amount | Age | Reasons | Percentage to total advances paid (%) |
| No. 1 | third party | 27,005,328.32 | Within 1 year | Goods not received | 17.08 |
| No. 2 | third party | 23,621,431.84 | Within 1 year | Goods not received | 14.94 |
| No. 3 | third party | 16,181,548.86 | Within 1 year | Goods not received | 10.23 |
| No. 4 | third party | 12,477,187.30 | Within 1 year | Goods not received | 7.89 |
| No. 5 | third party | 6,781,193.40 | Within 1 year | Goods not received | 4.29 |
| Total | 86,066,689.72 | 54.43 |
| Items | Closing balance | Opening balance |
| Interest receivables | 0.00 | |
| Dividend receivables | 0.00 | |
| Other receivables | 68,318,081.18 | 916,325,582.02 |
| Total | 68,318,081.18 | 916,325,582.02 |
(1) Interest receivables
1) Interest receivables categories
Unit: RMB
| Items | Closing balance | Opening balance |
| Total |
| Borrower | Closing balance | Overdue time | Overdue reasons | Whether the interest receivable impaired and its criteria |
| Items (or investee) | Closing balance | Opening balance |
| Total |
| Items (or investee) | Closing balance | Age | Reasons | Whether it has impaired and its criteria |
3) Provision of doubtful debt
□ Applicable √ Not applicable
Other remarks:
None
(3) Other receivables
1) Other receivables categorized by nature
Unit: RMB
| Items | Closing balance | Opening balance |
| Related parties occupy funds | 0.00 | 843,320,000.00 |
| Guarantee deposit | 7,622,075.86 | 11,930,507.11 |
| Stock repurchase payment | 866,935.63 | 6,913,835.11 |
| Petty Cash for employee | 3,849,343.39 | 4,304,279.29 |
| Reimbursed expenses | 3,551,863.38 | 1,211,041.51 |
| Compensation receivable | 2,558,050.02 | 2,730,734.57 |
| Export tax refund | 215,930.22 | 28,828.35 |
| Tax refund receivable | 20,904,450.90 | 24,350,645.18 |
| Employee compensation receivable | 11,700,450.00 | |
| Others | 20,816,494.34 | 24,707,193.43 |
| Total | 72,085,593.74 | 919,497,064.55 |
| Provision for doubtful debt | Phase I | Phase II | Phase III | Total |
| 12-month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance on January 1, 2020 | 84,280.54 | 1,126,401.99 | 1,960,800.00 | 3,171,482.53 |
| The balance as of January 1, 2020 is in the current period | —— | —— | —— | —— |
| Transferred to Phase II | -84,280.54 | 84,280.54 | ||
| Transferred to Phase III | -128,015.35 | 128,015.35 |
| Provision made in the current period | 348,067.87 | 678,287.91 | 1,026,355.78 | |
| Provision recovered in current period | 173,874.15 | 151,924.25 | 104,527.35 | 430,325.75 |
| Balance on December 31, 2020 | 174,193.72 | 1,609,030.84 | 1,984,288.00 | 3,767,512.56 |
| Aging | Closing balance |
| Within 1 year （including 1 year） | 56,351,143.02 |
| 1 to 2 years | 1,005,658.62 |
| 2 to 3 years | 4,259,072.47 |
| Over 3 years | 10,469,719.63 |
| 3 to 4 years | 10,469,719.63 |
| Total | 72,085,593.74 |
| Categories | Opening balance | Changed amount of the current period | Closing balance | |||
| Accrued | Recovered or reversed | Written off | Others | |||
| 2020 FY | 3,171,482.53 | 1,026,355.78 | 430,325.75 | 3,767,512.56 | ||
| Total | 3,171,482.53 | 1,026,355.78 | 430,325.75 | 3,767,512.56 | ||
| Company | Amount reversed or recovered | Recovery Method |
| Items | Amount written off after verification |
| Company | Nature of other account receivables | Amount written off | Reason | Procedure for written-off | Whether the amount is generate by related party transactions |
| Company | Nature of receivables | Closing balance | Age | Proportion to the total balance of other receivables | Provision for doubtful debt at the end of the period |
| Austrian Tax and Finance Bureau | Tax refund receivable | 20,904,450.90 | Within 1 year | 29.00% | |
| Austrian Labor Bureau | Employee compensation receivable | 11,700,450.00 | Within 1 year | 16.23% | |
| Xinchang County Land and Resources Bureau | Guarantee deposit | 2,879,575.00 | 2-3 years | 3.99% | 287,957.50 |
| Gates Canada Inc | Compensation receivable | 2,558,050.02 | over 3 years | 3.55% | |
| Dongguan Huawei Coating Equipment Co., Ltd. | Advance payment for equipment | 2,000,000.00 | Within 1 year | 2.77% | |
| Total | 40,042,525.92 | 55.54% | 287,957.50 |
| Company | Government grant | Closing balance | Aging | Estimated receipt time, amount and basis |
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for decline in value of inventories or provision for impairment of contract performance costs | Carrying amount | Book balance | Provision for decline in value of inventories or provision for impairment of contract performance costs | Carrying amount | |
| Raw materials | 1,021,336,904.37 | 93,791,188.32 | 927,545,716.05 | 1,050,945,010.87 | 95,480,390.87 | 955,464,620.00 |
| Work-in-progress | 656,710,134.88 | 4,790,661.33 | 651,919,473.55 | 680,658,858.81 | 3,694,539.11 | 676,964,319.70 |
| Finished goods | 745,299,986.77 | 14,851,786.11 | 730,448,200.66 | 779,307,046.36 | 17,784,505.82 | 761,522,540.54 |
| Total | 2,423,347,026.02 | 113,433,635.76 | 2,309,913,390.26 | 2,510,910,916.04 | 116,959,435.80 | 2,393,951,480.24 |
| Items | Opening balance | Increase in current period | Decrease in current period | Closing balance | ||
| Accrued | Others | Reversal or write-off | Others | |||
| Raw materials | 95,480,390.87 | 2,042,644.70 | 3,731,847.25 | 93,791,188.32 | ||
| Work-in-progress | 3,694,539.11 | 1,105,500.72 | 9,378.50 | 4,790,661.33 | ||
| Finished goods | 17,784,505.82 | 5,323,533.33 | 8,256,253.04 | 14,851,786.11 | ||
| Total | 116,959,435.80 | 8,471,678.75 | 11,997,478.79 | 113,433,635.76 | ||
(3) Explanation on inventory closing balance including capitalized borrowingcostsNone
(4) Explanation on amortization of contract cost in the current periodNone
10. Contract assets
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Items | Amount changed | Reasons |
| Items | Provisions in current period | Reversal in current period | Write- off in current period | Reasons |
| Items | Closing balance | Provisions for impairment | Carrying value at the end of period | Fair value | Estimated disposal cost | Estimated disposal time |
| Items | Closing balance | Opening balance |
| Items | Closing balance | Opening balance | ||||||
| Book balance | Coupon rate | Effective rate | Time to maturity | Book balance | Coupon rate | Effective rate | Time to maturity | |
| Items | Closing balance | Opening balance |
| Deductible VAT, Sales tax, and consumption tax/ pending tax | 69,003,341.08 | 69,837,690.54 |
| Prepaid corporate income tax | 26,600,908.56 | 47,170,182.60 |
| Total | 95,604,249.64 | 117,007,873.14 |
| Items | Closing balance | Opening balance | ||||
| Book balance | Provisions for impairment | Carrying amount | Book balance | Provisions for impairment | Carrying amount | |
| Debt investment items | Closing balance | Opening balance | ||||||
| Face value | Coupon rate | Effective rate | Time to maturity | Face value | Coupon rate | Effective rate | Time to maturity | |
| Provision for doubtful debt | Phase I | Phase II | Phase III | Total |
| 12-month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance on January 1, 2020 |
| Item | Opening balance | Accrued interest | Change of fair value in the current period | Closing balance | Cost | Accumulative change in fair value | Accumulative impairment provisions recognized in other comprehensive income | Note |
| Other debt investment items | Closing balance | Opening balance | ||||||
| Face value | Coupon rate | Effective rate | Time to maturity | Face value | Coupon rate | Effective rate | Time to maturity | |
| Provision for doubtful debt | Phase I | Phase II | Phase III | Total |
| 12-month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance on January 1, 2020 |
period
□ Applicable √ Not Applicable
Other remarks:
None
16. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Items | Closing balance | Opening balance | Range of discount rate | ||||
| Book balance | Provisions for impairment | Carrying amount | Book balance | Provisions for impairment | Carrying amount | ||
| Provision for doubtful debt | Phase I | Phase II | Phase III | Total |
| 12-month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance on January 1, 2020 |
Unit: RMB
| Investee | Opening balance (book value) | Percentage change in the current period | Closing balance (Carrying value) | Closing balance of provisions for impairment | |||||||
| Increased investment | Decreased investment | Investment gain or loss recognized under equity method | Change in other comprehensive income | Change in other equity | Cash dividend paid or profit | Provision for impairment | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Diamond Flight Centre London INC. | 765,855.96 | -166,729.89 | -31,315.23 | 567,810.84 | |||||||
| CETC Wuhu General Aviation Industry Technology Research Institute Co., Ltd. | 11,846,686.90 | -11,136,957.56 | -709,729.34 | ||||||||
| Subtotal | 12,612,542.86 | -11,136,957.56 | -876,459.23 | -31,315.23 | 567,810.84 | ||||||
| Total | 12,612,542.86 | -11,136,957.56 | -876,459.23 | -31,315.23 | 567,810.84 |
| Items | Closing balance | Opening balance |
| Diamond Flight Centre London INC. | 4,733,395.22 | 4,942,489.56 |
| Total | 4,733,395.22 | 4,942,489.56 |
Unit: RMB
| Items | Recognized dividend income | Accumulative gain | Accumulative loss | Amount of other comprehensive income transferred to retained earnings | Reason for the designation as being measured at fair value and the changes recognized in other comprehensive income | Reasons for transferring other comprehensive income to retained earnings |
| Items | Closing balance | Opening balance |
| Items | Book value | Reasons for not having property ownership certificate |
21. Fixed assets
Unit: RMB
| Items | Closing balance | Opening balance |
| Fixed asset | 4,872,464,413.48 | 5,113,660,627.42 |
| Total | 4,872,464,413.48 | 5,113,660,627.42 |
| Items | Buildings | Specialized Equipment | Vehicle | General tools | Decoration | Total |
| I. Original book value | ||||||
| 1. Opening balance | 3,055,868,712.55 | 4,614,959,380.24 | 107,869,598.56 | 222,244,427.42 | 2,340,060.98 | 8,003,282,179.75 |
| 2. Increase in the current period | 78,285,305.98 | 327,433,341.47 | 37,357,047.62 | 15,323,963.50 | 26,045.31 | 458,425,703.88 |
| (1) Purchase | 2,548,119.90 | 52,422,104.25 | 37,246,428.15 | 11,353,851.31 | 26,045.31 | 103,596,548.92 |
| (1) Transferred from construction in progress | 75,737,186.08 | 275,011,237.22 | 110,619.47 | 3,970,112.19 | 354,829,154.96 | |
| (2) Increase in business combination | ||||||
| 3. Decrease in the current period | 45,788,527.40 | 181,865,263.50 | 10,678,267.39 | 29,282,107.74 | 30,000.00 | 267,644,166.03 |
| (1). Disposal or scrap | 2,007,506.37 | 106,547,352.57 | 12,719,051.08 | 29,331,275.10 | 30,000.00 | 150,635,185.12 |
| Foreign currency translation | 43,781,021.03 | 75,317,910.93 | -2,040,783.69 | -49,167.36 | 117,008,980.91 | |
| 4. Closing balance | 3,088,365,491.13 | 4,760,527,458.21 | 134,548,378.79 | 208,286,283.18 | 2,336,106.29 | 8,194,063,717.60 |
| II. Accumulative depreciation | ||||||
| 1. Opening balance | 635,660,456.18 | 2,034,215,012.89 | 25,637,002.03 | 135,638,742.07 | 1,966,060.72 | 2,833,117,273.89 |
| 2. Increase in the current period | 122,374,683.92 | 430,016,646.04 | 9,676,594.26 | 20,621,205.24 | 164,681.37 | 582,853,810.83 |
| (1). Accrual | 122,374,683.92 | 430,016,646.04 | 9,676,594.26 | 20,621,205.24 | 164,681.37 | 582,853,810.83 |
| 3. Decrease in the current period | 12,152,116.67 | 108,472,830.22 | 1,392,883.95 | 28,403,855.69 | 28,500.00 | 150,450,186.53 |
| (1). Disposal or scrap | 2,006,459.67 | 86,392,170.99 | 1,607,875.14 | 29,157,095.90 | 28,500.00 | 119,192,101.70 |
| (2). Foreign currency translation | 10,145,657.00 | 22,080,659.23 | -214,991.19 | -753,240.21 | 31,258,084.83 | |
| 4. Closing balance | 745,883,023.43 | 2,355,758,828.71 | 33,920,712.34 | 127,856,091.62 | 2,102,242.09 | 3,265,520,898.19 |
| III. Provisions for impairment | ||||||
| 1. Opening balance | 2,266,776.28 | 53,832,251.62 | 405,250.54 | 56,504,278.44 | ||
| 2. Increase in the current period | 2,675,523.03 | 10,234.45 | 2,685,757.48 | |||
| (1). Accrual | 2,675,523.03 | 10,234.45 | 2,685,757.48 | |||
| 3. Decrease in the current period | 98,956.02 | 2,964,488.23 | 48,185.74 | 3,111,629.99 | ||
| (1). Disposal or scrap | 1,017,453.06 | 32,050.46 | 1,049,503.52 | |||
| 4. Closing balance | 98,956.02 | 1,947,035.17 | 16,135.28 | 2,062,126.47 | ||
| IV. Book value | 2,167,820.26 | 53,543,286.42 | 367,299.25 | 56,078,405.93 | ||
| 1. Book value at the end of the period |
| 2. Book value at the beginning of the period | 2,340,314,647.44 | 2,351,225,343.08 | 100,627,666.45 | 80,062,892.31 | 233,864.20 | 4,872,464,413.48 |
| 2,417,941,480.09 | 2,526,912,115.73 | 82,232,596.53 | 86,200,434.81 | 374,000.26 | 5,113,660,627.42 |
| Items | Historical book value | Accumulative depreciation | Provisions for impairment | Book value | Note |
| Building | 1,520,714.68 | 1,520,714.68 | |||
| Specialized equipment | 89,315,237.07 | 62,104,530.92 | 5,037,016.50 | 22,173,689.65 | |
| General equipment | 6,023,171.77 | 5,472,894.78 | 28,516.04 | 521,760.95 | |
| Total | 96,859,123.52 | 69,098,140.38 | 5,065,532.54 | 22,695,450.60 |
| Items | Historical book value | Accumulative depreciation | Provisions for impairment | Carrying value |
Unit: RMB
| Items | Closing book value |
| Buildings | 145,679,914.15 |
| Items | Book value | Reasons for without property ownership certificate |
| Buildings | 98,395,904.63 | The property ownership certificate is being processed |
| Items | Closing balance | Opening balance |
| Items | Closing balance | Opening balance |
| Construction in progress | 258,966,481.11 | 426,345,202.99 |
| Total | 258,966,481.11 | 426,345,202.99 |
(1) Construction in progress overview
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provisions for impairment | Book value | Book balance | Provisions for impairment | Book value | |
| Construction in progress | 258,966,481.11 | 258,966,481.11 | 426,345,202.99 | 426,345,202.99 | ||
| Total | 258,966,481.11 | 258,966,481.11 | 426,345,202.99 | 426,345,202.99 | ||
| Items | Budget amount | Opening balance | Amount increased in the current period | Amount transferred to fixed assets in current period | Other reductions in the current period | Closing balance | Accumulative project investment as a percentage of budget | Project progress | Accumulative amount of interest capitalization | Including: interest capitalized in the current period. | Interest capitalization rate in the current period | Capital resources |
| Aluminum Alloy Wheels Smart Factory with 2.2 million sets capacity | 53,193 | 3,139 | 299 | 3,438 | 7.00% | 7% | Others |
| Auto Wheel Smart Factory in Jilin with 3 million sets capacity | 38,157 | 1,450 | 1,298 | 2,410 | 338 | 85.00% | 85% | Others | ||||
| Aluminum Alloy Motorcycle Wheels Smart Factory with 6 million | 44,873 | 1,311 | 64 | 1,003 | 371 | 95.00% | 95% | Others |
| sets capacity | ||||||||||||
| Equipment to be installed | 0.00 | 321 | 422 | 421 | 322 | Others | ||||||
| Aluminum alloy wheels project in India with 3 million sets capacity | 11,696 | 3,161 | 969 | 2,224 | 343 | 1,563 | 86.00% | 86% | Others | |||
| Meridian America Factory | 0.00 | 6,136 | 2,680 | 8,594 | 221 | Others | ||||||
| Other equipment | 0.00 | 19,623 | 11,223 | 15,325 | 412 | 15,108 | Others | |||||
| Other project | 0.00 | 7,495 | 2,932 | 5,506 | 164 | 4,756 | Others | |||||
| Total | 147,919 | 42,635 | 19,886 | 35,483 | 1,141 | 25,897 | -- | -- | -- |
(3) Provisions for impairment of accrual construction in progress
Unit: RMB
| Items | Accrual amount in the current period | Reasons |
| Items | Closing balance | Opening balance | ||||
| Book balance | Provisions for impairment | Book value | Book balance | Provisions for impairment | Book value | |
| Items | Total | |
None
26. Intangible assets
(1) Intangible assets overview
Unit: RMB
| Items | Land use rights | Patent rights | Non-patent rights | Customer relations | Trademark | Software | Technology authorization | Total |
| I. Original book value | ||||||||
| 1. Opening balance | 762,797,808.37 | 1,003,206,595.05 | 175,900,000.00 | 92,486,670.23 | 60,433,833.20 | 70,393,236.48 | 2,165,218,143.33 | |
| 2. Increase in the current period | 3,105,331.75 | 395,336.71 | 4,309,852.51 | 135,773.61 | 7,946,294.58 | |||
| (1). Purchase | 3,105,331.75 | 395,336.71 | 4,309,852.51 | 135,773.61 | 7,946,294.58 | |||
| (2). Internal R&D | ||||||||
| (3). Increase in business combination | ||||||||
| 3. Decrease in the current period | -10,558,394.96 | -33,672,741.74 | 0.00 | 0.00 | -2,464,147.14 | -1,435,490.87 | -463,906.67 | -48,594,681.38 |
| (1). Disposal | -2,315,733.43 | -1,291,236.67 | -2,315,733.43 | -3,606,970.10 | ||||
| Foreign currency translation | -10,558,394.96 | -33,672,741.74 | -2,464,147.14 | -144,254.20 | 1,851,826.76 | -44,987,711.28 |
| 4. Closing balance | 755,344,745.16 | 969,929,190.02 | 175,900,000.00 | 90,022,523.09 | 63,308,194.84 | 70,065,103.42 | 2,124,569,756.53 | |
| II. Accumulative depreciation | ||||||||
| 1. Opening balance | 85,690,815.72 | 182,071,752.28 | 50,941,250.00 | 5,421,352.27 | 45,605,736.27 | 17,307,330.73 | 387,038,237.27 | |
| 2. Increase in the current period | 12,937,886.67 | 48,697,542.55 | 8,795,000.00 | 3,424,011.96 | 2,215,715.49 | 4,552,713.21 | 80,622,869.88 | |
| (1). Accrual | 12,937,886.67 | 48,697,542.55 | 8,795,000.00 | 3,424,011.96 | 2,215,715.49 | 4,552,713.21 | 80,622,869.88 | |
| 3. Decrease in the current period | -0.03 | -5,067,260.35 | 0.00 | 0.00 | 0.00 | -1,694,250.37 | -1,763,715.91 | -8,525,226.66 |
| (1). Disposal | -1,287,210.78 | -2,264,508.38 | -3,551,719.16 | |||||
| Foreign currency translation | -0.03 | -5,067,260.35 | -407,039.59 | 500,792.47 | -4,973,507.50 | |||
| 4. Closing balance | 98,628,702.36 | 225,702,034.48 | 59,736,250.00 | 8,845,364.23 | 46,127,201.39 | 20,096,328.03 | 459,135,880.49 | |
| III. Provisions for impairment | ||||||||
| 1. Opening balance | ||||||||
| 2. Increase in the current period | ||||||||
| (1). Accrual | ||||||||
| 3. Decrease in the current period | ||||||||
| (1). Disposal | ||||||||
| 4. Closing balance | ||||||||
| IV. Book value | ||||||||
| 1. Closing book value | 656,716,042.80 | 744,227,155.54 | 116,163,750.00 | 81,177,158.86 | 17,180,993.45 | 49,968,775.39 | 1,665,433,876.04 | |
| 2. Opening book value | 677,106,992.65 | 821,134,842.77 | 124,958,750.00 | 87,065,317.96 | 14,828,096.93 | 53,085,905.75 | 1,778,179,906.06 |
| Items | Book value | Reasons for without property ownership certificate |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||||
| Internal development expenditures | Others | Recognized as intangible assets | Transferred to current profit and loss | Foreign currency translation | ||||
| General Aviation Aircraft R&D Project | 69,419,211.82 | 1,118,681.18 | 70,537,893.00 | |||||
| Total | 69,419,211.82 | 1,118,681.18 | 70,537,893.00 | |||||
| Investee or event forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Formed by business combination | Disposal | Foreign currency translation | ||||
| Goodwill | 1,701,158,115.52 | 38,163,606.20 | 1,662,994,509.32 | |||
| Total | 1,701,158,115.52 | 38,163,606.20 | 1,662,994,509.32 | |||
(2) Provisions for impairment of goodwill
Unit: RMB
| Investee or event forming goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Accrual | Disposal | |||||
| Total | ||||||
industry in which the CGU is located.The CGU of Ningbo Economic and Technological Development Zone DacrometCo., Ltd. mainly consists of the long-term assets of the company. The value isconsistent with the CGU determined during the impairment test on the purchasedate and previous years. The book value of this CGU is RMB 41,466,389.36(excluding goodwill). The recoverable amount adopts the present value of theexpected future cash flow of the CGU and is determined according to the cashflow forecast based on the five-year financial budget approved by themanagement. The discount rate used in the cash flow forecast is 21% (2019:
22%). The growth rate used to forecast income five years from now is 3% (2019:
3%). This growth rate is similar to the long-term average growth rate of theindustry in which the CGU is located.The cash inflows generated by Wuxi Xiongwei Precision Technology Co., Ltd.and its subsidiaries are independent of the cash inflows of other assets or CGUsof the Group. The operating and production activities of Wuxi XiongweiPrecision Technology Co., Ltd and its subsidiaries are managed by themanagement team of Wuxi Xiongwei Precision Technology Co., Ltd. Therefore,the goodwill is allocated to the group of CGUs of Wuxi Xiongwei PrecisionTechnology Co., Ltd. and its subsidiaries. The group of CGUs is mainlycomposed of the long-term assets of Wuxi Xiongwei Precision Technology Co.,Ltd. and its subsidiaries, and is consistent with the group of CGUs determinedon the purchase date. The book value of the group of CGUs is RMB457,751,993.48 (excluding goodwill). The recoverable amount adopts thepresent value of the expected future cash flow of the group of CGUs and isdetermined according to the cash flow forecast based on the five-year financialbudget approved by the management. The discount rate used in the cash flowforecast is 17% (2019: 17%). The growth rate used to forecast income fiveyears from now is 3% (2019: 3%). This growth rate is similar to the long-termaverage growth rate of the industry in which the group of CGUs is located.The cash inflows generated by Wanfeng Aircraft Industry Co., Ltd. and itssubsidiaries are independent of the cash inflows of other assets or CGUs of theGroup. At the same time, the management of Wanfeng Aircraft Industry Co.,Ltd. manages the overall production and operation activities of Wanfeng AircraftIndustry Co., Ltd. and its subsidiaries, so the goodwill is allocated to the groupof CGUs of Wanfeng Aircraft Industry Co., Ltd. and its subsidiaries. The groupof CGUs is mainly composed of the long-term assets of Wanfeng AircraftIndustry Co., Ltd. and its subsidiaries, and the value is consistent with the groupof CGUs determined on the combination date. The book value of the group ofCGUs is RMB 1,189,116,794.64 (excluding goodwill). The recoverable amountadopts the present value of the expected future cash flow of the group of CGUsand is determined according to the cash flow forecast based on the five-yearfinancial budget approved by the management. The discount rate used for cashflow forecasting is 15%. The growth rate of income in five years is 0%. Thisgrowth rate is similar to the long-term average growth rate of the industry in
which the group of CGUs is located.
The impact of goodwill impairment testingAssumptions are used to calculate the present value of the estimated futurecash flows of the CGU on December 31, 2020, and December 31, 2019. Thekey assumptions made by the management in determining the cash flowforecast to conduct the impairment test of goodwill are as follows:
The budgeted gross profit- is based on the average gross profit marginachieved in the year before the budget year, and appropriate adjustments tothe average gross profit margin based on the expected improvement inefficiency and the expected market development.Discount rate—The discount rate used is the pre-tax discount rate that reflectsthe specific risks of the relevant CGU.The amount of key assumptions allocated to the aforementioned CGU or groupof CGUs is consistent with the historical experience of the Group and externalinformation.Other remarks：
None
29. Long-term prepayments
Unit: RMB
| Items | Opening balance | Increase in the current period | Amortization amount in the current period | Other decreased amount | Closing balance |
| Mold cost | 155,574,404.91 | 120,403,888.58 | 117,296,286.89 | 6,539,051.40 | 152,142,955.20 |
| Others | 4,138,217.16 | 3,426,357.10 | 2,533,271.36 | 5,031,302.90 | |
| Total | 159,712,622.07 | 123,830,245.68 | 119,829,558.25 | 6,539,051.40 | 157,174,258.10 |
| Items | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Impairment of assets | 103,197,497.76 | 19,454,818.29 | 101,571,717.56 | 18,733,041.43 |
| Unrealized profit from internal transactions | 28,403,632.18 | 6,513,020.37 | 38,452,198.52 | 9,139,506.41 |
| Deductible losses | 887,572,565.95 | 207,165,175.85 | 539,284,651.54 | 134,364,475.53 |
| Held for trading financial liabilities | 0.00 | 1,324,581.60 | 198,687.24 | |
| Deferred income | 34,991,981.94 | 5,234,028.07 | 19,743,547.14 | 2,961,532.07 |
| Differences in depreciation life of fixed assets | 46,415,580.39 | 7,635,453.22 | 50,651,033.40 | 8,202,838.28 |
| Accrued costs | 88,400,965.39 | 17,439,780.95 | 75,946,109.24 | 15,110,034.11 |
| Total | 1,188,982,223.61 | 263,442,276.75 | 826,973,839.00 | 188,710,115.07 |
| Items | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Appraisal and appreciation of combined assets of companies under the uncommon control | 618,572,990.33 | 128,998,950.89 | 695,954,080.47 | 143,940,380.48 |
| Differences in depreciation life of fixed assets | 449,463,686.72 | 105,621,790.35 | 460,724,738.47 | 107,779,719.37 |
| Mold amortization | 64,905,823.19 | 15,977,333.04 | 67,576,409.18 | 16,513,246.58 |
| Held-for-trading financial assets | 2,682,400.00 | 402,360.00 | 0.00 | |
| Capitalized R&D expense | 70,537,893.00 | 17,634,473.25 | ||
| Total | 1,206,162,793.24 | 268,634,907.53 | 1,224,255,228.12 | 268,233,346.43 |
| Items | Deferred tax assets and liabilities offset amount at the end of the balance amount | Closing balance of deferred tax assets or liabilities after offset | Deferred tax assets and liabilities offset amount at the beginning of the balance amount | Opening balance of deferred tax assets or liabilities after offset |
| Deferred tax assets | 1,188,982,223.61 | 263,442,276.75 | 826,973,839.00 | 188,710,115.07 |
| Deferred tax liabilities | 1,206,162,793.24 | 268,634,907.53 | 1,224,255,228.12 | 268,233,346.43 |
| Items | Closing balance | Opening balance |
| Deductible temporary difference | 64,892,971.32 | 58,123,373.93 |
| Deductible loss | 709,064,668.42 | 1,121,656,110.65 |
| Total | 773,957,639.74 | 1,179,779,484.58 |
| Maturity years | Closing balance | Opening balance | Note |
| 2020 | 0.00 | 14,462,870.02 | |
| 2021 | 0.00 | 29,923,131.64 | |
| 2022 | 14,107,939.28 | 33,953,830.77 | |
| 2023 | 0.00 | 1,503,643.11 | |
| 2024 | 19,874,937.50 | 57,734,101.04 | |
| 2025 and onwards | 675,081,791.64 | 984,078,534.07 | |
| Total | 709,064,668.42 | 1,121,656,110.65 | -- |
| Items | Closing balance | Opening balance | ||||
| Book balance | Provisions for impairment | Book value | Book balance | Provisions for impairment | Book value | |
| Prepayment for equipment purchase (note 1) | 7,461,417.37 | 7,461,417.37 | 50,655,894.55 | 50,655,894.55 | ||
| Total | 7,461,417.37 | 7,461,417.37 | 50,655,894.55 | 50,655,894.55 | ||
36.23 million to Zhejiang Wanfeng Technology Development Co., Ltd. topurchase equipment required for the smart factory project. Since then, due tomarket changes in the automotive industry, the Company decided to suspendthe smart factory project. As of December 31, 2019, the payment was stillprepaid for equipment. The Company recovered the payment in June 2020.
32. Short-term borrowings
(1) Categories of short-term borrowings
Unit: RMB
| Items | Closing balance | Opening balance |
| Pledge borrowings | 350,971,345.88 | 318,825,376.00 |
| Mortgage borrowings | 466,584,522.23 | 198,476,192.23 |
| Guaranteed borrowings | 261,912,928.58 | 300,287,468.95 |
| Credit borrowings | 1,621,761,545.54 | 2,007,220,560.05 |
| Mortgage and Guaranteed Loan | 843,066,327.79 | 245,309,170.96 |
| Total | 3,544,296,670.02 | 3,070,118,768.19 |
| Borrower | Closing balance | Borrowing rate | Overdue time | Overdue interest rate |
| Items | Closing balance | Opening balance |
| Held-for-trading financial liabilities | 1,324,581.60 | |
| Including: |
| Foreign exchange option contract | 1,155,357.75 | |
| Interest swap contract | 169,223.85 | |
| Including: | ||
| Total | 0.00 | 1,324,581.60 |
| Items | Closing balance | Opening balance |
| Categories | Closing balance | Opening balance |
| Bank acceptance bill | 192,867,169.90 | 218,601,865.08 |
| Total | 192,867,169.90 | 218,601,865.08 |
| Items | Closing balance | Opening balance |
| Accounts payable | 935,542,222.20 | 1,115,150,353.00 |
| Total | 935,542,222.20 | 1,115,150,353.00 |
| Items | Closing balance | Reasons for outstanding or carry-over |
(1) Unearned revenue overview
Unit: RMB
| Items | Closing balance | Opening balance |
| 0.00 |
| Items | Closing balance | Reasons for outstanding or carry-over |
| Items | Closing balance | Opening balance |
| Unearned revenue from merchandise sales | 512,836,059.89 | 648,572,264.26 |
| Total | 512,836,059.89 | 648,572,264.26 |
| Items | Amount Change | Reasons for change |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term employee benefits | 233,205,108.09 | 1,576,879,887.52 | 1,586,451,269.92 | 223,633,725.69 |
| II. Post-employment benefits - defined contribution plan | 5,534,982.64 | 140,553,760.87 | 138,205,683.83 | 7,883,059.68 |
| Total | 238,740,090.73 | 1,717,433,648.39 | 1,724,656,953.75 | 231,516,785.37 |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Wage, bonus, allowances and subsidy | 222,730,889.11 | 1,391,851,569.01 | 1,400,543,318.63 | 214,039,139.49 |
| 2. Employee welfare fund | 6,312,197.09 | 56,801,256.61 | 58,032,387.97 | 5,081,065.73 |
| 3. Social insurance premium | 2,570,817.85 | 78,445,371.51 | 77,984,675.41 | 3,031,513.95 |
| Including: medical care premium | 1,661,616.35 | 73,236,052.08 | 73,008,266.24 | 1,889,402.19 |
| Occupational injuries premium | 784,818.06 | 4,167,349.33 | 4,013,894.55 | 938,272.84 |
| Maternity premium | 124,383.44 | 1,041,970.10 | 962,514.62 | 203,838.92 |
| 4. Housing provident fund | 644,019.62 | 28,896,668.58 | 28,923,149.42 | 617,538.78 |
| 5. Trade union fund and employee education fund | 947,184.42 | 10,050,223.65 | 10,132,940.33 | 864,467.74 |
| Others | 10,834,798.16 | 10,834,798.16 | ||
| Total | 233,205,108.09 | 1,576,879,887.52 | 1,586,451,269.92 | 223,633,725.69 |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Basic pension premium | 5,137,086.26 | 137,737,516.10 | 135,435,334.63 | 7,439,267.73 |
| 2. Unemployment insurance premium | 397,896.38 | 2,816,244.77 | 2,770,349.20 | 443,791.95 |
| Total | 5,534,982.64 | 140,553,760.87 | 138,205,683.83 | 7,883,059.68 |
| Items | Closing balance | Opening balance |
| VAT | 26,542,927.11 | 34,206,653.17 |
| Corporate income tax | 39,186,672.93 | 22,371,143.85 |
| Individual income tax | 5,102,080.09 | 4,256,244.53 |
| Urban maintenance and construction tax | 1,899,576.31 | 2,221,116.30 |
| Land use tax | 4,254,745.36 | 2,209,282.12 |
| Housing property tax | 4,852,646.95 | 2,451,938.91 |
| Stamp tax | 124,470.71 | 71,666.17 |
| Education surcharge | 1,266,995.16 | 1,786,125.57 |
| Vehicle and vessel usage fee | 2,940.00 | 2,940.00 |
| Local foundation for water works | 289,400.82 | 517,649.20 |
| Property tax | 4,176,660.14 | 398,994.34 |
| Withholding income tax | 837,889.76 | 957,925.19 |
| Withholding and paying income tax | 19,869,554.00 | |
| Business activity tax | 14,956.76 | |
| Others | 4,779,295.22 | 5,420.00 |
| Total | 113,185,854.56 | 71,472,056.11 |
| Items | Closing balance | Opening balance |
| Interest payable | 0.00 | |
| Dividend payable | 0.00 | |
| Other payable | 384,220,500.31 | 727,292,685.82 |
| Total | 384,220,500.31 | 727,292,685.82 |
| Items | Closing balance | Opening balance |
| Total |
| Borrower | Overdue amount | Overdue reasons |
| Items | Closing balance | Opening balance |
| Total | 0.00 |
| Items | Closing balance | Opening balance |
| Investment payable (note) | 250,875,527.78 | |
| Engineering equipment payable | 123,040,085.71 | 195,544,451.22 |
| Contract deposit | 20,506,005.21 | 18,438,067.14 |
| Freight and storage fees payable | 21,188,614.05 | 26,534,374.31 |
| Other payables | 169,154,774.77 | 170,461,805.20 |
| Others | 50,331,020.57 | 65,438,460.17 |
| Total | 384,220,500.31 | 727,292,685.82 |
| Items | Closing balance | Reasons for outstanding or carry-over |
| Huawei Coating Equipment HK CO.,LTD | 5,394,029.63 | Project to be accepted |
| Wanfeng Group | 5,000,000.00 | Deposit for intended cooperation |
| Shenyang Dongda Sanjian Industrial Furnace Manufacturing Co., Ltd. | 4,834,285.70 | Project to be accepted |
| Zhejiang Huali Intelligent Equipment Co., Ltd. | 2,710,274.01 | Project to be accepted |
| Zhejiang Wanfeng Technology Development Co., Ltd. | 1,390,249.94 | Warranty period |
| Nanjing Changjiang Industrial Furnace Technology Co., Ltd. | 1,301,914.60 | Project to be accepted |
| Shenzhen Yuandong Machinery Development Co., Ltd. | 1,085,394.10 | Project to be accepted |
| Total | 21,716,147.98 | -- |
| Items | Closing balance | Opening balance |
Other remarks:
None
43. Non-current liabilities due within one year
Unit: RMB
| Items | Closing balance | Opening balance |
| Long-term loan due within one year | 694,425,998.19 | 571,968,504.83 |
| Total | 694,425,998.19 | 571,968,504.83 |
| Items | Closing balance | Opening balance |
| Output VAT to be transferred | 4,192,272.05 | 5,301,872.45 |
| Total | 4,192,272.05 | 5,301,872.45 |
| Bond | Par value | Issue date | Term | Issuance amount | Opening balance | Current issue | Interest accrued at face value | Amortization of premium and discount | Repayment in the current period | Closing balance | |
| -- |
| Items | Closing balance | Opening balance |
| Pledge borrowings | 396,962,631.92 | |
| Mortgage borrowings | 500,503,566.56 | 553,895,193.84 |
| Guaranteed borrowings | 408,697,705.52 | |
| Credit borrowings | 80,000,000.00 | 214,362,666.24 |
| Mortgage and Guaranteed Loan | 190,000,000.00 | |
| Total | 1,179,201,272.08 | 1,165,220,492.00 |
Remarks on classification of long-term borrowings:
NoneOther remarks, including interest rate range:
As of December 31, 2020, the annual interest rate of the above-mentionedborrowings was 3.50%-5.22% (December 31, 2019: 3.50%-6.52%). Amongthem, please refer to Note VII. 81 for information on mortgaged loans andmortgaged assets related to pledged loans.
46. Bonds payable
(1) Bonds payable
Unit: RMB
| Items | Closing balance | Opening balance |
| Bond | Par value | Issue date | Term | Issuance amount | Opening balance | Current issue | Interest accrued at face value | Amortization of premium and discount | Repayment in the current period | Closing balance | |
| -- | |||||||||||
| Total | -- | -- | -- |
Unit: RMB
| Outstanding financial instrument | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||||
| Amount | Book value | Amount | Book value | Amount | Book value | Amount | Book value | |
| Items | Closing balance | Opening balance |
| Items | Closing balance | Opening balance |
| Items | Closing balance | Opening balance |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reasons |
| -- |
| Items | Closing balance | Opening balance |
(2) Changes in defined benefit plans
Present value of defined benefit plans:
Unit: RMB
| Items | Amount in current period | Amount in prior period |
| Items | Amount in current period | Amount in prior period |
| Items | Amount in current period | Amount in prior period |
| Items | Closing balance | Opening balance | Reasons |
| Pending litigation (Note 1) | 157,323,343.91 | 151,393,866.81 | |
| Product quality assurance | 27,389,011.22 | 19,118,430.88 | |
| Fixed asset disposal costs | 3,538,805.35 | 3,646,570.77 | |
| Employee compensation (Note 2) | 946,458.39 | 521,998.44 | |
| Total | 189,197,618.87 | 174,680,866.90 | -- |
arbitration process. As of December 31, 2020, Austria Diamond Aircraft Industry Co., Ltd. accumulatively accrued provisions of RMB157,323,343.91 based on estimates (December 31, 2019: RMB 151,393,866.81).
Note 2: Wanfeng Meridian and its subsidiaries (hereinafter referred to as “Wanfeng Meridian Group”) hired CMI, A York Risk ServicesCompany, Inc. (hereinafter referred to as CMI), a third-party employee compensation risk management agency to handle employeecompensation claim. CMI provides estimates to the Company after evaluating all outstanding claims each year. As of December 31,2020, there were several outstanding claims (2019: multiple outstanding claims), and Wanfeng Meridian Group recognized contingentliabilities based on the estimated amount.
51. Deferred income
Unit: RMB
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reasons |
| Government grants | 202,630,087.75 | 69,496,834.32 | 57,852,069.49 | 214,274,852.58 | |
| Total | 202,630,087.75 | 69,496,834.32 | 57,852,069.49 | 214,274,852.58 | -- |
| Liability projects | Opening balance | New subsidy amount for the current period | Amount included in non-operating revenue in the current period | Amount included in other income in the current period | Amount of cost reduction in the current period | Other changes | Closing balance | Related to assets/related to income |
| Technical transformation project of intelligent production line for auto parts | 1,262,775.16 | 164,724.84 | 1,098,050.32 | Related to assets |
| Industrialization and Informatization Development Fund | 200,000.00 | 150,000.00 | 50,000.00 | Related to assets | ||||
| Fiscal subsidies for energy saving and consumption reduction projects | 30,000.00 | 30,000.00 | Related to assets | |||||
| National Industrial Transformation and Upgrade Fund | 7,200,000.00 | 900,000.00 | 6,300,000.00 | Related to assets | ||||
| Intelligent Casting Technological Transformation Project for Annual Production of 3 Million Motorcycle Wheels | 6,300,000.00 | 900,000.00 | 5,400,000.00 | Related to assets | ||||
| National Intelligent Manufacturing New Model Application Project | 11,000,000.00 | 1,571,429.00 | 9,428,571.00 | Related to assets | ||||
| Industrialization project of ultra-light and high-strength digital forming aluminum-magnesium alloy sub-frame | 960,000.00 | 960,000.00 | Related to income | |||||
| Complete sets of technology and industrialization of engineering preparation and processing of high thermal /electric conductivity magnesium alloy materials and their products-1 | 149,999.96 | 50,000.04 | 99,999.92 | Related to income | ||||
| Preparation, processing and industrialization of high thermal conductivity magnesium alloy materials and products | 147,368.44 | 147,368.44 | Related to income |
| Weihai Lightweight Material Technology Innovation Center | 1,000,000.04 | 1,000,000.04 | Related to income | |||||
| Multi-function data logger rack | 214,285.76 | 214,285.76 | Related to income | |||||
| Complete sets of technology and industrialization of engineering preparation and processing of high thermal /electric conductivity magnesium alloy materials and their products-2 | 153,191.48 | 51,063.84 | 102,127.64 | Related to income | ||||
| Key technologies for plastic processing, manufacturing and application of high-strength and tough magnesium alloys for load-bearing applications | 1,010,526.29 | 1,010,526.29 | Related to income | |||||
| Digital visual management processing workshop project | 531,600.00 | 531,600.00 | Related to income | |||||
| High strength and toughness Al-Cu rare earth casting alloy and its lightweight application | 91,200.00 | 91,200.00 | Related to income | |||||
| R&D and industrialization of high-strength and high-toughness magnesium-aluminum alloy bulletproof support | 1,920,000.00 | 960,000.00 | 960,000.00 | Related to income | ||||
| Magnesium alloy materials for communication equipment and their application technology R&D projects | 600,000.00 | 399,999.96 | 200,000.04 | Related to income |
| High thermal conductivity magnesium alloy body component industry chain construction project | 4,800,000.00 | 4,800,000.00 | Related to income | |||||
| Undertake international service outsourcing business (service outsourcing enterprise) | 367,600.00 | 367,600.00 | Related to income | |||||
| Complete sets of technology and industrialization projects for the engineering preparation and processing of high thermal / electric conductivity magnesium alloy materials and their products | 300,000.00 | 65,217.40 | 234,782.60 | Related to income |
| 500,000.00 | 108,695.70 | 391,304.30 | Related to income | |||||
| Large-scale thin-wall casting technology R&D project | 250,000.00 | 250,000.00 | Related to income | |||||
| Foundry sand core unorganized waste gas treatment project | 1,500,000.00 | 1,500,000.00 | Related to income |
| Large-displacement motorcycle racing aluminum-magnesium alloy sub-frame (rocker arm) technology patented navigation project | 200,000.00 | 200,000.00 | Related to income | |||||
| Application of high thermal conductivity magnesium alloy in 5G communication base station | 3,000,000.00 | 214,285.71 | 2,785,714.29 | Related to income | ||||
| Development and industrialization of a composite integrated framework of carbon fiber and magnesium alloy for communications | 100,000.00 | 9,090.91 | 90,909.09 | Related to income | ||||
| Study on Atomic Cluster Structure Spectrum and Atomic Diffusion Behavior of Aluminum-Cu Alloy Melt | 70,000.00 | 2,258.06 | 67,741.94 | Related to income | ||||
| Complete sets of technology and industrialization of engineering preparation and processing of high thermal / electric conductivity magnesium alloy materials and their products -3 | 300,000.00 | 54,545.44 | 245,454.56 | Related to income | ||||
| Complete sets of technology and industrialization of engineering preparation and processing of high thermal / electric conductivity magnesium alloy materials and their products-4 | 2,000,000.00 | 363,636.40 | 1,636,363.60 | Related to income |
| Complete set technology and industrialization of engineering preparation and processing of high thermal / electric conductivity magnesium alloy materials and their products -5 | 600,000.00 | 97,674.43 | 502,325.57 | Related to income | ||||
| High-strength, low-heat-cracking susceptibility magnesium alloy materials and compact forming technology and lightweight applications-1 | 600,000.00 | 119,999.96 | 480,000.04 | Related to income | ||||
| High-strength, low-heat-cracking sensitivity magnesium alloy material and compact forming technology and lightweight application-2 | 500,000.00 | 90,909.12 | 409,090.88 | Related to income | ||||
| High strength and toughness, low thermal cracking susceptibility magnesium alloy material and compact forming technology and lightweight application-3 | 2,000,000.00 | 153,846.15 | 1,846,153.85 | Related to income | ||||
| Research on Key Processes of Preparation of Diamond/Copper Matrix Composites for Heat Dissipation | 160,000.00 | 12,307.69 | 147,692.31 | Related to income | ||||
| OME Aluminum Alloy Wheel Project | 65,254,418.06 | 11,951,636.28 | 53,302,781.78 | Related to asset | ||||
| New Energy Automobile Wheel Smart Factory Construction Project | 7,971,632.71 | 5,000,000.00 | 921,632.71 | 12,050,000.00 | Related to asset |
| Support funds for the construction of aluminum alloy wheel projects | 82,732,248.52 | 13,745,354.92 | 68,986,893.60 | Related to asset | ||||
| Support funds for industrial transformation and upgrading projects | 16,433,102.81 | 2,690,737.93 | 13,742,364.88 | Related to asset | ||||
| Special funds for private economic development | 3,452,542.57 | 561,975.34 | 2,890,567.23 | Related to asset | ||||
| Rewards for the construction of smart factories and digital workshops | 473,362.40 | 56,197.55 | 417,164.85 | Related to asset | ||||
| 2020 energy optimization project subsidy transferred to deferral | 1,872,600.00 | 511,600.00 | 1,361,000.00 | Related to asset | ||||
| Industrial Strong Base Project | 28,820,000.00 | 9,334,217.84 | 19,485,782.16 | Related to asset | ||||
| Museum subsidy | 363,504.17 | 91,831.69 | 8,263.76 | 279,936.24 | Related to asset | |||
| Photovoltaic project subsidy | 2,204,098.71 | 479,011.30 | 148,687.23 | 64,406.78 | 2,598,829.56 | Related to asset | ||
| Housing and equipment subsidies | 6,801,630.67 | 295,932.82 | 177,552.48 | 6,683,250.33 | Related to asset | |||
| Total | 202,630,087.75 | 69,246,611.30 | 57,852,069.49 | 250,223.02 | 214,274,852.58 |
52. Other non-current liabilities
Unit: RMB
| Items | Closing balance | Opening balance |
| -- |
| Opening balance | Change in the current period（+、-） | Closing balance | |||||
| New issuance | Bonus shares | Provident Fund Conversion | Others | Subtotal | |||
| Total number of shares | 218,688 | 218,688 | |||||
| Outstanding financial instrument | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||||
| Amount | Book value | Amount | Book value | Amount | Book value | Amount | Book value | |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium（Share premium） | 110,790,013.13 | 110,790,013.13 | ||
| Other capital reserve | 2,747,500.00 | 2,747,500.00 | ||
| Combination under the common control | 1,576,333,004.32 | 1,576,333,004.32 | ||
| Original system capital reserve | 1,419,423.32 | 1,419,423.32 | ||
| Total | 1,691,289,940.77 | 1,691,289,940.77 | 0.00 |
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Treasury stock | 333,092,868.42 | 238,720,382.77 | 571,813,251.19 | |
| Total | 333,092,868.42 | 238,720,382.77 | 571,813,251.19 |
incentives. The total amount of funds for the repurchase of shares shall not beless than RMB 150 million and not more than RMB 300 million, and therepurchase price shall not exceed RMB 10 per share (inclusive). Therepurchase period is no more than 12 months from the approval date of therepurchase plan by the board of directors. As of December 25, 2020, theCompany's share repurchase period has expired. During the repurchase period,the Company accumulatively repurchased 35,501,808 shares by means of acentralized bidding transaction through the special securities account forrepurchase, accounting for 1.62% of the Company's total share capital, and thetotal transaction amount was RMB 239,640,478.46 (including transaction costs).The Company's share repurchase plan has been completed.
The Company held the sixth meeting of the seventh board of directors onDecember 30, 2020, approved the Proposal on the Repurchase of CompanyShares, disclosed the Report on Repurchase of Company Shares on January4, 2021. The decision was made to repurchase the Company’s shares bymeans of centralized bidding through the Shenzhen Stock Exchange tradingsystem with its own funds or self-raised funds. These shares will be used forsubsequent employee stock ownership plans or equity incentives. The totalamount of funds for the repurchase of shares shall not be less than RMB 100million and not more than RMB 200 million, and the repurchase price shall notexceed RMB 11 per share (inclusive), and the repurchase period is no morethan 12 months from the approval date of the repurchase plan by the board ofdirectors . As of December 31, 2020, the Company's share repurchase planhas not yet been implemented.
57. Other comprehensive income (OCI)
Unit: RMB
| Items | Opening balance | Current period | Closing balance | |||||
| Amount before income tax in current period | Less: OCI carried forward transferred to profit and loss | Less: OCI carried forward transferred to retained earnings | Less: income tax expense | Attributable to the parent company after tax | Attributable to non-controlling interest after tax | |||
| II. Items to be reclassified subsequently to profit and loss | 74,589,529.22 | -148,446,465.82 | -129,418,056.84 | -19,028,408.98 | -54,828,527.62 | |||
| Foreign currency translation reserves | 74,589,529.22 | -148,446,465.82 | -129,418,056.84 | -19,028,408.98 | -54,828,527.62 | |||
| Other comprehensive income in total | 74,589,529.22 | -148,446,465.82 | -129,418,056.84 | -19,028,408.98 | -54,828,527.62 | |||
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Safety production fee | 10,261,018.12 | 20,979,159.41 | 17,727,120.11 | 13,513,057.42 |
| Total | 10,261,018.12 | 20,979,159.41 | 17,727,120.11 | 13,513,057.42 |
59. Surplus reserve
Unit: RMB
| Items | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserve | 427,043,757.25 | 47,015,012.60 | 427,043,757.25 | 47,015,012.60 |
| Total | 427,043,757.25 | 47,015,012.60 | 427,043,757.25 | 47,015,012.60 |
| Items | Current period | Previous period |
| Balance of undistributed profit at the end of the previous period before adjustment | 3,935,484,397.57 | 3,621,219,587.26 |
| Total amount of undistributed profits at the beginning of the period before adjustment (increase +, decrease -) | 107,711,409.83 | |
| Undistributed profit at the beginning of the period after adjustment | 3,935,484,397.57 | 3,728,930,997.09 |
| Add: Net profit attributable to shareholders of the parent company for current year | 565,820,630.75 | 895,769,920.83 |
| Less: Appropriation of statutory surplus reserve | 47,015,012.60 | 33,152,616.95 |
| Payable dividends on ordinary shares | 421,689,724.00 | 656,063,903.40 |
| Business combination under the common control | 299,757,230.72 | |
| Closing balance | 3,732,843,061.00 | 3,935,484,397.57 |
2). Due to changes in accounting policies, the undistributed profit at thebeginning of the period was affected by RMB-12,227,868.01.
3) Due to the correction of major accounting errors, the undistributed profit atthe beginning of the period was affected by RMB 0.00.
4) The change in the scope of consolidation caused by the same controlaffected the undistributed profit at the beginning of the period by RMB119,939,277.84.
5) Other adjustments affected the undistributed profit at the beginning of theperiod by RMB 0.00.
61. Operating revenue and Operating cost
Unit: RMB
| Items | Current period | Prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 10,295,928,707.36 | 8,256,622,391.91 | 12,240,494,250.98 | 9,614,365,593.75 |
| Other operations | 403,296,197.21 | 282,787,673.51 | 394,637,725.28 | 284,183,485.67 |
| Total | 10,699,224,904.57 | 8,539,410,065.42 | 12,635,131,976.26 | 9,898,549,079.42 |
| Contract classification | Section 1 | Section 2 | Total | |
| Including: |
Unit: RMB
| Items | Current period | Prior period |
| Urban maintenance and construction tax | 13,816,638.45 | 19,745,602.24 |
| Education surcharge | 11,840,055.90 | 17,805,728.34 |
| Housing property tax | 11,769,148.28 | 10,896,560.51 |
| Land use tax | 9,848,384.13 | 11,197,338.30 |
| Vehicle usage tax | 22,272.08 | 107,075.05 |
| Stamp duty | 3,556,512.48 | 3,646,380.92 |
| Environmental protection tax | 334,797.31 | 298,447.98 |
| Chamber of Commerce Tax | 444,915.02 | 648,072.21 |
| Business tax | 1,746,705.49 | 1,210,761.06 |
| Others | 650,056.39 | 470,748.48 |
| Total | 54,029,485.53 | 66,026,715.09 |
| Items | Current period | Prior period |
| Transportation fee | 98,999,575.96 | |
| Rental costs | 32,639,223.39 | 33,427,814.50 |
| Employee compensation and labor insurance premiums | 57,286,444.90 | 49,507,270.00 |
| Commission | 80,144,914.92 | 98,764,600.84 |
| Travel expense | 2,917,023.59 | 8,112,411.21 |
| Business hospitality | 2,280,016.25 | 5,135,790.26 |
| Rework and repair fee | 1,314,888.29 | 1,021,698.74 |
| Other | 26,354,907.56 | 31,404,151.59 |
| Total | 202,937,418.90 | 326,373,313.10 |
| Items | Current period | Prior period |
| Employee compensation and labor insurance premiums | 253,974,877.57 | 336,547,102.49 |
| Depreciation expense | 81,012,763.39 | 84,928,773.17 |
| Professional service fee | 67,268,386.40 | 68,386,119.76 |
| Amortization of intangible assets | 28,081,645.11 | 27,377,486.81 |
| Business hospitality | 24,918,655.72 | 24,112,594.31 |
| Office expense | 20,034,195.34 | 22,860,054.00 |
| Property rental fee | 14,777,427.27 | 16,925,824.89 |
| Computer and software maintenance fee | 13,717,008.33 | 13,242,229.66 |
| Travel expense | 5,196,486.24 | 13,022,022.58 |
| Insurance | 4,654,956.23 | 1,953,097.69 |
| Employee education funds and labor union funds | 2,914,839.77 | 2,497,355.21 |
| Others | 74,286,505.01 | 57,609,135.28 |
| Total | 590,837,746.38 | 669,461,795.85 |
| Items | Current period | Prior period |
| Trial production and material cost | 120,631,171.97 | 165,239,150.69 |
| Depreciation expenses | 35,023,658.55 | 34,559,098.29 |
| Fuel and power | 37,037,593.92 | 57,391,913.63 |
| Mold expenses | 14,064,645.28 | 14,567,653.35 |
| Employee compensation and labor insurance premiums | 121,930,108.10 | 155,149,369.13 |
| Others | 8,761,692.86 | 19,195,773.76 |
| Total | 337,448,870.68 | 446,102,958.85 |
| Items | Current period | Prior period |
| Interest expense | 245,818,075.95 | 241,813,490.17 |
| Less: Interest income | 34,003,395.60 | 46,585,659.98 |
| Translation losses | 49,782,761.54 | 14,505,478.58 |
| Bank fees | 7,524,559.08 | 9,279,889.76 |
| Total | 269,122,000.97 | 219,013,198.53 |
| Source of the other income | Current period | Prior period |
| Government grants related to operating activities | 104,562,193.16 | 91,765,417.17 |
| Items | Current period | Prior period |
| Investment income from long-term equity investments under equity method | -876,459.23 | 633,198.02 |
| Investment income from disposal of long-term equity investments | -675,223.58 | |
| Investment income from disposal of held-for-trading financial assets | -4,600.00 | |
| Gains and losses on settlement of foreign exchange forward contracts | 2,077,790.82 | -1,037,330.00 |
| Investment income of short-term financial products | 1,485.24 | 2,834,421.98 |
| Gains and losses on settlement of futures contracts | -1,235,024.00 | |
| Gains and losses on settlement of foreign exchange option | 1,324,581.60 | -409,440.00 |
| Total | 612,550.85 | 2,020,850.00 |
| Items | Current period | Prior period |
| Sources of income from | Current period | Prior period |
| changes in fair value | ||
| Held-for-trading financial assets | 4,154.36 | 18,630.78 |
| Foreign exchange forward contract | 1,960,000.00 | 1,050,000.00 |
| Gains and losses on settlement of foreign exchange option | 282,400.00 | -1,155,357.75 |
| Gains and losses on settlement of interest rate swap | -169,223.85 | |
| Total | 2,246,554.36 | -255,950.82 |
| Items | Current period | Prior period |
| Impairment losses on other receivables | -596,030.03 | 1,856,502.90 |
| Impairment losses on accounts receivable | -6,627,489.02 | -34,793,447.68 |
| Total | -7,223,519.05 | -32,936,944.78 |
| Items | Current period | Prior period |
| Ⅱ. Inventory write-down loss and contract performance cost impairment loss | -7,493,604.15 | -16,367,780.12 |
| VI. Fixed assets impairment loss | -2,685,757.48 | -2,282,636.17 |
| Total | -10,179,361.63 | -18,650,416.29 |
| Sources of gains on disposal of asset | Current period | Prior period |
| Gains from disposal of non-current assets | 2,913,955.21 | 2,114,706.06 |
| Losses from disposal of non- | -2,412,798.27 | -2,897,932.24 |
| current assets | ||
| Total | 501,156.94 | -783,226.18 |
| Items | Current period | Prior period | Amount recorded into the current non-recurring profit and loss |
| Confiscated income | 1,046,034.81 | 6,659,158.22 | 1,046,034.81 |
| Compensation income (Note 1) | 28,071,500.00 | ||
| Net income from production accidents in U.S. factories (Note 2) | 35,106,031.66 | 126,048,046.71 | 35,106,031.66 |
| Others | 6,898,645.35 | 9,420,393.12 | 6,898,645.35 |
| Total | 43,050,711.82 | 170,199,098.05 | 43,050,711.82 |
| Subsidy items | Issuer | Reasons | Type | Whether the subsidy affect the current year's profit and loss | Whether it is a special subsidy | Current period | Prior period | Related to assets/related to income |
| -- |
75. Non-operating expenditures
Unit: RMB
| Items | Current period | Prior period | Amount recorded into the current non-recurring profit and loss |
| External donation | 1,362,874.02 | 80,410.61 | 1,362,874.02 |
| Losses from production accidents in U.S. and Canadian factories | 3,539,343.31 | 3,539,343.31 | |
| Special Fund for Water Conservancy Construction | 752,950.97 | 693,492.19 | 752,950.97 |
| Loss from scrap of non-current assets | 1,599,934.06 | ||
| Others | 4,331,701.81 | 4,561,344.43 | 4,331,701.81 |
| Total | 9,986,870.11 | 6,935,181.29 | 9,986,870.11 |
| Items | Current period | Prior period |
| Current period income tax expenses | 124,485,676.11 | 138,277,717.78 |
| Deferred income tax expenses | -60,339,163.96 | 34,516,501.29 |
| Total | 64,146,512.15 | 172,794,219.07 |
| Items | Current period |
| Profit before tax | 829,022,733.03 |
| Income tax expense based on statutory/applicable tax rate | 124,353,409.98 |
| The impact of different tax rates applied to subsidiaries | 54,621,522.03 |
| The impact of income tax before adjustment | -2,088,886.95 |
| The impact of non-taxable income | -7,407,788.55 |
| The impact of non-deductible cost, expense, and losses | 13,225,300.77 |
| The impact of change in tax rate | -1,097,562.36 |
| Use of deductible losses of the previous years and recognize the deductible losses that have not been recognized in the previous years | -106,350,989.94 |
| Effect of deducible temporary differences or deductible losses not recognized | 13,851,320.32 |
| Deductible expenses not included in the total profit | -160,134.66 |
| Extra deduction of expenses | -46,749,493.17 |
| Cross-border profit distribution withholding income tax | 21,949,814.68 |
| Tax expenses calculated according to the company's effective tax rate | 64,146,512.15 |
| Income tax expenses | 64,146,512.15 |
| Items | Current period | Prior period |
| Insurance indemnities received in a production accident in the United States except for the purchase and construction of assets | 35,106,031.66 | 72,873,856.18 |
| Government grants related to income | 92,987,587.09 | 61,362,644.82 |
| Government grants related to assets | 22,779,011.30 | 500,000.00 |
| Changes in other cash and cash equivalents | 10,408,322.61 | 297,656.27 |
| Others | 46,980,676.05 | 33,041,991.55 |
| Total | 208,261,628.71 | 168,076,148.82 |
Description of other cash receipts related to operating activities:
No
(2) Other cash payments related to operating activities
Unit: RMB
| Items | Current period | Prior period |
| Selling expenses | 148,403,947.53 | 277,559,152.72 |
| Administrative and R&D expenses | 427,832,236.32 | 589,436,025.60 |
| Expenditures related to production accidents in the United States and Canada | 3,539,343.30 | 36,144,970.27 |
| Changes in other cash and cash equivalents | -4,097,276.75 | - |
| Bank fees | 8,022,755.63 | 9,510,528.79 |
| Cash paid for operating costs | 126,351,662.51 | |
| Others | 9,416,220.14 | 18,089,678.97 |
| Total | 719,468,888.68 | 930,740,356.35 |
| Items | Current period | Prior period |
| Related parties return funds and interest | 944,235,315.71 | 1,360,423,532.78 |
| Wuxi Precision Acquisition Performance Compensation | 24,460,500.00 | |
| Receipt of payment for default on disposal of equity | 3,611,000.00 | |
| Insurance compensation received for the purchase and construction of assets in a production accident in a US factory | 89,319,160.80 | |
| Gains from disposal of held-for-trading financial assets | 2,962,130.80 | |
| Settlement income of other financial products | 1,485.24 | 7,793.38 |
| Changes in restricted cash and cash equivalents guaranteed for Wanfeng Group | 629,500,000.00 | 635,893,602.05 |
| Others | 74,602.02 | |
| Total | 1,576,698,931.75 | 2,113,790,191.03 |
| Items | Current period | Prior period |
| Cash lent to related parties | 76,650,000.00 | 1,883,450,707.00 |
| Disposal of held-for-trading financial assets | 888,940.00 | 1,446,770.00 |
| Changes in restricted cash and cash equivalents guaranteed for Wanfeng Group | 13,049,800.00 | - |
| Total | 90,588,740.00 | 1,884,897,477.00 |
| Items | Current period | Prior period |
| Recover the deposit paid to obtain loan | 218,800,000.00 | 58,929,200.00 |
| Total | 218,800,000.00 | 58,929,200.00 |
| Items | Current period | Prior period |
| Stock repurchases | 238,720,382.77 | 333,092,868.42 |
| Deposit paid to obtain loan | 230,000,000.00 | 268,800,000.00 |
| Cash paid to acquire subsidiary | 2,418,075,000.00 | |
| Total | 2,886,795,382.77 | 601,892,868.42 |
Unit: RMB
| Supplement information | Current period | Prior period |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 764,876,220.88 | 1,041,234,342.21 |
| Add：Provisions for assets impairment loss | 17,402,880.68 | 51,587,361.07 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 582,853,810.83 | 551,655,806.11 |
| Amortization of right-of-use assets | ||
| Amortization of intangible assets | 80,622,869.88 | 91,458,733.96 |
| Amortization of long-term deferred expenses | 119,829,558.25 | 118,705,736.28 |
| Loss on disposal of fixed assets, intangible assets and other long-term assets (Less:gains) | -501,156.94 | 783,226.18 |
| Loss on scrap of fixed assets (Less: gains) | 1,599,934.06 | |
| Losses on changes in fair value (Less: gains) | -2,246,554.36 | 255,950.82 |
| Financial expenses (Less: gains) | 248,850,044.00 | 237,169,394.08 |
| Investment losses (Less: gains) | -612,550.85 | -2,020,850.00 |
| Decrease of deferred tax assets (Less: increase) | -75,400,834.00 | 20,468,783.72 |
| Increase of deferred tax liabilities (Less: decrease) | 8,208,840.54 | 16,116,037.21 |
| Decrease of inventories (Less: increase) | 69,482,782.06 | -131,522,140.63 |
| Decrease of operating receivables (Less: increase) | -181,446,594.32 | -404,474,923.83 |
| Increase of operating payables (Less: decrease) | 102,038,205.77 | -53,092,585.55 |
| Others | 1,823,384.00 | -119,555,925.92 |
| Net cash flows generated from operating activities | 1,735,780,906.42 | 1,420,368,879.77 |
| 2．Significant investing and financing activities not related to cash receipts and payments: | -- | -- |
| Conversion of debt into capital | ||
| Convertible bonds due within one year | ||
| Fixed assets leased in under finance leases | ||
| 3．Net changes in cash and cash equivalents: | -- | -- |
| Cash at the end of the period | 1,412,366,847.54 | 1,426,647,961.41 |
| Less: Cash at the beginning of the period | ||
| Add: Cash equivalents at the end of the period | ||
| Less: Cash equivalents at the beginning of the period | 1,426,647,961.41 | 1,167,968,107.34 |
| Net increase of cash and cash equivalents | -14,281,113.87 | 258,679,854.07 |
| Amount | |
| Cash and cash equivalents paid in current period for business combination | 2,418,075,000.00 |
| Including: | -- |
| Acquired subsidiaries | 2,418,075,000.00 |
| Including: | -- |
| Including: | -- |
| Net cash paid to acquire subsidiaries | 2,418,075,000.00 |
| Amount | |
| Net cash of cash equivalents receipts from disposal of subsidiaries in current period | 10,461,733.98 |
| Net cash receipts from disposal of subsidiaries | 10,461,733.98 |
| Items | Closing balance | Opening balance |
| I. Cash | 1,412,366,847.54 | 1,426,647,961.41 |
| Including: Cash on hand | 928,560.58 | 1,007,340.38 |
| Cash in bank that can be readily drawn on demand | 1,411,438,286.96 | 1,425,640,621.03 |
| II. Cash equivalents |
| Ⅲ. Cash and cash equivalents at end of year | 1,412,366,847.54 | 1,426,647,961.41 |
| Items | Carrying amount at the end of the period | Reasons for restriction |
| Cash and cash equivalents | 262,612,110.63 | Note 1 |
| Fixed assets | 756,254,109.17 | Note 3 |
| Intangible assets | 317,431,152.87 | Note 3 |
| Accounts receivable financing | 187,082,811.84 | Note 2 |
| Total | 1,523,380,184.51 | -- |
Note 2: As of December 31, 2019, the Group’s held-for-trading financial assetswith restricted ownership were RMB 60,000,000.00. Including 1) Pledge ofstructured deposits of RMB 50,000,000.00 to obtain loans; 2) Pledge ofstructured deposits of RMB 10,000,000.00 to obtain bank acceptance bills.
Note 3: As of December 31, 2020, the Group’s restricted ownership of accountsreceivable financing was RMB 187,082,811.84 (December 31, 2019:
147,871,797.58). Including: 1) Pledge of RMB 95,818,762.46 of accountsreceivable financing (December 31, 2019: RMB 63,456,986.58 of billsreceivable) to issue bank acceptance drafts; 2) Pledge of RMB 30,000,000.00of accounts receivable financing to obtain loans from China Construction BankFuling Branch (December 31, 2019: Pledge of RMB 20,870,000.00 of billsreceivable to obtain loans from China Construction Bank Fuling Branch); 3)Financing of RMB 58,264,049.38 yuan (December 31, 2019: RMB53,544,811.00 of bills receivable) endorsed to pay the supplier purchase price;
4) Financing of RMB 3,000,000.00 with accounts receivable (December 31,2019: RMB 10,000,000.00 of bills receivable) and discounted to obtain bankloans.
Note 4: As of December 31, 2020, except for the assets guaranteed ormortgaged by Wanfeng Meridian disclosed below, the fixed assets andintangible assets with restricted ownership of the Group were RMB756,254,109.17 and RMB 317,431,152.87, respectively (December 31, 2019:
RMB 529,912,312.56 and RMB 184,362,853.26), including:
1) Fixed assets of RMB 17,056,994.90 and intangible assets of RMB6,820,428.00 were pledged to obtain a loan line of RMB 164.12 million fromJiangmen Rural Commercial Bank Co., Ltd Tangxia Branch. On December 31,2020, under the agreement, the balance of short-term loan was RMB 128.35million;
2) Fixed assets of RMB 103,453,918.66 and intangible assets of RMB138,628,139.83 were collateralized to obtain a loan line of RMB 200 million fromExport-Import Bank of China Jilin Branch. On December 31, 2020, under theagreement, the balance of short-term loans obtained was RMB 40 million, andthe balance of long-term loans obtained was RMB 102.16 million, of which RMB
34.16 million was due within one year;
3) Intangible assets of RMB 71,927,645.22 were collateralized to obtain a loanline of Indian rupees 800 million from HDFC Bank . On December 31, 2020,under the agreement, the balance of short-term loan obtained was Indianrupees 200 million (Equivalent to RMB 17.82 million);
4) Fixed assets of RMB 82,973,199.73 were collateralized to obtain a loan lineof EUR 10 million from Oberbank AG. As of December 31, 2020, under theagreement, there was no loan balance;
5) With fixed assets of RMB 54,198,682.69 as collateral, on December 31, 2020,under the agreement, Wanfeng Auto Wheel obtained a short-term loan of RMB60 million from Agricultural Bank of China Xinchang Branch;
6) With Wanfeng Auto Wheel’s fixed assets of RMB 22,953,031.39 andintangible assets of RMB 49,928,224.40 as collateral, on December 31, 2020,under the agreement, Wanfeng Auto Wheel obtained a short-term loan of RMB230 million from Agricultural Bank of China Xinchang Branch;
7) With Fengzeyuan’s fixed assets of RMB 399,001,519.62 as collateral, onDecember 31, 2020, under the agreement, the Company obtained a short-termloan of RMB 30 million from Agricultural Bank of China Xinchang Branch ;
8) With the residual value of fixed assets of Fengzeyuan and the residual valueof fixed assets and intangible assets of Wanfeng Auto Wheel as collateral, onDecember 31, 2020, under the agreement, Wanfeng Auto Wheel obtained ashort-term loan of RMB 80 million from Agricultural Bank of China XinchangBranch;
9) With the residual value of fixed assets of Fengzeyuan and the residual valueof fixed assets and intangible assets of Wanfeng Auto Wheel as collateral, andguarantee from Zhejiang Rifa Holding Group Co., Ltd., on December 31, 2020,under the agreement, the Company obtained a short-term loan of RMB 260million from Agricultural Bank of China Xinchang Branch;
10) With the residual value of fixed assets and intangible assets of WanfengAuto Wheel as collateral, and guarantee from Zhejiang Rifa Holding Group Co.,on December 31, 2020, under the agreement, the Company obtained a long-term loan of RMB 190 million from Agricultural Bank of China Xinchang Branch;
11) With its fixed assets of RMB 13,842,308.28 and intangible assets of RMB22,813,328.69 as collateral, and joint liability guarantee from Zhejiang RifaHolding Group Co., Ltd., on December 31, 2020, under the agreement, theCompany obtained a short-term loan of RMB 1.82 million from Export-ImportBank of China Zhejiang Branch;
12) With fixed assets of RMB 62,774,453.90 and intangible assets of RMB27,313,386.73 as collateral, and 95% equity of the subsidiary Wuxi XiongweiPrecision Technology Co., Ltd. pledged to Minsheng Bank Hangzhou Branch,the Company obtained a credit line of RMB 750,000,000.00. Please refer to thefollowing " Pledge of long-term equity investment in subsidiaries" for details.
The above 5 to 11 loans are all supplemented with Chen Ailian's personal jointliability guarantee.
Other situations where ownership or use rights are restricted
Wanfeng Meridian Guarantee
Wanfeng Meridian Group is a subsidiary group controlled by the Company. OnAugust 27, 2014, Meridian Lightweight Technologies UK Limited, MagnesiumProducts of America Inc., and Magnesium Meridian Lightweight TechnologiesInc. signed a term and revolving credit loan agreement with ComericaIncorporated (as the lead bank), with a revolving loan amount of up to USD 65million and a term loan amount of up to USD 81.6 million. The maturity date forrevolving loans and term loans is September 20, 2023. On December 31, 2020,under the agreement, long-term loans of USD 74,987,847.79 (equivalent toRMB 489,288,208.06) and GBP 10,865,111.00 (equivalent to RMB96,594,096.32) were obtained, of which USD 20,333,218.77 (equivalent toRMB 132,672,219.18) and GBP 2,329,113.60 RMB (equivalent to RMB20,706,518.64), will mature within one year (December 31, 2019: Long-termborrowings of USD 74,497,542.43 (equivalent to RMB 517,983,727.20) andGBP 7,571,361.52 (equivalent to RMB 69,556,654.95), of which USD 17.2million (equivalent to RMB 123,370,484.51) and GBP 1,336,122.62 (equivalentto RMB 12,274,703.80), will be due within one year).
As of December 31, 2020, and December 31, 2019, the assets of WanfengMeridian Group have the following guarantees:
a. Meridian Lightweight Technologies UK Limited took Comerica Bank (as thelead bank) as the beneficiary and set fixed and floating charges on all its land,goodwill, accounts, investments, intellectual property rights and licenses toguarantee debts under the credit agreement.
b. Wanfeng Meridian took Comerica Bank (as the lead bank) as the beneficiaryand set all the property rights, interests and other rights it enjoys in any land,equipment, goodwill, accounts, shares and intellectual property as mortgage toguarantee the debts under the credit agreement. In addition, Wanfeng Meridianhave also pledged its shares of its subsidiary companies Meridian LightweightTechnologies UK Limited, Meridian Lightweight Technologies DeutschlandGmbH, Mexico Meridian Technologies Mexico, S. de RL de CV.
c. Meridian Lightweight Technologies Inc. pledged all its shares and assets toComerica Bank (as the lead bank) as the beneficiary at the same time, for debtsassumed by Comerica Incorporated (as the lead bank), and subject to the risksof credit agreements and related guarantees.
d. Meridian Lightweight Technologies Holdings Inc. pledged all its shares andassets to Comerica Bank (as the lead bank) as the beneficiary at the same time,for debts assumed by Comerica Incorporated (as the lead bank), and subjectto the risks of credit agreements and related guarantees.
e. Magnesium Products of America Inc. pledged all its shares, assets andequipment to Comerica Incorporated (as the lead bank) as the beneficiary, asa guarantee for the debts of its and/or affiliated companies under the creditagreement.
f. Mexico Meridian Technologies Mexico, S. de RL de CV. pledged its assets(equipment, machinery, accessories, and movable property used to implementthe company's main business activities) to Comerica Bank (as the lead bank)as the pledgee, in a non-possessive way.The 2-A and 2-B plots and buildingsowned by Meridian Technologies Mexico, S. de R.L. de C.V. have all beenmortgaged to Comerica Incorporated (as the lead bank).
Pledge of long-term equity investment in subsidiaries
As of December 31, 2020, the Company's long-term equity investment withrestricted ownership was RMB 1.254 billion (December 31, 2019: RMB 1.254billion). The Company pledged 95% equity of Wuxi Xiongwei PrecisionTechnology Co., Ltd. to Minsheng Bank Hangzhou Branch to obtain a creditline of RMB 750,000,000.00.
On December 31, 2020, under this line of credit, the Company obtained afinancing guarantee letter of EUR 85,000,000.00 issued by the Minsheng BankHangzhou Branch, against which the Company borrowed EUR 18,531,816.60(equivalent to RMB 148,717,828.22) and Euro 32,259,896.27 (equivalent toRMB 258,885,667.48) for long-term loans from Minsheng Bank Hong KongBranch and China Merchants Bank Hong Kong Branch. Loans from MinshengBank Hong Kong Branch Euro 18,631,799.84 (equivalent to RMB149,520,193.69 yuan) and China Merchants Bank Hong Kong Branch Euro32,259,896.27 (equivalent to RMB 258,885,667.48 yuan) will mature within oneyear.
82. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Items | Closing balance in foreign currencies | Exchange rate | RMB equivalent |
| Cash and cash equivalents | -- | -- | |
| Including: USD | 93,819,960.95 | 6.5249 | 612,165,863.19 |
| EUR | 35,301,672.42 | 8.0250 | 283,295,921.17 |
| HKD | |||
| CAD | 12,610,915.22 | 5.1161 | 64,518,703.37 |
| MXN | 6,143,754.32 | 0.3280 | 2,015,151.42 |
| YEN | 153,044,536.00 | 0.0632 | 9,677,924.28 |
| GBP | 4,405,086.45 | 8.8903 | 39,162,540.06 |
| INR | 488,563,163.81 | 0.0891 | 43,532,932.15 |
| CZK | 3,230,720.63 | 0.3046 | 984,077.50 |
| Accounts receivable | -- | -- | |
| Including: USD | 83,057,055.28 | 6.5249 | 541,938,980.00 |
| EUR | 10,316,741.45 | 8.0250 | 82,791,850.17 |
| HKD | |||
| CAD | 13,801,351.24 | 5.1161 | 70,609,093.10 |
| MXN | 401,652.66 | 0.3280 | 131,742.07 |
| YEN | 344,785,275.06 | 0.0632 | 21,802,841.65 |
| GBP | 1,392,790.53 | 8.8903 | 12,382,325.65 |
| INR | 801,918,585.01 | 0.0891 | 71,454,153.60 |
| CZK | 9,648,899.10 | 0.3046 | 2,939,054.67 |
| Other accounts receivable | |||
| USD | 1,198,098.08 | 6.5249 | 7,817,470.16 |
| CAD | 1,557,272.36 | 5.1161 | 7,967,161.10 |
| YEN | 1,326,000.06 | 0.0632 | 83,850.94 |
| EUR | 5,480,137.04 | 8.0250 | 43,978,099.75 |
| GBP | 28,827.37 | 8.8903 | 256,283.97 |
| INR | 17,581,895.62 | 0.0891 | 1,566,617.23 |
| CZK | 1,489.96 | 0.3046 | 453.84 |
| Short-term borrowings | |||
| USD | 6.5249 | ||
| EUR | 1,637,487.80 | 8.0250 | 13,140,839.60 |
| INR | 500,000,000.00 | 0.0891 | 44,552,000.00 |
| Accounts payable | |||
| USD | 19,433,367.90 | 6.5249 | 126,800,782.19 |
| CAD | 11,492,117.79 | 5.1161 | 58,794,823.84 |
| MXN | 7,711,898.90 | 0.3280 | 2,529,502.84 |
| YEN | 0.0632 | ||
| EUR | 14,350,423.29 | 8.0250 | 115,162,146.88 |
| GBP | 783,794.99 | 8.8903 | 6,968,172.60 |
| INR | 243,396,199.16 | 0.0891 | 21,687,574.93 |
| CZK | 998.19 | 0.3046 | 304.05 |
| Other accounts payable | |||
| USD | 630,060.27 | 6.5249 | 4,111,080.27 |
| CAD | 345,315.59 | 5.1161 | 1,766,669.09 |
| MXN | 1,294.67 | 0.3280 | 424.65 |
| YEN | 6,416,792.02 | 0.0632 | 405,772.26 |
| EUR | 8,076,552.28 | 8.0250 | 64,814,332.05 |
| GBP | 986.66 | 8.8903 | 8,771.68 |
| INR | 615,007,123.06 | 0.0891 | 54,799,594.69 |
| Non-current liabilities due within one year | |||
| USD | 26,083,218.77 | 6.5249 | 170,190,394.15 |
| EUR | 50,791,712.87 | 8.0250 | 407,603,495.77 |
| GBP | 2,329,113.60 | 8.8903 | 20,706,518.64 |
| Long-term borrowings | -- | -- | |
| Including: USD | 63,654,629.02 | 6.5249 | 415,340,088.89 |
| EUR | 8.0250 | ||
| HKD | |||
| GBP | 8,535,997.40 | 8.8903 | 75,887,577.69 |
| Currency exchange on December 31, 2020 | Currency exchange on December 31, 2019 | |
| USD | 6.5249 | 6.9762 |
| GBP | 8.8903 | 9.1501 |
| CAD | 5.1161 | 5.3421 |
| INR | 0.0891 | 0.1021 |
| EUR | 8.0250 | 7.8155 |
| Principle place of | Reporting Currency |
| business | ||
| Wanfeng Meridain Holdings Co., Ltd. | UK | USD |
| Meridian Lightweight Technologies Holdings Inc. | Canada | CAD |
| Meridian Lightweight Technologies Deutschland GmbH | Germany | CAD |
| Meridian Lightweight Technologies UK Limited | UK | GBP |
| Meridian Technologies Mexico, S. de R.L. de C.V. | Mexico | USD |
| Magnesium Products of America Inc. | America | USD |
| Meridian Lightweight Technologies Inc. | Canada | CAD |
| Wanfeng Aluminum Wheels (India) Pty Co., Ltd. | India | INR |
| Diamond Aircraft Industries GmbH | Austria | EUR |
| Austro Engine GmbH | Austria | EUR |
| Diamond Aircraft Industries Inc. | Canada | CAD |
Unit: RMB
| Category | Amount | Listed project | Amount recognized through profit and loss |
| -- |
| Acquiree | Date of equity acquisition | Cost of equity acquisition | Proportion of equity acquisition | Method of equity acquisition | Purchase date | The basis for determining the purchase date | Revenue of acquiree from the purchase date to the end of the period | Net profit of acquiree from the purchase date to the end of the period |
| -- |
| Combination cost | |
| -- |
Other remarks:
None
(3) Identifiable assets and liabilities on the purchase date
Unit: RMB
| Fair value at purchase date | Carrying value at purchase date | |
Unit: RMB
| Combined party | Proportion of equity acquisition | The basis for a business combination under the common control | Combination date | The basis for determining the combination date | Revenue of the combined party from the beginning of the current period to the combination date | Net profit of the combined party from the beginning of the current period to the combination date | Revenue of the combined party during the comparison period | Net profit of the combined party during the comparison period |
| Wanfeng Aircraft Industry Co., Ltd. | 55.00% | The parent company of the Aircraft Industry is the Aviation Industry, and the ultimate controlling shareholder is Wanfeng Group. Since both parties are controlled by Wanfeng Group before and after the combination and the control is not temporary, the transaction is a business combination under the common control. | April 16, 2020 | Aviation Industry completed the industrial and commercial change registration on April 16 and transferred all the shares of the Aircraft Industry to the Company, so the combination date was determined to be April 16. | 438,319,818.56 | 74,836,418.19 | 1,847,397,485.11 | 229,910,806.41 |
combination under the common control. The industrial and commercialchange registration for this equity transfer was completed on September 11,2019, so the combination date was determined as of September 11. Inaccordance with the relevant accounting requirements for businesscombinations under the common control, the financial position, operatingresults and cash flow of Wanfeng (UK) Aviation Co., Ltd in the consolidatedfinancial statements of its ultimate controlling party will be included inWanfeng Aircraft’s consolidated financial statements since January 1, 2019.And the balance and transactions occurred between the two parties will beoffset at the time of the combination. The reporting entity formed after thecombination is deemed to have always existed since the ultimate controllingparty began to exercise control.In April 2020, the Company acquired a 55% equity interest in WanfengAircraft for RMB 2,418,075,000.00 in cash. Wanfeng Aviation Industry Co.,Ltd. completed the industrial and commercial change registration on April 16and transferred all the shares of Wanfeng Aviation to the Company.Therefore, the combination date is determined to be April 16.The above-mentioned business combination under the common controlconstitutes a related transaction.
(2) Combination cost
Unit: RMB
| Combination cost | |
| --Cash | 2,418,075,000.00 |
| Items | Balance at the combination date | Balance at the end of the previous period |
| Assets： | 4,440,614,324.41 | 4,498,316,371.34 |
| Cash and cash equivalents | 217,109,673.96 | 398,090,569.07 |
| Account receivables | 155,575,659.38 | 131,640,062.99 |
| Inventory | 1,213,468,662.16 | 1,079,583,549.14 |
| Fixed assets | 330,606,218.74 | 276,904,814.44 |
| Intangible assets | 833,140,588.89 | 839,189,958.47 |
| Held- for-trading financial | 2,559,383.90 | 2,559,383.90 |
| assets | ||
| Advances paid | 9,524,841.32 | 46,082,520.69 |
| Other account receivables | 384,336,723.38 | 356,043,582.32 |
| Other current assets | 19,073,647.50 | 26,832,125.14 |
| Long-term equity investments | 567,810.84 | 12,612,542.86 |
| Other equity instrument investments | 4,733,395.22 | 4,942,489.56 |
| Construction in progress | 20,429,169.40 | 19,760,466.37 |
| Intangible assets | 833,140,588.89 | 839,189,958.47 |
| R&D expenses | 12,869,539.70 | |
| Goodwill | 1,104,898,547.65 | 1,159,535,292.23 |
| Long-term prepayments | 240,934.87 | 247,818.70 |
| Deferred tax assets | 131,479,527.50 | 143,803,981.04 |
| Liabilities： | 976,780,258.18 | 1,151,205,028.35 |
| Account payables | 128,081,891.74 | 175,358,430.08 |
| Unearned revenue | 606,781,571.25 | |
| Contract liabilities | 474,698,284.16 | |
| Employee benefits payable | 66,313,543.82 | 74,491,858.24 |
| Tax payable | 10,903,698.95 | 9,945,612.55 |
| Other payable | 59,694,052.74 | 68,309,049.34 |
| Provisions | 188,391,712.74 | 170,512,297.69 |
| Deferred income | 9,296,944.93 | 9,369,233.55 |
| Deferred tax liabilities | 39,400,129.10 | 36,436,975.65 |
| Net assets | 3,463,834,066.23 | 3,347,111,342.99 |
| Less：Minority interest | 1,557,977,455.85 | 1,505,477,431.91 |
| Net assets acquired | 1,905,856,610.38 | 1,841,633,911.08 |
the amount of equity adjustment and its calculation when processing the equitytransaction:
None
4. Disposal of subsidiaries
Whether single disposal of the investment in the subsidiary will lose control ofthe investment
□ Yes √ No
Whether the investment in the subsidiary is disposed of step by step throughmultiple transactions and the control is lost in the current period
□ Yes √ No
5. Changes in consolidation scope due to other reasons
Explain the changes in the scope of consolidation caused by other reasons(such as the establishment of a new subsidiary, a liquidation subsidiary, etc.)and related conditions:
WNS Grundstücksverwertungsgesellschaft M.B.H., to simplify the groupstructure, the board of directors of the company decided to dissolve thecompany. Related assets and liabilities were absorbed by its parent companyDiamond Verwaltungs GmbH. The company has been liquidated and canceledin 2019.
Diamond Maintenance GmbH, to simplify the group structure, the board ofdirectors of the company decided to dissolve the company. Related assets andliabilities were absorbed by its parent company Diamond Verwaltungs GmbH.The company has been liquidated and cancelled in 2019.
Diamond Star Engines GmbH, to simplify the group structure, the board ofdirectors of the company decided to dissolve the company. Related assets andliabilities were absorbed by its parent company, Austro Engine GmbH. Thecompany has been liquidated and cancelled in 2019.
Diamond Simulation Holding GmbH, to simplify the group structure, the boardof directors of the company decided to dissolve the company. Related assetsand liabilities were absorbed by its parent company Diamond Aircraft IndustriesGmbH. The company has been liquidated and cancelled in 2019.
Diamond Simulation Holding GmbH & Co. KG, to simplify the group structure,the board of directors of the company decided to dissolve the company. Relatedassets and liabilities were absorbed by its parent company Diamond AircraftIndustries GmbH. The company has been liquidated and cancelled in 2019.
Diamond Aircraft Holdings Inc., to simplify the group structure, the company'sboard of directors decided to dissolve the company. Related assets andliabilities were absorbed by Diamond Aircraft Industries Inc. The company hasbeen liquidated and cancelled in 2020.
Diamond D-Jet Corporation, to simplify the group structure, the board ofdirectors of the company decided to dissolve the company. Related assets andliabilities were absorbed by Diamond Aircraft Industries Inc. The company hasbeen liquidated and cancelled in 2020.
6. Others
None
IX. Interest in Other Entities
1. Interest in subsidiaries
(1) The composition of the Group
| Subsidy | Main operating place | Place of registration | Business nature | Holding proportion | Inclusion method | |
| Direct | Indirect | |||||
| Weihai Wanfeng Auto Wheel Co., Ltd. | Shandong | Shandong | Manufacture | 65.00% | Establishment | |
| Ningbo Aoweier Wheel Co., Ltd. | Zhejiang | Zhejiang | Manufacture | 75.00% | Establishment | |
| Jilin Wanfeng Auto Wheel Co., Ltd. | Jilin | Jilin | Manufacture | 100.00% | Establishment | |
| Chongqing Wanfeng Aolun Aluminum Wheel Co., Ltd | Chongqing | Chongqing | Manufacture | 100.00% | Establishment | |
| Wanfeng North America Co., Ltd. | America | America | Service | 100.00% | Establishment | |
| Wanfeng Aluminum Wheels (India) Pty. Co., Ltd | India | India | Manufacture | 100.00% | Establishment | |
| Shandong Weiwan Ke Chuanglian Engineering Technology Co., Ltd. | Shandong | Shandong | Manufacture | 68.80% | Establishment | |
| Shanghai Fengtu Automobile Technology Co., Ltd. | Shanghai | Shanghai | Commerce | 55.00% | Establishment | |
| Wanfeng Meridian New Material Technology Co., Ltd. | Zhejiang | Zhejiang | Manufacture | 100.00% | Establishment | |
| Zhejiang Wanfeng Shangda Coating Technology Co., Ltd. | Zhejiang | Zhejiang | Manufacture | 100.00% | Establishment | |
| Wanfeng Japan Co., Ltd. | Japan | Japan | Service | 100.00% | Establishment | |
| Zhejiang Wanfeng Motorcycle Wheel Co., Ltd. | Zhejiang | Zhejiang | Manufacture | 100.00% | Business combination | |
| Guangdong Motorcycle Wheel Co., Ltd. | Guangdong | Guangdong | Manufacture | 100.00% | Business combination | |
| Weihai Wanfeng Magnesium Technology Development Co., Ltd. | Shandong | Shandong | Manufacture | 68.80% | Business combination | |
| Wanfeng MLTH Holdings CO.,Ltd. | UK | UK | Investment | 100.00% | Business combination | |
| Meridian Lightweight Technologies Holdings Inc. | Canada | Canada | Investment | 100.00% | Business combination | |
| Meridian Lightweight Technologies Deutschland GmbH | Germany | Germany | Office | 100.00% | Business combination | |
| Meridian Lightweight Technologies UK Limited | UK | UK | Manufacture | 100.00% | Business combination | |
| Meridian Technologies Mexico,S.de R.L de C.V. | Mexico | Mexico | Manufacture | 100.00% | Business combination | |
| Magnesium Products of America Inc. | America | America | Manufacture | 100.00% | Business combination | |
| Meridian Lightweight Technologies Inc. | Canada | Canada | Manufacture | 100.00% | Business combination | |
| Meridian Canada Inc. | Canada | Canada | Investment | 100.00% | Business combination |
| Shanghai Meridian Magnesium Products Company Limited | Shanghai | Shanghai | Manufacture | 60.00% | Business combination | |
| Wanfeng Aircraft Industry Co., Ltd. | Zhejiang | Zhejiang | Manufacture | 55.00% | Business combination | |
| Wanfeng （UK） Aviation Co., Ltd. | UK | UK | Investment | 55.00% | Business combination | |
| Wanfeng Aircraft Industries s.r.o | Czech Republic | Czech Republic | Service | 55.00% | Business combination | |
| Diamond Verwaltungs GmbH | Austria | Austria | Manufacture | 55.00% | Business combination | |
| Wanfeng （Canada） Aviation Co., Inc. | Canada | Canada | Investment | 55.00% | Business combination | |
| Diamond SFCA Flugplatzbetriebs GmbH | Austria | Austria | Service | 54.40% | Business combination | |
| Diamond Informatics GmbH | Austria | Austria | Manufacture | 55.00% | Business combination | |
| 2542112 Ontario Inc. | Canada | Canada | Investment | 55.00% | Business combination | |
| Diamond finance-Services GmbH | Austria | Austria | Finance | 55.00% | Business combination | |
| Diamond Development GmbH | Austria | Austria | Manufacture | 55.00% | Business combination | |
| Diamond Aircraft Industries GmbH | Austria | Austria | Manufacture | 55.00% | Business combination | |
| Austro Engine GmbH | Austria | Austria | Manufacture | 55.00% | Business combination | |
| 钻石飞机工业有限公司（Diamond Aircraft Industries Inc.） | Canada | Canada | Manufacture | 55.00% | Business combination | |
| Diamond Airborne Sensing GmbH | Austria | Austria | Commerce | 55.00% | Business combination | |
| Diamond Aircraft Industries | Germany | Germany | Service | 55.00% | Business combinati |
| Deutschland GmbH | on | |||||
| Diamond Aviation Center d.o.o | Croatia | Croatia | Service | 49.50% | Business combination | |
| Diamond Financial USA Inc. | America | America | Service | 55.00% | Business combination | |
| Diamond Aircraft Sales USA Inc. | America | America | Commerce | 55.00% | Business combination | |
| DK café Inc. | Canada | Canada | Service | 55.00% | Business combination | |
| Shanghai Dacromet Coating Industry Co., Ltd | Shanghai | Shanghai | Manufacture | 100.00% | Business combination | |
| Ningbo Economic and Technological Development Zone Dacromet Coating Industry Co., Ltd | Ningbo | Ningbo | Manufacture | 100.00% | Business combination | |
| Wuxi Xiongwei Precision Technology Co., Ltd. | Jiangsu | Jiangsu | Manufacture | 95.00% | Business combination | |
| Changchun Xiongwei Auto Parts Co., Ltd. | Jilin | Jilin | Manufacture | 95.00% | Business combination | |
| Wuxi Geoff Machinery Technology Co., Ltd. | Jiangsu | Jiangsu | Manufacture | 95.00% | Business combination | |
| Yancheng Xiongwei Auto Parts Co., Ltd. | Jiangsu | Jiangsu | Manufacture | 95.00% | Business combination | |
| Yizheng Xiongwei Machinery Technology Co., Ltd. | Jiangsu | Jiangsu | Manufacture | 95.00% | Business combination | |
| Suzhou Yucuiyuan Trading Enterprise (General Partnership) | Shanghai | Jiangsu | Service | 75.03% | Business combination |
and holding more than half of the voting rights but not controlling the investee:
NoneBasis for significant structured entities included in the scope of consolidationand control:
NoneBasis for determining whether the company is an agent or a principal:
Noneother remarks:
None
(2) Significant but not wholly owned subsidiaries
Unit: RMB
| Subsidy | Minority shareholders' shareholding ratio | Profit and loss attributable to minority shareholders in the current period | Dividends declared to minority shareholders in the current period | Balance of minority shareholders' equity at the end of the period |
| Weihai Wanfeng Auto Wheel Co., Ltd. | 35.00% | 4,834,605.90 | 17,500,000.00 | 262,479,382.40 |
| Ningbo Aoweier Wheel Co., Ltd. and its subsidiaries | 25.00% | -645,141.19 | 46,732,996.94 | |
| Weihai Wanfeng Magnesium Technology Development Co., Ltd. and its subsidiaries | 31.20% | 14,498,760.18 | 3,744,000.00 | 65,621,607.55 |
| Shanghai Meridian Magnesium Products Co., Ltd | 40.00% | 20,533,316.47 | 12,736,253.01 | 78,187,737.82 |
| Shanghai Fengtu Automobile Technology Co., Ltd. | 45.00% | 1,549,586.01 | 11,730,384.21 | |
| Wuxi Xiongwei Precision Technology Co., Ltd. | 5.00% | 5,091,015.31 | 5,925,000.00 | 50,830,107.81 |
| Wanfeng Aircraft Industry Co., Ltd. and its subsidiaries | 45.00% | 153,193,447.38 | 1,639,642,470.39 | |
| Total | 199,055,590.06 | 39,905,253.01 | 2,155,224,687.12 |
Other remarks:
None
(3) Financial information of significant not wholly-owned subsidiaries
Unit: RMB
| Subsidy | Closing balance | Opening balance | ||||||||||
| Current asset | Non-current asset | Total asset | Current liability | Non-current liability | Total liability | Current asset | Non-current asset | Total asset | Current liability | Non-current liability | Total liability | |
| Weihai Wanfeng Auto Wheel Co., Ltd. | 794,177,416.41 | 280,815,017.83 | 1,074,992,434.24 | 324,551,341.62 | 324,551,341.62 | 808,518,137.56 | 301,520,710.34 | 1,110,038,847.90 | 323,910,915.00 | 323,910,915.00 | ||
| Ningbo Aoweier Wheel Co., Ltd. and its subsidiaries | 108,400,523.31 | 501,063,987.27 | 609,464,510.58 | 414,903,052.71 | 414,903,052.71 | 205,810,706.91 | 514,724,296.75 | 720,535,003.66 | 523,713,810.62 | 523,713,810.62 | ||
| Weihai Wanfeng Magnesium Technology Development Co., Ltd. and its subsidiaries | 273,765,767.21 | 119,207,910.91 | 392,973,678.12 | 161,488,352.27 | 10,559,660.63 | 172,048,012.90 | 208,648,418.99 | 111,403,926.15 | 320,052,345.14 | 128,527,561.80 | 14,858,171.97 | 143,385,733.77 |
| Shanghai Meridian Magnesium | 221,587,127.07 | 108,619,121.84 | 330,206,248.91 | 162,327,657.61 | 162,327,657.61 | 164,243,712.93 | 120,312,891.65 | 284,556,604.58 | 133,048,491.26 | 133,048,491.26 | ||
| Products Co., Ltd | ||||||||||||
| Shanghai Fengtu Automobile Technology Co., Ltd. | 27,006,853.75 | 1,191,624.04 | 28,198,477.79 | 2,130,957.33 | 2,130,957.33 | 23,841,008.04 | 2,048,613.94 | 25,889,621.98 | 3,265,625.98 | 3,265,625.98 | ||
| Wuxi Xiongwei Precision Technology Co., Ltd. | 837,836,401.05 | 354,243,955.49 | 1,192,080,356.54 | 273,601,668.54 | 3,999,207.84 | 277,600,876.38 | 701,692,373.22 | 383,143,929.06 | 1,084,836,302.28 | 165,215,556.54 | 4,917,614.04 | 170,133,170.58 |
| Wanfeng Aircraft Industry Co., Ltd. and its subsidiaries | 2,185,109,576.62 | 2,504,994,279.14 | 4,690,103,855.76 | 798,502,880.59 | 245,772,024.86 | 1,044,274,905.45 | 2,040,831,793.25 | 2,457,484,578.09 | 4,498,316,371.34 | 934,886,521.45 | 216,318,506.89 | 1,151,205,028.34 |
| Subsidy | Current period | Prior period | ||||||
| Operating revenue | Net profit | Other comprehensive income | Cash flow generate by operating activities | Operating revenue | Net profit | Other comprehensive income | Cash flow generate by operating activities | |
| Weihai Wanfeng Auto Wheel Co., Ltd. | 558,754,738.19 | 13,813,159.72 | 13,813,159.72 | 12,764,916.42 | 774,637,527.87 | 37,182,310.51 | 37,182,310.51 | 30,282,570.93 |
| Ningbo Aoweier Wheel Co., Ltd. and its | 299,608,751.12 | -2,588,674.19 | -2,588,674.19 | 45,138,682.32 | 245,254,508.45 | -28,986,937.83 | -28,986,937.83 | 43,878,947.19 |
| subsidiaries | ||||||||
| Weihai Wanfeng Magnesium Technology Development Co., Ltd. and its subsidiaries | 337,661,298.68 | 48,590,385.18 | 48,590,385.18 | 43,609,591.42 | 335,979,824.72 | 46,985,561.24 | 46,985,561.24 | 33,067,452.70 |
| Shanghai Meridian Magnesium Products Co., Ltd | 323,295,619.36 | 50,219,906.78 | 50,219,906.78 | 80,207,783.88 | 332,422,363.18 | 35,378,480.58 | 35,378,480.58 | 45,802,503.40 |
| Shanghai Fengtu Automobile Technology Co., Ltd. | 56,541,260.51 | 3,443,524.46 | 3,443,524.46 | 6,678,598.10 | 40,693,342.65 | 2,329,133.92 | 2,329,133.92 | -6,185,631.51 |
| Wuxi Xiongwei Precision Technology Co., Ltd. | 753,572,627.73 | 117,389,834.06 | 117,389,834.06 | 77,175,260.06 | 823,033,014.32 | 146,459,146.34 | 146,459,146.34 | 233,554,648.19 |
| Wanfeng Aircraft Industry Co., Ltd. and its subsidiaries | 1,630,390,974.68 | 340,429,883.23 | 298,543,578.19 | 152,598,936.24 | 1,847,397,485.11 | 229,910,806.40 | 294,949,841.61 | 57,966,752.80 |
(5) Financial support or other support provided to structured entities included inthe scope of consolidated financial statementsNoneOther remarks:
None
2. Transactions resulting in changes in subsidiaries’ equity but withoutlosing control
(1) Changes in subsidiaries’ equity
As stated in Note VII. 55, in 2020, Zhejiang Wanfeng Motorcycle Wheel Co.,Ltd., a subsidiary of the Company, invested RMB 399,800.00 in cash to acquirethe 0.1% partnership share of Suzhou Yucuiyuan Trading Enterprise (GeneralPartnership) held by Wanfeng Aviation. The net asset share of SuzhouYucuiyuan Trading Enterprise (general partnership) obtained in this acquisitionis RMB 383,871.26 based on the proportion of the partnership share. Thedifference between the purchase cost and the net asset share calculatedaccording to the proportion of the partnership share obtained was RMB15,928.74 to offset the share premium of the capital reserve.
(2) Effect of transactions on non-controlling interest and equity attributable toparent company
Unit: RMB
| Joint venture or associates | Principal place of business | Place of registration | Business nature | Holding proportion | Accounting treatment of investment in joint ventures or associaes | |
| Direct | Indirect | |||||
| Diamond Flight Centre London INC. | Canada | Canada | Service | 25.00% | Equity method | |
| CETC Wuhu General Aviation Industry Technology Research Institute Co., Ltd. | Anhui Wuhu | Anhui Wuhu | Manufacture | 20.00% | Equity method | |
the voting rights ratio:
NoneBasis for holding less than 20% of the voting rights but having significantinfluence, or holding 20% or more of the voting rights but not having significantinfluence:
None
(2) Financial information of significant joint venture
Unit: RMB
| Closing balance/ Current period | Opening balance / Prior period | |
| Closing balance/ Current period | Opening balance / Prior period | |
| Closing balance/ Current period | Opening balance / Prior period | |
| Joint venture： | -- | -- |
| The total of the following items calculated according to the shareholding ratio | -- | -- |
| Associate： | -- | -- |
| The total of the following items calculated according to the shareholding ratio | -- | -- |
(5) Explanation of significant restrictions on the ability of joint ventures or
associates to transfer funds to the companyNone
(6) Excess losses incurred by joint ventures or associates
Unit: RMB
| Joint venture or associate | Cumulative unrecognized loss accumulated in the previous period | Unrecognized loss in the current period (or net profit shared in the current period) | Accumulated unrecognized loss at the end of the period |
| -- |
| Joint operation | Principal place of business | Place of registration | Business nature | Holding proportion | |
| Direct | Indirect | ||||
consolidated financial statements:
None
6. Others
No
X. Financial Instrument Related Risk
1. Financial instruments classification
The book values of various financial instruments on the balance sheet date areas follows:
2020 FYFinancial asset
Unit: RMB
| Financial assets measured at fair value and changes recognized through profit and loss | Financial assets measured at amortized cost | Financial assets measured at fair value and changes recognized through other comprehensive income | Total | |||
| Standards requirement | Designation | Standards requirement | Designation | |||
| Cash | - | - | 1,674,978,958.17 | - | - | 1,674,978,958.17 |
| Held-for-trading financial assets | 5,312,974.87 | - | - | - | - | 5,312,974.87 |
| Account receivalbe | - | - | 2,314,980,882.28 | - | - | 2,314,980,882.28 |
| Account receivable financing | - | - | - | 382,204,743.00 | - | 382,204,743.00 |
| Other account receivable | - | - | 68,318,081.18 | - | - | 68,318,081.18 |
| Investment in other equity instruments | - | - | - | 4,733,395.22 | - | 4,733,395.22 |
| Total | 5,312,974.87 | - | 4,058,277,921.63 | 386,938,138.22 | - | 4,450,529,034.72 |
| Financial liability measured at fair value and changes recognized through profit and loss | Financial liabilities measured at amortized cost | Total |
| Standards requirement | Designation | |||
| Short-term borrowings | - | - | 3,544,296,670.02 | 3,544,296,670.02 |
| Notes payable | - | - | 192,867,169.90 | 192,867,169.90 |
| Account payable | - | - | 935,542,222.20 | 935,542,222.20 |
| Other account payable | - | - | 384,220,500.31 | 384,220,500.31 |
| Non-current liability due within one year | - | - | 694,425,998.19 | 694,425,998.19 |
| Long-term borrowings | - | - | 1,179,201,272.08 | 1,179,201,272.08 |
| Total | - | - | 6,930,553,832.70 | 6,930,553,832.70 |
| Financial assets measured at fair value and changes recognized through profit and loss | Financial assets measured at amortized cost | Financial assets measured at fair value and changes recognized through other comprehensive income | Total | |||
| Standards requirement | Designation | Standards requirement | Designation | |||
| Cash | - | - | 2,452,754,083.38 | - | - | 2,452,754,083.38 |
| Held-for-trading financial assets | 63,034,283.90 | - | - | - | - | 63,034,283.90 |
| Account receivalbe | - | - | 2,555,697,203.97 | - | - | 2,555,697,203.97 |
| Account receivable financing | - | - | - | 378,904,590.58 | - | 378,904,590.58 |
| Other account receivable | - | - | 916,325,582.02 | - | - | 916,325,582.02 |
| Investment in other equity instruments | - | - | - | 4,942,489.56 | - | 4,942,489.56 |
| Total | 63,034,283.90 | - | 5,924,776,869.37 | 383,847,080.14 | - | 6,371,658,233.41 |
| Financial liability measured at fair value and changes recognized through profit and loss | Financial liability measured at amortized cost | Total |
| Standards requirement | Designation | |||
| Short-term borrowing | - | - | 3,070,118,768.19 | 3,070,118,768.19 |
| Held-for-trading financial liability | 1,324,581.60 | - | - | 1,324,581.60 |
| Notes payable | - | - | 218,601,865.08 | 218,601,865.08 |
| Account payable | - | - | 1,083,181,883.19 | 1,083,181,883.19 |
| Other account payable | - | - | 759,261,155.63 | 759,261,155.63 |
| Non-current liability due within one year | - | - | 571,968,504.83 | 571,968,504.83 |
| Long-term borrowings | - | - | 1,165,220,492.00 | 1,165,220,492.00 |
| Total | 1,324,581.60 | - | 6,868,352,668.92 | 6,869,677,250.52 |
derecognized is RMB 586,953,297.41). On December 31, 2020, its maturitydate is 1 to 12 months. According to the relevant provisions of the NegotiableInstruments Law, if the accepting bank refuses to pay, its holder has the rightto recourse against the Group ("continued involvement "). The Group believesthat the Group has transferred almost all of its risks and rewards. Therefore, ithas derecognized its book value and related settled accounts payable and otherpayables. The maximum loss and undiscounted cash flow of continuinginvolvement and repurchase are equal to its book value. The Group believesthat continued involvement in fair value is not significant.In 2020, the Group did not recognize gains and losses on the transfer date. TheGroup did not continue to be involved in the derecognized financial assets forthe current year and accumulatively recognized income or expenses.Endorsements occurred roughly evenly this year.
4. Financial instrument risk
The Group faces various financial instrument risks in its daily activities, mainlyincluding credit risk, liquidity risk and market risk (including exchange rate risk,interest rate risk and commodity price risk). The main financial instruments ofthe Group include monetary funds, equity investment, loans, notes receivableand accounts receivable, notes payable and accounts payable, etc. The risksassociated with these financial instruments and the risk management strategiesadopted by the Group to reduce these risks are as follows. The Group mitigatesthe risks of financial instruments through appropriately diversified investmentand business portfolios and formulates risk management policies to reduce therisks concentrated in any single industry, specific region or specific counterparty.Credit riskThe Group only conducts transactions with recognized and reputable thirdparties and related parties. According to the Group's policy, all customers whorequire credit-based transactions are subject to credit review. In addition, theGroup continuously monitors the balance of accounts receivable to ensure thatthe Group does not face significant risks of doubtful debts. For transactions thatare not settled in the functional currency of the relevant business unit, the Groupdoes not provide credit transaction conditions, unless specifically approved bythe credit control department of the Group.Since the counterparties of monetary funds, bank acceptance bills receivableand derivative financial instruments are banks with good reputations and highcredit ratings, these financial instruments have relatively low credit risks.Other financial assets of the Group include accounts receivable and otherreceivables. The credit risk of these financial assets originates from the defaultof the counterparty, and the maximum risk exposure is equal to the book valueof these instruments.
The maximum credit risk exposure that the Group faces on each balance sheetdate is the total amount received from customers minus the amount of doubtfuldebt provision.Since the Group only conducts transactions with recognized and reputable thirdparties and related parties, there is no need for collateral. Credit risk iscentralized and managed according to customers. As of December 31, 2020,the Group has a specific concentration of credit risk. 6.11% (2019: 5.93%) and
18.56% (2019: 19.08%) of the Group’s accounts receivable are derived fromaccounts receivable of the largest and the top five customers respectively. TheGroup does not hold any collateral or other credit enhancements for the balanceof accounts receivable.For quantitative data on the credit risk exposure of the Group due to accountsreceivable and other receivables, please refer to Notes VII, 5 and 8.
Standards to judge the significant increase of credit risk
The Group assesses on each balance sheet date whether the credit risk ofrelevant financial instruments has increased significantly since the initialrecognition. When determining whether the credit risk has increasedsignificantly since the initial recognition, The Group considers reasonable andwell-founded information obtained without unnecessary additional cost or effort,including qualitative analysis based on historical data of the Group, externalcredit risk ratings, and forward-looking information. Based on a single financialinstrument or a combination of financial instruments with similar credit riskcharacteristics, the Group compares the risk of default on the balance sheetdate and the risk of default on the initial recognition date to determine thechanges in the risk of default during expected life of the financial instrument.When the following qualitative standards are triggered, the Group believes thatthe credit risk of financial instruments has increased significantly:
The qualitative standards are mainly the major adverse changes in the owingparty’s business or financial situation, the list of early warning customers, etc.
Definition of credit-impaired assets
In order to determine whether credit impairment has occurred, the standardused by the Group is consistent with the internal credit risk managementobjectives for relevant financial instruments, and qualitative indicators are alsoconsidered. When the Group assesses whether an owing party has creditimpairment, it mainly considers the following factors:
(1) The issuer or owing party has major financial difficulties;
(2) The owing party breached the contract, such as defaulting or overduepayment of interest or principal;
(3) The creditor, out of economic or contractual considerations related to theowing party’s financial difficulties, gives the owing party a concession that thecreditor would not make under any other circumstances;
(4) The owing party is likely to go bankrupt or other financial reorganization;
(5) The issuer or owing party’s financial difficulties lead to the disappearance ofthe active market for the financial asset;
(6) A financial asset is purchased or originated at a steep discount, and thediscount reflects the fact that credit losses have occurred.The credit impairment of financial assets may be caused by a combination ofmultiple events, and may not be caused by a separately identifiable event.
Parameters of expected credit loss measurement
According to whether there has been a significant increase in credit risk andwhether credit impairment has occurred, the Group measures impairmentprovisions for different assets with 12-month or entire duration expected creditlosses. The key parameters of expected credit loss measurement includedefault probability, loss given default and default risk exposure. The Groupconsiders the quantitative analysis and forward-looking information of historicalstatistical data (such as counterparty ratings, guarantee methods and types ofcollaterals, repayment methods, etc.) to establish models of default probability,loss given default and default risk exposure.
The relevant definitions are as follows:
(1) The probability of default refers to the possibility that the owing party will notbe able to perform its payment obligations in the next 12 months or throughoutthe remaining duration. The Group’s default probability is adjusted based onthe expected credit impairment model results. And forward-looking informationis added to reflect the default probability of owing parties under the currentmacroeconomic environment;
(2) The loss given default refers to the Group's expectations of the extent oflosses incurred by default risk exposures. The loss given defaulty variesaccording to the type of counterparty, the method and priority of recourse, andthe collateral. The loss given default is the percentage of the risk exposure lossat the time of the default, calculated based on the next 12 months or the entireduration;
(3) Default risk exposure refers to the amount that the Group should be repaidwhen default occurs in the next 12 months or throughout the remaining duration.
The assessment of a significant increase in credit risk and the calculation ofexpected credit losses involve forward-looking information. Through historicaldata analysis, the Group has identified key economic indicators that affect thecredit risks and expected credit losses of various business types.
The impact of these economic indicators on the probability of default and lossgiven default vary by different types of businesses. In this process, the Groupreferred to authoritative forecasts. Based on the results, the Group predictedthese economic indicators and determined the impact of these economicindicators on the probability of default and loss given default.
2020 FYThe maximum risk exposure of the Group's financial assets and theclassification according to the credit risk level at the end of the year are asfollows:
Unit: RMB
| Expected credit loss in the next 12 months | Lifetime expected credit loss | Total | |||
| Phase I | Phase II | Phase III | Simple method | ||
| Cash and cash equivalents | 1,674,978,958.17 | - | - | - | 1,674,978,958.17 |
| Account receivable financing | - | - | - | 382,204,743.00 | 382,204,743.00 |
| Account receivable | - | - | - | 2,314,980,882.28 | 2,314,980,882.28 |
| Other account receivable | 55,724,863.72 | 6,810,285.82 | 5,782,931.64 | - | 68,318,081.18 |
| Total | 1,730,703,821.89 | 6,810,285.82 | 5,782,931.64 | 2,697,185,625.28 | 4,440,482,664.63 |
| Expected credit loss in the next 12 months | Lifetime expected credit loss | Total | |||
| Phase I | Phase II | Phase III | Simple method | ||
| Cash and cash equivalents | 2,452,754,083.38 | - | - | - | 2,452,754,083.38 |
| Account receivable financing | - | - | - | 378,904,590.58 | 378,904,590.58 |
| Account | - | - | - | 2,555,697,203.97 | 2,555,697,203.97 |
| receivable | |||||
| Other account receivable | 570,392,006.87 | 342,677,517.73 | 3,256,057.42 | 916,325,582.02 | |
| Total | 3,023,146,090.25 | 342,677,517.73 | 3,256,057.42 | 2,934,601,794.55 | 6,303,681,459.95 |
| Spot | Less than 3 months | 3 months to 1 year | 1 year to 5 years | More than 5 years | Total | |
| Short-term borrowings | - | 492,747,376.81 | 3,117,045,843.55 | - | - | 3,609,793,220.36 |
| Notes payable | - | 111,693,820.23 | 81,173,349.67 | - | - | 192,867,169.90 |
| Account payable | 134,192,679.97 | 800,394,943.15 | 954,599.08 | - | - | 935,542,222.20 |
| Other account payable | 157,657,562.97 | 154,861,277.46 | 71,701,659.88 | - | - | 384,220,500.31 |
| Non-current liability due within 1 year | 33,930,384.46 | 159,019,310.94 | 520,711,222.10 | - | - | 713,660,917.50 |
| Long-term borrowings | - | - | - | 1,307,099,209.23 | - | 1,307,099,209.23 |
| Total | 325,780,627.40 | 1,718,716,728.59 | 3,791,586,674.28 | 1,307,099,209.23 | - | 7,143,183,239.50 |
| Shor-term borrowings | - | 492,747,376.81 | 3,117,045,843.55 | - | - | 3,609,793,220.36 |
| Spot | Less than 3 months | 3 months to 1 year | 1 year to 5 years | More than 5 years | Total |
| Short-term borrowings | - | 418,136,596.22 | 2,710,155,298.08 | - | - | 3,128,291,894.30 |
| Held-for-trading financial | - | 852,989.70 | 471,591.90 | - | - | 1,324,581.60 |
liabilityNotespayable
| Notes payable | - | 107,274,147.22 | 111,327,717.86 | - | - | 218,601,865.08 |
| Account payable | 200,124,368.72 | 883,057,514.47 | - | - | - | 1,083,181,883.19 |
| Other account payable | 196,397,643.81 | 508,620,199.87 | 54,243,311.95 | - | - | 759,261,155.63 |
| Non-current liability due within 1 year | - | 254,361,971.74 | 333,471,823.50 | - | - | 587,833,795.24 |
| Long-term borrowings | - | - | - | 1,320,050,160.04 | - | 1,320,050,160.04 |
| Total | 396,522,012.53 | 2,172,303,419.22 | 3,209,669,743.29 | 1,320,050,160.04 | - | 7,098,545,335.08 |
| Basis point increase/（decrease） | Net profit and loss increase/（decrease） | Net after tax other comprehensive income increase/（decrease） | Total shareholders' equity increase/（decrease） |
| December 31, 2020 USD borrowings | 0.50% | （2,182,169.15） | - | （2,182,169.15） |
| （0.50%） | 2,182,169.15 | - | 2,182,169.15 | |
| December 31, 2019 USD borrowings | 0.50% | （1,996,573.70） | - | （1,996,573.70） |
| （0.50%） | 1,996,573.70 | - | 1,996,573.70 |
2020 FY
Unit: RMB
| Exchange rate increase/(decrease) | Net profit and loss increase/(decrease) | Net after tax other comprehensive income increase/(decrease) | Equity increase/(decrease) |
| RMB depreciaiton against USD | 5% | 15,834,638.29 | - | 15,834,638.29 |
| RMB appreciation against USD | （5%） | （15,834,638.29） | - | （15,834,638.29） |
| CAD depreciaiton against USD | 5% | （3,456,879.75） | - | （3,456,879.75） |
| CAD appreciation against USD | （5%） | 3,456,879.75 | - | 3,456,879.75 |
| INR depreciaiton against USD | 5% | （4,624,522.88） | - | （4,624,522.88） |
| INR appreciation against USD | （5%） | 4,624,522.88 | - | 4,624,522.88 |
| RMB depreciaiton against EUR | 5% | （16,653,106.66） | - | （16,653,106.66） |
| RMB appreciation against EUR | （5%） | 16,653,106.66 | - | 16,653,106.66 |
| Exchange rate increase/(decrease) | Net profit and loss increase/(decrease) | Net after tax other comprehensive income increase/(decrease) | Equity increase/(decrease) | |
| RMB depreciaiton against USD | 5% | 13,224,707.73 | - | 13,224,707.73 |
| RMB appreciation against USD | （5%） | （13,224,707.73） | - | （13,224,707.73） |
| CAD depreciaiton against USD | 5% | （8,709,300.19） | - | （8,709,300.19） |
| CAD appreciation against USD | （5%） | 8,709,300.19 | - | 8,709,300.19 |
| INR depreciaiton against USD | 5% | （4,944,381.75） | - | （4,944,381.75） |
| INR appreciation against USD | （5%） | 4,944,381.75 | - | 4,944,381.75 |
| RMB depreciaiton against EUR | 5% | （27,396,053.18） | - | （27,396,053.18） |
| RMB appreciation against EUR | （5%） | 27,396,053.18 | - | 27,396,053.18 |
5. Capital management
The main objective of the Group's capital management is to ensure continuingoperations and maintaining a healthy capital ratio to support businessdevelopment and maximize shareholder value.The Group manages the capital structure and adjusts it according to changesin the economic situation and the risk characteristics of related assets. Tomaintain or adjust the capital structure, the Group may adjust the distributionof profits to shareholders, return capital to shareholders or issue new shares.In 2020 and 2019, there is no change in capital management objectives,policies or procedures.The Group uses a leverage ratio to manage capital. The leverage ratio refersto the ratio of net debt to shareholders’ equity plus net debt. Net debt refers tothe net amount of short-term loans, long-term loans due within one year, long-term loans, and bonds payable after deducting cash and cash equivalents.The Group’s leverage ratio at the balance sheet date is as follows:
Unit: RMB
| Items | 2020FY | 2019FY |
| Short-term borrowings | 3,544,296,670.02 | 3,070,118,768.19 |
| Long-term borrowings due within one year | 694,425,998.19 | 571,968,504.83 |
| Long-term borrowings | 1,179,201,272.08 | 1,165,220,492.00 |
| Less: Cash and cash equivalents | 1,674,978,958.17 | 2,452,754,083.38 |
| Net debt | 3,742,944,982.12 | 2,354,553,681.64 |
| Shareholder’s equity | 7,508,833,717.32 | 10,007,942,082.74 |
| Net debt and shareholder’s equity | 11,251,778,699.44 | 12,362,495,764.38 |
| Leverage ratio | 33.27% | 19.05% |
| Items | Fair value as of the balance sheet date | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Constant fair value measurement | -- | -- | -- | -- |
| i. Held-for-trading financial assets | 5,312,974.87 | 381,704,743.00 | 387,017,717.87 | |
| 1. Financial assets measured at fair value and changes recognized through profit and loss | 5,312,974.87 | 381,704,743.00 | 387,017,717.87 | |
| （1）Debt instrument investments | 381,704,743.00 | 381,704,743.00 | ||
| （2）equity instrument investments | 2,630,574.87 | 2,630,574.87 | ||
| （3）Derivative financial assets | 2,682,400.00 | 2,682,400.00 | ||
| iii.Other equity investments | 4,733,395.22 | 4,733,395.22 | ||
| II. Non-constant measurement at fair values | -- | -- | -- | -- |
8. The fair value of financial assets and financial liabilities not measuredat fair value
Not applicable
9. Others
Fair value valuation
The following are the book values and fair values of various types of financialinstruments of the Group, except for financial instruments with little differencebetween book value and fair value, and equity instruments without quotation inan active market and can not reliably be measured.
Unit: RMB
| 2020 FY | 2019 FY | |||
| Carrying value | Fair value | Carrying value | Fair value | |
| Long-term borrowings | 1,179,201,272.08 | 1,143,282,342.39 | 1,165,220,492.00 | 1,149,530,944.40 |
exchange forward contract is the same as the fair value.
The financial instruments measured at fair value by the Group and theCompany in this year and last year did not have significant transfers betweenvarious levels.
XII. Related Party Relationships and Transactions
1. Parent Company
Unit: RMB
| Parent Company | Place of registration | Business nature | Registered capital | Shareholding proportion over the Company | Voting right proportion over the Company |
| Wanfeng Holding Group Co., Ltd | Zhejiang, China | Manufacture | RMB 120 million | 33.37% | 33.37% |
| Joint venture or associates | Relationship with the Company |
| -- |
| Other related parties | Relationship with the Company |
| Wanfeng Jinyuan Holding Group Co., Ltd. | Company controlled by Chen Ailian |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Subsidiary of Wanfeng Jinyuan Holding Group Co., Ltd |
| Zhejiang Rifa Holding Group Co., Ltd. | Company controlled by Wu Liangding |
| Zhejiang Rifa Precision Machinery Co., Ltd. | Subsidiary of Zhejiang Rifa Holding Group Co., Ltd. |
| Xinchang Textile Investment Fund Association | Wu Liangding, Director of the Association |
| Beijing Wanfeng Innovation Investment Co., Ltd. | Subsidiary of Wanfeng Jinyuan Holding Group Co., Ltd. |
| Zhejiang Wanfeng Industrial Co., Ltd. | Company controlled by the parent company |
| Zhejiang Wanfeng Real Estate Co., Ltd. | Company s controlled by the parent company |
| Zhejiang Wanfeng General Aviation Co., Ltd. | Company controlled by the parent company |
| Zhejiang Wanfeng Property Management Co., Ltd. | Company controlled by the parent company |
| Wanfeng Aviation Industry Co., Ltd. | Company controlled by the parent company |
| Shanghai Wanfeng Aviation Club Co., Ltd. | Company controlled by the parent company |
| Shengzhou Hechuang Trading Co., Ltd. | Subsidiary of Wanfeng Jinyuan Holding Group Co., Ltd. |
| Wanfeng General Airport Management Co., Ltd. | Company controlled by the parent company |
| Zhejiang Wanfeng New Energy Automobile Technology Co., Ltd. | Company controlled by the parent company |
| Wanfeng General Aviation Co., Ltd. | Company controlled by the parent company |
| Shaoxing Jiajing Trading Co., Ltd. | Company controlled by Zhang Linglin, an employee of the parent company |
| Wanfeng Financial Leasing Co., Ltd. | Subsidiary of Wanfeng Jinyuan Holding Group Co., Ltd. |
| Xinchang County Chitong Intelligent Equipment Co., Ltd. | Company controlled by the parent company |
| Zhejiang Rifa Precision Machine Tool Co., Ltd. | Subsidiary of Zhejiang Rifa Holding Group Co., Ltd. |
| Zhejiang Wanfeng Precision Manufacturing Co., Ltd. | Subsidiary of Wanfeng Jinyuan Holding Group Co., Ltd. |
| Wanfeng General Airport Management Co., Ltd. | Subsidiary of Wanfeng Aviation Industry Co., Ltd. |
Unit: RMB
| Related parties | Content of transaction | Current period | Approved Transaction Limit | Over the Transaction Limit or No | Prior period |
| Wanfeng Aviation Industry Co., Ltd. | Purchase aircraft and aviation materials | 4,513,168.35 | No | 2,903,871.79 | |
| Shengzhou Hechuang Trading Co., Ltd. | Purchase molds and equipment accessories | 4,132,865.14 | No | 6,385,194.83 | |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Purchase raw materials, molds and equipment accessories | 1,268,509.02 | No | 3,178,959.25 | |
| Zhejiang Rifa Precision Machine Tool Co., Ltd. | Purchase equipment accessories | 332,458.38 | No | 39,668.15 | |
| Zhejiang Rifa Precision Machinery Co., Ltd. | Purchase raw materials and equipment accessories | 6,796.46 | No | 383,784.63 | |
| Wanfeng General Aviation Co., Ltd. | Purchase goods | No | 6,792.45 | ||
| Wanfeng General Aviation Co., Ltd. | Air charter service | 13,908,446.06 | No | 3,524,382.29 | |
| Zhejiang Wanfeng Property Management Co., Ltd. | Property Management Service | 3,717,673.85 | No | 6,805,275.94 | |
| Wanfeng Group | Network and equipment maintenance services | 3,678,420.37 | No | 5,195,743.42 | |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Equipment maintenance service | 964,543.62 | No | 238,244.40 | |
| Wanfeng Aviation Industry Co., Ltd. | Network and equipment maintenance services | 488,304.32 | No |
| Zhejiang Rifa Precision Machine Tool Co., Ltd. | Equipment maintenance service | 391,407.07 | No | ||
| Zhejiang Wanfeng General Aviation Co., Ltd. | Airport service fee | 257,477.10 | No | 280,476.98 | |
| Wanfeng General Airport Management Co., Ltd. | Airport aircraft take-off and landing service | 60,687.93 | No | 12,877.36 |
| Related parties | Content of transaction | Current period | Prior period |
| Zhejiang Wanfeng General Aviation Co., Ltd. | Sales of aircraft and aviation materials | 3,734,690.02 | 24,292.04 |
| Shengzhou Hechuang Trading Co., Ltd. | Sales of mold | 1,995,689.49 | 4,614,862.09 |
| Wanfeng Aviation Industry Co., Ltd. | Sales of parts | 5,183,717.63 | |
| Diamond Flight Centre London INC. | Sales of repair parts | 1,627,441.28 | |
| Zhejiang Wanfeng Technology Development Co., Ltd. | Sales of finished products, raw materials and molds | 863,469.44 | |
| Zhejiang Wanfeng Precision Manufacturing Co., Ltd. | For metrological maintenance service | 51,880.00 | |
| Diamond Flight Centre London INC. | Training Services | 1,231,000.08 | |
| Wanfeng Aviation Industry Co., Ltd. | Providing labor services | 619,539.05 |
| Principal/Outsourcer's Name | Name of contractor | Types of entrusted/contracted assets | Entrustment/contracting start date | Entrustment/contracting end date | Pricing basis for entrustment /contracting income | Entrustment /contracting income recognized in the current period |
| -- |
| Principal/Outsourcer's Name | Name of contractor | Types of entrusted/outsourced assets | Entrustment/outsourcing start date | End of entrustment/outsourcing end date | Pricing basis for entrustment /outsourcing fees | Entrustment /outsourcing fees recognized in the current period |
| -- |
| Lessees | Types of asset leased | Lease income for current period | Lease income for the prior period |
| Suzhou Yucuiyuan Trading Enterprise (General Partnership) | Real estate | 2,522,935.83 | 1,225,000.00 |
| Aircraft industry | Real estate | 512,841.60 | |
| Aircraft industry | Aircraft | 406,407.74 | |
| Aircraft industry | Aircraft | 88,495.58 |
| Lessors | Types of asset leased | Lease expenses for current period | Lease expenses for the prior period |
| Xinchang Textile Investment Fund Association | Real estate | 290,537.80 | 290,537.80 |
| Xinchang Textile Investment Fund Association | Real estate | 134,497.40 | 134,497.40 |
| Wanfeng Jinyuan Holding Group Co., Ltd. | Real estate | 1,192,660.55 | 1,183,165.14 |
| Xinchang County Chitong Intelligent Equipment Co., Ltd. | Real estate | 2,100,000.00 | 2,100,000.00 |
| Xinchang County Chitong Intelligent Equipment Co., Ltd. | Real estate | 2,508,400.00 | 2,508,400.00 |
| Zhejiang Wanfeng Industrial Co., Ltd. | Real estate | 1,333,333.32 | |
| Zhejiang Wanfeng Industrial Co., Ltd. | Real estate, land, etc. | 5,885,714.29 | 5,777,460.10 |
| Wanfeng Aviation Industry Co., Ltd. | Real estate | 1,929,524.49 | 1,929,524.49 |
| Wanfeng General Aviation Co., Ltd. | Aircraft | 2,551,778.76 |
| Guaranteed party | Amount guaranteed | Commencement date | Maturity date | Whether the guarantee is mature |
| Wanfeng Group u | 313,500,000.00 | January 15, 2019 | January 15, 2020 | Yes |
| Wanfeng Group u | 316,000,000.00 | October 24, 2019 | October 23, 2020 | Yes |
| Wanfeng Group v | USD100,000,000.00 | July 19, 2019 | July 18, 2024 | Yes |
| Wanfeng Group w | USD100,000,000.00 | November 18, 2020 | December 31, 2024 | No |
| Guarantor | Amount guaranteed | Commencement date | Maturity date | Whether the guarantee is mature |
| Wanfeng Group a | 10,000,000.00 | May 10, 2019 | May 07, 2022 | No |
| Wanfeng Group b | 100,000,000.00 | August 05, 2019 | May 03, 2020 | Yes |
| Wanfeng Group c | 250,000,000.00 | February 15, 2019 | February 15, 2021 | No |
| Wanfeng Group d | 100,000,000.00 | December 23, 2019 | March 19, 2022 | No |
| Zhejiang Rifa Holding Group Co., Ltd. e | 245,000,000.00 | December 05, 2019 | September 10, 2022 | No |
| Zhejiang Rifa Holding Group Co., Ltd. f | USD30,000,000.00 | May 15, 2015 | May 15, 2025 | No |
| Wanfeng Group g | 100,000,000.00 | April 27, 2020 | March 19, 2022 | No |
| Wanfeng Group h | 33,000,000.00 | October 13, 2020 | October 13, 2023 | No |
| Wanfeng Group i | 65,000,000.00 | March 20, 2020 | June 19, 2020 | Yes |
| Wanfeng Group j | 35,000,000.00 | March 25, 2020 | November 09, 2020 | Yes |
| Wanfeng Group and Wanfeng Jinyuan Holdings Group Co., Ltd. k | 132,000,000.00 | October 14, 2020 | October 13, 2022 | No |
| Zhejiang Rifa Holding Group Co., Ltd. l | 240,000,000.00 | September 21, 2020 | September 17, 2021 | No |
| Zhejiang Rifa Holding Group Co., Ltd. m | 960,000,000.00 | April 16, 2020 | April 23, 2023 | No |
| Chen Ailian n | 1,200,000,000.00 | April 16, 2020 | April 23, 2023 | No |
f. From May 15th, 2015 to May 15th, 2025, Zhejiang Rifa Holding Group Co.,Ltd. provided a free guarantee for Wanfeng Aluminum Wheels (India)’s loanfrom China Development Bank, with a guaranteed amount of USD30,000,000.00.g. From April 27, 2020 to March 19, 2022, Wanfeng Group provided a freeguarantee for Wanfeng Auto Wheel’s loan from China Merchants BankShaoxing Branch, with a guaranteed amount of RMB 100,000,000.00.h. From October 13, 2020 to October 13, 2023, Wanfeng Group provided a freeguarantee for Wanfeng Auto Wheel’s loan to Shanghai Pudong DevelopmentBank Shengzhou Branch, with a guaranteed amount of RMB 33,000,000.00.i. From March 20, 2020 to June 19, 2020, Wanfeng Group provided a freeguarantee for Wanfeng Auto Wheel’s loan from the Bank of HangzhouXinchang Branch, with a guaranteed amount of RMB 65,000,000. Theguarantee has expired and been released.j. From March 25, 2020 to November 9, 2020, Wanfeng Group provided a freeguarantee for Wanfeng Auto Wheel’s loan from Bank of Hangzhou ShaoxingBranch, with a guaranteed amount of RMB 35,000,000. The guarantee hasexpired and been released.k. From October 14, 2020 to October 13, 2022, Wanfeng Group and WanfengJinyuan Holding Group Co., Ltd. provided free guarantees for Wanfeng AutoWheel’s loans from Bank of Hangzhou Shaoxing Branch, with a guaranteedamount of RMB 132,000,000.l. From September 21, 2020 to September 17, 2021, Zhejiang Rifa HoldingGroup Co., Ltd. provided a free guarantee for Wanfeng Auto Wheel’s loan fromthe Export-Import Bank Zhejiang Branch, with a guaranteed amount of RMB240 million.m. From April 16, 2020 to April 23, 2023, Zhejiang Rifa Holding Group Co., Ltd.provided a free guarantee for Wanfeng Aowei’s loan from Agricultural Bank ofChina Xinchang Branch, with a guaranteed amount of RMB 960,000,000.
n. From April 16, 2020 to April 23, 2023, Chen Ailian provided a free guaranteefor Wanfeng Auto Wheel’s loan from Agricultural Bank of China XinchangBranch, with a guaranteed amount of RMB 1,200,000,000.u. From July 2018 to October 2019, Wanfeng Auto Wheel provided a guaranteeto Wanfeng Group through pledge and re-pledge after release of its bankdeposit certificates deposited in the Baoji Branch of Changan Bank Co., Ltd.Under these guarantees, Wanfeng Group obtained a total of RMB 1.530 millionin loans from the Baoji Branch of Chang'an Bank Co., Ltd. from 2018 to 2019,and Wanfeng Auto Wheel provided guarantees to Wanfeng Group for a total ofRMB 1.594 billion.
As of December 31, 2019, Wanfeng Group's outstanding loan amount wasRMB 60 million, and Wanfeng Auto Wheel's outstanding guarantee amount wasRMB 629,500,000.In March and April 2020, Wanfeng Group has repaid the remaining RMB 60million of the loan to the Baoji Branch of Chang'an Bank Co., Ltd., and WanfengAuto Wheel released the guarantee of RMB 629.5 million accordingly.v. Meridian Lightweight Technologies Inc. provided a free credit guarantee forWanfeng Group’s loan from Export Development Canada (EDC). Theguarantee period is from July 19, 2019 to July 18, 2024. The guaranteedamount is USD 100,000,000.00. At the same time, Wanfeng Auto Wheelprovides liquidity support for the loan. According to the guarantee agreementand the liquidity support agreement, if Wanfeng Group is unable to perform itsrepayment obligations as required by the loan agreement, Meridian LightweightTechnologies Inc. shall assume joint and several repayment liabilities.Wanfeng Auto Wheel shall provide liquidity support to Wanfeng Group or theguarantor of the loan to ensure that Wanfeng Group or the guarantor of the loanperforms its obligations following the requirements of the loan agreement.In January and May 2020, Wanfeng Group has repaid US$20 million inborrowings, and the remaining US$80 million has not been repaid. Theaforementioned guarantees and liquidity support have subsequently beenreleased.w. Wanfeng Auto Wheel held the 2019 Annual General Meeting ofShareholders on July 15, 2020, and approved the Proposal on ProvidingExternal Guarantees in 2020. In 2020, it will provide a guarantee plan of RMB150 million for controlling shareholders. On November 19, 2020, Wanfeng AutoWheel and Meridian have signed the Liquidity Support Contract ExemptionLetter and Regarding the Termination and Disclaimer Agreement of theGuarantee of Meridian Lightweight Technologies Inc. with EDC, respectively.The liquidity support and joint liability guarantee provided by Wanfeng AutoWheel and its subsidiary Meridian respectively to Wanfeng Group’s remainingUS$80 million borrowings from EDC has been released.On the same day, Wanfeng Group and EDC signed the Revised and RestatedLoan Agreement with a loan balance of US$80 million. Wanfeng Auto Wheeland its controlling subsidiary Ontario 2542112 Co., Ltd. provided joint liabilityguarantees for the above loans. The guarantee period is from November 19,2020 to July 18, 2024. The Company’s controlling subsidiary Wanfeng (Canada)Aviation Co., Ltd. will issue a US$2 million letter of guarantee. The guaranteeperiod is from November 18, 2020 to December 31, 2024. The amount of theguarantee is within the total amount of RMB 1.5 billion in guarantee for thecontrolling shareholder Wanfeng Group approved by Wanfeng Auto Wheel atthe 2019 Annual General Meeting of Shareholders on July 15, 2020. At thesame time, Wanfeng Group pledged its 40% equity of Wanfeng AviationIndustry Co., Ltd. to Wanfeng Auto Wheel as a counter-guarantee measure for
the guarantee. As of December 31, 2020, Wanfeng Group's outstanding loanbalance under this guarantee was US$80 million.
(5) Related party lending
Unit: RMB
| Related parties | Loan amount | Commencement date | Maturity date | Description |
| Borrowed from | ||||
| Lent to | ||||
| Wanfeng Aviation Industry Co., Ltd. | 312,620,000.00 | April 16, 2020 | August 17, 2020 | Prior to January 1, 2020, Diamond Aircrafts Industries GMBH, a subsidiary of Wanfeng Aircraft, had borrowed funds from Wanfeng Aviation Industry Co., Ltd. with a balance of RMB 312.62 million, which Wanfeng Aviation Industry Co., Ltd. had repaid in August 2020. The total principal and interest were RMB 316.18 million. |
| Wanfeng Group | 76,650,000.00 | January 02, 2020 | August 14, 2020 | From January to April 2020, prior to business combination under the same control, Wanfeng Aircraft had lent RMB 76.65 million to Wanfeng Group, and Wanfeng Group had repaid RMB 4.65 million, and the remaining amount was RMB 72 million. Wanfeng Group has repaid all principal and interest of RMB 73.51 million from April to August 2020. |
| Wanfeng Group | 380,700,000.00 | December 05, 2019 | March 25, 2020 | On December 5, 2019, Chongqing Wanfeng repaid the principal and interest of the loan RMB 380.70 million on behalf of Wanfeng Group due to the overdue payment of the remaining loans of RMB 376 million. On December 31, 2019, the balance formed Wanfeng Group's capital occupation of Wanfeng Auto Wheel. Wanfeng Group has repaid RMB 120 million and RMB 260.7 million to Chongqing Wanfeng on March 24, 2020 and March 25, 2020, respectively, and the capital occupation has been settled. |
| Wanfeng Group (through Shaoxing Jiajing Trading Co., Ltd.) | 740,000,000.00 | January 02, 2019 | March 26, 2020 | In 2019, the Group lent RMB 740 million to Wanfeng Group through Shaoxing Jiajing Trading Co., Ltd., and recovered RMB 590 million. As of December 31, 2019, the balance was RMB 150 million. The above-mentioned lent funds formed Wanfeng Group's capital occupation of Wanfeng Auto Wheel. On March 26, 2020, the amount was repaid to the Group by Wanfeng Group through Shaoxing Jiajing Trading Co., Ltd. |
| Related parties | Content of related party transactions | Current period | Prior period |
| -- |
| Items | Current period | Prior period |
| Key management’s emoluments | 8,555,298.00 | 5,864,537.00 |
| Items | Related parties | Closing balance | Beginning balance | ||
| Book balance | Provision for doubtful debts | Book balance | Provision for doubtful debts | ||
| Account receivable | Wanfeng Aviation Industry Co., Ltd. | 7,349,781.19 | 7,157,908.40 | ||
| Account receivable | Zhejiang Wanfeng General Aviation Co., Ltd. | 4,089,187.56 | 1,011,549.00 | ||
| Account receivable | Shanghai Wanfeng Aviation Club Co., Ltd. | 900,000.00 | |||
| Account receivable | Diamond Flight Centre London INC. | 439,969.35 | |||
| Account receivable | Shengzhou Hechuang Trading Co., Ltd. | 100,000.00 | 5,214,794.16 | ||
| Advances paid | Zhejiang Wanfeng Technology Development Co., Ltd. | 24,000.00 | 189,462.00 | ||
| Advances paid | Wanfeng General Aviation Co., Ltd. | 1,339,952.92 | |||
| Other account receivable | Zhejiang Rifa Precision Machinery Co., Ltd. | 176,000.00 | |||
| Other account receivable | Wanfeng Auto Holding Group Co., Ltd. | 380,700,000.00 | |||
| Other account receivable | Wanfeng Aviation Industry Co., Ltd. | 312,620,000.00 | |||
| Other account receivable | Shaoxing Jiajing Trading Co., Ltd. | 150,000,000.00 | |||
| Other account receivable | Zhejiang Wanfeng Technology Development Co., Ltd. | 91,538.50 | |||
| Other account receivable | Zhejiang Wanfeng Property Management Co., Ltd. | 25,037.62 | |||
| Other account receivable | Zhejiang Wanfeng New Energy Automobile Technology Co., Ltd. | 2,040.61 | |||
| Other non-current assets | Zhejiang Wanfeng Technology Development Co., Ltd. | 49,771.65 | 38,271,052.25 |
| Items | Related parties | Closing balance | Beginning balance |
| Account payable | Wanfeng Aviation Industry Co., Ltd. | 4,518,937.15 | 29,875,732.07 |
| Account payable | Zhejiang Wanfeng Technology Development Co., Ltd. | 1,082,569.09 | 1,380,818.37 |
| Account payable | Zhejiang Rifa Precision Machinery Co., Ltd. | 1,062,394.00 | 207,044.08 |
| Account payable | Zhejiang Rifa Precision Machine Tool Co., Ltd. | 264,822.00 | 75,072.00 |
| Account payable | Shengzhou Hechuang Trading Co., Ltd. | 5,409.14 | 2,442,228.10 |
| Account payable | Wanfeng General Aviation Co., Ltd. | 505,023.91 |
| Account payable | Wanfeng Group | 29,266.73 | |
| Account payable | Wanfeng General Airport Management Co., Ltd. | 6,975.50 | |
| Other account payable | Zhejiang Rifa Precision Machinery Co., Ltd. | 16,115,519.05 | 4,928,580.19 |
| Other account payable | Wanfeng Group | 5,000,000.00 | 33,820,000.00 |
| Other account payable | Zhejiang Wanfeng Technology Development Co., Ltd. | 4,938,304.35 | 8,995,287.32 |
| Other account payable | Zhejiang Rifa Precision Machine Tool Co., Ltd. | 1,924,001.84 | |
| Other account payable | Shengzhou Hechuang Trading Co., Ltd. | 253,862.98 | 452,369.32 |
| Other account payable | Wanfeng Finance Leasing Co., Ltd. | 2,000,000.00 |
8. Others
None
XIII. Share-based Payment
1. Overall information of share-based payment
□Applicable √Not applicable
2. Equity-settled share-based payment
□Applicable √Not applicable
3. Cash-settled share-based payment
□Applicable √Not applicable
4. Amendment and termination of share-based payment
None
5. Others
None
XIV. Commitments and Contingencies
1. Significant commitments
Important commitment on the balance sheet date
(1) Important commitments
As of December 31, 2020, the amount of capital commitments that the Grouphas signed but not provided for is RMB 67,753,615.41 (December 31, 2019:
RMB 73,700,139.92). As of December 31, 2020, the Group has no investmentcommitments that have been signed but not provided for (December 31, 2019:
None).
(2) Pending litigation
As stated in Note VII, 50, Shandong Bin'ao Aircraft Manufacturing Co., Ltd.litigated a dispute over the authorization of model production licenses by theCompany's subsidiary Austria Diamond Aircraft Industries GmbH. As ofDecember 31, 2020, the litigation is still in the process of arbitration. AustriaDiamond Aircraft Industries GmbH made provisions based on estimates.
(3) Outstanding claims
As stated in Note VII, 50, the Group had a number of outstanding employeeclaims on December 31, 2020. The Group has hired a third-party riskmanagement company to handle employee compensation claims and madeprovisions based on its estimated amount after evaluating all outstandingclaims.
2. Contingencies
(1) Significant contingencies existing on the balance sheet date
①Environmental testing deposit
In April 2001, Canada Meridian Technology Holdings Inc. divested its businessactivities related to its primary aluminum business unit. As one of the steps indivestiture, the Company disposed of all the net assets of Jutras Die CastingLtd. except for real estate, which is located in Toronto, Ontario. According tothe terms of the divestiture, Canadian Meridian Technology Holdings Inc.continues to retain the rights to the real estate, mainly because the real estateis undergoing environmental investigations related to legal proceedings at thattime. The lawsuit was filed by a company adjacent to Jutras Die Casting Ltd.and a financial institution that provided financing services for the company. InDecember 2001, the lawsuit ended. According to the results of the lawsuit, thereal estate will be transferred to the adjacent company of Jutras Die CastingLtd. after completing a series of administrative procedures and environmentalinvestigations in accordance with Ontario’s legal requirements. CanadaMeridian Technology Holding Inc. is obliged to monitor the environmental levelof the real estate within 10 years, and the monitoring results must show that thepollution level of the transferred real estate has been gradually degradedaccording to the model predictions displayed at the time of the lawsuit. In 2004,the relevant administrative procedures were completed, including the provisionof a CAD 2,100,000.00 guarantee to the Ministry of Environment in the form ofa letter of credit. The relevant real estate was transferred on December 14,2004. In 2014, before the expiration of the monitoring obligation, CanadianMeridian Technology Holdings Inc. agreed to continue to extend the monitoringobligation to 2017. In 2020, the company has completed the above-mentionedenvironmental testing obligations and is waiting for the final certification resultof the government's Ministry of Environment.
②Pay taxes
On April 16, 2013, Meridian Lightweight Technologies Holding Inc. wasinformed that, after completing the audit, the Italian customs department hadfiled with the liquidator Magnesium Products of Italy S.r.L (formerly known asMagnesium Products of America Inc.) during the 2009 tax period. It is claimed
that its unpaid value-added tax amounted to EUR 138,000 and demanded afine of EUR 141,640. Magnesium Products of Italy has been liquidated and hasno assets to repay. As of the date of issuance of this report, none of the abovetaxes and fines have been paid. After consulting with legal counsel, themanagement believes that Magnesium Products of America Inc. and WanfengMeridian Group, as independent entities, have no legal obligation to pay suchtaxes and fines. In 2015, Wanfeng Group issued a commitment, and it agreedthat if Wanfeng Meridian Group would eventually have to bear correspondingtaxes and/or penalties due to these matters, the resulting losses (including butnot limited to taxes, fines, and litigation costs) will be compensated by WanfengGroup or its designated third party (excluding Wanfeng Meridian Group, andWanfeng Auto Wheel and its companies within the scope of its consolidatedfinancial statements).
③Customer compensation
Magnesium Products of America Inc. and Meridian Lightweight TechnologiesInc. had multiple production accidents in 2018 that affected daily production.One or more customers may request Magnesium Products of America Inc. andMeridian Lightweight Technologies Inc. to compensate for the losses causedby the interruption of their supply chain. In October 2020, Ford Motor Companyfiled a lawsuit against Meridian Lightweight Technologies Inc. through its agentinsurance company. Since the specific compensation amount will be formallyproposed in the discovery stage several months later, the future compensationobligations and compensation amount are highly uncertain. Therefore, onDecember 31, 2020, the Group did not make relevant provisions.
(2) If no significant contingent matter to be disclosed by the Company, it shouldalso be noted accordinglyNo important contingent matter needs to be disclosed by the Company.
(3) Other information required by the Guidelines for Information Disclosure ofAutomobile Manufacturing Related IndustriesMortgage sales, finance leasing and other models of sales accounted for morethan 10% of operating revenue
□ Applicable √ Not applicable
The Company's guarantee to the dealer
□ Applicable √ Not applicable
3. Others
No
XV. Events after the Balance Sheet Date
1. Significant non-adjustment items
Unit: RMB
| Items | Content | Impact on financial position and operating results | Reasons |
| Proposed profits or dividends | 207,210,752.00 |
| Profits or dividends declared to be paid after approval | 207,210,752.00 |
address is located at No. 1, Aofeng Road, Xinchang Industrial Park, Zhejiang,China. The scope of business includes design, testing, production, sales,maintenance and repair of general aviation aircraft, helicopters, aero engines,avionics, electrical and mechanical systems; technology development andconsulting services for the general aviation industry; bonded warehouseoperations; goods import and export; technology import and export.
XVI. Other Significant Events
1. Prior accounting error correction
(1) Retrospective restatement method
Unit: RMB
| Correction of accounting error | Processing procedure | Items in each comparison period affected | Cumulative influence |
| -- |
| Correction of accounting error | Approval procedure | Reasons for adopting prospective adjustment method |
| -- |
| Items | Revenue | Expenses | Total profit | Income tax | Net profit | Discontinue |
| expense | d operating profit attributable to owners of the parent company | |||||
| -- |
Unit: RMB
| Item | Automobile wheel | Motorcycle wheel | Coating processing | Magnesium alloy die casting products | Stamping | General Aviation Aircraft | Inter-segment elimination | Total |
| External transaction revenue | 3,861,538,493.07 | 1,623,157,538.62 | 272,914,859.29 | 2,557,650,411.18 | 753,572,627.73 | 1,630,390,974.68 | 10,699,224,904.57 | |
| Inter-segment transaction revenue | 2,825,131.19 | -2,825,131.19 | ||||||
| Investment income from associates | -876,459.23 | |||||||
| Asset impairment loss | -3,988,474.85 | -3,036,182.07 | 509,471.83 | -2,983,670.52 | -680,506.02 | -10,179,361.63 | ||
| Depreciation and amortization | 258,899,027.39 | 122,648,411.78 | 32,815,327.54 | 225,733,598.51 | 68,442,088.67 | 74,767,785.07 | 783,306,238.96 | |
| The total profit | 532,939,773.63 | 33,621,660.30 | 46,252,586.15 | 263,278,982.96 | 117,676,362.71 | 294,305,214.27 | -459,051,846.99 | 829,022,733.03 |
| Income tax expense | 6,795,013.66 | -2,853,684.21 | 9,345,321.42 | 82,128,473.82 | 14,856,056.42 | -46,124,668.96 | 64,146,512.15 | |
| Total assets | 10,089,670,942.84 | 1,971,970,108.80 | 463,180,113.04 | 3,435,371,228.62 | 1,192,080,356.54 | 4,690,103,855.76 | -5,869,150,704.73 | 15,973,225,900.87 |
| Total liabilities | 5,596,204,167.89 | 1,285,425,861.89 | 75,421,685.39 | 1,358,857,504.44 | 277,600,876.38 | 1,044,274,905.45 | -1,173,392,817.89 | 8,464,392,183.55 |
| Long-term equity investment in associates | 567,810.84 | 567,810.84 |
(4) Other remarks
None
7. Other significant events influencing investor’s investment decision
None
8. Others
None
XVII. Notes to Parent Company Financial Statements Items
1. Accounts receivable
(1) Account receivable disclosed by category
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Doubtful debt provisions | Carrying value | Book balance | Doubtful debt provisions | Carrying value | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |||
| Accounts receivable provided for doubtful debts on individual basis | 17,923,454.32 | 3.44% | 5,305,626.69 | 29.60% | 12,617,827.63 | 16,558,335.50 | 2.40% | 7,689,685.14 | 46.44% | 8,868,650.36 |
| Including: | ||||||||||
| Accounts receivable provided for doubtful debts on collective basis | 502,413,199.87 | 96.56% | 2,659,777.96 | 0.53% | 499,753,421.91 | 673,934,882.91 | 97.60% | 4,617,306.15 | 0.69% | 669,317,576.76 |
| Including: | ||||||||||
| Total | 520,336,654.19 | 100.00% | 7,965,404.65 | 1.53% | 512,371,249.54 | 690,493,218.41 | 100.00% | 12,306,991.29 | 1.78% | 678,186,227.12 |
| Company | Closing balance | |||
| Book balance | Provisions for doubtful debt | % | Reasons | |
| Hunan Leopard Automobile Co., Ltd. | 8,280,910.13 | 2,781,910.13 | 33.59% | Estimated collection risk |
| CIA WHEEL GROUP | 6,625,061.06 | 1,414,787.38 | 21.36% | Product quality disputes |
| CPC WHEELS CORPORATION | 3,017,483.13 | 1,108,929.18 | 36.75% | Estimated collection risk |
| Total | 17,923,454.32 | 5,305,626.69 | -- | -- |
| Company | Closing balance | |||
| Book balance | Provisions for doubtful debt | % | Reasons | |
Unit: RMB
| Company | Closing balance | ||
| Book balance | Provisions for doubtful debt | % | |
| Within 1 year | 499,501,004.84 | 2,296,548.48 | 0.46% |
| 1 year to 2 years | 372,690.38 | 79,459.12 | 21.32% |
| 2 years to 3 years | 438,033.11 | 131,409.93 | 30.00% |
| More than 3 years | 2,101,471.54 | 152,360.43 | 7.25% |
| Total | 502,413,199.87 | 2,659,777.96 | -- |
| Company | Closing balance | ||
| Book balance | Provisions for doubtful debt | % | |
| Aging | Book balance |
| Within 1 year (including 1 year) | 505,726,693.22 |
| 1 year to 2 years | 2,407,884.12 |
| 2 years to 3 years | 8,718,943.24 |
| More than 3 years | 3,483,133.61 |
| 3 years to 4 years | 3,483,133.61 |
| Total | 520,336,654.19 |
Unit: RMB
| Category | Opening balance | Change in current reporting period | Closing balance | |||
| Accrual | Recovery or reversal | Write-off | Others | |||
| 2020FY | 12,306,991.29 | 4,341,586.64 | 7,965,404.65 | |||
| Total | 12,306,991.29 | 4,341,586.64 | 7,965,404.65 | |||
| Company | Recovery or reversal amount | Recovery method |
| -- |
| Items | Written off amount |
| -- |
| Company | Nature of account receivable | Written off amount | Reasons for write- off | Write-off procedure | Whether the payment is generated by related party transactions |
| -- |
| Company | Account receivable closing balance | % of the total balance of accounts receivable at the end of the period | Closing balance of provisions for doubtful debt |
| No. 1 | 72,086,733.75 | 13.85% | 360,433.67 |
| No. 2 | 58,758,771.03 | 11.29% | 282,042.10 |
| No. 3 | 57,723,960.86 | 11.09% | 277,075.01 |
| No. 4 | 37,786,187.75 | 7.26% | 181,373.70 |
| No. 5 | 31,414,819.00 | 6.04% | 150,791.13 |
| Total | 257,770,472.39 | 49.53% |
| Items | Closing balance | Opening balance |
| Interest receivables | 0.00 | |
| Dividend receivables | 0.00 | 129,600,000.00 |
| Other receivables | 241,713,997.31 | 365,180,887.10 |
| Total | 241,713,997.31 | 494,780,887.10 |
| Items | Closing balance | Opening balance |
| Total | 0.00 |
| Borrower | Closing balance | Overdue time | Reasons for overdue | Whether impairment occurred and its judgment basis |
| -- |
(2) Dividend receivables
1) Dividend receivables by category
Unit: RMB
| Items (or investee) | Closing balance | Opening balance |
| Zhejiang Wanfeng Motorcycle Wheel Co., Ltd. | 0.00 | 129,600,000.00 |
| Total | 0.00 | 129,600,000.00 |
| Items (or investee) | Closing balance | Age | Reasons for not received | Whether impairment occurred and its judgment basis |
| -- |
| Other receivables categorized by nature | Closing balance | Opening balance |
| Subsidiary financial aid | 229,800,000.00 | 247,700,000.00 |
| Amounts due from related parties | 100,000,000.00 | |
| Stock repurchases deposit and withdrawal | 866,935.63 | 6,913,835.11 |
| Employee petty cash | 173,368.21 | 198,110.62 |
| Disbursement fee | 10,157,307.66 | 10,157,307.66 |
| Other | 716,385.81 | 211,680.95 |
| Total | 241,713,997.31 | 365,180,934.34 |
Unit: RMB
| Doubtful debt provisions | Phase I | Phase II | Phase III | Total |
| Next 12?month expected credit losses | Lifetime expected credit losses (credit not impaired) | Lifetime expected credit losses (credit impaired) | ||
| Balance on January 1, 2020 | 47.24 | 47.24 | ||
| Balance in current period on January 1, 2020 | —— | —— | —— | —— |
| Provision reversed in current period | 47.24 | 47.24 | ||
| Balance on December 31, 2020 | 0.00 | 0.00 |
| Aging | Closing balance |
| Within 1 year (including 1 year) | 231,356,452.61 |
| 1 to 2 years | 38,650.56 |
| Over 3 years | 10,318,894.14 |
| 3 to 4 years | 10,318,894.14 |
| Total | 241,713,997.31 |
| Category | Opening balance | Changes in the current period | Closing balance | |||
| Accrued | Recovered or reversed | Write- off | Others | |||
| 2020FY | 47.24 | 47.24 | 0.00 | |||
| Total | 47.24 | 47.24 | 0.00 | |||
| Owing parties | Recovered or reversed | Way of collection |
| -- |
| Items | Amount written off |
| -- |
| Owing parties | Nature of other account receivable | Amount written off | Reasons for write-off | Write-off procedures | Whether the payment is generated by related party transactions |
| -- |
| Owing parties | Nature of receivables | Closing balance | Aging | Proportion to the total balance of other receivables | Provision for doubtful debt at the end of the period |
| -- |
| Company | Government subsidy project | Closing balance | Aging | Estimated time, amount and basis of receipt |
| -- |
receivables and continuing to be involvedNoneOther remarks:
None
3. Long-term equity investments
Unit: RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Investments in subsidiaries | 6,104,568,111.43 | 6,104,568,111.43 | 4,198,711,501.05 | 4,198,711,501.05 | ||
| Total | 6,104,568,111.43 | 6,104,568,111.43 | 4,198,711,501.05 | 4,198,711,501.05 | ||
| Investees | Opening balance (Carrying amount) | Changes in the current period | Closing balance (Carrying amount) | Closing balance of provision for impairment | |||
| Investment increased | Investments decreased | Provision for impairment | Others | ||||
| Weihai Wanfeng Auto Wheel Co., Ltd. | 78,600,024.75 | 78,600,024.75 | |||||
| Ningbo Aoweier Wheel Co., Ltd. | 118,269,148.42 | 118,269,148.42 | |||||
| Jilin Wanfeng Auto Wheel Co., Ltd. | 250,000,000.00 | 250,000,000.00 | |||||
| Chongqing Wanfeng Aolun Aluminum Wheel Co., | 200,000,000.00 | 200,000,000.00 | |||||
| Ltd | |||||||
| Wanfeng North America Co., Ltd. | 797,300.00 | 797,300.00 | |||||
| Zhejiang Wanfeng Motorcycle Wheel Co., Ltd. | 587,585,877.60 | 587,585,877.60 | |||||
| Weihai Wanfeng Magnesium Technology Development Co., Ltd. | 32,647,399.88 | 32,647,399.88 | |||||
| Shanghai Dacromet Coating Industry Co., Ltd. | 508,163,547.00 | 508,163,547.00 | |||||
| Wanfeng Meridian Holdings Co., Ltd. | 1,151,962,857.40 | 1,151,962,857.40 | |||||
| Shanghai Fengtu Automobile Technology Co., Ltd. | 16,500,000.00 | 16,500,000.00 | |||||
| Wuxi Xiongwei Precision Technology Co., Ltd. | 1,254,000,000.00 | 1,254,000,000.00 | |||||
| Wanfeng Japan Co., Ltd. | 185,346.00 | 185,346.00 | |||||
| Wanfeng Aircraft Industry Co., Ltd. | 1,905,856,610.38 | 1,905,856,610.38 | |||||
| Total | 4,198,711,501.05 | 1,905,856,610.38 | 6,104,568,111.43 |
| Investees | Opening balance | Changes in the current period | Closing balance | Closing balance of | |||||||
| Investments | Investments | Investment | Adjustment | Changes in | Cash dividen | Provision for | Others | ||||
| (Carrying amount) | increased | decreased | gains and losses recognized under equity method | in other comprehensive income | other equity | d/profit declared for distribution | impairment | (Carrying amount) | provision for impairment | ||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Items | Current period | Prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Main operations | 2,294,509,596.18 | 1,994,367,230.96 | 3,076,231,080.13 | 2,559,457,625.21 |
| Other operations | 54,634,067.04 | 42,564,059.18 | 63,428,127.46 | 46,464,981.02 |
| Total | 2,349,143,663.22 | 2,036,931,290.14 | 3,139,659,207.59 | 2,605,922,606.23 |
| Contract classification | Segment 1 | Segment 2 | Total | |
| Including： |
| Items | Current period | Prior period |
| Investment income from long-term equity investments under | 499,807,846.99 | 116,260,000.00 |
| cost method | ||
| Gains on disposal of held-for-trading financial products | -4,600.00 | |
| Gains on settlement of foreign exchange forward contract | 1,603,380.82 | |
| Total | 501,406,627.81 | 116,260,000.00 |
| Items | Amount | Note |
| Gains or loss on disposal of non-current assets | 501,156.94 | |
| Government grants included in profit and loss (excluding those closely related to operating activities of the Company, with quantity/quota based on certain standards) | 104,562,193.16 | |
| Net profit and loss in the current period from the beginning of the period to the date of the combination arising from a business combination under the common control | 74,836,418.19 | |
| Gains on changes in fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities, and investment income from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other investment, excluding those arising from hedging business related to operating activities | 2,859,105.21 | |
| Reversal of provision for impairment of receivables and contract assets that have been tested for impairment on individual basis | 4,653,372.07 | |
| Other non-operating revenue or expenditures except the above items | 33,063,841.71 | |
| Less: Corporate income tax affected | 27,235,065.43 | |
| Non-controlling interest affected | 43,299,488.94 | |
| Total | 149,941,532.91 | -- |
items, specify the reason
□ Applicable √ Not Applicable
2. ROE and EPS
| Profit of the reporting period | Weighted average ROE | EPS | |
| Basic EPS (RMB/share) | Diluted EPS (RMB/share) | ||
| Net profit attributable to ordinary shareholders of the Company | 10.27% | 0.27 | 0.27 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring profit and loss | 7.21% | 0.20 | 0.20 |
Section XIII: Documents Available for Reference
I. Financial statements signed and sealed by the legal
representative, the person in charge of the accounting work, andthe person in charge of the accounting department.
II. The original audit report with the seal of the accounting firm and
the signature and seal of the certified public accountant.
III. The original copies of all Company documents and
announcements publicly disclosed in newspapers designated bythe CSRC during the reporting period.
IV. The original documents of the 2020 Annual Report with the
signature of the legal representative.
V. The place where the above reference documents are prepared: the
office of the Company's Board of Directors.
Zhejiang Wanfeng Auto Wheel Co., LtdLegal Representative: Chen BinApril 30, 2021